Question 1

The goal of an economist who formulates new theories is to

Accepted Answer

A)  provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works. 
B)  provoke stimulating debate in scientific journals. 
C)  contribute to an understanding of how the world works. 
D)  demonstrate that economists, like other scientists, can formulate testable theories. 
A)  provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works. 
B)  provoke stimulating debate in scientific journals. 
C)  contribute to an understanding of how the world works. 
D)  demonstrate that economists, like other scientists, can formulate testable theories. C

Question 2

"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 B

Question 3

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

Accepted Answer

A) True 
 B)False  False

Question 4

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other depends on how much of each good is being produced.

Accepted Answer

A) True 
 B)False

Question 5

Evaluating normative statements involves values as well as facts.

Accepted Answer

A) True 
 B)False

Question 6

Figure 2-17
Relationship Between Years of Education and Annual Income
  
-Refer to Figure 2-17. Senator Smith observes the graph and concludes that people who earn higher incomes attend school for more years. Senator Jones observes the graph and concludes that people who attend school for more years earn higher incomes. Who is correct?

Accepted Answer

A)  Senator Smith is correct. 
B)  Senator Jones is correct. 
C)  It is difficult to say which senator might be correct due to the reverse causality problem. 
D)  It is difficult to say which senator might be correct due to omitted variable bias. 
A)  Senator Smith is correct. 
B)  Senator Jones is correct. 
C)  It is difficult to say which senator might be correct due to the reverse causality problem. 
D)  It is difficult to say which senator might be correct due to omitted variable bias.

Question 7

When two variables have a positive correlation,

Accepted Answer

A)  when the x-variable increases, the y-variable decreases. 
B)  when the x-variable decreases, the y-variable increases. 
C)  when the x-variable increases, the y-variable increases. 
D)  More than one of the above is correct. 
A)  when the x-variable increases, the y-variable decreases. 
B)  when the x-variable decreases, the y-variable increases. 
C)  when the x-variable increases, the y-variable increases. 
D)  More than one of the above is correct.

Question 8

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Accepted Answer

A) True 
 B)False

Question 9

Figure 2-4
  
-Refer to Figure 2-4. It is not possible for this economy to produce at point

Accepted Answer

A)  V. 
B)  W. 
C)  Y. 
D)  Z. 
A)  V. 
B)  W. 
C)  Y. 
D)  Z.

Question 10

Which of these statements about economic models is correct?

Accepted Answer

A)  For economists, economic models provide insights about the world. 
B)  Economic models are built with assumptions. 
C)  Economic models are often composed of equations and diagrams. 
D)  All of the above are correct. 
A)  For economists, economic models provide insights about the world. 
B)  Economic models are built with assumptions. 
C)  Economic models are often composed of equations and diagrams. 
D)  All of the above are correct.

Question 11

Which of the following is an example of a normative, as opposed to positive, statement?

Accepted Answer

A)  Gasoline prices ought to be lower than they are now. 
B)  The federal government should raise taxes on wealthy people. 
C)  The social security system is a good system and it deserves to be preserved as it is. 
D)  All of the above are normative statements. 
A)  Gasoline prices ought to be lower than they are now. 
B)  The federal government should raise taxes on wealthy people. 
C)  The social security system is a good system and it deserves to be preserved as it is. 
D)  All of the above are normative statements.

Question 12

Figure 2-2
  
-Refer to Figure 2-2. Carla regularly buys fruits and vegetables at a grocery store. Roberto regularly pays a lawn-care company to mow his lawn. If the flow of fruits and vegetables from the grocery store to Carla is represented by an arrow from Box C to Box B of this circular-flow diagram, then the money paid by Roberto to the lawn-care company is represented by an arrow

Accepted Answer

A)  from Box A to Box D. 
B)  from Box B to Box C. 
C)  from Box C to Box B. 
D)  from Box D to Box A. 
A)  from Box A to Box D. 
B)  from Box B to Box C. 
C)  from Box C to Box B. 
D)  from Box D to Box A.

Question 13

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Accepted Answer

A) True 
 B)False

Question 14

Economists at the Department of the Treasury

Accepted Answer

A)  design U.S. currency and coins. 
B)  provide Congress with the annual budget. 
C)  enforce the U.S. antitrust laws. 
D)  provide advice on tax policy to the President. 
A)  design U.S. currency and coins. 
B)  provide Congress with the annual budget. 
C)  enforce the U.S. antitrust laws. 
D)  provide advice on tax policy to the President.

Question 15

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 500 textiles and 1300 computers. This year it produced 450 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Accepted Answer

A)  Indiadesh decreased unemployment. 
B)  Indiadesh experienced an improvement in textile-making technology. 
C)  Indiadesh experienced an improvement in computer-making technology. 
D)  Indiadesh experienced a reduction in resources. 
A)  Indiadesh decreased unemployment. 
B)  Indiadesh experienced an improvement in textile-making technology. 
C)  Indiadesh experienced an improvement in computer-making technology. 
D)  Indiadesh experienced a reduction in resources.

Question 16

Figure 2-14
  
-Refer to Figure 2-14. The movement from point B to point C could have been caused by

Accepted Answer

A)  inflation. 
B)  a change in income. 
C)  a change in the price of grapes. 
D)  a change in the cost of producing grapes. 
A)  inflation. 
B)  a change in income. 
C)  a change in the price of grapes. 
D)  a change in the cost of producing grapes.

Question 17

Figure 2-1
  
-Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
A)  A 
B)  B 
C)  C 
D)  D

Question 18

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

When income increases the slope of an individual's demand curve, the demand curve

Accepted Answer

A)  turns positive. 
B)  becomes undefined. 
C)  remains negative. 
D)  becomes infinite. 
A)  turns positive. 
B)  becomes undefined. 
C)  remains negative. 
D)  becomes infinite.

The goal of an economist who formulates new theories is to

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

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other depends on how much of each good is being produced.

Evaluating normative statements involves values as well as facts.

When two variables have a positive correlation,

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Figure 2-4 -Refer to Figure 2-4. It is not possible for this economy to produce at point

Which of these statements about economic models is correct?

Which of the following is an example of a normative, as opposed to positive, statement?

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Economists at the Department of the Treasury

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 500 textiles and 1300 computers. This year it produced 450 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Figure 2-14 -Refer to Figure 2-14. The movement from point B to point C could have been caused by

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

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

When income increases the slope of an individual's demand curve, the demand curve

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

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

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Exam 2: Thinking Like an Economist

The goal of an economist who formulates new theories is to

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

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other depends on how much of each good is being produced.

Evaluating normative statements involves values as well as facts.

When two variables have a positive correlation,

Normative statements describe how the world is, while positive statements prescribe how the world should be.

Figure 2-4 -Refer to Figure 2-4. It is not possible for this economy to produce at point

Which of these statements about economic models is correct?

Which of the following is an example of a normative, as opposed to positive, statement?

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Economists at the Department of the Treasury

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 500 textiles and 1300 computers. This year it produced 450 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Figure 2-14 -Refer to Figure 2-14. The movement from point B to point C could have been caused by

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

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

When income increases the slope of an individual's demand curve, the demand curve

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

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

Filters