Question 1

Which of the following is NOT a problem associated with graphing in economics?

Accepted Answer

A)  omitted variables 
B)  holding everything else constant 
C)  reverse causality 
D)  the ability to show a relationship between two variables 
A)  omitted variables 
B)  holding everything else constant 
C)  reverse causality 
D)  the ability to show a relationship between two variables

Question 2

Figure 2-2
  
-Refer to Figure 2-2. What do boxes A and B represent?

Accepted Answer

A)  firms and households 
B)  government and the foreign sector 
C)  the goods and services market and the factors of production market 
D)  households and government 
A)  firms and households 
B)  government and the foreign sector 
C)  the goods and services market and the factors of production market 
D)  households and government

Question 3

What does the x-coordinate give?

Accepted Answer

A)  the diagonal location of the point 
B)  the vertical location of the point 
C)  the horizontal location of the point 
D)  the quadrant location of the point 
A)  the diagonal location of the point 
B)  the vertical location of the point 
C)  the horizontal location of the point 
D)  the quadrant location of the point

Question 4

What is a common thread between economics and other sciences, such as physics?

Accepted Answer

A)  Experiments are most often conducted in a lab. 
B)  Real-world observations often lead to theories. 
C)  They deal with similar phenomena. 
D)  They deal primarily with abstract concepts. 
A)  Experiments are most often conducted in a lab. 
B)  Real-world observations often lead to theories. 
C)  They deal with similar phenomena. 
D)  They deal primarily with abstract concepts.

Question 5

In what region of the production possibilities frontier can an economy produce?

Accepted Answer

A)  An economy can produce only on the production possibilities frontier. 
B)  An economy can produce at any point inside or outside the production possibilities frontier. 
C)  An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. 
D)  An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier. 
A)  An economy can produce only on the production possibilities frontier. 
B)  An economy can produce at any point inside or outside the production possibilities frontier. 
C)  An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. 
D)  An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.

Question 6

Suppose there are two countries, Freedonia and Sylvania, which have identical amounts of resources, identical technologies, and identical populations. Both produce two types of goods, consumer goods and capital goods, and they both always operate on their production possibilities frontiers. The only difference is that this year Sylvania chooses to produce relatively more capital goods than Freedonia.??What will happen as a result?

Accepted Answer

A)  Freedonia will have a lower living standard this year and will grow slower than Sylvania. 
B)  Freedonia will have a lower living standard this year but will grow faster than Sylvania. 
C)  Sylvania will have a lower living standard this year and will grow slower than Freedonia. 
D)  Sylvania will have a lower living standard this year but will grow faster than Freedonia. 
A)  Freedonia will have a lower living standard this year and will grow slower than Sylvania. 
B)  Freedonia will have a lower living standard this year but will grow faster than Sylvania. 
C)  Sylvania will have a lower living standard this year and will grow slower than Freedonia. 
D)  Sylvania will have a lower living standard this year but will grow faster than Freedonia.

Question 7

What are economists who try to explain economic phenomena considered?

Accepted Answer

A)  scientists 
B)  policy advisors 
C)  statisticians 
D)  teachers 
A)  scientists 
B)  policy advisors 
C)  statisticians 
D)  teachers

Question 8

Suppose a nation is currently producing at a point inside its production possibilities frontier. What do we know?

Accepted Answer

A)  The nation is producing beyond its capacity, and inflation will occur. 
B)  The nation is not using all available resources and is inefficient. 
C)  The nation needs improved technology in order to produce an efficient combination of goods. 
D)  There will be a large opportunity cost if the nation tries to increase production. 
A)  The nation is producing beyond its capacity, and inflation will occur. 
B)  The nation is not using all available resources and is inefficient. 
C)  The nation needs improved technology in order to produce an efficient combination of goods. 
D)  There will be a large opportunity cost if the nation tries to increase production.

Question 9

Figure 2-10
  
-Refer to Figure 2-10. How are the price of roses and the quantity of roses related?

Accepted Answer

A)  directly related, and therefore moving in the same direction 
B)  directly related, and therefore moving in opposite directions 
C)  inversely related, and therefore moving in opposite directions 
D)  independent of each other 
A)  directly related, and therefore moving in the same direction 
B)  directly related, and therefore moving in opposite directions 
C)  inversely related, and therefore moving in opposite directions 
D)  independent of each other

Question 10

When studying the effects of public policy changes, what do economists do?

Accepted Answer

A)  They often falsify results if the desired effect is not reached. 
B)  They may make different assumptions for the long run and the short run. 
C)  They attempt to consider only the direct effects and not the indirect effects. 
D)  They can immediately change policies if they are ineffective. 
A)  They often falsify results if the desired effect is not reached. 
B)  They may make different assumptions for the long run and the short run. 
C)  They attempt to consider only the direct effects and not the indirect effects. 
D)  They can immediately change policies if they are ineffective.

Question 11

What is the single most important purpose of your textbook?

Accepted Answer

A)  to teach you about the effects of the government's economic policies 
B)  to teach you the language of economics 
C)  to teach you the economist's way of thinking 
D)  to teach you how to make good consumer choices 
A)  to teach you about the effects of the government's economic policies 
B)  to teach you the language of economics 
C)  to teach you the economist's way of thinking 
D)  to teach you how to make good consumer choices

Question 12

How is the slope of a straight line calculated?

Accepted Answer

A)  rise divided by run 
B)  run divided by rise 
C)  the average of rise and run 
D)  rise plus run 
A)  rise divided by run 
B)  run divided by rise 
C)  the average of rise and run 
D)  rise plus run

Question 13

All people use models in their everyday lives, and I am no exception in this regard. While meteorologists use extremely complex weather forecasting models, my model is much simpler. My model predicts that if it is cold in the morning, it will be cold in the afternoon.
a. Why do I need such a silly model, instead of using more reliable forecasts that are easily and freely available?
b. What is the main assumption of my model?
c. How did I choose the assumption underlying my model?
d. Is my assumption (and, therefore, my model) realistic?
e. Is my model useful?
f. How can I improve the predictions of my model?
g. What is your model of weather forecasting when deciding what to wear for the day?
h. What other simple models of weather forecasting can you imagine?

Accepted Answer

a. People think in models. Even when I k

Question 14

Figure 2-7
  
-Refer to Figure 2-7. What would most likely have caused the production possibilities frontier to shift outward from A to B?

Accepted Answer

A)  an increase in resources necessary to produce capital goods 
B)  an improvement in the technology of producing consumer goods 
C)  an increase in the overall level of technology in the economy 
D)  an increase in opportunity cost 
A)  an increase in resources necessary to produce capital goods 
B)  an improvement in the technology of producing consumer goods 
C)  an increase in the overall level of technology in the economy 
D)  an increase in opportunity cost

Question 15

What is a characteristic of factors of production?

Accepted Answer

A)  They are used to produce goods and services. 
B)  They are owned by firms. 
C)  They are abundant in most economies. 
D)  They are provided by both firms and households. 
A)  They are used to produce goods and services. 
B)  They are owned by firms. 
C)  They are abundant in most economies. 
D)  They are provided by both firms and households.

Question 16

How is the slope of a line calculated?

Accepted Answer

A)  change in x/change in y 
B)  change in y/change in x 
C)  x/y 
D)  x + y 
A)  change in x/change in y 
B)  change in y/change in x 
C)  x/y 
D)  x + y

Question 17

-Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of fire trucks from 450 to 500?

Accepted Answer

A)  50 dolls 
B)  100 dolls 
C)  150 dolls 
D)  200 dolls 
A)  50 dolls 
B)  100 dolls 
C)  150 dolls 
D)  200 dolls

Question 18

Which of the following is NOT a positive statement?

Accepted Answer

A)  Lower oil prices will result in higher unemployment. 
B)  Equity is more important than efficiency. 
C)  Trade restrictions lower our standard of living. 
D)  If a nation wants to avoid inflation, it should not print too much money. 
A)  Lower oil prices will result in higher unemployment. 
B)  Equity is more important than efficiency. 
C)  Trade restrictions lower our standard of living. 
D)  If a nation wants to avoid inflation, it should not print too much money.

Question 19

What might a microeconomist NOT study?

Accepted Answer

A)  the effects of rent control on housing in Toronto 
B)  how a college student makes financial decisions 
C)  how tariffs on shoes affects the shoe industry 
D)  the effect on the economy when interest rates change 
A)  the effects of rent control on housing in Toronto 
B)  how a college student makes financial decisions 
C)  how tariffs on shoes affects the shoe industry 
D)  the effect on the economy when interest rates change

Question 20

What does Human Resources Canada do?

Accepted Answer

A)  enforces the country's antitrust laws 
B)  analyzes economic developments in Canada 
C)  sets the country's monetary policy 
D)  helps formulate labour market policies 
A)  enforces the country's antitrust laws 
B)  analyzes economic developments in Canada 
C)  sets the country's monetary policy 
D)  helps formulate labour market policies

Which of the following is NOT a problem associated with graphing in economics?

Figure 2-2 -Refer to Figure 2-2. What do boxes A and B represent?

What does the x-coordinate give?

What is a common thread between economics and other sciences, such as physics?

In what region of the production possibilities frontier can an economy produce?

What are economists who try to explain economic phenomena considered?

Suppose a nation is currently producing at a point inside its production possibilities frontier. What do we know?

Figure 2-10 -Refer to Figure 2-10. How are the price of roses and the quantity of roses related?

When studying the effects of public policy changes, what do economists do?

What is the single most important purpose of your textbook?

How is the slope of a straight line calculated?

Figure 2-7 -Refer to Figure 2-7. What would most likely have caused the production possibilities frontier to shift outward from A to B?

What is a characteristic of factors of production?

How is the slope of a line calculated?

-Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of fire trucks from 450 to 500?

Which of the following is NOT a positive statement?

What might a microeconomist NOT study?

What does Human Resources Canada do?

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters

Exam 2: Thinking Like an Economist

Which of the following is NOT a problem associated with graphing in economics?

Figure 2-2 -Refer to Figure 2-2. What do boxes A and B represent?

What does the x-coordinate give?

What is a common thread between economics and other sciences, such as physics?

In what region of the production possibilities frontier can an economy produce?

What are economists who try to explain economic phenomena considered?

Suppose a nation is currently producing at a point inside its production possibilities frontier. What do we know?

Figure 2-10 -Refer to Figure 2-10. How are the price of roses and the quantity of roses related?

When studying the effects of public policy changes, what do economists do?

What is the single most important purpose of your textbook?

How is the slope of a straight line calculated?

Figure 2-7 -Refer to Figure 2-7. What would most likely have caused the production possibilities frontier to shift outward from A to B?

What is a characteristic of factors of production?

How is the slope of a line calculated?

-Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of fire trucks from 450 to 500?

Which of the following is NOT a positive statement?

What might a microeconomist NOT study?

What does Human Resources Canada do?

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters