Question 1

The circular-flow diagram is a

Accepted Answer

A)   visual model of the economy.
B)   visual model of the relationships among money, prices, and businesses.
C)   model that shows the effects of government on the economy.
D)   mathematical model of how the economy works.E) B) and C)
F) A) and D)

Question 2

In the markets for goods and services in the circular-flow diagram,households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 3

An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

Accepted Answer

A) True 
 B)False

Question 4

If a line passes through the points (20,5)and (10,10),then the slope of the line is 1/2.

Accepted Answer

A) True 
 B)False

Question 5

Figure 2-10
 
-Refer to Figure 2-10.Which of the following events would explain the shift of the production possibilities frontier from A to B?

Accepted Answer

A)   The economy's citizens developed an enhanced taste for books.
B)   The economy experienced a technological advance in the production of books.
C)   More capital became available in the economy.
D)   More labor became available in the economy.E) None of the above
F) B) and C)

Question 6

Economic growth causes a production possibilities frontier to shift outward.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an example of a normative,as opposed to positive,statement?

Accepted Answer

A)   The price of gasoline came down sharply during the second half of 2006.
B)   If the government were to set a maximum legal price on gasoline, then there would be a shortage of gasoline.
C)   Income taxes should be reduced.
D)   The federal government obtains much of its revenue from income taxes.E) A) and B)
F) C) and D)

Question 8

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Accepted Answer

A)   For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics.
B)   Microeconomists study markets for small products, whereas macroeconomists study markets for large products.
C)   Microeconomics and macroeconomics are distinct from one another, yet they are closely related.
D)   Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies.E) A) and D)
F) B) and C)

Question 9

The Economic Report of the President

Accepted Answer

A)   discusses recent developments in the economy and presents analysis of current policy issues.
B)   is written by the Council of Economic Advisers.
C)   is the responsibility of the economists at the Office of Management and Budget.
D)   Both a and b are correct.E) None of the above
F) A) and C)

Question 10

Which of the following transactions does not take place in the markets for the factors of production in the circular-flow diagram?

Accepted Answer

A)   Jason provides plumbing services for a plumbing company and receives an hourly wage from the company for his services.
B)   Jennifer works as a marriage counselor and her clients pay her on a per-hour basis for her services.
C)   Brody owns several shopping malls and receives rent payments from the companies that operate those malls.
D)   Bree sells advertising for a newspaper and receives a commission from the newspaper company for each advertisement that she sells.E) A) and C)
F) B) and C)

Question 11

Which of the following is an example of a normative,as opposed to positive,statement?

Accepted Answer

A)   If the price of a product decreases, people's willingness to buy that product will increase.
B)   Reducing tax rates on the wealthy would benefit the nation.
C)   If the national saving rate were to increase, so would the rate of economic growth.
D)   The elimination of trade restrictions would increase an economy's standard of living.E) None of the above
F) A) and B)

Question 12

The x-coordinate of an ordered pair specifies the

Accepted Answer

A)   diagonal location of the point.
B)   vertical location of the point.
C)   horizontal location of the point.
D)   quadrant location in which the point is located.E) All of the above
F) A) and C)

Question 13

For an economist,the idea of making assumptions is regarded generally as a

Accepted Answer

A)   bad idea, since doing so leads to the omission of important ideas and variables from economic models.
B)   bad idea, since doing so invariably leads to data-collection problems.
C)   good idea, since doing so helps to simplify the complex world and make it easier to understand.
D)   good idea, since economic analysis without assumptions leads to complicated results that the general public finds hard to understand.E) A) and B)
F) A) and C)

Question 14

In the circular-flow diagram,one loop represents the flow of goods,services,and factors of production,and the other loop represents the corresponding flow of dollars.

Accepted Answer

A) True 
 B)False

Question 15

Figure 2-2
 
-Refer to Figure 2-2.Boxes A and B of this circular-flow diagram represent

Accepted Answer

A)   firms and households.
B)   households and government.
C)   the markets for goods and services and the markets for financial assets.
D)   the markets for goods and the markets for services.E) A) and C)
F) All of the above

Question 16

Because almost all economists oppose policies that restrict trade among nations,policymakers do not restrict imports of certain goods.

Accepted Answer

A) True 
 B)False

Question 17

The Council of Economic Advisers

Accepted Answer

A)   was created in 1776 and consists of three members and a staff of several dozen economists.
B)   was created in 1776 and consists of thirty members and a staff of a dozen economists.
C)   was created in 1946 and consists of three members and a staff of several dozen economists.
D)   was created in 1946 and consists of thirty members and a staff of a dozen economists.E) C) and D)
F) B) and C)

Question 18

If an economy is producing efficiently,then

Accepted Answer

A)   there is no way to produce more of one good without producing less of another good.
B)   it is possible to produce more of both goods without increasing the quantities of inputs that are being used.
C)   it is possible to produce more of one good without producing less of another good.
D)   it is not possible to produce more of any good at any cost.E) None of the above
F) A) and B)

Question 19

Economists acting as scientists make positive statements,while economists acting as policy advisers make normative statements.

Accepted Answer

A) True 
 B)False

Question 20

Figure 2-6
 
-Refer to Figure 2-6.This economy cannot produce at which point(s) ?

Accepted Answer

A)   A, B, D
B)   C, D, F, G
C)   C, F, G
D)   DE) All of the above
F) C) and D)

Exam 2: Thinking Like an Economist.

Economic growth causes a production possibilities frontier to shift outward.

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The Economic Report of the President

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The circular-flow diagram is a

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Which of the following statements best captures the relationship between microeconomics and macroeconomics?

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Economists acting as scientists make positive statements,while economists acting as policy advisers make normative statements.

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For an economist,the idea of making assumptions is regarded generally as a

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Because almost all economists oppose policies that restrict trade among nations,policymakers do not restrict imports of certain goods.

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Which of the following is an example of a normative,as opposed to positive,statement?

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Figure 2-10 -Refer to Figure 2-10.Which of the following events would explain the shift of the production possibilities frontier from A to B?

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In the circular-flow diagram,one loop represents the flow of goods,services,and factors of production,and the other loop represents the corresponding flow of dollars.

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Which of the following transactions does not take place in the markets for the factors of production in the circular-flow diagram?

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The x-coordinate of an ordered pair specifies the

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In the markets for goods and services in the circular-flow diagram,households are buyers and firms are sellers.

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Figure 2-6 -Refer to Figure 2-6.This economy cannot produce at which point(s) ?

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The Council of Economic Advisers

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Figure 2-2 -Refer to Figure 2-2.Boxes A and B of this circular-flow diagram represent

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If an economy is producing efficiently,then

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An outcome is said to be efficient if an economy is getting all it can from the scarce resources it has available.

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Which of the following is an example of a normative,as opposed to positive,statement?

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If a line passes through the points (20,5)and (10,10),then the slope of the line is 1/2.

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