Question 1

Which of the following statements is true?

Accepted Answer

A) Economists almost always find it easy to conduct experiments in order to test their theories. 
B) Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C) Economics is a social science rather than a true science because it cannot employ the scientific method. 
D) Economists are usually not allowed to conduct experiments, and so they must rely on natural experiments offered by history. 
A) Economists almost always find it easy to conduct experiments in order to test their theories. 
B) Economics is not a true science because economists are not usually allowed to conduct experiments to test their theories. 
C) Economics is a social science rather than a true science because it cannot employ the scientific method. 
D) Economists are usually not allowed to conduct experiments, and so they must rely on natural experiments offered by history. D

Question 2

The art in scientific thinking -- whether in chemistry,economics,or psychology -- is

Accepted Answer

A) the design and implementation of laboratory experiments. 
B) knowing when to stop collecting data and when to start analyzing the data. 
C) deciding which assumptions to make. 
D) being able to mathematically model natural phenomena. 
A) the design and implementation of laboratory experiments. 
B) knowing when to stop collecting data and when to start analyzing the data. 
C) deciding which assumptions to make. 
D) being able to mathematically model natural phenomena. C

Question 3

A survey of business,government,and academic economists revealed widespread disagreement on ten propositions about economic policy.

Accepted Answer

A) True 
 B)False  False

Question 4

Production possibilities frontiers are usually bowed outward.This is because

Accepted Answer

A) the more resources a society uses to produce one good, the fewer resources it has available to produce another good. 
B) it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced. 
C) of the effects of technological change. 
D) resources are specialized, that is, some are better at producing particular goods rather than other goods. 
A) the more resources a society uses to produce one good, the fewer resources it has available to produce another good. 
B) it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced. 
C) of the effects of technological change. 
D) resources are specialized, that is, some are better at producing particular goods rather than other goods.

Question 5

Which two groups of decisionmakers are included in the simple circular-flow diagram?

Accepted Answer

A) markets and government 
B) households and government 
C) firms and government 
D) households and firms 
A) markets and government 
B) households and government 
C) firms and government 
D) households and firms

Question 6

A type of graph that can be used to display the relationship between two variables is

Accepted Answer

A) a pie chart. 
B) a bar graph. 
C) a time-series graph. 
D) the coordinate system. 
A) a pie chart. 
B) a bar graph. 
C) a time-series graph. 
D) the coordinate system.

Question 7

Economists view positive statements as

Accepted Answer

A) affirmative, justifying existing economic policy. 
B) optimistic, putting the best possible interpretation on things. 
C) descriptive, making a claim about how the world is. 
D) prescriptive, making a claim about how the world ought to be. 
A) affirmative, justifying existing economic policy. 
B) optimistic, putting the best possible interpretation on things. 
C) descriptive, making a claim about how the world is. 
D) prescriptive, making a claim about how the world ought to be.

Question 8

The field of economics is divided into two subfields: microeconomics and macroeconomics.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Accepted Answer

A) For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics. 
B) Microeconomists study markets for small products, whereas macroeconomists study markets for large products. 
C) Microeconomics and macroeconomics are distinct from one another, yet they are closely related. 
D) Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies. 
A) For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics. 
B) Microeconomists study markets for small products, whereas macroeconomists study markets for large products. 
C) Microeconomics and macroeconomics are distinct from one another, yet they are closely related. 
D) Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies.

Question 11

The most common data for testing economic theories come from

Accepted Answer

A) carefully controlled and conducted laboratory experiments. 
B) traditional economies. 
C) historical episodes of economic change. 
D) centrally planned economies. 
A) carefully controlled and conducted laboratory experiments. 
B) traditional economies. 
C) historical episodes of economic change. 
D) centrally planned economies.

Question 12

In the simple circular-flow diagram,the participants in the economy are

Accepted Answer

A) firms and government. 
B) households and firms. 
C) households and government. 
D) elected officials and ordinary citizens. 
A) firms and government. 
B) households and firms. 
C) households and government. 
D) elected officials and ordinary citizens.

Question 13

Suppose an economy produces two goods,food and machines.This economy always operates on its production possibilities frontier.Last year,it produced 50 units of food and 30 machines.This year,it is producing 55 units of food and 33 machines.Which of the following events could not explain the increase in output?

Accepted Answer

A) a reduction in unemployment 
B) an increase in available labor 
C) an improvement in technology 
D) Any of these events could explain the increase in output. 
A) a reduction in unemployment 
B) an increase in available labor 
C) an improvement in technology 
D) Any of these events could explain the increase in output.

Question 14

Here are some production possibilities for an imaginary economy for a given year.  
If the production possibilities frontier is bowed outward,then in place of "?" we might have

Accepted Answer

A) 340. 
B) 330. 
C) 320. 
D) 310. 
A) 340. 
B) 330. 
C) 320. 
D) 310.

Question 15

Economists regard events from the past as

Accepted Answer

A) irrelevant, since history is unlikely to repeat itself. 
B) of limited interest, since those events seldom provide any useful economic data. 
C) interesting but not particularly valuable, since those events cannot be used to evaluate present-day economic theories. 
D) interesting and valuable, because those events are capable of helping us to understand the past, the present, and the future. 
A) irrelevant, since history is unlikely to repeat itself. 
B) of limited interest, since those events seldom provide any useful economic data. 
C) interesting but not particularly valuable, since those events cannot be used to evaluate present-day economic theories. 
D) interesting and valuable, because those events are capable of helping us to understand the past, the present, and the future.

Question 16

Figure 2-2
  
-Refer to Figure 2-2.The figure represents a circular-flow diagram.If the flow of goods and services is part of what is represented by the inner loop,then

Accepted Answer

A) the flow of factors of production is also part of what is represented by the inner loop. 
B) the flow of income paid to households is also part of what is represented by the inner loop. 
C) Box C must represent households and Box D must represent firms. 
D) households must be sellers of output. 
A) the flow of factors of production is also part of what is represented by the inner loop. 
B) the flow of income paid to households is also part of what is represented by the inner loop. 
C) Box C must represent households and Box D must represent firms. 
D) households must be sellers of output.

Question 17

The President of the United States receives tax policy advice from economists in the

Accepted Answer

A) Federal Reserve. 
B) Department of Justice. 
C) Department of Treasury. 
D) Congressional Budget Office. 
A) Federal Reserve. 
B) Department of Justice. 
C) Department of Treasury. 
D) Congressional Budget Office.

Question 18

Albert Einstein once made the following observation about science:

Accepted Answer

A) "The whole of science is nothing more than the refinement of everyday thinking." 
B) "The whole of science is nothing more than an interesting intellectual exercise." 
C) "In order to understand science, one must rely solely on abstraction." 
D) "In order to understand science, one must transcend everyday thinking." 
A) "The whole of science is nothing more than the refinement of everyday thinking." 
B) "The whole of science is nothing more than an interesting intellectual exercise." 
C) "In order to understand science, one must rely solely on abstraction." 
D) "In order to understand science, one must transcend everyday thinking."

Question 19

"If all economists were laid end to end,they would not reach a conclusion." Who made this whimsical observation?

Accepted Answer

A) Harry Truman 
B) George Bernard Shaw 
C) John Maynard Keynes 
D) Ronald Reagan 
A) Harry Truman 
B) George Bernard Shaw 
C) John Maynard Keynes 
D) Ronald Reagan

Question 20

The slope of a fairly flat,upward-sloping line will be a

Accepted Answer

A) small positive number. 
B) large positive number. 
C) small negative number. 
D) large negative number. 
A) small positive number. 
B) large positive number. 
C) small negative number. 
D) large negative number.

Exam 2: Thinking Like an Economist

Which of the following statements is true?

The art in scientific thinking -- whether in chemistry,economics,or psychology -- is

A survey of business,government,and academic economists revealed widespread disagreement on ten propositions about economic policy.

Production possibilities frontiers are usually bowed outward.This is because

Which two groups of decisionmakers are included in the simple circular-flow diagram?

A type of graph that can be used to display the relationship between two variables is

Economists view positive statements as

The field of economics is divided into two subfields: microeconomics and macroeconomics.

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

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

The most common data for testing economic theories come from

In the simple circular-flow diagram,the participants in the economy are

Here are some production possibilities for an imaginary economy for a given year. If the production possibilities frontier is bowed outward,then in place of "?" we might have

Economists regard events from the past as

Figure 2-2 -Refer to Figure 2-2.The figure represents a circular-flow diagram.If the flow of goods and services is part of what is represented by the inner loop,then

The President of the United States receives tax policy advice from economists in the

Albert Einstein once made the following observation about science:

"If all economists were laid end to end,they would not reach a conclusion." Who made this whimsical observation?

The slope of a fairly flat,upward-sloping line will be a

Ten Principles of Economics

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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