Question 1

Points inside the production possibilities frontier represent feasible levels of production.

Accepted Answer

A) True 
 B)False

Question 2

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) None of the above
F) A) and C)

Question 3

The circular-flow diagram

Accepted Answer

A)  is an economic model.
B)  incorporates two types of decision makers: households and firms.
C)  represents the flows of inputs, outputs, and dollars.
D)  All of the above are correct.E) A) and C)
F) A) and B)

Question 4

Figure 2-14 
-Refer to Figure 2-14. The opportunity cost of moving from point B to point A is zero.

Accepted Answer

A) True 
 B)False

Question 5

The Federal Reserve

Accepted Answer

A)  designs tax policy.
B)  enforces the nation's antitrust laws.
C)  sets the nation's monetary policy.
D)  analyzes data on workers.E) A) and B)
F) C) and D)

Question 6

Figure 2-1 
-Refer to Figure 2-1. Harvey receives his first paycheck for working as an ice cream vendor. To which of the arrows does this transaction directly contribute?

Accepted Answer

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

Question 7

Is the following a positive or normative statement? The federal minimum wage is lower than many state minimum wages.

Accepted Answer

The answer of Is the following a positive or normative...

Question 8

What type of statement is a prescriptive statement about how the world ought to be?

Accepted Answer

The answer of What type of statement is a prescriptive...

Question 9

Figure 2-20
Relationship Between Years of Education and Annual Income 
-Refer to Figure 2-20. The graph above is a

Accepted Answer

A)  bar graph
B)  scatterplot
C)  pie chart
D)  time series analysisE) None of the above
F) C) and D)

Question 10

In addition to advising the president, one duty of the Council of Economic Advisers is to

Accepted Answer

A)  prepare the federal budget.
B)  write government regulations.
C)  advise Congress on economic matters.
D)  write the annual Economic Report of the President.E) A) and B)
F) A) and C)

Question 11

Figure 2-18
Relationship between Price and Restaurant Meals 
-Refer to Figure 2-18. Which of the following could result in a movement from point B to point Z?

Accepted Answer

A)  a change in the price of a restaurant meal
B)  a change in the number of restaurant meals demanded
C)  a change in income
D)  Both a and b are correct.E) C) and D)
F) A) and C)

Question 12

Figure 2-17​ 
-Refer to Figure 2-17. This economy fully employs its resources when it produces 4000 shoes and zero t-shirts.

Accepted Answer

A) True 
 B)False

Question 13

Who would be more likely to study the effects of rent control on housing in New York City, a macroeconomist or a microeconomist?

Accepted Answer

The answer of Who would be more likely to study...

Question 14

Figure 2-14 
-Refer to Figure 2-14. If this economy uses all its resources in the dishwasher industry, it produces 35 dishwashers and no doghouses.

Accepted Answer

A) True 
 B)False

Question 15

When studying the effects of changes in public policy, economists believe that

Accepted Answer

A)  it is important to distinguish between the short run and the long run.
B)  the assumptions used in studying those effects should be the same for the short run as for the long run.
C)  the short-run effects of those changes are always more beneficial to society than are the long-run effects.
D)  the long-run effects of those changes are always more beneficial to society than are the short-run effects.E) B) and D)
F) B) and C)

Question 16

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) C) and D)
F) A) and D)

Question 17

Economic models

Accepted Answer

A)  are constructed to mirror reality as closely as possible, and in this respect economic models are no different from other scientific models.
B)  are constructed to mirror reality as closely as possible, and in this respect economic models are very different from other scientific models.
C)  are simplifications of reality, and in this respect economic models are no different from other scientific models.
D)  are simplifications of reality, and in this respect economic models are very different from other scientific models.E) A) and D)
F) None of the above

Question 18

According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

Accepted Answer

A) True 
 B)False

Question 19

Figure 2-5 
-Refer to Figure 2-5. The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is

Accepted Answer

A)  0 washers.
B)  20 washers.
C)  40 washers.
D)  None of the above; the economy cannot move from point D to point C.E) A) and B)
F) A) and C)

Question 20

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

Accepted Answer

A)  Gasoline prices ought to be lower than they are now.
B)  The federal government should raise taxes on wealthy people.
C)  The social security system is a good system and it deserves to be preserved as it is.
D)  All of the above are normative statements.E) B) and C)
F) None of the above

Exam 2: Thinking Like an Economist

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

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Figure 2-5 -Refer to Figure 2-5. The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is

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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?

Correct AnswerverifiedShow Answer

Who would be more likely to study the effects of rent control on housing in New York City, a macroeconomist or a microeconomist?

Correct AnswerverifiedShow Answer

According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

Correct AnswerverifiedShow Answer

When studying the effects of changes in public policy, economists believe that

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What type of statement is a prescriptive statement about how the world ought to be?

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Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. Which of the following could result in a movement from point B to point Z?

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Figure 2-14 -Refer to Figure 2-14. If this economy uses all its resources in the dishwasher industry, it produces 35 dishwashers and no doghouses.

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Figure 2-1 -Refer to Figure 2-1. Harvey receives his first paycheck for working as an ice cream vendor. To which of the arrows does this transaction directly contribute?

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The circular-flow diagram

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Points inside the production possibilities frontier represent feasible levels of production.

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The Federal Reserve

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Is the following a positive or normative statement? The federal minimum wage is lower than many state minimum wages.

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Figure 2-17​ -Refer to Figure 2-17. This economy fully employs its resources when it produces 4000 shoes and zero t-shirts.

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Economic models

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Figure 2-14 -Refer to Figure 2-14. The opportunity cost of moving from point B to point A is zero.

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Figure 2-20 Relationship Between Years of Education and Annual Income -Refer to Figure 2-20. The graph above is a

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In addition to advising the president, one duty of the Council of Economic Advisers is to

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Figure 2-17 -Refer to Figure 2-17. This economy fully employs its resources when it produces 4000 shoes and zero t-shirts.

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