Question 1

A major reason for the development of new models is

Accepted Answer

A)  because of asymmetric information. 
B)  that new observations cannot be explained by existing models. 
C)  that old economic laws are often repealed. 
D)  that human behavior is no longer important. 
E)  that new models are always easier to understand. 
A)  because of asymmetric information. 
B)  that new observations cannot be explained by existing models. 
C)  that old economic laws are often repealed. 
D)  that human behavior is no longer important. 
E)  that new models are always easier to understand.

Question 2

In modern market economies, the role government is small.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 2A-5
   True/False
-Refer to Exhibit 2A-5. Which of the following would best explain the shift from line 1 to line 2?

Accepted Answer

A)  An increase in X 
B)  A decline in Y 
C)  A decrease in X 
D)  A change in a third variable, Z, which affects the relationship between Y and X 
E)  An increase in the slope 
A)  An increase in X 
B)  A decline in Y 
C)  A decrease in X 
D)  A change in a third variable, Z, which affects the relationship between Y and X 
E)  An increase in the slope

Question 4

Economic data always give an accurate picture of what affects consumers.

Accepted Answer

A) True 
 B)False

Question 5

Two variables are negatively correlated if

Accepted Answer

A)  the value of one variable decreases as the value of the other variable decreases. 
B)  the value of one variable increases as the value of the other variable decreases. 
C)  a fall in one variable only causes another variable to fall. 
D)  changes in one have no effect on the other. 
E)  the value of one variable remains constant as the value of another variable changes. 
A)  the value of one variable decreases as the value of the other variable decreases. 
B)  the value of one variable increases as the value of the other variable decreases. 
C)  a fall in one variable only causes another variable to fall. 
D)  changes in one have no effect on the other. 
E)  the value of one variable remains constant as the value of another variable changes.

Question 6

If we observe that an increase in 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 7

A positive statement is necessarily a subjective statement.

Accepted Answer

A) True 
 B)False

Question 8

Exhibit 2A-1  
-Exhibit 2A-1 is an example of a

Accepted Answer

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

Question 9

An inverse relationship between two variables indicates a

Accepted Answer

A)  causation. 
B)  constant slope. 
C)  positive slope. 
D)  negative slope. 
A)  causation. 
B)  constant slope. 
C)  positive slope. 
D)  negative slope.

Question 10

Explain how economic models are similar to and different from models used in other sciences.
What are the consequences of these differences?

Accepted Answer

Acceptable answers will mention that eco

Question 11

Refer to the information in the following table:
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Price of All } \
\text { Gands }
\end{array} & \begin{array} { c } 
\text { Price of } \
\text { Bmrirtphanes }
\end{array} \
\hline 2015 & 100 & 100 \
\hline 2016 & 103 & 101 \
\hline 2017 & 105 & 102 \
\hline 2018 & 107 & 103 \
\hline
\end{array}$$ Using the numerical examples in the table, show that the relative price of smartphones can fall on occasions where the price of those goods could be rising, falling, or remaining unchanged.

Accepted Answer

The following table shows the prices of

Question 12

There is total agreement in economics among economists and policymakers.

Accepted Answer

A) True 
 B)False

Question 13

Studying economics will provide you with tools that are

Accepted Answer

A)  mainly useful for understanding business issues. 
B)  useless in real-world situations. 
C)  mainly useful for financial analysis. 
D)  not useful for studying issues such as crime, discrimination, and who has the right to sue. 
E)  useful for studying issues such as monetary policy, discrimination, and who has the right to sue. 
A)  mainly useful for understanding business issues. 
B)  useless in real-world situations. 
C)  mainly useful for financial analysis. 
D)  not useful for studying issues such as crime, discrimination, and who has the right to sue. 
E)  useful for studying issues such as monetary policy, discrimination, and who has the right to sue.

Question 14

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 15

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 16

A newspaper editorial explaining what should be done to reduce the national debt is an example of

Accepted Answer

A)  the ceteris paribus assumption. 
B)  microeconomics. 
C)  functional economics. 
D)  positive economics. 
E)  normative economics. 
A)  the ceteris paribus assumption. 
B)  microeconomics. 
C)  functional economics. 
D)  positive economics. 
E)  normative economics.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A system in which the government essentially owns and controls all production is called

Accepted Answer

A)  capitalism. 
B)  socialism. 
C)  a market system. 
D)  a laissez faire system. 
E)  a mixed economy. 
A)  capitalism. 
B)  socialism. 
C)  a market system. 
D)  a laissez faire system. 
E)  a mixed economy.

Question 19

To determine causality in many sciences such as physics, researchers

Accepted Answer

A)  check for correlation. 
B)  use scatter diagrams. 
C)  perform controlled experiments. 
D)  plot the variables against time or location. 
E)  use only a small amount of data. 
A)  check for correlation. 
B)  use scatter diagrams. 
C)  perform controlled experiments. 
D)  plot the variables against time or location. 
E)  use only a small amount of data.

Question 20

A model gives the most realistic description of the real world.

Accepted Answer

A) True 
 B)False

A major reason for the development of new models is

In modern market economies, the role government is small.

Exhibit 2A-5 True/False -Refer to Exhibit 2A-5. Which of the following would best explain the shift from line 1 to line 2?

Economic data always give an accurate picture of what affects consumers.

Two variables are negatively correlated if

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

A positive statement is necessarily a subjective statement.

Exhibit 2A-1 -Exhibit 2A-1 is an example of a

An inverse relationship between two variables indicates a

Explain how economic models are similar to and different from models used in other sciences. What are the consequences of these differences?

There is total agreement in economics among economists and policymakers.

Studying economics will provide you with tools that are

Controlled experiments are

Which of the following is a normative statement?

A newspaper editorial explaining what should be done to reduce the national debt is an example of

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

A system in which the government essentially owns and controls all production is called

To determine causality in many sciences such as physics, researchers

A model gives the most realistic description of the real world.

The Central Idea

The Supply and Demand Model

Subtleties of the Supply and Demand Model

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

Capital and Financial Markets

Economic Growth Around the World

International Trade

International Finance

Filters

Exam 2: Observing and Explaining the Economy

A major reason for the development of new models is

In modern market economies, the role government is small.

Exhibit 2A-5 True/False -Refer to Exhibit 2A-5. Which of the following would best explain the shift from line 1 to line 2?

Economic data always give an accurate picture of what affects consumers.

Two variables are negatively correlated if

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

A positive statement is necessarily a subjective statement.

Exhibit 2A-1 -Exhibit 2A-1 is an example of a

An inverse relationship between two variables indicates a

Explain how economic models are similar to and different from models used in other sciences. What are the consequences of these differences?

There is total agreement in economics among economists and policymakers.

Studying economics will provide you with tools that are

Controlled experiments are

Which of the following is a normative statement?

A newspaper editorial explaining what should be done to reduce the national debt is an example of

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

A system in which the government essentially owns and controls all production is called

To determine causality in many sciences such as physics, researchers

A model gives the most realistic description of the real world.

The Central Idea

The Supply and Demand Model

Subtleties of the Supply and Demand Model

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

Capital and Financial Markets

Economic Growth Around the World

International Trade

International Finance

Filters