Question 1

Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

Accepted Answer

A)  President Truman received input from so many economists that he only wanted one view from each.
B)  President Truman thought economists should analyze policies but not make or enforce them.
C)  Economists understand that most policy decisions involve trade-offs so they are likely to present multiple views of policies.
D)  A one-armed economist would conduct only positive analysis and no normative analysis.E) A) and B)
F) A) and C)

Question 2

The essence of science is

Accepted Answer

A)  the laboratory experiment.
B)  the scientific method.
C)  the study of nature, but not the study of society.
D)  All of the above are correct.E) B) and C)
F) A) and D)

Question 3

If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

Accepted Answer

A) True 
 B)False

Question 4

Economists at which administrative department help formulate spending plans and regulatory policies?

Accepted Answer

Office of ...

Question 5

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 D)
F) A) and C)

Question 6

Figure 2-5 
-Refer to Figure 2-5. The opportunity cost of obtaining 20 additional dryers by moving from point D to point A is

Accepted Answer

A)  0 washers.
B)  20 washers.
C)  40 washers.
D)  None of the above; the economy cannot move from point D to point A.E) A) and D)
F) None of the above

Question 7

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

Accepted Answer

A)  A, B
B)  A, B, D
C)  A, B, C
D)  CE) C) and D)
F) None of the above

Question 8

Figure 2-18
Relationship between Price and Restaurant Meals 
-Refer to Figure 2-18. In the ordered pair (8, 24)

Accepted Answer

A)  the x-coordinate is 8 and the y-coordinate is 24.
B)  the x-coordinate is 24 and the y-coordinate is 8.
C)  the numbers tell the location of the origin.
D)  the 8 represents the price and the 24 represents the number of restaurant meals.E) None of the above
F) A) and D)

Question 9

With respect to how economists study the economy, which of the following statements is most accurate?

Accepted Answer

A)  Economists study the past, but they do not try to predict the future.
B)  Economists use "rules of thumb" to predict the future.
C)  Economists devise theories, collect data, and analyze the data to test the theories.
D)  Economists use controlled experiments in much the same way that biologists and physicists do.E) B) and D)
F) B) and C)

Question 10

Congress relies on economists at the Congressional Budget Office to

Accepted Answer

A)  enforce the nation's antitrust laws.
B)  set the nation's monetary policy.
C)  provide evidence that incumbent members of Congress are performing well in their jobs.
D)  provide independent evaluations of policy proposals.E) A) and D)
F) C) and D)

Question 11

In the ordered pair (3, 6) , 3 is the

Accepted Answer

A)  x-coordinate.
B)  y-coordinate.
C)  origin.
D)  slope.E) B) and D)
F) C) and D)

Question 12

Two variables that have a positive correlation move in the same direction.

Accepted Answer

A) True 
 B)False

Question 13

The art in scientific thinking is

Accepted Answer

A)  finding the right problem to study.
B)  deciding which assumptions to make.
C)  the ability to make an abstract subject easy to understand.
D)  not something in which economists have to be skilled.E) A) and B)
F) A) and C)

Question 14

According to the circular-flow diagram, if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn,

Accepted Answer

A)  the $50 represents a cost of production for Denny's firm.
B)  the $50 represents wages, rent, and profit to Denny's firm.
C)  Denny acts as a firm who interacted in the markets for factors of production with Mrs. Pendleton.
D)  Denny acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton.E) None of the above
F) A) and B)

Question 15

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) All of the above
F) B) and C)

Question 16

A demand curve displaying the relationship between the price of cars and the quantity demanded of cars should have a slope that is

Accepted Answer

A)  less than 0.
B)  between zero and 1.
C)  between one and infinity.
D)  undefined.E) A) and B)
F) C) and D)

Question 17

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Accepted Answer

A) True 
 B)False

Question 18

In the circular flow diagram, who owns the factors of production and consumes all of the goods and services produced?

Accepted Answer

The answer of In the circular flow diagram, who owns...

Question 19

In the simple circular-flow diagram, the participants in the economy are

Accepted Answer

A)  firms and government.
B)  households and firms.
C)  households and government.
D)  households, firms, and government.E) B) and D)
F) B) and C)

Question 20

Factors of production are

Accepted Answer

A)  used to produce goods and services.
B)  also called output.
C)  abundant in most economies.
D)  assumed to be owned by firms in the circular-flow diagram.E) A) and D)
F) A) and C)

Exam 2: Thinking Like an Economist

Congress relies on economists at the Congressional Budget Office to

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The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

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Economists at which administrative department help formulate spending plans and regulatory policies?

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In the circular flow diagram, who owns the factors of production and consumes all of the goods and services produced?

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The essence of science is

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Two variables that have a positive correlation move in the same direction.

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Figure 2-5 -Refer to Figure 2-5. The opportunity cost of obtaining 20 additional dryers by moving from point D to point A is

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In the simple circular-flow diagram, the participants in the economy are

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When economists make normative statements, they are

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If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.

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A demand curve displaying the relationship between the price of cars and the quantity demanded of cars should have a slope that is

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According to the circular-flow diagram, if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn,

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Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. In the ordered pair (8, 24)

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Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

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With respect to how economists study the economy, which of the following statements is most accurate?

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In the ordered pair (3, 6) , 3 is the

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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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Factors of production are

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The art in scientific thinking is

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

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Office of ...
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