Question 1

A macroeconomist,rather than a microeconomist,would study the effects on a market from two firms merging.

Accepted Answer

A) True 
 B)False

Question 2

A demand curve shows the relationship

Accepted Answer

A)   between income and quantity demanded.
B)   between price and income.
C)   between price and quantity demanded.
D)   among income,price,and quantity demanded.E) None of the above
F) B) and D)

Question 3

Indiadesh is a country that produces two goods,textiles and computers.Last year,Indiadesh produced 500 textiles and 1300 computers.This year it produced 450 textiles and 1100 computers.Given no further information,which of the following events could explain this change?

Accepted Answer

A)   Indiadesh decreased unemployment.
B)   Indiadesh experienced an improvement in textile-making technology.
C)   Indiadesh experienced an improvement in computer-making technology.
D)   Indiadesh experienced a reduction in resources.E) A) and D)
F) All of the above

Question 4

Production possibilities frontiers can be used to illustrate scarcity,trade-offs,opportunity cost,efficiency,unemployment,technological advances,and economic growth.

Accepted Answer

A) True 
 B)False

Question 5

On a bowed production possibilities frontier,as you move down along the curve

Accepted Answer

A)   more of one good must be given up to receive one unit of the other good.
B)   the available production technology does not change.
C)   the opportunity cost increases.
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 6

In the simple circular-flow diagram,the participants in the economy are

Accepted Answer

A)   firms and government.
B)   households and firms.
C)   households and government.
D)   households,firms,and government.E) A) and B)
F) None of the above

Question 7

Sometimes economists disagree because their values differ.Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)   One economist believes the North American Free Trade Agreement (NAFT
A)  has led to a loss of American jobs;another economist disputes this claim.
B)   One economist believes that when income taxes are cut,people will increase their spending;another economist believes that when income taxes are cut,people will increase their saving.
C)   One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people;another economist disputes the idea that increases in sales taxes are unfair to low-income people.
D)   One economist believes that,prior to the Civil War,slavery contributed to economic growth in the South;another economist believes that slavery held back the South's economic growth.E) B) and C)
F) A) and C)

Question 8

Which types of models are built with assumptions?

Accepted Answer

A)   economic models,but not models in other disciplines such as physics and biology
B)   economic models as well as models in other disciplines such as physics and biology
C)   models that are built for teaching purposes but not for research purposes
D)   bad modelsE) B) and D)
F) None of the above

Question 9

The Council of Economic Advisers

Accepted Answer

A)   was created in 1946.
B)   advises the president of the United States on economic policy matters.
C)   writes the annual Economic Report of the President.
D)   All of the above are correct.E) All of the above
F) A) and C)

Question 10

For economists,statements about the world are of two types:

Accepted Answer

A)   assumptions and theories.
B)   true statements and false statements.
C)   specific statements and general statements.
D)   positive statements and normative statements.E) B) and C)
F) C) and D)

Question 11

The argument that purchases of minivans cause large families is an example of

Accepted Answer

A)   omitted variables.
B)   normative statements.
C)   reverse causality.
D)   bias.E) C) and D)
F) B) and C)

Question 12

"Society would be better off if the welfare system were abolished" is a normative statement,not a positive statement.

Accepted Answer

A) True 
 B)False

Question 13

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) C) and D)
F) All of the above

Question 14

The slope of a horizontal line is infinite,and the slope of a vertical line is zero.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following trade-offs does the production possibilities frontier illustrate?

Accepted Answer

A)   if an economy wants to increase efficiency in production,then it must sacrifice equality in consumption
B)   once an economy has reached the efficient points on its production possibilities frontier,the only way of getting more of one good is to get less of the other
C)   for an economy to consume more of one good,it must stop consuming the other good entirely
D)   for an economy to produce and consume goods,it must sacrifice environmental qualityE) A) and D)
F) B) and D)

Question 16

Figure 2-7 
-Refer to Figure 2-7.In order to reach point L,the economy would have to

Accepted Answer

A)   acquire more resources or experience a technological advance.
B)   begin using its available resources more efficiently than it is currently using them.
C)   shift resources away from the production of nails and toward production of hammers.
D)   None of the above are correct;the economy will never be able to reach point L.E) A) and C)
F) A) and B)

Question 17

In the circular-flow diagram,

Accepted Answer

A)   factors of production flow from government to firms.
B)   goods and services flow from households to firms.
C)   income paid to the factors of production flows from firms to households.
D)   spending on goods and services flows from firms to households.E) A) and B)
F) A) and C)

Question 18

Figure 2-1 
-Refer to Figure 2-1.Which arrow represents the flow of spending by households?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) None of the above
F) C) and D)

Question 19

Figure 2-2  Consider the production possibilities curve for a country that can produce cars,corn (in bushels),or a combination of the two.
-Refer to Figure 2-2.The bowed outward shape of the production possibilities curve indicates that opportunity cost of corn in terms of cars is

Accepted Answer

The answer of Figure 2-2  Consider the production possibilities...

Question 20

In the ordered pair (17,75) ,17 is the

Accepted Answer

A)   vertical location of the point.
B)   the slope.
C)   the x-coordinate.
D)   the y-coordinate.E) A) and B)
F) B) and C)

Exam 2: Thinking Like an Economist

In the circular-flow diagram,

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"Society would be better off if the welfare system were abolished" is a normative statement,not a positive statement.

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Which of the following trade-offs does the production possibilities frontier illustrate?

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In the simple circular-flow diagram,the participants in the economy are

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A macroeconomist,rather than a microeconomist,would study the effects on a market from two firms merging.

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Which types of models are built with assumptions?

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Production possibilities frontiers can be used to illustrate scarcity,trade-offs,opportunity cost,efficiency,unemployment,technological advances,and economic growth.

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The argument that purchases of minivans cause large families is an example of

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Figure 2-2 Consider the production possibilities curve for a country that can produce cars,corn (in bushels),or a combination of the two. -Refer to Figure 2-2.The bowed outward shape of the production possibilities curve indicates that opportunity cost of corn in terms of cars is

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The slope of a horizontal line is infinite,and the slope of a vertical line is zero.

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For economists,statements about the world are of two types:

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Figure 2-1 -Refer to Figure 2-1.Which arrow represents the flow of spending by households?

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In the circular-flow diagram,

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In the ordered pair (17,75) ,17 is the

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A demand curve shows the relationship

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The Council of Economic Advisers

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Figure 2-7 -Refer to Figure 2-7.In order to reach point L,the economy would have to

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On a bowed production possibilities frontier,as you move down along the curve

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Sometimes economists disagree because their values differ.Which of the following instances best reflects this source of disagreement?

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Indiadesh is a country that produces two goods,textiles and computers.Last year,Indiadesh produced 500 textiles and 1300 computers.This year it produced 450 textiles and 1100 computers.Given no further information,which of the following events could explain this change?

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