Question 1

There is total agreement in economics among economists and policymakers.

Accepted Answer

A) True 
 B)False  False

Question 2

Most disagreements between economists occur because of different data sources.

Accepted Answer

A) True 
 B)False  False

Question 3

Explain why there is the popular impression that economists seldom agree with each other.

Accepted Answer

First, even if 99 percent of the economics profession agrees with an issue, it is always possible for a news show to find an economist who represents the 1 percent that does not.

In addition, economists are human beings with different moral and philosophical beliefs about what should happen in the world, unrelated to economic models. Consequently, even if economists agree on abstract theory, their different moral and philosophical beliefs cause them to disagree with respect to policy.

Question 4

Explain why it is more difficult to determine causality in economics than in other sciences such as physics, chemistry, and biology.

Accepted Answer

Repeated, controlled experiments are oft

Question 5

Exhibit 2-3  
-In Exhibit 2-3, an example of a variable would be the

Accepted Answer

A)  price of coffee. 
B)  intercept. 
C)  relationship that shows by how many units the supply of coffee will change for any unit change in the price of coffee. 
D)  slope of the line. 
E)  price at which the supply of coffee is zero. 
A)  price of coffee. 
B)  intercept. 
C)  relationship that shows by how many units the supply of coffee will change for any unit change in the price of coffee. 
D)  slope of the line. 
E)  price at which the supply of coffee is zero.

Question 6

"Inflation is currently 4 percent in the United States." This statement is an example of

Accepted Answer

A)  a positive statement. 
B)  a normative statement. 
C)  the fallacy of composition. 
D)  macroeconomics. 
E)  microeconomics. 
A)  a positive statement. 
B)  a normative statement. 
C)  the fallacy of composition. 
D)  macroeconomics. 
E)  microeconomics.

Question 7

If the quantity demanded of coffee increases when the price of coffee declines, then these two ____ are ____.

Accepted Answer

A)  variables; negatively related 
B)  constants; positively related 
C)  variables; positively related 
D)  constants; negatively related 
E)  variables; not related 
A)  variables; negatively related 
B)  constants; positively related 
C)  variables; positively related 
D)  constants; negatively related 
E)  variables; not related

Question 8

For policy decisions to be useful,

Accepted Answer

A)  political issues need to be taken into consideration along with economic issues. 
B)  economics is the only factor for consideration. 
C)  economics usually is of little help. 
D)  economic analysis is seldom sought. 
E)  economic data must be falsified. 
A)  political issues need to be taken into consideration along with economic issues. 
B)  economics is the only factor for consideration. 
C)  economics usually is of little help. 
D)  economic analysis is seldom sought. 
E)  economic data must be falsified.

Question 9

Whether to have more or less government involvement in the overall economy is essentially a

Accepted Answer

A)  normative issue. 
B)  positive issue. 
C)  political issue, and therefore the techniques of economic analysis are not applicable. 
D)  positive or normative issue; it could be either. 
E)  both normative and positive issues. 
A)  normative issue. 
B)  positive issue. 
C)  political issue, and therefore the techniques of economic analysis are not applicable. 
D)  positive or normative issue; it could be either. 
E)  both normative and positive issues.

Question 10

All of the following are what economists commonly do except

Accepted Answer

A)  describing economic events. 
B)  explaining why economic events occur. 
C)  making predictions for some economic events. 
D)  eliminating scarcity in resources. 
E)  making recommendations for economic policy. 
A)  describing economic events. 
B)  explaining why economic events occur. 
C)  making predictions for some economic events. 
D)  eliminating scarcity in resources. 
E)  making recommendations for economic policy.

Question 11

The figure below shows the relationship of the quantity demanded for coffee beans to the price of coffee beans at a local coffee shop.   (A)If the price of coffee increases from $6 per pound to $10 per pound, by how much will the quantity demanded for coffee change?
(B)Explain how your answer in part (A) relies on the ceteris paribus assumption.

Accepted Answer

(A)The daily demand for coffee will decl

Question 12

A model is valid if

Accepted Answer

A)  it is based on human behavior. 
B)  it is new. 
C)  it has been around for many years. 
D)  observations can be explained by it. 
E)  it incorporates asymmetric information. 
A)  it is based on human behavior. 
B)  it is new. 
C)  it has been around for many years. 
D)  observations can be explained by it. 
E)  it incorporates asymmetric information.

Question 13

Economic models need to resemble, as much as possible, the phenomena being explained.

Accepted Answer

A) True 
 B)False

Question 14

Positive economics

Accepted Answer

A)  will usually indicate which economic policy is best. 
B)  is concerned with what ought to be. 
C)  is the same as normative economics. 
D)  is strictly quantitative and so has little to say to those with philosophical goals to achieve in policymaking. 
E)  produces verifiable statements. 
A)  will usually indicate which economic policy is best. 
B)  is concerned with what ought to be. 
C)  is the same as normative economics. 
D)  is strictly quantitative and so has little to say to those with philosophical goals to achieve in policymaking. 
E)  produces verifiable statements.

Question 15

Two variables are correlated if

Accepted Answer

A)  they both move up or down at about the same time. 
B)  an increase in one variable only causes another variable to increase. 
C)  a fall in one variable only causes another variable to fall. 
D)  changes in one have no effect on the other. 
E)  changes in one variable do not cause changes in the other. 
A)  they both move up or down at about the same time. 
B)  an increase in one variable only causes another variable to increase. 
C)  a fall in one variable only causes another variable to fall. 
D)  changes in one have no effect on the other. 
E)  changes in one variable do not cause changes in the other.

Question 16

What is the difference between correlation and causality?

Accepted Answer

Correlation means that one eve

Question 17

Economics is the only science concerned with politically controversial subjects.

Accepted Answer

A) True 
 B)False

Question 18

Causation

Accepted Answer

A)  occurs when there is no correlation. 
B)  occurs when two variables are correlated. 
C)  means one event brings about another event. 
D)  means one event is observed to occur along with another. 
E)  means one event occurs subsequently to another event. 
A)  occurs when there is no correlation. 
B)  occurs when two variables are correlated. 
C)  means one event brings about another event. 
D)  means one event is observed to occur along with another. 
E)  means one event occurs subsequently to another event.

Question 19

To argue that economics is a partisan policy tool means that

Accepted Answer

A)  economics is being used without political considerations. 
B)  part of the policy is based on economic analysis. 
C)  economics is not always used objectively. 
D)  economics is used objectively. 
E)  economic analysis is always misleading. 
A)  economics is being used without political considerations. 
B)  part of the policy is based on economic analysis. 
C)  economics is not always used objectively. 
D)  economics is used objectively. 
E)  economic analysis is always misleading.

Question 20

It has been documented that beer consumption rises when the unemployment rate rises. To conclude that this correlation means that increased unemployment causes increased beer consumption is to mistake correlation for causality.

Accepted Answer

A) True 
 B)False

Exam 2: Observing and Explaining the Economy

There is total agreement in economics among economists and policymakers.

Most disagreements between economists occur because of different data sources.

Explain why there is the popular impression that economists seldom agree with each other.

Explain why it is more difficult to determine causality in economics than in other sciences such as physics, chemistry, and biology.

Exhibit 2-3 -In Exhibit 2-3, an example of a variable would be the

"Inflation is currently 4 percent in the United States." This statement is an example of

If the quantity demanded of coffee increases when the price of coffee declines, then these two ____ are ____.

For policy decisions to be useful,

Whether to have more or less government involvement in the overall economy is essentially a

All of the following are what economists commonly do except

A model is valid if

Economic models need to resemble, as much as possible, the phenomena being explained.

Positive economics

Two variables are correlated if

What is the difference between correlation and causality?

Economics is the only science concerned with politically controversial subjects.

Causation

To argue that economics is a partisan policy tool means that

It has been documented that beer consumption rises when the unemployment rate rises. To conclude that this correlation means that increased unemployment causes increased beer consumption is to mistake correlation for causality.

The Central Idea

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Capital and Financial Markets

Economic Growth and Globalization

International Trade

International Finance

Reading, Understanding, and Creating Graphs

the Miracle of Compound Growth

Present Discounted Value

Deriving the Growth Accounting Formula

Filters

If the quantity demanded of coffee increases when the price of coffee declines, then these two are .