Question 1

Using gasoline prices as an example, explain what a normative statement is and what a positive statement is.

Accepted Answer

Valid positive statements would include

Question 2

Explain how the distinction between positive and normative economics provides insight as to why economists do disagree.

Accepted Answer

In the abstract, economists are often in

Question 3

Economists develop new models only when new economic data become available.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 2-2  
-Exhibit 2-2 shows the relationship between X and Y between 2007 and 2016. Suppose this correlation between X and Y continues to hold for the next 10 years. If Y declines over the period 2017 through 2020, we would expect

Accepted Answer

A) X to fall over the same period because X and Y are negatively correlated. 
B) X to increase over the same period because X and Y are positively correlated. 
C) X to increase over the same period because X and Y are negatively correlated. 
D) the correlation to be unknown because we do not know the units of measurement for X and Y and thus cannot say anything about how X and Y are related. 
E) X to fall over the same period because X and Y are positively correlated. 
A) X to fall over the same period because X and Y are negatively correlated. 
B) X to increase over the same period because X and Y are positively correlated. 
C) X to increase over the same period because X and Y are negatively correlated. 
D) the correlation to be unknown because we do not know the units of measurement for X and Y and thus cannot say anything about how X and Y are related. 
E) X to fall over the same period because X and Y are positively correlated.

Question 5

Macroeconomics is concerned primarily with

Accepted Answer

A) the economy as a whole. 
B) the operation of a particular firm. 
C) individual consumer behavior. 
D) the labor market. 
E) a detailed examination of how price and output decisions are made in specific markets. 
A) the economy as a whole. 
B) the operation of a particular firm. 
C) individual consumer behavior. 
D) the labor market. 
E) a detailed examination of how price and output decisions are made in specific markets.

Question 6

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

Accepted Answer

A) the quantity of coffee supplied. 
B) the price that corresponds to any quantity of coffee supplied. 
C) the price of coffee. 
D) the slope of the line. 
E) both the price and quantity of coffee. 
A) the quantity of coffee supplied. 
B) the price that corresponds to any quantity of coffee supplied. 
C) the price of coffee. 
D) the slope of the line. 
E) both the price and quantity of coffee.

Question 7

An economic model is a tool used to help us understand the real world.

Accepted Answer

A) True 
 B)False

Question 8

Identify whether the following issues are macroeconomic or microeconomic and explain why you categorized them in that way.

Accepted Answer

The answer of Identify whether the following issues are macroeconomic...

Question 9

A positive statement is necessarily a subjective statement.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

Controlled experiments are

Accepted Answer

A) seldom used in economics because economists do not like to repeat experiments. 
B) often used because controlling other factors is relatively easy in economics. 
C) not used as widely in economics as in other disciplines. 
D) often used in economics. 
E) performed by the government to collect economic data. 
A) seldom used in economics because economists do not like to repeat experiments. 
B) often used because controlling other factors is relatively easy in economics. 
C) not used as widely in economics as in other disciplines. 
D) often used in economics. 
E) performed by the government to collect economic data.

Question 12

A microeconomic model must be much smaller in size than a macroeconomic model.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Exhibit 2A-2  
-Suppose in 2016, on average, 10 million people were unemployed. According to Exhibit 2A-2, how many of these people had been unemployed for less than five weeks?

Accepted Answer

A) 2.5 million 
B) 25 million 
C) 0.25 million 
D) 3.2 million 
E) 32 million 
A) 2.5 million 
B) 25 million 
C) 0.25 million 
D) 3.2 million 
E) 32 million

Question 15

What is the difference between correlation and causality?

Accepted Answer

Correlation means that one eve

Question 16

What problems would arise if economists did not make ceteris paribus assumptions when making predictions?

Accepted Answer

Without making ceteris paribus

Question 17

Exhibit 2A-2  
-The type of chart shown in Exhibit 2A-2 is referred to as a

Accepted Answer

A) dual-scale diagram. 
B) time-series graph. 
C) bar chart. 
D) pie chart. 
E) scatter diagram. 
A) dual-scale diagram. 
B) time-series graph. 
C) bar chart. 
D) pie chart. 
E) scatter diagram.

Question 18

Exhibit 2A-8   
-There is a linear relationship between X and Y in Exhibit 2A-8.

Accepted Answer

A) True 
 B)False

Question 19

The ceteris paribus assumption is used in economics

Accepted Answer

A) because economic theory is an accurate reflection of the real world. 
B) to isolate the important variables when formulating a theory. 
C) primarily to identify unstable equilibrium situations. 
D) to make the theory more complicated 
E) to distinguish economics from other disciplines. 
A) because economic theory is an accurate reflection of the real world. 
B) to isolate the important variables when formulating a theory. 
C) primarily to identify unstable equilibrium situations. 
D) to make the theory more complicated 
E) to distinguish economics from other disciplines.

Question 20

If two variables are correlated, then it must be true that one of the variables causes the other.

Accepted Answer

A) True 
 B)False

Exam 2: Observing and Explaining the Economy

Using gasoline prices as an example, explain what a normative statement is and what a positive statement is.

Explain how the distinction between positive and normative economics provides insight as to why economists do disagree.

Economists develop new models only when new economic data become available.

Exhibit 2-2 -Exhibit 2-2 shows the relationship between X and Y between 2007 and 2016. Suppose this correlation between X and Y continues to hold for the next 10 years. If Y declines over the period 2017 through 2020, we would expect

Macroeconomics is concerned primarily with

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

An economic model is a tool used to help us understand the real world.

Identify whether the following issues are macroeconomic or microeconomic and explain why you categorized them in that way.

A positive statement is necessarily a subjective statement.

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.

Controlled experiments are

A microeconomic model must be much smaller in size than a macroeconomic model.

To argue that economics is a partisan policy tool means that

Exhibit 2A-2 -Suppose in 2016, on average, 10 million people were unemployed. According to Exhibit 2A-2, how many of these people had been unemployed for less than five weeks?

What is the difference between correlation and causality?

What problems would arise if economists did not make ceteris paribus assumptions when making predictions?

Exhibit 2A-2 -The type of chart shown in Exhibit 2A-2 is referred to as a

Exhibit 2A-8 -There is a linear relationship between X and Y in Exhibit 2A-8.

The ceteris paribus assumption is used in economics

If two variables are correlated, then it must be true that one of the variables causes the other.

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

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