Question 1

A model is valid

Accepted Answer

A) if it is based on human behavior. 
B) if it is new. 
C) if it has been around for many years. 
D) if it can explains some observations or events. 
E) only if it makes predictions perfectly. 
A) if it is based on human behavior. 
B) if it is new. 
C) if it has been around for many years. 
D) if it can explains some observations or events. 
E) only if it makes predictions perfectly.

Question 2

Exhibit 2A-3  
-According to Exhibit 2A-3, which of the following is true?

Accepted Answer

A) The magnitude of the slope at point B is the same as it is at point A. 
B) The magnitude of the slope at point A is less than the magnitude of the slope at point B. 
C) The slope at point A is negative, whereas the slope at point B is positive. 
D) The magnitude of the slope at point B is less than the magnitude of the slope at point A. 
E) The magnitude of the slope at point A is greater than the magnitude of the slope at point B. 
A) The magnitude of the slope at point B is the same as it is at point A. 
B) The magnitude of the slope at point A is less than the magnitude of the slope at point B. 
C) The slope at point A is negative, whereas the slope at point B is positive. 
D) The magnitude of the slope at point B is less than the magnitude of the slope at point A. 
E) The magnitude of the slope at point A is greater than the magnitude of the slope at point B.

Question 3

There is total agreement in economics among economists and policymakers.

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 6

Economic models

Accepted Answer

A) are not complicated because the behavior they describe is not complicated. 
B) require either algebra or graphs. 
C) are complicated because human behavior is complicated. 
D) are simplifications of the phenomena they attempt to explain. 
E) need to be the same as the phenomena they describe. 
A) are not complicated because the behavior they describe is not complicated. 
B) require either algebra or graphs. 
C) are complicated because human behavior is complicated. 
D) are simplifications of the phenomena they attempt to explain. 
E) need to be the same as the phenomena they describe.

Question 7

Exhibit 2A-5
  
-According to Exhibit 2A-5, the slope of line 1 may be 1.25, whereas the slope of line 2 may be .75.

Accepted Answer

A) True 
 B)False

Question 8

Indicate whether you expect positive or negative correlation for the following pairs of variables. For each pair, state whether causation exists.

Accepted Answer

The answer of Indicate whether you expect positive or negative...

Question 9

When economists do disagree, the disagreement most likely concerns

Accepted Answer

A) positive issues. 
B) normative issues. 
C) theoretical issues. 
D) minor issues. 
E) just about any economic topic. 
A) positive issues. 
B) normative issues. 
C) theoretical issues. 
D) minor issues. 
E) just about any economic topic.

Question 10

Knowledge of economics will help you make better decisions about education, employment, and investments.

Accepted Answer

A) True 
 B)False

Question 11

Economics was originally called

Accepted Answer

A) political engineering. 
B) political economy. 
C) economic physics. 
D) social engineering. 
E) social physics. 
A) political engineering. 
B) political economy. 
C) economic physics. 
D) social engineering. 
E) social physics.

Question 12

What is the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics studies the behavior of i

Question 13

Experimental economics

Accepted Answer

A) is the most common method in economics. 
B) does not exist. 
C) uses laboratory experiments to analyze economic behavior. 
D) is the method used by most economists to analyze individuals' economic behavior. 
E) is the method used by the government to collect economic data. 
A) is the most common method in economics. 
B) does not exist. 
C) uses laboratory experiments to analyze economic behavior. 
D) is the method used by most economists to analyze individuals' economic behavior. 
E) is the method used by the government to collect economic data.

Question 14

Exhibit 2-3
  
-Ceteris paribus means

Accepted Answer

A) that rational self-interest is being assumed. 
B) "all variables are independent." 
C) that no other assumptions are being made. 
D) "other things being equal." 
E) "all relationships are inverse." 
A) that rational self-interest is being assumed. 
B) "all variables are independent." 
C) that no other assumptions are being made. 
D) "other things being equal." 
E) "all relationships are inverse."

Question 15

If we observe that the amount of vehicle miles traveled rises after the price of gasoline rises, then we can conclude that

Accepted Answer

A) the amount of vehicle miles traveled and the price of gasoline are positively correlated. 
B) the amount of vehicle miles traveled and the price of gasoline are negatively correlated. 
C) the amount of vehicle miles traveled causes the price of gasoline to go up. 
D) the price of gasoline causes the amount of vehicle miles traveled to go up. 
E) a negative causation occurs between the amount of vehicle miles traveled and the price of gasoline 
A) the amount of vehicle miles traveled and the price of gasoline are positively correlated. 
B) the amount of vehicle miles traveled and the price of gasoline are negatively correlated. 
C) the amount of vehicle miles traveled causes the price of gasoline to go up. 
D) the price of gasoline causes the amount of vehicle miles traveled to go up. 
E) a negative causation occurs between the amount of vehicle miles traveled and the price of gasoline

Question 16

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) there is no observable pattern in the changes of the two variables over time. 
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) there is no observable pattern in the changes of the two variables over time. 
E) changes in one variable do not cause changes in the other.

Question 17

In order to determine a causation between a change in the price of iPhones and the amount of iPhones purchased by customers, an economist must show that

Accepted Answer

A) there is no correlation between the price of iPhones and the quantity of iPhones purchased. 
B) the change in the quantity of iPhones purchased occurs after the change in the price of iPhones. 
C) the change in the price of iPhones occurs along with the change in the quantity of iPhones purchased. 
D) the changes in the price and quantity of iPhones purchased always move in the same direction. 
E) the change in the price of iPhones brings about the change in the quantity of iPhones purchased. 
A) there is no correlation between the price of iPhones and the quantity of iPhones purchased. 
B) the change in the quantity of iPhones purchased occurs after the change in the price of iPhones. 
C) the change in the price of iPhones occurs along with the change in the quantity of iPhones purchased. 
D) the changes in the price and quantity of iPhones purchased always move in the same direction. 
E) the change in the price of iPhones brings about the change in the quantity of iPhones purchased.

Question 18

Which of the following is a normative statement?

Accepted Answer

A) "Income inequality in the United States has increased." 
B) "The Federal Reserve has observed rising inflation." 
C) "The government should increase the minimum wage to help low-income groups." 
D) "The minimum wages are higher in some cities than in other cities." 
E) "The relative price of gasoline has remained low in the past 30 years." 
A) "Income inequality in the United States has increased." 
B) "The Federal Reserve has observed rising inflation." 
C) "The government should increase the minimum wage to help low-income groups." 
D) "The minimum wages are higher in some cities than in other cities." 
E) "The relative price of gasoline has remained low in the past 30 years."

Question 19

Suppose a curve shows that every time family income increases by $1, spending increases by $.80. If family income increases by $100, then spending will increase by

Accepted Answer

A) $8. 
B) $20. 
C) $80. 
D) $800. 
E) $200. 
A) $8. 
B) $20. 
C) $80. 
D) $800. 
E) $200.

Question 20

An economic variable is any economic measure that

Accepted Answer

A) has different values because of researchers' different perspectives. 
B) has no market value. 
C) has a fixed value over time. 
D) has no effect on the economy. 
E) can vary over a range of values. 
A) has different values because of researchers' different perspectives. 
B) has no market value. 
C) has a fixed value over time. 
D) has no effect on the economy. 
E) can vary over a range of values.

Exam 2: Observing and Explaining the Economy

A model is valid

Exhibit 2A-3 -According to Exhibit 2A-3, which of the following is true?

There is total agreement in economics among economists and policymakers.

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

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

Economic models

Exhibit 2A-5 -According to Exhibit 2A-5, the slope of line 1 may be 1.25, whereas the slope of line 2 may be .75.

Indicate whether you expect positive or negative correlation for the following pairs of variables. For each pair, state whether causation exists.

When economists do disagree, the disagreement most likely concerns

Knowledge of economics will help you make better decisions about education, employment, and investments.

Economics was originally called

What is the difference between microeconomics and macroeconomics?

Experimental economics

Exhibit 2-3 -Ceteris paribus means

If we observe that the amount of vehicle miles traveled rises after the price of gasoline rises, then we can conclude that

Two variables are correlated if

In order to determine a causation between a change in the price of iPhones and the amount of iPhones purchased by customers, an economist must show that

Which of the following is a normative statement?

Suppose a curve shows that every time family income increases by $1, spending increases by $.80. If family income increases by $100, then spending will increase by

An economic variable is any economic measure that

The Central Idea

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

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

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters

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