Exam 2: Thinking Like an Economist

What does evaluating a positive statement involve?

What happens when economists test theories?

Figure 2-9 -Refer to Figure 2-9. What do cups of coffee per day and the hours that someone can go without sleep have?

What is the x-coordinate?

Why are graphs such as bar graphs limited?

What is an ordered pair?

What would NOT be considered a factor of production?

What is a characteristic of a good theory?

Economic growth causes a production possibilities frontier to shift outward.

What does macroeconomics study?

What are economists who try to improve the world considered?

Figure 2-3 -Refer to Figure 2-3. At which point or points can the economy NOT produce?

Which statement about slope is NOT correct?

What happens when scientists make good assumptions?

Figure 2-11 -Refer to Figure 2-11. The opportunity cost of more doghouses increases as more doghouses are produced.

What do economists at the Bank of Canada do?

This is an exercise in model building, based on the idea that one better understands the concept of models when faced with the task of making them. a. Construct a block diagram showing how different levels of governments interact with taxpayers and with each other in a federal state like Canada. Indicate with arrows what they exchange with each other. Identify the main elements of your model. b. Describe your model in a few sentences. c. What makes your description to be a model, instead of an accurate picture of the Canadian economy? d. What purpose can your model serve, or is there anything that this model helped you understand?

Who designs tax policy?

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

How does a scientist make assumptions?