Question 1

Figure 2-5
  
-Refer to Figure 2-5.A movement from point C to point D could be caused by

Accepted Answer

A)  unemployment. 
B)  a decrease in society's preference for sweaters. 
C)  fewer resources available for production of sweaters. 
D)  All of the above are correct. 
A)  unemployment. 
B)  a decrease in society's preference for sweaters. 
C)  fewer resources available for production of sweaters. 
D)  All of the above are correct. A

Question 2

The slope of a line that passes through the points (15,10)and (7,30)is

Accepted Answer

A)  -5/2. 
B)  -2/5. 
C)  2/5. 
D)  5/2. 
A)  -5/2. 
B)  -2/5. 
C)  2/5. 
D)  5/2. A

Question 3

Suppose an economy produces two goods,food and machines.This economy always operates on its production possibilities frontier.Last year,it produced 1000 units of food and 47 machines.This year it experienced a technological advance in its machine-making industry.As a result,this year the society wants to produce 1050 units of food and 47 machines.Which of the following statements is correct?

Accepted Answer

A)  Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47. 
B)  Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. 
C)  In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. 
D)  The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food. 
A)  Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47. 
B)  Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. 
C)  In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies. 
D)  The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food. D

Question 4

John Maynard Keynes referred to economics as an easy subject,

Accepted Answer

A)  at which very few excel. 
B)  but not as easy as philosophy or the pure sciences. 
C)  which very few can enjoy. 
D)  which deals primarily with common sense. 
A)  at which very few excel. 
B)  but not as easy as philosophy or the pure sciences. 
C)  which very few can enjoy. 
D)  which deals primarily with common sense.

Question 5

With respect to how economists study the economy,which of the following statements is most accurate?

Accepted Answer

A)  Economists study the past, but they do not try to predict the future. 
B)  Economists use "rules of thumb" to predict the future. 
C)  Economists devise theories, collect data, and analyze the data to test the theories. 
D)  Economists use controlled experiments in much the same way that biologists and physicists do. 
A)  Economists study the past, but they do not try to predict the future. 
B)  Economists use "rules of thumb" to predict the future. 
C)  Economists devise theories, collect data, and analyze the data to test the theories. 
D)  Economists use controlled experiments in much the same way that biologists and physicists do.

Question 6

The President receives economic policy advice from economists at each of the following except

Accepted Answer

A)  the Council of Economic Advisors. 
B)  the Department of the Treasury. 
C)  the Congressional Budget office. 
D)  the Department of Labor. 
A)  the Council of Economic Advisors. 
B)  the Department of the Treasury. 
C)  the Congressional Budget office. 
D)  the Department of Labor.

Question 7

Economic models

Accepted Answer

A)  cannot be useful if they are based on false assumptions. 
B)  were once thought to be useful, but that is no longer true. 
C)  must incorporate all aspects of the economy if they are to be useful. 
D)  can be useful, even if they are not particularly realistic. 
A)  cannot be useful if they are based on false assumptions. 
B)  were once thought to be useful, but that is no longer true. 
C)  must incorporate all aspects of the economy if they are to be useful. 
D)  can be useful, even if they are not particularly realistic.

Question 8

Table 2-2
The following table contains some production possibilities for an economy for a given year:
  
-Refer to Table 2-2.If the production possibilities frontier is bowed outward,then "?" could be

Accepted Answer

A)  4400. 
B)  4300. 
C)  4200. 
D)  4100. 
A)  4400. 
B)  4300. 
C)  4200. 
D)  4100.

Question 9

Figure 2-7
  
-Refer to Figure 2-7.In order to reach point L,the economy would have to

Accepted Answer

A)  acquire more resources or experience a technological advance. 
B)  begin using its available resources more efficiently than it is currently using them. 
C)  shift resources away from the production of nails and toward production of hammers. 
D)  None of the above are correct; the economy will never be able to reach point L. 
A)  acquire more resources or experience a technological advance. 
B)  begin using its available resources more efficiently than it is currently using them. 
C)  shift resources away from the production of nails and toward production of hammers. 
D)  None of the above are correct; the economy will never be able to reach point L.

Question 10

Since 1946,the president of the United States has received guidance from the Council of Economic Advisers.

Accepted Answer

A) True 
 B)False

Question 11

Home is a country that produces two goods,pears and cellular phones.Last year,Home produced 450 bushels of pears and 1050 cellular phones.This year it produced 450 bushels of pears and 2000 cellular phones.Given no other information,which of the following events could explain this change?

Accepted Answer

A)  Home experienced increased unemployment. 
B)  Home experienced a decline in pear-producing technology. 
C)  Home experienced an improvement in cellular phone-making technology. 
D)  Home experienced a reduction in resources. 
A)  Home experienced increased unemployment. 
B)  Home experienced a decline in pear-producing technology. 
C)  Home experienced an improvement in cellular phone-making technology. 
D)  Home experienced a reduction in resources.

Question 12

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 13

Almost all economists agree that tariffs and import quotas

Accepted Answer

A)  reduces general economic welfare. 
B)  increases general economic welfare. 
C)  have no effect on general economic welfare. 
D)  stimulate a less than fully employed economy. 
A)  reduces general economic welfare. 
B)  increases general economic welfare. 
C)  have no effect on general economic welfare. 
D)  stimulate a less than fully employed economy.

Question 14

Factors of production are

Accepted Answer

A)  the mathematical calculations firms make in determining their optimal production levels. 
B)  social and political conditions that affect production. 
C)  the physical relationships between economic inputs and outputs. 
D)  inputs into the production process. 
A)  the mathematical calculations firms make in determining their optimal production levels. 
B)  social and political conditions that affect production. 
C)  the physical relationships between economic inputs and outputs. 
D)  inputs into the production process.

Question 15

Figure 2-9

-Refer to Figure 2-9,Panel (a).Production is

Accepted Answer

A)  possible at points A, B, C, and D, but efficient only at points A, C, and D. 
B)  possible at points A, B, C, and D, but efficient only at point B. 
C)  possible at points A, C, D, and F, but efficient only at points A, C, and D. 
D)  possible at points A, C, D, and F, but efficient only at point F. 
A)  possible at points A, B, C, and D, but efficient only at points A, C, and D. 
B)  possible at points A, B, C, and D, but efficient only at point B. 
C)  possible at points A, C, D, and F, but efficient only at points A, C, and D. 
D)  possible at points A, C, D, and F, but efficient only at point F.

Question 16

Figure 2-3
  
-Refer to Figure 2-3.Unemployment could cause this economy to produce at which point(s)?

Accepted Answer

A)  J, L 
B)  J, L, M 
C)  K, N 
D)  M 
A)  J, L 
B)  J, L, M 
C)  K, N 
D)  M

Question 17

When an economy is operating at a point on its production possibilities frontier,then

Accepted Answer

A)  consumers are content with the mix of goods and services that is being produced. 
B)  there is no way to produce more of one good without producing less of the other. 
C)  equal amounts of the two goods are being produced. 
D)  All of the above are correct. 
A)  consumers are content with the mix of goods and services that is being produced. 
B)  there is no way to produce more of one good without producing less of the other. 
C)  equal amounts of the two goods are being produced. 
D)  All of the above are correct.

Question 18

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. 
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.

Question 19

Which of these terms are used interchangeably?

Accepted Answer

A)  "goods and services" and "inputs" 
B)  "goods and services" and "factors of production" 
C)  "inputs" and "factors of production" 
D)  "land, labor, and capital" and "goods and services" 
A)  "goods and services" and "inputs" 
B)  "goods and services" and "factors of production" 
C)  "inputs" and "factors of production" 
D)  "land, labor, and capital" and "goods and services"

Question 20

Which of the following statements about the circular-flow diagram is correct?

Accepted Answer

A)  One must imagine that the economy operates without money in order to make sense of the diagram. 
B)  The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. 
C)  The government cannot be excluded as a decision maker in a circular-flow diagram. 
D)  All of the above are correct. 
A)  One must imagine that the economy operates without money in order to make sense of the diagram. 
B)  The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms. 
C)  The government cannot be excluded as a decision maker in a circular-flow diagram. 
D)  All of the above are correct.

Exam 2: Thinking Like an Economist.

Figure 2-5 -Refer to Figure 2-5.A movement from point C to point D could be caused by

The slope of a line that passes through the points (15,10)and (7,30)is

John Maynard Keynes referred to economics as an easy subject,

With respect to how economists study the economy,which of the following statements is most accurate?

The President receives economic policy advice from economists at each of the following except

Economic models

Table 2-2 The following table contains some production possibilities for an economy for a given year: -Refer to Table 2-2.If the production possibilities frontier is bowed outward,then "?" could be

Figure 2-7 -Refer to Figure 2-7.In order to reach point L,the economy would have to

Since 1946,the president of the United States has received guidance from the Council of Economic Advisers.

Home is a country that produces two goods,pears and cellular phones.Last year,Home produced 450 bushels of pears and 1050 cellular phones.This year it produced 450 bushels of pears and 2000 cellular phones.Given no other information,which of the following events could explain this change?

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

Almost all economists agree that tariffs and import quotas

Factors of production are

Figure 2-9 -Refer to Figure 2-9,Panel (a).Production is

Figure 2-3 -Refer to Figure 2-3.Unemployment could cause this economy to produce at which point(s)?

When an economy is operating at a point on its production possibilities frontier,then

Sometimes economists disagree because their values differ.Which of the following instances best reflects this source of disagreement?

Which of these terms are used interchangeably?

Which of the following statements about the circular-flow diagram is correct?

Ten Principles of Economics.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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