Question 1

One thing economists do to help them understand how the real world works is

Accepted Answer

A)   make assumptions.
B)   ignore the past.
C)   they try to capture every aspect of the real world in the models they construct.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 2

The scientific method is the dispassionate development and testing of theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 3

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies,probably because

Accepted Answer

A)   economists have not yet convinced the general public that the policies are undesirable.
B)   economists engage in positive analysis,not normative analysis.
C)   economists have values that are different from the values of most non-economists.
D)   economists' theories are not easily confirmed or refuted in laboratory analysis.E) B) and C)
F) A) and B)

Question 4

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Accepted Answer

A)   a controlled experiment that lead to the formulation of a scientific theory.
B)   being in the right place at the right time.
C)   an idea whose time had come.
D)   the interplay between observation and theory in science.E) C) and D)
F) B) and D)

Question 5

The decision of which assumptions to make is

Accepted Answer

A)   an easy decision for an economist,but a difficult decision for a physicist or a chemist.
B)   not a particularly important decision for an economist.
C)   usually regarded as an art in scientific thinking.
D)   usually regarded as the easiest part of the scientific method.E) A) and D)
F) C) and D)

Question 6

A circular-flow diagram is a visual model of the economy.

Accepted Answer

A) True 
 B)False

Question 7

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other is constant.

Accepted Answer

A) True 
 B)False

Question 8

Figure 2-2 
-Refer to Figure 2-2.If the outer loop of this circular-flow diagram represents flows of dollars,then the inner loop includes

Accepted Answer

A)   flows of goods and services from households to firms.
B)   flows of inputs from households to firms.
C)   flows of rent payments paid to owners of land.
D)   flows of wages and salaries paid to workers.E) B) and D)
F) B) and C)

Question 9

When a production possibilities frontier is bowed outward,the opportunity cost of the second good in terms of the first good is higher when the economy is producing much of the second good and little of the first good than it is when the economy is producing little of the second good and much of the first good.

Accepted Answer

A) True 
 B)False

Question 10

Table 2-1
Production Possibilities for Toyland
 
-Refer to Table 2-1.Which of the following statements is correct?

Accepted Answer

A)   The opportunity cost of an additional 100 dolls is constant at 50 fire trucks.
B)   The opportunity cost of an additional 100 dolls is constant at 100 fire trucks.
C)   Toyland's production possibilities frontier is a straight,downward-sloping line.
D)   The opportunity cost of an additional 100 dolls increases as more dolls are produced.E) All of the above
F) B) and C)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

In the markets for goods and services in the circular-flow diagram,households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 13

The slope of a steep upward-sloping line will be a

Accepted Answer

A)   small positive number.
B)   large positive number.
C)   small negative number.
D)   large negative number.E) A) and B)
F) All of the above

Question 14

Figure 2-7 
-Refer to Figure 2-7.In order to reach point C,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 ribeye steaks and toward production of books.
D)   None of the above are correct;the economy will never be able to reach point C.E) None of the above
F) B) and D)

Question 15

Economic models are most often composed of diagrams and equations.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not an example of a positive,as opposed to normative,statement?

Accepted Answer

A)   Higher gasoline prices will reduce gasoline consumption.
B)   Equality is more important than efficiency.
C)   Trade restrictions lower our standard of living.
D)   If a nation wants to avoid inflation,it will restrict the growth rate of the quantity of money.E) None of the above
F) B) and C)

Question 17

In conducting their research,economists often substitute historical events and historical episodes for

Accepted Answer

A)   theories and observations.
B)   laboratory experiments.
C)   models.
D)   assumptions.E) All of the above
F) A) and B)

Question 18

Which of the following is not correct?

Accepted Answer

A)   The slope of a line will be a small positive number for a fairly flat upward-sloping line.
B)   The slope of a line will be a large positive number for a steep upward-sloping line.
C)   The slope of a line will be a negative number for a downward-sloping line.
D)   The slope of a line will be infinite for a horizontal line.E) None of the above
F) A) and B)

Question 19

The Council of Economic Advisers

Accepted Answer

A)   was created in 1946.
B)   advises the president of the United States on economic policy matters.
C)   writes the annual Economic Report of the President.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 20

When economists make normative statements,they are

Accepted Answer

A)   speaking as scientists.
B)   speaking as policy advisers.
C)   making claims about how the world is.
D)   revealing that they are very liberal in their views of how the world works.E) B) and C)
F) A) and C)

Exam 2: Thinking Like an Economist

Correct Answer
verified

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies,probably because

Correct Answer
verified

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

Correct Answer
verified

A circular-flow diagram is a visual model of the economy.

Correct Answer
verified

Which of the following is not an example of a positive,as opposed to normative,statement?

Correct Answer
verified

Figure 2-2 -Refer to Figure 2-2.If the outer loop of this circular-flow diagram represents flows of dollars,then the inner loop includes

Correct Answer
verified

Economic models are most often composed of diagrams and equations.

Correct Answer
verified

The Council of Economic Advisers

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

In the markets for goods and services in the circular-flow diagram,households are buyers and firms are sellers.

Correct Answer
verified

Table 2-1 Production Possibilities for Toyland -Refer to Table 2-1.Which of the following statements is correct?

Correct Answer
verified

When economists make normative statements,they are

Correct Answer
verified

The decision of which assumptions to make is

Correct Answer
verified

The scientific method is the dispassionate development and testing of theories about how the world works.

Correct Answer
verified

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

Correct Answer
verified

The slope of a steep upward-sloping line will be a

Correct Answer
verified

In conducting their research,economists often substitute historical events and historical episodes for

Correct Answer
verified

One thing economists do to help them understand how the real world works is

Correct Answer
verified

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other is constant.

Correct Answer
verified

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Correct Answer
verified

Exam 2: Thinking Like an Economist

Correct AnswerverifiedShow Answer

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies,probably because

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A circular-flow diagram is a visual model of the economy.

Correct AnswerverifiedShow Answer

Which of the following is not an example of a positive,as opposed to normative,statement?

Correct AnswerverifiedShow Answer

Figure 2-2 -Refer to Figure 2-2.If the outer loop of this circular-flow diagram represents flows of dollars,then the inner loop includes

Correct AnswerverifiedShow Answer

Economic models are most often composed of diagrams and equations.

Correct AnswerverifiedShow Answer

The Council of Economic Advisers

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

In the markets for goods and services in the circular-flow diagram,households are buyers and firms are sellers.

Correct AnswerverifiedShow Answer

Table 2-1 Production Possibilities for Toyland -Refer to Table 2-1.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

When economists make normative statements,they are

Correct AnswerverifiedShow Answer

The decision of which assumptions to make is

Correct AnswerverifiedShow Answer

The scientific method is the dispassionate development and testing of theories about how the world works.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The slope of a steep upward-sloping line will be a

Correct AnswerverifiedShow Answer

In conducting their research,economists often substitute historical events and historical episodes for

Correct AnswerverifiedShow Answer

One thing economists do to help them understand how the real world works is

Correct AnswerverifiedShow Answer

When a production possibilities frontier is bowed outward,the opportunity cost of one good in terms of the other is constant.

Correct AnswerverifiedShow Answer

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Correct AnswerverifiedShow Answer

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