Question 1

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science,it is a subject at which few excel?

Accepted Answer

A)   Most people who study economics are not very bright.
B)   Good economists must possess a rare combination of gifts.
C)   Economics is quite boring; hence, people tend to lose interest in it before mastering it.
D)   Good thinkers become frustrated with economics because it does not make use of the scientific method.E) A) and D)
F) All of the above

Question 2

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

Question 3

Normative statements are

Accepted Answer

A)   descriptive.
B)   claims about how the world should be.
C)   claims about how the world is.
D)   made by economists speaking as scientists.E) All of the above
F) C) and D)

Question 4

Figure 2-1
 
-Refer to Figure 2-1.Sonia completes her first week of employment working as a hairdresser at a salon.On Friday of that week,she receives her first paycheck.To which of the arrows does this transaction directly contribute?

Accepted Answer

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

Question 5

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Accepted Answer

A)   is useless, since the real world has many countries trading many goods.
B)   can be useful only in situations involving two countries and two goods.
C)   can be useful in the classroom, but is useless in the real world.
D)   can be useful in helping economists understand the complex world of international trade involving many countries and many goods.E) A) and D)
F) All of the above

Question 6

In the circular-flow diagram,another name for goods and services produced by firms is

Accepted Answer

A)   factors of production.
B)   output.
C)   inputs.
D)   resources.E) A) and D)
F) B) and D)

Question 7

Figure 2-6
 
-Refer to Figure 2-6.If this economy moved from point C to point F,then

Accepted Answer

A)   it still would not be producing efficiently.
B)   there would be no gain in either candles or clocks.
C)   it would be producing more candles and more clocks than at point C.
D)   It is not possible for this economy to move from point C to point F without additional resources.E) C) and D)
F) A) and C)

Question 8

Evaluating normative statements involves values as well as facts.

Accepted Answer

A) True 
 B)False

Question 9

A production possibilities frontier can shift outward if

Accepted Answer

A)   government increases the amount of money in the economy.
B)   there is a technological improvement.
C)   resources are shifted from the production of one good to the production of the other good.
D)   the economy abandons inefficient production methods in favor of efficient production methods.E) A) and B)
F) A) and C)

Question 10

Figure 2-13
 
-Refer to Figure 2-13.The graph shown is known as a

Accepted Answer

A)   time-series graph.
B)   bar graph.
C)   scatterplot.
D)   pie chart.E) A) and B)
F) A) and C)

Question 11

While the production possibilities frontier is a useful model,it cannot be used to illustrate economic growth.

Accepted Answer

A) True 
 B)False

Question 12

In the circular-flow diagram,firms own the factors of production and use them to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Figure 2-8

-Refer to Figure 2-8,Panel (a) .Production at point K is

Accepted Answer

A)   possible and efficient.
B)   possible but inefficient.
C)   impossible but efficient.
D)   impossible and inefficient.E) B) and C)
F) A) and D)

Question 15

In the simple circular-flow diagram,

Accepted Answer

A)   households own the factors of production.
B)   households buy all the goods and services that firms produce.
C)   land, labor, and capital flow from households to firms.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 16

Figure 2-3
 
-Refer to Figure 2-3.At which point is this economy producing its maximum possible quantity of pans?

Accepted Answer

A)   J
B)   L
C)   M
D)   NE) All of the above
F) A) and C)

Question 17

Economists use some familiar terms in specialized ways

Accepted Answer

A)   to make the subject sound more complex than it is.
B)   because every respectable field of study has its own language.
C)   to provide a new and useful way of thinking about the world.
D)   because it was too difficult to come up with new terms.E) B) and C)
F) A) and D)

Question 18

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 19

Which types of models are built with assumptions?

Accepted Answer

A)   economic models, but not models in other disciplines such as physics and biology
B)   economic models as well as models in other disciplines such as physics and biology
C)   models that are built for teaching purposes but not for research purposes
D)   bad modelsE) C) and D)
F) A) and B)

Question 20

Figure 2-1
 
-Refer to Figure 2-1.Which arrow represents the flow of income payments?

Accepted Answer

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

Exam 2: Thinking Like an Economist.

Figure 2-1 -Refer to Figure 2-1.Sonia completes her first week of employment working as a hairdresser at a salon.On Friday of that week,she receives her first paycheck.To which of the arrows does this transaction directly contribute?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An economic theory about international trade that is based on the assumption that there are only two countries trading two goods

Correct AnswerverifiedShow Answer

Normative statements are

Correct AnswerverifiedShow Answer

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

In the circular-flow diagram,another name for goods and services produced by firms is

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

In the circular-flow diagram,firms own the factors of production and use them to produce goods and services.

Correct AnswerverifiedShow Answer

Economists use some familiar terms in specialized ways

Correct AnswerverifiedShow Answer

A production possibilities frontier can shift outward if

Correct AnswerverifiedShow Answer

How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science,it is a subject at which few excel?

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8,Panel (a) .Production at point K is

Correct AnswerverifiedShow Answer

Figure 2-13 -Refer to Figure 2-13.The graph shown is known as a

Correct AnswerverifiedShow Answer

Figure 2-6 -Refer to Figure 2-6.If this economy moved from point C to point F,then

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Figure 2-3 -Refer to Figure 2-3.At which point is this economy producing its maximum possible quantity of pans?

Correct AnswerverifiedShow Answer

Evaluating normative statements involves values as well as facts.

Correct AnswerverifiedShow Answer

In the simple circular-flow diagram,

Correct AnswerverifiedShow Answer

Figure 2-1 -Refer to Figure 2-1.Which arrow represents the flow of income payments?

Correct AnswerverifiedShow Answer

While the production possibilities frontier is a useful model,it cannot be used to illustrate economic growth.

Correct AnswerverifiedShow Answer

Which types of models are built with assumptions?

Correct AnswerverifiedShow Answer

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This diagram should duplicate the essen...
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