Question 1

Figure 2-22 
-Refer to Figure 2-22. Is a move from point A to point R considered a shift of the curve or a movement along the curve?

Accepted Answer

The answer of Figure 2-22 
-Refer to Figure 2-22. Is...

Question 2

"Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement.

Accepted Answer

A) True 
 B)False

Question 3

Economists at which administrative department analyze data on workers and those looking for work to help formulate labor-market policies?

Accepted Answer

The answer of Economists at which administrative department analyze data...

Question 4

Figure 2-2 
-Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, then

Accepted Answer

A)   Box D must represent the markets for factors of production.
B)   Box C must represent the markets for goods and services.
C)   firms are buyers in the markets represented by Box D.
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 5

John Maynard Keynes described economics as an easy subject at which very few excel. Which of the following is not one of the reasons Keynes gave for why so few people excel at the study of economics?

Accepted Answer

A)   An economist must also be a mathematician, historian, statesman, and philosopher in some degree.
B)   An economist must understand symbols and speak in words.
C)   An economist must be purposeful and disinterested in a simultaneous mood.
D)   An economist must understand environmental science, regulation, and political science.E) A) and B)
F) C) and D)

Question 6

Figure 2-21 
-Refer to Figure 2-21. Your friend John created the graph above to illustrate that snowstorms are caused by more snowblowers being sold. You inform him that his interpretation is incorrect due to

Accepted Answer

A)   omitted variable bias.
B)   reverse causality.
C)   slope mismatch.
D)   shifting versus moving along a curve.E) B) and C)
F) C) and D)

Question 7

In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

Accepted Answer

A) True 
 B)False

Question 8

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Accepted Answer

A)   is useless, since the real world has many countries trading many goods.
B)   can be useful only in situations involving two countries and two goods.
C)   can be useful in the classroom, but is useless in the real world.
D)   can be useful in helping economists understand the complex world of international trade involving many countries and many goods.E) None of the above
F) A) and C)

Question 9

The bowed shape of the production possibilities frontier can be explained by the fact that

Accepted Answer

A)   all resources are scarce.
B)   economic growth is always occurring.
C)   the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.
D)   the only way to get more of one good is to get less of the other.E) A) and B)
F) All of the above

Question 10

Figure 2-16 
-Refer to Figure 2-16. Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

Accepted Answer

A)   The less coffee a person drinks per day, the more time he can go without sleep.
B)   There is no relationship between how much coffee per day a person drinks and how long he can go without sleep.
C)   The more coffee a person drinks per day, the more time he can go without sleep.
D)   The more coffee a person drinks per day, the less time he can go without sleep.E) B) and D)
F) B) and C)

Question 11

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

Accepted Answer

A)   is rooted in the principle that people face tradeoffs.
B)   indicates that economists recognize that there are opportunity costs associated with policy decisions.
C)   confirms that economists are not suited to be presidential advisers.
D)   More than one of the above is correct.E) A) and D)
F) A) and B)

Question 12

One way to characterize the difference between positive statements and normative statements is as follows:

Accepted Answer

A)   Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future.
B)   Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be.
C)   Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation.
D)   Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements.E) A) and B)
F) A) and C)

Question 13

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 C)
F) B) and C)

Question 14

Economists speaking like policy advisers make

Accepted Answer

A)   positive statements.
B)   descriptive statements.
C)   claims about how the world is.
D)   claims about how the world should be.E) B) and D)
F) B) and C)

Question 15

In the circular-flow diagram, which of the following items flows from households to firms through the markets for the factors of production?

Accepted Answer

A)   goods and services
B)   land, labor, and capital
C)   dollars spent on goods and services
D)   wages, rent, and profitE) C) and D)
F) None of the above

Question 16

Figure 2-10
Panel (a)  Panel (b) 
  
-Refer to Figure 2-10, 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 sofa production technology.
C)   an improvement in tractor production technology.
D)   an improvement in both sofa and tractor production technology.E) A) and C)
F) C) and D)

Question 17

Instead of conducting laboratory experiments to generate data to test their theories, economists often

Accepted Answer

A)   ask winners of the Nobel Prize in Economics to evaluate their theories.
B)   argue that data is impossible to collect in economics.
C)   gather data from historical episodes of economic change.
D)   assume that data would support their theories.E) B) and C)
F) C) and D)

Question 18

Which of the following trade-offs does the production possibilities frontier illustrate?

Accepted Answer

A)   If an economy wants to increase efficiency in production, then it must sacrifice equality in consumption.
B)   Once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other.
C)   For an economy to consume more of one good, it must stop consuming the other good entirely.
D)   For an economy to produce and consume goods, it must sacrifice environmental quality.E) B) and D)
F) B) and C)

Question 19

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 20

Figure 2-5 
-Refer to Figure 2-5. If this economy devotes all of its resources to the production of dryers, then it will produce

Accepted Answer

A)   0 dryers and 100 washers.
B)   60 dryers and 50 washers.
C)   80 dryers and 0 washers.
D)   80 dryers and 50 washers.E) A) and D)
F) None of the above

Exam 2: Thinking Like an Economist

Figure 2-2 -Refer to Figure 2-2. If households are sellers in the markets represented by Box D of this circular-flow diagram, then

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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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"Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive statement.

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In the circular-flow diagram, which of the following items flows from households to firms through the markets for the factors of production?

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Instead of conducting laboratory experiments to generate data to test their theories, economists often

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Figure 2-22 -Refer to Figure 2-22. Is a move from point A to point R considered a shift of the curve or a movement along the curve?

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An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

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John Maynard Keynes described economics as an easy subject at which very few excel. Which of the following is not one of the reasons Keynes gave for why so few people excel at the study of economics?

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Which of the following trade-offs does the production possibilities frontier illustrate?

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Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, 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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Economists speaking like policy advisers make

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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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In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

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Figure 2-16 -Refer to Figure 2-16. Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep?

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One way to characterize the difference between positive statements and normative statements is as follows:

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Figure 2-5 -Refer to Figure 2-5. If this economy devotes all of its resources to the production of dryers, then it will produce

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Figure 2-21 -Refer to Figure 2-21. Your friend John created the graph above to illustrate that snowstorms are caused by more snowblowers being sold. You inform him that his interpretation is incorrect due to

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The bowed shape of the production possibilities frontier can be explained by the fact that

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Economists at which administrative department analyze data on workers and those looking for work to help formulate labor-market policies?

Correct AnswerverifiedShow Answer

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

Correct AnswerverifiedShow Answer

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