Question 1

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A)   households and firms are both buyers.
B)   households and firms are both sellers.
C)   households are buyers and firms are sellers.
D)   households are sellers and firms are buyers.E) None of the above
F) All of the above

Question 2

In the circular-flow diagram, factors of production are the goods and services produced by firms.

Accepted Answer

A) True 
 B)False

Question 3

Positive statements are descriptive, while normative statements are prescriptive.

Accepted Answer

A) True 
 B)False

Question 4

Unemployment would cause an economy to

Accepted Answer

A)   produce inside its production possibilities frontier.
B)   produce on its production possibilities frontier.
C)   produce outside its production possibilities frontier.
D)   experience an inward shift of its production possibilities frontier.E) A) and B)
F) B) and C)

Question 5

Figure 2-6
 
-Refer to Figure 2-6. If this economy devotes all of its resources to the production of clocks, then it will produce

Accepted Answer

A)   0 clocks and 35 candles.
B)   10 clocks and 25 candles.
C)   16 clocks and 0 candles.
D)   16 clocks and 35 candles.E) B) and C)
F) A) and D)

Question 6

In the circular-flow diagram, the two types of markets in which households and firms interact are the markets for goods and services and the markets for factors of production.

Accepted Answer

A) True 
 B)False

Question 7

One way to characterize the difference between positive statements and normative statements is as follows:

Accepted Answer

A)   Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future.
B)   Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be.
C)   Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation.
D)   Economists outside of government tend to make normative statements, whereas government-employed economists tend to make positive statements.E) B) and C)
F) A) and D)

Question 8

In the circular-flow diagram, firms consume all the goods and services that they produce.

Accepted Answer

A) True 
 B)False

Question 9

It is possible for an economy to increase its production of both goods if the economy

Accepted Answer

A)   moves downward and to the right along its production possibilities frontier and the frontier is bowed outward.
B)   moves upward and to the left along its production possibilities frontier and the frontier is bowed outward.
C)   moves in either direction along its production possibilities frontier and the frontier is a straight line.
D)   moves from a situation of inefficient production to a situation of efficient production.E) A) and B)
F) A) and C)

Question 10

Figure 2-14
 
-Refer to Figure 2-14. Point B represents an inefficient outcome for this economy.

Accepted Answer

A) True 
 B)False

Question 11

Economists view normative statements as

Accepted Answer

A)   prescriptive, making a claim about how the world ought to be.
B)   descriptive, making a claim about how the world is.
C)   statements about the normal condition of the world.
D)   pessimistic, putting the worst possible interpretation on things.E) B) and C)
F) A) and D)

Question 12

Economists face an obstacle that many other scientists do not face. What is that obstacle?

Accepted Answer

A)   It is often difficult to formulate theories in economics.
B)   It is often difficult and sometimes impossible to perform experiments in economics.
C)   Economics cannot be addressed objectively; it must be addressed subjectively.
D)   The scientific method cannot be applied to the study of economics.E) C) and D)
F) B) and D)

Question 13

The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not correct?

Accepted Answer

A)   The slope of a line will be a small positive number for a fairly flat upward-sloping line.
B)   The slope of a line will be a large positive number for a steep upward-sloping line.
C)   The slope of a line will be a negative number for a downward-sloping line.
D)   The slope of a line will be infinite for a horizontal line.E) A) and B)
F) A) and C)

Question 15

The scientific method is the dispassionate development and testing of theories about how the world works.

Accepted Answer

A) True 
 B)False

Question 16

When a variable that is not named on either axis of a graph changes, we read the change as a movement along the curve.

Accepted Answer

A) True 
 B)False

Question 17

Macroeconomics is the study of

Accepted Answer

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

Question 18

According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

Accepted Answer

A) True 
 B)False

Question 19

A production possibilities frontier will be bowed outward if some of the economy's resources are better suited to producing one good than another.

Accepted Answer

A) True 
 B)False

Question 20

Figure 2-14
 
-Refer to Figure 2-14. Points B and C represent infeasible outcomes for this economy.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Economists view normative statements as

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When a variable that is not named on either axis of a graph changes, we read the change as a movement along the curve.

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Positive statements are descriptive, while normative statements are prescriptive.

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In the circular-flow diagram, the two types of markets in which households and firms interact are the markets for goods and services and the markets for factors of production.

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A production possibilities frontier will be bowed outward if some of the economy's resources are better suited to producing one good than another.

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Which of the following is not correct?

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In the markets for goods and services in the circular-flow diagram,

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Unemployment would cause an economy to

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The effects of borrowing by the federal government would be studied by a microeconomist rather than a macroeconomist.

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Figure 2-6 -Refer to Figure 2-6. If this economy devotes all of its resources to the production of clocks, then it will produce

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Macroeconomics is the study of

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One way to characterize the difference between positive statements and normative statements is as follows:

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Figure 2-14 -Refer to Figure 2-14. Point B represents an inefficient outcome for this economy.

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Economists face an obstacle that many other scientists do not face. What is that obstacle?

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It is possible for an economy to increase its production of both goods if the economy

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In the circular-flow diagram, firms consume all the goods and services that they produce.

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The scientific method is the dispassionate development and testing of theories about how the world works.

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Figure 2-14 -Refer to Figure 2-14. Points B and C represent infeasible outcomes for this economy.

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According to John Maynard Keynes, an economist must possess a rare combination of skills including being a mathematician, historian, statesman, and philosopher.

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In the circular-flow diagram, factors of production are the goods and services produced by firms.

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