Question 1

Figure 2-5
 
-Refer to Figure 2-5. If this economy moves from point A to point B, then which of the following statements is correct?

Accepted Answer

A)   This economy has moved from a point of inefficient production to a point of efficient production.
B)   This economy has experienced economic growth.
C)   This economy has experienced an increase in employment.
D)   None of the above is correct.E) None of the above
F) A) and C)

Question 2

The circular-flow diagram is a

Accepted Answer

A)   visual model of the economy.
B)   visual model of the relationships among money, prices, and businesses.
C)   model that shows the effects of government on the economy.
D)   mathematical model of how the economy works.E) B) and C)
F) B) and D)

Question 3

A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Points inside the production possibilities frontier represent inefficient levels of production.

Accepted Answer

A) True 
 B)False

Question 6

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) B) and C)

Question 7

Figure 2-14
 
-Refer to Figure 2-14. The opportunity cost of moving from point B to point A is zero.

Accepted Answer

A) True 
 B)False

Question 8

In the markets for the factors of production in the circular-flow diagram, households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 9

The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop?

Accepted Answer

A)   Wages
B)   Income
C)   Capital
D)   RentE) C) and D)
F) B) and C)

Question 10

The President receives economic policy advice from economists at each of the following except

Accepted Answer

A)   the Council of Economic Advisors.
B)   the Department of the Treasury.
C)   the Congressional Budget office.
D)   the Department of Labor.E) B) and C)
F) A) and B)

Question 11

Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

Accepted Answer

A)   the effect of an increase in the alcohol tax on the market for beer
B)   the effect of foreign competition on the domestic auto industry
C)   the effect of a price war in the airline industry
D)   the effect of an increase in the minimum wage on an economy's overall rate of unemploymentE) A) and B)
F) B) and D)

Question 12

Figure 2-12
 
-Refer to Figure 2-12. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

Accepted Answer

A)   D, H
B)   B, C
C)   F, G
D)   A, BE) A) and C)
F) All of the above

Question 13

Figure 2-3
 
-Refer to Figure 2-3. Unemployment could cause this economy to produce at which point(s) ?

Accepted Answer

A)   J, L
B)   J, L, M
C)   K, N
D)   ME) A) and B)
F) C) and D)

Question 14

Figure 2-2
 
-Refer to Figure 2-2. Boxes C and D of this circular-flow diagram represent

Accepted Answer

A)   households and government.
B)   firms and government.
C)   the markets for goods and services and the markets for financial assets.
D)   the markets for goods and services and the markets for factors of production.E) B) and D)
F) A) and B)

Question 15

The Federal Reserve

Accepted Answer

A)   designs tax policy.
B)   enforces the nation's antitrust laws.
C)   sets the nation's monetary policy.
D)   analyzes data on workers.E) All of the above
F) C) and D)

Question 16

Figure 2-3
 
-Refer to Figure 2-3. Efficient production is represented by which point(s) ?

Accepted Answer

A)   J, K, N
B)   K, M, N
C)   K, N
D)   L, ME) A) and C)
F) None of the above

Question 17

Production possibilities frontiers are usually bowed outward. This is because

Accepted Answer

A)   the more resources a society uses to produce one good, the fewer resources it has available to produce another good.
B)   it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced.
C)   of the effects of technological change.
D)   resources are specialized; that is, some are better at producing particular goods rather than other goods.E) B) and D)
F) A) and B)

Question 18

Positive statements can be evaluated using data alone, but normative statements cannot.

Accepted Answer

A) True 
 B)False

Question 19

Microeconomics and macroeconomics are closely intertwined.

Accepted Answer

A) True 
 B)False

Question 20

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) A) and D)
F) B) and D)

Exam 2: Thinking Like an Economist

Figure 2-2 -Refer to Figure 2-2. Boxes C and D of this circular-flow diagram represent

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Positive statements can be evaluated using data alone, but normative statements cannot.

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The Federal Reserve

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Which of the following would likely be studied by a macroeconomist rather than a microeconomist?

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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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In the markets for the factors of production in the circular-flow diagram, households are buyers and firms are sellers.

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The outer loop of the circular-flow diagram represents the flows of dollars in the economy. Which of the following does not appear on the outer loop?

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

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Figure 2-14 -Refer to Figure 2-14. The opportunity cost of moving from point B to point A is zero.

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Production possibilities frontiers are usually bowed outward. This is because

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Figure 2-3 -Refer to Figure 2-3. Efficient production is represented by which point(s) ?

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A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.

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Microeconomics and macroeconomics are closely intertwined.

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The circular-flow diagram is a

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

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Figure 2-5 -Refer to Figure 2-5. If this economy moves from point A to point B, then which of the following statements is correct?

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The President receives economic policy advice from economists at each of the following except

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Points inside the production possibilities frontier represent inefficient levels of production.

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Figure 2-12 -Refer to Figure 2-12. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

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Figure 2-3 -Refer to Figure 2-3. Unemployment could cause this economy to produce at which point(s) ?

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