Question 1

Figure 2-7 
-Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

Accepted Answer

A)   0 engines and 40 tvs.
B)   10 engines and 35 tvs.
C)   40 engines and 0 tvs.
D)   40 engines and 40 tvs.E) A) and B)
F) B) and C)

Question 2

The Council of Economic Advisers

Accepted Answer

A)   was created in 1776 and consists of three members and a staff of several dozen economists.
B)   was created in 1776 and consists of thirty members and a staff of a dozen economists.
C)   was created in 1946 and consists of three members and a staff of several dozen economists.
D)   was created in 1946 and consists of thirty members and a staff of a dozen economists.E) A) and B)
F) B) and C)

Question 3

Figure 2-9
Panel (a)  Panel (b)   
-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 donuts and coffee changes
B)   the opportunity cost of a cup of coffee is higher at all levels of coffee production
C)   production of 4 donuts and 2 cups of coffee becomes possible
D)   production of 1 donut and 4 cups of coffee becomes efficientE) B) and D)
F) A) and B)

Question 4

When economists make normative statements, they are

Accepted Answer

A)   speaking as scientists.
B)   speaking as policy advisers.
C)   making claims about how the world is.
D)   revealing that they are very liberal in their views of how the world works.E) A) and B)
F) B) and D)

Question 5

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) A) and C)
F) None of the above

Question 6

Which of these terms are used interchangeably?

Accepted Answer

A)   "goods and services" and "inputs"
B)   "goods and services" and "factors of production"
C)   "inputs" and "factors of production"
D)   "land, labor, and capital" and "goods and services"E) None of the above
F) A) and D)

Question 7

Economists speaking like scientists make

Accepted Answer

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

Question 8

It is difficult for economists to make observations and develop theories, but it is easy for economists to run experiments to generate data to test their theories.

Accepted Answer

A) True 
 B)False

Question 9

Figure 2-14  Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two.
-Refer to Figure 2-14. What is the opportunity cost of moving from point R to point Q?

Accepted Answer

80 bushels...

Question 10

Where can an economy not produce?

Accepted Answer

A)   inside its production possibilities frontier
B)   on its production possibilities frontier
C)   outside its production possibilities frontier
D)   at the endpoints of its production possibilities frontierE) A) and D)
F) All of the above

Question 11

In the markets for the factors of production in the circular-flow diagram,

Accepted Answer

A)   households are sellers and firms are buyers.
B)   households are buyers and firms are sellers.
C)   households and firms are both buyers.
D)   households and firms are both sellers.E) B) and C)
F) C) and D)

Question 12

Good assumptions simplify a problem without substantially affecting the answer.

Accepted Answer

A) True 
 B)False

Question 13

Figure 2-6 
-Refer to Figure 2-6. If this economy moves from point F to point G, 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) C) and D)
F) B) and D)

Question 14

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 15

Macroeconomics is the study of

Accepted Answer

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

Question 16

With the resources it has, an economy can produce at any point on or outside the production possibilities frontier, but it cannot produce at points inside the frontier.

Accepted Answer

A) True 
 B)False

Question 17

Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> This diagram should duplicate the essen...

Question 18

Figure 2-2 
-Refer to Figure 2-2. If Box A of this circular-flow diagram represents firms, then which box represents households?

Accepted Answer

A)   Box B
B)   Box C
C)   Box D
D)   Any one of the other boxes (B, C, or 
D)   could represent households.E) A) and D)
F) A) and C)

Question 19

Figure 2-5 
-Refer to Figure 2-5. Inefficient production is represented by which point(s) ?

Accepted Answer

A)   A, B
B)   C
C)   C, D
D)   DE) B) and D)
F) C) and D)

Question 20

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

Accepted Answer

A)   amount of the other good that must be given up.
B)   market price of the additional amount produced.
C)   amount of resources that must be devoted to its production.
D)   number of dollars that must be spent to produce it.E) All of the above
F) A) and C)

Exam 2: Thinking Like an Economist

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

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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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With the resources it has, an economy can produce at any point on or outside the production possibilities frontier, but it cannot produce at points inside the frontier.

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Figure 2-5 -Refer to Figure 2-5. Inefficient production is represented by which point(s) ?

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In the markets for the factors of production in the circular-flow diagram,

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

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Which of these terms are used interchangeably?

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Using the outline below, draw a circular-flow diagram representing the interactions between households and firms in a simple economy. Explain briefly the various parts of the diagram.

Correct Answerverified This diagram should duplicate the essen...View AnswerShow Answer

When economists make normative statements, they are

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Figure 2-14 Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two. -Refer to Figure 2-14. What is the opportunity cost of moving from point R to point Q?

Correct Answerverified80 bushels...View AnswerShow Answer

Figure 2-7 -Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

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Macroeconomics is the study of

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Figure 2-6 -Refer to Figure 2-6. If this economy moves from point F to point G, then which of the following statements is correct?

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Figure 2-2 -Refer to Figure 2-2. If Box A of this circular-flow diagram represents firms, then which box represents households?

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Figure 2-9 Panel (a) Panel (b) -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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Where can an economy not produce?

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Economists speaking like scientists make

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Good assumptions simplify a problem without substantially affecting the answer.

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It is difficult for economists to make observations and develop theories, but it is easy for economists to run experiments to generate data to test their theories.

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The Council of Economic Advisers

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This diagram should duplicate the essen...
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80 bushels...
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