Question 1

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

Accepted Answer

A)  the effect of foreign direct investment on economic growth
B)  the effect of a sales tax on the cigarette industry
C)  the effect of an investment tax credit on the economy's capital stock
D)  the effect of a war on government spendingE) A) and B)
F) B) and D)

Question 2

The outer loop of the circular-flow diagram represents the flows of dollars in the economy.Which of the following does not appear on the outer loop?

Accepted Answer

A)  wages
B)  income
C)  capital
D)  rentE) B) and D)
F) None of the above

Question 3

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Accepted Answer

A)  efficiency
B)  opportunity cost
C)  equality
D)  trade-offsE) A) and D)
F) A) and B)

Question 4

In a certain economy,toys and greeting cards are produced,and the economy currently operates on its production possibilities frontier.Which of the following events would allow the economy to produce more toys and more greeting cards,relative to the quantities of those goods that are being produced now?

Accepted Answer

A)  The economy experiences economic growth.
B)  There is a technological advance in the toy industry,but the greeting card industry experiences no such advance.
C)  There is a technological advance in the greeting card industry,but the toy industry experiences no such advance.
D)  All of the above are correct.E) All of the above
F) A) and B)

Question 5

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Accepted Answer

A)  is useless,since the real world has many countries trading many goods.
B)  can be useful only in situations involving two countries and two goods.
C)  can be useful in the classroom,but is useless in the real world.
D)  can be useful in helping economists understand the complex world of international trade involving many countries and many goods.E) All of the above
F) C) and D)

Question 6

Economists,like mathematicians,physicists,and biologists,

Accepted Answer

A)  make use of the scientific method.
B)  try to address their subject with a scientist's objectivity.
C)  devise theories,collect data,and then analyze these data in an attempt to verify or refute their theories.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 7

Which of the following steps does an economist take when studying the economy?

Accepted Answer

A)  devise theories
B)  collect data
C)  analyze data
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 8

Figure 2-5 
-Refer to Figure 2-5.It is not possible for this economy to produce at point

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) B) and D)
F) B) and C)

Question 9

Figure 2-9

-Refer to Figure 2-9,Panel (a) and Panel (b) .Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a) to Panel (b) ?

Accepted Answer

A)  the tradeoff between the production of donuts and coffee changes
B)  the opportunity cost of a cup of coffee is higher at all levels of coffee production
C)  production of 4 donuts and 2 cups of coffee becomes possible
D)  production of 1 donut and 4 cups of coffee becomes efficientE) B) and C)
F) C) and D)

Question 10

When constructing a production possibilities frontier,which of the following assumptions is not made?

Accepted Answer

A)  The economy produces only two goods or two types of goods.
B)  Firms produce goods using factors of production.
C)  The technology available to firms is given.
D)  The quantities of the factors of production that are available are increasing over the relevant time period.E) A) and B)
F) A) and C)

Question 11

In the circular-flow diagram,

Accepted Answer

A)  profit flows from households to firms.
B)  labor flows from households to firms.
C)  services flow from households to firms.
D)  All of the above are correct.E) A) and B)
F) B) and D)

Question 12

Figure 2-1 
-Refer to Figure 2-1.Raymond buys a refrigerator for his new home.To which of the arrows does this transaction directly contribute?

Accepted Answer

A)  A only
B)  A and B
C)  C only
D)  C and DE) B) and C)
F) A) and D)

Question 13

Figure 2-15 
-Refer to Figure 2-15.Consider the production possibilities frontier for an economy that produces only sofas and cars.The opportunity cost of each car is

Accepted Answer

A)  the slope of the production possibilities frontier.
B)  3/2 sofas.
C)  2/3 of a sofa.
D)  Both a and b are correct.E) A) and B)
F) A) and C)

Question 14

Figure 2-15 
-Refer to Figure 2-15.Consider the production possibilities frontier for an economy that produces only sofas and cars.When society moves from point A to point B,

Accepted Answer

A)  the opportunity cost is the same as when society moves from point B to point C.
B)  it is giving up cars to get sofas.
C)  the opportunity cost is increasing.
D)  it moves from an inefficient point to an efficient point.E) B) and C)
F) None of the above

Question 15

Economists make use of assumptions,some of which are unrealistic,for the purpose of

Accepted Answer

A)  teaching economics to people who have never before studied economics.
B)  advancing their political agendas.
C)  developing models when the scientific method cannot be used.
D)  focusing their thinking.E) A) and D)
F) A) and B)

Question 16

It is possible for an economy to increase its production of both goods if the economy

Accepted Answer

A)  moves downward and to the right along its production possibilities frontier and the frontier is bowed outward.
B)  moves upward and to the left along its production possibilities frontier and the frontier is bowed outward.
C)  moves in either direction along its production possibilities frontier and the frontier is a straight line.
D)  moves from a situation of inefficient production to a situation of efficient production.E) B) and D)
F) B) and C)

Question 17

A circular-flow diagram is a model that

Accepted Answer

A)  helps to explain how participants in the economy interact with one another.
B)  helps to explain how the economy is organized.
C)  incorporates all aspects of the real economy.
D)  Both (a) and (b) are correct.E) B) and D)
F) All of the above

Question 18

The production possibilities frontier illustrates

Accepted Answer

A)  the trade-off between efficiency and equality.
B)  the combination of output that an economy should produce.
C)  the combination of output that each member of society should consume.
D)  None of the above is correct.E) All of the above
F) B) and C)

Question 19

Figure 2-8 
-Refer to Figure 2-8.Inefficient production is represented by which point(s) ?

Accepted Answer

A)  K,M
B)  L
C)  L,M
D)  ME) All of the above
F) C) and D)

Question 20

In the circular-flow diagram,in the markets for

Accepted Answer

A)  goods and services,households and firms are both sellers.
B)  goods and services,households are buyers and firms are sellers.
C)  the factors of production,households are buyers and firms are sellers.
D)  the factors of production,households and firms are both buyers.E) A) and D)
F) C) and D)

Exam 2: Thinking Like an Economist: The Economist As Scientist

Figure 2-5 -Refer to Figure 2-5.It is not possible for this economy to produce at point

Correct Answer
verified

In the circular-flow diagram,

Correct Answer
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The outer loop of the circular-flow diagram represents the flows of dollars in the economy.Which of the following does not appear on the outer loop?

Correct Answer
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Figure 2-1 -Refer to Figure 2-1.Raymond buys a refrigerator for his new home.To which of the arrows does this transaction directly contribute?

Correct Answer
verified

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

Correct Answer
verified

It is possible for an economy to increase its production of both goods if the economy

Correct Answer
verified

Figure 2-8 -Refer to Figure 2-8.Inefficient production is represented by which point(s) ?

Correct Answer
verified

Figure 2-15 -Refer to Figure 2-15.Consider the production possibilities frontier for an economy that produces only sofas and cars.When society moves from point A to point B,

Correct Answer
verified

Figure 2-15 -Refer to Figure 2-15.Consider the production possibilities frontier for an economy that produces only sofas and cars.The opportunity cost of each car is

Correct Answer
verified

In the circular-flow diagram,in the markets for

Correct Answer
verified

Which of the following steps does an economist take when studying the economy?

Correct Answer
verified

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Correct Answer
verified

The production possibilities frontier illustrates

Correct Answer
verified

When constructing a production possibilities frontier,which of the following assumptions is not made?

Correct Answer
verified

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Correct Answer
verified

A circular-flow diagram is a model that

Correct Answer
verified

Figure 2-9 -Refer to Figure 2-9,Panel (a) and Panel (b) .Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a) to Panel (b) ?

Correct Answer
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Correct Answer
verified

Economists make use of assumptions,some of which are unrealistic,for the purpose of

Correct Answer
verified

Economists,like mathematicians,physicists,and biologists,

Correct Answer
verified

Exam 2: Thinking Like an Economist: The Economist As Scientist

Figure 2-5 -Refer to Figure 2-5.It is not possible for this economy to produce at point

Correct AnswerverifiedShow Answer

In the circular-flow diagram,

Correct AnswerverifiedShow Answer

The outer loop of the circular-flow diagram represents the flows of dollars in the economy.Which of the following does not appear on the outer loop?

Correct AnswerverifiedShow Answer

Figure 2-1 -Refer to Figure 2-1.Raymond buys a refrigerator for his new home.To which of the arrows does this transaction directly contribute?

Correct AnswerverifiedShow Answer

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

Correct AnswerverifiedShow Answer

It is possible for an economy to increase its production of both goods if the economy

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8.Inefficient production is represented by which point(s) ?

Correct AnswerverifiedShow Answer

Figure 2-15 -Refer to Figure 2-15.Consider the production possibilities frontier for an economy that produces only sofas and cars.When society moves from point A to point B,

Correct AnswerverifiedShow Answer

Figure 2-15 -Refer to Figure 2-15.Consider the production possibilities frontier for an economy that produces only sofas and cars.The opportunity cost of each car is

Correct AnswerverifiedShow Answer

In the circular-flow diagram,in the markets for

Correct AnswerverifiedShow Answer

Which of the following steps does an economist take when studying the economy?

Correct AnswerverifiedShow Answer

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Correct AnswerverifiedShow Answer

The production possibilities frontier illustrates

Correct AnswerverifiedShow Answer

When constructing a production possibilities frontier,which of the following assumptions is not made?

Correct AnswerverifiedShow Answer

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Correct AnswerverifiedShow Answer

A circular-flow diagram is a model that

Correct AnswerverifiedShow Answer

Figure 2-9 -Refer to Figure 2-9,Panel (a) and Panel (b) .Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a) to Panel (b) ?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists make use of assumptions,some of which are unrealistic,for the purpose of

Correct AnswerverifiedShow Answer

Economists,like mathematicians,physicists,and biologists,

Correct AnswerverifiedShow Answer

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