Question 1

Figure 2-7 
-Refer to Figure 2-7. This economy cannot produce at which point(s) ?

Accepted Answer

A)   L, M
B)   N, O, P, Q
C)   N, O, P
D)   QE) B) and D)
F) All of the above

Question 2

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)   A ceiling on rents reduces the quantity and quality of housing available.
B)   Fiscal policy has a significant stimulative impact on a less than fully employed economy.
C)   The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged.
D)   The United States should implement universal health care for its citizens.E) A) and B)
F) All of the above

Question 3

The slope of a line is equal to

Accepted Answer

A)   the change in the value of x divided by the change in the value of y.
B)   the change in the value of y divided by the change in the value of x.
C)   the horizontal distance divided by the vertical distance.
D)   the value of y divided by the value of x.E) B) and C)
F) All of the above

Question 4

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Accepted Answer

A) True 
 B)False

Question 5

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 C)
F) A) and C)

Question 6

Table 2-5
 
-Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in the table, the production possibilities frontier is

Accepted Answer

A)   bowed outward indicating increasing opportunity costs.
B)   bowed outward indicating decreasing opportunity costs.
C)   a straight line indicating constant opportunity costs.
D)   bowed inward indicating increasing opportunity costs.E) C) and D)
F) All of the above

Question 7

The opportunity cost of something is what you give up to get it.

Accepted Answer

A) True 
 B)False

Question 8

In the simple circular-flow diagram, households

Accepted Answer

A)   are the only decision makers.
B)   own the factors of production.
C)   are buyers of inputs.
D)   consume only some of the goods and services that firms produce.E) All of the above
F) C) and D)

Question 9

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) A) and B)
F) A) and C)

Question 10

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) B) and C)
F) A) and B)

Question 11

When two variables have a positive correlation,

Accepted Answer

A)   they tend to move in opposite directions.
B)   they tend to move in the same direction.
C)   one variable will move while the other remains constant.
D)   the variables' values are never negative.E) A) and C)
F) B) and C)

Question 12

Figure 2-6 
-Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point F is

Accepted Answer

A)   zero.
B)   40 blankets.
C)   120 pillows.
D)   360 blankets.E) None of the above
F) A) and C)

Question 13

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Accepted Answer

A) True 
 B)False

Question 14

Figure 2-1 
-Refer to Figure 2-1. Which arrow represents the flow of spending by households?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) All of the above
F) A) and B)

Question 15

Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports of certain goods.

Accepted Answer

A) True 
 B)False

Question 16

On a bowed production possibilities frontier, as you move down along the curve

Accepted Answer

A)   more of one good must be given up to receive one unit of the other good.
B)   the available production technology does not change.
C)   the opportunity cost increases.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 17

The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

Accepted Answer

A) True 
 B)False

Question 18

If a line passes through the points (20,5) and (10,10), then the slope of the line is 1/2.

Accepted Answer

A) True 
 B)False

Question 19

Figure 2-6 
-Refer to Figure 2-6. If this economy devotes one-half of its available resources to the production of blankets and the other half to the production of pillows, it could produce

Accepted Answer

A)   120 pillows and 320 blankets.
B)   180 pillows and 180 blankets.
C)   240 pillows and 200 blankets.
D)   We would have to know the details of this economy's technology in order to determine this.E) A) and D)
F) B) and D)

Question 20

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) A) and B)
F) B) and C)

Exam 2: Thinking Like an Economist

The Federal Reserve

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Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports of certain goods.

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Figure 2-1 -Refer to Figure 2-1. Which arrow represents the flow of spending by households?

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The opportunity cost of something is what you give up to get it.

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

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Figure 2-6 -Refer to Figure 2-6. If this economy devotes one-half of its available resources to the production of blankets and the other half to the production of pillows, it could produce

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In the simple circular-flow diagram, households

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The slope of a line is equal to

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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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When two variables have a positive correlation,

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On a bowed production possibilities frontier, as you move down along the curve

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Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

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Economists speaking like scientists make

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If a line passes through the points (20,5) and (10,10), then the slope of the line is 1/2.

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Figure 2-6 -Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point F is

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Figure 2-7 -Refer to Figure 2-7. This economy cannot produce at which point(s) ?

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Table 2-5 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in the table, the production possibilities frontier is

Correct AnswerverifiedShow Answer

The production possibilities frontier is a graph that shows the various combinations of outputs that the economy can possibly produce given the available factors of production and the available production technology.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

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