Question 1

Figure 2-14
 
-Refer to Figure 2-14. The movement from point B to point C could have been caused by

Accepted Answer

A)   inflation.
B)   a change in income.
C)   a change in the price of grapes.
D)   a change in the cost of producing grapes.E) B) and D)
F) A) and C)

Question 2

When income increases the slope of an individual's demand curve, the demand curve

Accepted Answer

A)   turns positive.
B)   becomes undefined.
C)   remains negative.
D)   becomes infinite.E) All of the above
F) A) and D)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Figure 2-17
Relationship Between Years of Education and Annual Income
 
-Refer to Figure 2-17. Senator Smith observes the graph and concludes that people who earn higher incomes attend school for more years. Senator Jones observes the graph and concludes that people who attend school for more years earn higher incomes. Who is correct?

Accepted Answer

A)   Senator Smith is correct.
B)   Senator Jones is correct.
C)   It is difficult to say which senator might be correct due to the reverse causality problem.
D)   It is difficult to say which senator might be correct due to omitted variable bias.E) All of the above
F) None of the above

Question 5

Figure 2-4
 
-Refer to Figure 2-4. It is not possible for this economy to produce at point

Accepted Answer

A)   V.
B)   W.
C)   Y.
D)   Z.E) A) and B)
F) A) and D)

Question 6

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

Accepted Answer

A) True 
 B)False

Question 7

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 500 textiles and 1300 computers. This year it produced 450 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Accepted Answer

A)   Indiadesh decreased unemployment.
B)   Indiadesh experienced an improvement in textile-making technology.
C)   Indiadesh experienced an improvement in computer-making technology.
D)   Indiadesh experienced a reduction in resources.E) All of the above
F) B) and D)

Question 8

Evaluating normative statements involves values as well as facts.

Accepted Answer

A) True 
 B)False

Question 9

Which of these statements about economic models is correct?

Accepted Answer

A)   For economists, economic models provide insights about the world.
B)   Economic models are built with assumptions.
C)   Economic models are often composed of equations and diagrams.
D)   All of the above are correct.E) All of the above
F) A) and D)

Question 10

The goal of an economist who formulates new theories is to

Accepted Answer

A)   provide an interesting framework of analysis, whether or not the framework turns out to be of much use in understanding how the world works.
B)   provoke stimulating debate in scientific journals.
C)   contribute to an understanding of how the world works.
D)   demonstrate that economists, like other scientists, can formulate testable theories.E) B) and D)
F) A) and C) C

Question 11

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

Accepted Answer

A) True 
 B)False  False

Question 12

Figure 2-1
 
-Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) None of the above
F) A) and B)

Question 13

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Accepted Answer

A) True 
 B)False

Question 14

Economists at the Department of the Treasury

Accepted Answer

A)   design U.S. currency and coins.
B)   provide Congress with the annual budget.
C)   enforce the U.S. antitrust laws.
D)   provide advice on tax policy to the President.E) A) and B)
F) All of the above

Question 15

Which of the following is an example of a normative, as opposed to positive, statement?

Accepted Answer

A)   Gasoline prices ought to be lower than they are now.
B)   The federal government should raise taxes on wealthy people.
C)   The social security system is a good system and it deserves to be preserved as it is.
D)   All of the above are normative statements.E) None of the above
F) A) and C)

Question 16

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Accepted Answer

A)   Harry Truman
B)   George Bernard Shaw
C)   John Maynard Keynes
D)   Ronald ReaganE) A) and B)
F) A) and C) B

Question 17

Figure 2-2
 
-Refer to Figure 2-2. Carla regularly buys fruits and vegetables at a grocery store. Roberto regularly pays a lawn-care company to mow his lawn. If the flow of fruits and vegetables from the grocery store to Carla is represented by an arrow from Box C to Box B of this circular-flow diagram, then the money paid by Roberto to the lawn-care company is represented by an arrow

Accepted Answer

A)   from Box A to Box D.
B)   from Box B to Box C.
C)   from Box C to Box B.
D)   from Box D to Box A.E) None of the above
F) B) and D)

Question 18

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 19

The president of the United States receives tax policy advice from economists in the

Accepted Answer

A)   Federal Reserve.
B)   Department of Justice.
C)   Department of the Treasury.
D)   Congressional Budget Office.E) B) and C)
F) A) and D)

Question 20

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) B) and D)
F) C) and D)

Exam 2: Thinking Like an Economist

Figure 2-14 -Refer to Figure 2-14. The movement from point B to point C could have been caused by

Correct Answer
verified

When income increases the slope of an individual's demand curve, the demand curve

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
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Figure 2-4 -Refer to Figure 2-4. It is not possible for this economy to produce at point

Correct Answer
verified

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

Correct Answer
verified

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 500 textiles and 1300 computers. This year it produced 450 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Correct Answer
verified

Evaluating normative statements involves values as well as facts.

Correct Answer
verified

Which of these statements about economic models is correct?

Correct Answer
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The goal of an economist who formulates new theories is to

Correct Answer
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C

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

Correct Answer
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False

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

Correct Answer
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The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Correct Answer
verified

Economists at the Department of the Treasury

Correct Answer
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Which of the following is an example of a normative, as opposed to positive, statement?

Correct Answer
verified

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Correct Answer
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B

Correct Answer
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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.

Correct Answer
verified

The president of the United States receives tax policy advice from economists in the

Correct Answer
verified

When two variables have a positive correlation,

Correct Answer
verified

Exam 2: Thinking Like an Economist

Figure 2-14 -Refer to Figure 2-14. The movement from point B to point C could have been caused by

Correct AnswerverifiedShow Answer

When income increases the slope of an individual's demand curve, the demand curve

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 2-4 -Refer to Figure 2-4. It is not possible for this economy to produce at point

Correct AnswerverifiedShow Answer

The concept of slope can be used to answer questions about how much one variable responds to changes in another variable.

Correct AnswerverifiedShow Answer

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 500 textiles and 1300 computers. This year it produced 450 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Correct AnswerverifiedShow Answer

Evaluating normative statements involves values as well as facts.

Correct AnswerverifiedShow Answer

Which of these statements about economic models is correct?

Correct AnswerverifiedShow Answer

The goal of an economist who formulates new theories is to

Correct AnswerverifiedC

When two variables move in the same direction, the curve relating them is downward sloping, and we say the variables are negatively related.

Correct AnswerverifiedFalse

Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of land, labor, and capital?

Correct AnswerverifiedShow Answer

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Correct AnswerverifiedShow Answer

Economists at the Department of the Treasury

Correct AnswerverifiedShow Answer

Which of the following is an example of a normative, as opposed to positive, statement?

Correct AnswerverifiedShow Answer

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

The president of the United States receives tax policy advice from economists in the

Correct AnswerverifiedShow Answer

When two variables have a positive correlation,

Correct AnswerverifiedShow Answer

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C

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False

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B

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