Question 1

When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

Accepted Answer

A) True 
 B)False

Question 2

Figure 2-23 
-Refer to Figure 2-23. Point B represents an inefficient outcome for this economy.

Accepted Answer

A) True 
 B)False

Question 3

In the circular-flow diagram,

Accepted Answer

A)   firms are buyers in the markets for goods and services.
B)   households are sellers in the markets for the factors of production.
C)   firms are sellers in the markets for factors of production and in the markets for goods and services.
D)   dollars that are spent on goods and services flow directly from firms to households.E) B) and C)
F) C) and D)

Question 4

Macroeconomics is the study of

Accepted Answer

A)   individual decision makers.
B)   international trade.
C)   economy-wide phenomena.
D)   markets for large products.E) A) and B)
F) A) and C)

Question 5

The production possibilities frontier illustrates

Accepted Answer

A)   the trade-off between efficiency and equality.
B)   the combination of output that an economy should produce.
C)   the combination of output that each member of society should consume.
D)   None of the above is correct.E) A) and D)
F) B) and C)

Question 6

Which types of models are built with assumptions?

Accepted Answer

A)   economic models, but not models in other disciplines such as physics and biology
B)   economic models as well as models in other disciplines such as physics and biology
C)   models that are built for teaching purposes but not for research purposes
D)   bad modelsE) None of the above
F) A) and B)

Question 7

Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?

Accepted Answer

A)   Transit ridership increased in Atlanta following an increase in gas prices.
B)   Federal tax revenue increased following a decrease in the tax rate.
C)   Students in a principles of microeconomics course are asked to play a game with classmates to determine what decisions they make under certain circumstances.
D)   Following the imposition of austerity measures, the growth rate of the economy in Greece slowed.E) All of the above
F) A) and B)

Question 8

Policies such as rent control and trade barriers persist

Accepted Answer

A)   because economists are about evenly divided as to the merits of those policies.
B)   because almost all economists agree that those policies have no discernible economic effects.
C)   because almost all economists agree that those policies are desirable.
D)   despite the fact that almost all economists agree that those policies are undesirable.E) C) and D)
F) None of the above

Question 9

When studying the effects of changes in public policy, economists believe that

Accepted Answer

A)   it is important to distinguish between the short run and the long run.
B)   the assumptions used in studying those effects should be the same for the short run as for the long run.
C)   the short-run effects of those changes are always more beneficial to society than are the long-run effects.
D)   the long-run effects of those changes are always more beneficial to society than are the short-run effects.E) A) and B)
F) C) and D)

Question 10

A survey which sought the opinion of professional economists on fourteen propositions about economic policy found that

Accepted Answer

A)   the respondents were almost equally divided on the propositions.
B)   the respondents favored the propositions by a slight margin.
C)   the respondents disagreed with the propositions by a slight margin.
D)   there was overwhelming endorsement of the propositions among the respondents.E) C) and D)
F) A) and B)

Question 11

Table 2-6
 
-Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of mobile phones from 200 to 500?

Accepted Answer

The answer of Table 2-6
 
-Refer to Table 2-6. Consider...

Question 12

Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

Accepted Answer

A)   rotation of the curve.
B)   shift of the curve.
C)   movement along the curve.
D)   change in the slope of the curve.E) None of the above
F) All of the above

Question 13

Figure 2-8 
-Refer to Figure 2-8. To reach point L, 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 nails and toward the production of hammers.
D)   None of the above are correct; the economy will never be able to reach point L.E) C) and D)
F) All of the above

Question 14

Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

Accepted Answer

A)   President Truman received input from so many economists that he only wanted one view from each.
B)   President Truman thought economists should analyze policies but not make or enforce them.
C)   Economists understand that most policy decisions involve trade-offs so they are likely to present multiple views of policies.
D)   A one-armed economist would conduct only positive analysis and no normative analysis.E) None of the above
F) All of the above

Question 15

Figure 2-13 
-Refer to Figure 2-13. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Accepted Answer

A)   I, L
B)   G, H
C)   J, K
D)   F, GE) B) and C)
F) B) and D)

Question 16

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)   households, firms, and government.E) B) and D)
F) All of the above

Question 17

Figure 2-9
Panel a)  Panel b) 
  
-Refer to Figure 2-9, Panel a)  and Panel b) . A shift of the economy's production possibilities frontier from Panel a)  to Panel b)  could be caused by

Accepted Answer

A)   unemployment.
B)   an improvement in donut production technology.
C)   an improvement in coffee production technology.
D)   an improvement in both donut and coffee production technology.E) B) and C)
F) C) and D)

Question 18

The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

Accepted Answer

A) True 
 B)False

Question 19

Figure 2-17 
-Refer to Figure 2-17. The curves shown are

Accepted Answer

A)   supply curves.
B)   demand curves.
C)   preference curves.
D)   income-consumption curves.E) B) and C)
F) A) and C)

Question 20

A demand curve displaying the relationship between the price of cars and the quantity demanded of cars should have a slope that is

Accepted Answer

A)   less than 0.
B)   between zero and 1.
C)   between one and infinity.
D)   undefined.E) All of the above
F) B) and C)

Exam 2: Thinking Like an Economist

Macroeconomics is the study of

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Figure 2-17 -Refer to Figure 2-17. The curves shown are

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Figure 2-13 -Refer to Figure 2-13. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

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In the circular-flow diagram,

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

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Which types of models are built with assumptions?

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When economists are trying to explain the world, they are scientists, and when they are trying to help improve the world, they are policy advisers.

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Which of the following is not an example of a natural experiment an economist might use to evaluate a theory?

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A survey which sought the opinion of professional economists on fourteen propositions about economic policy found that

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A demand curve displaying the relationship between the price of cars and the quantity demanded of cars should have a slope that is

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Figure 2-8 -Refer to Figure 2-8. To reach point L, the economy would have to

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Policies such as rent control and trade barriers persist

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Figure 2-9 Panel a) Panel b) -Refer to Figure 2-9, Panel a) and Panel b) . A shift of the economy's production possibilities frontier from Panel a) to Panel b) could be caused by

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The production possibilities frontier illustrates

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Table 2-6 -Refer to Table 2-6. Consider the production possibilities table for an economy that produces only mobile phones and pizzas. What is the opportunity cost of increasing production of mobile phones from 200 to 500?

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Figure 2-23 -Refer to Figure 2-23. Point B represents an inefficient outcome for this economy.

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Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

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Suppose price is measured along the vertical axis on a graph. When price changes, there will be a

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The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

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When studying the effects of changes in public policy, economists believe that

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