Question 1

Economists believe that production possibilities frontiers

Accepted Answer

A)   never have a bowed shape.
B)   rarely have a bowed shape.
C)   often have a bowed shape.
D)   always have a bowed shape.E) B) and C)
F) B) and D)

Question 2

Economist Joseph Schumpeter coined the phrase "creative destruction" to describe the process by which

Accepted Answer

A)   the government destroys the failing markets that caused an economic crisis.
B)   innovation and enterpreneurial initiative have great power to drive economic growth.
C)   economists destroy long-held beliefs about how markets function.
D)   free markets need government intervention to create economic growth.E) B) and D)
F) A) and B)

Question 3

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) None of the above

Question 4

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.E) A) and B)
F) A) and C)

Question 5

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions.Which of the following is not one of those propositions?

Accepted Answer

A)   The United States should not restrict employers from outsourcing work to foreign countries.
B)   The United States should withdraw from the North American Free Trade Agreement (NAFT
A)  .
C)   The United States should eliminate agricultural subsidies.
D)   Local and state governments should eliminate subsidies to professional sports franchises.E) A) and B)
F) All of the above

Question 6

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 7

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) C) and D)
F) A) and D)

Question 8

The circular-flow diagram explains,in general terms,how the economy is organized and how participants in the economy interact with one another.

Accepted Answer

A) True 
 B)False

Question 9

The simple circular-flow diagram is a model that includes only some key players in the real economy.Which of the following key players are omitted from the simple circular-flow model?

Accepted Answer

A)   Households
B)   Firms
C)   Government
D)   Markets for Factors of ProductionE) B) and D)
F) B) and C)

Question 10

The scientific method can be applied to the study of economics.

Accepted Answer

A) True 
 B)False

Question 11

Economists at which of the following offices help formulate spending plans and regulatory policies?

Accepted Answer

A)   Office of Management and Budget
B)   Department of the Treasury
C)   Congressional Budget Office
D)   The Federal ReserveE) A) and B)
F) A) and C)

Question 12

Figure 2-1 
-Refer to Figure 2-1.What do the ovals represent in the figure?

Accepted Answer

Market for Goods and...

Question 13

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

Accepted Answer

A)   any misunderstandings in communicating the policy to the public.
B)   whether the policy will affect his standing among different groups in the electorate.
C)   what amendments will be suggested by members of Congress.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 14

Figure 2-9

-Refer to Figure 2-9,Panel (a) and Panel (b) .Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a) to Panel (b) ?

Accepted Answer

A)   the tradeoff between the production of printers and computers changes
B)   production of 2 printers and 5 computers becomes efficient
C)   production of 6 printers and 7 computers becomes possible
D)   the opportunity cost of a computer is higher at all levels of computer productionE) None of the above
F) C) and D)

Question 15

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 16

Economic growth causes a production possibilities frontier to shift outward.

Accepted Answer

A) True 
 B)False

Question 17

Economists often find it worthwhile to make assumptions that do not necessarily describe the real world.

Accepted Answer

A) True 
 B)False

Question 18

The y-coordinate is the

Accepted Answer

A)   first number of an ordered pair and represents the point's horizontal location.
B)   second number of an ordered pair and represents the point's horizontal location.
C)   first number of an ordered pair and represents the point's vertical location.
D)   second number of an ordered pair and represents the point's vertical location.E) A) and B)
F) C) and D)

Question 19

Figure 2-11 
-Refer to Figure 2-11.The shift of the production possibilities frontier from A to B can best be described as

Accepted Answer

A)   a downturn in the economy.
B)   economic growth.
C)   an enhancement of equality.
D)   an improvement in the allocation of resources.E) B) and D)
F) B) and C)

Question 20

Sometimes economists disagree because their scientific judgments differ.Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)   One economist believes income tax cuts are unfair to those with low incomes;another economist believes income tax cuts are not unfair to those with low incomes.
B)   One economist believes unemployment causes more human suffering than does inflation;another economist believes inflation causes more human suffering than does unemployment.
C)   One economist believes the policies of the Democratic party offer the best hope for America's future;another economist believes the policies of the Republican party offer the best hope for America's future.
D)   One economist believes increases in the minimum wage increase unemployment;another economist believes increases in the minimum wage do not increase unemployment.E) A) and D)
F) B) and D)

Exam 2: Thinking Like an Economist

Economists often find it worthwhile to make assumptions that do not necessarily describe the real world.

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The simple circular-flow diagram is a model that includes only some key players in the real economy.Which of the following key players are omitted from the simple circular-flow model?

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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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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

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The scientific method can be applied to the study of economics.

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Economists believe that production possibilities frontiers

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When two variables have a positive correlation,

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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.

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The y-coordinate is the

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Economic growth causes a production possibilities frontier to shift outward.

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A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions.Which of the following is not one of those propositions?

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One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about

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Figure 2-9 -Refer to Figure 2-9,Panel (a) and Panel (b) .Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a) to Panel (b) ?

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Sometimes economists disagree because their scientific judgments differ.Which of the following instances best reflects this source of disagreement?

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Figure 2-11 -Refer to Figure 2-11.The shift of the production possibilities frontier from A to B can best be described as

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Figure 2-1 -Refer to Figure 2-1.What do the ovals represent in the figure?

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The circular-flow diagram explains,in general terms,how the economy is organized and how participants in the economy interact with one another.

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In the circular-flow diagram,

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Economist Joseph Schumpeter coined the phrase "creative destruction" to describe the process by which

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Economists at which of the following offices help formulate spending plans and regulatory policies?

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Market for Goods and...
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