Question 1

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 2

When economists make

Accepted Answer

A)  positive statements, they are speaking not as scientists but as policy advisers.
B)  positive statements, they are speaking not as scientists but as forecasters.
C)  normative statements, they are speaking not as scientists but as policy advisers.
D)  normative statements, they are speaking not as policy advisers but as model-builders.E) None of the above
F) C) and D)

Question 3

The design of tax policy is one of the responsibilities of economists who work at the

Accepted Answer

A)  Council of Economic Advisers.
B)  Federal Reserve.
C)  Department of the Treasury.
D)  Congressional Budget Office.E) A) and B)
F) A) and D)

Question 4

Is the following a positive or normative statement? The United States government should mandate that every citizen purchases health insurance.

Accepted Answer

The answer of Is the following a positive or normative...

Question 5

In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

Accepted Answer

A) True 
 B)False

Question 6

A positive economic statement such as "Pollution taxes decrease the quantity of pollution firms generate"

Accepted Answer

A)  would likely be made by an economist acting as a policy adviser.
B)  would require values and data to be evaluated.
C)  would require data but not values to be evaluated.
D)  could not be evaluated by economists acting as scientists.E) A) and B)
F) B) and C)

Question 7

Economists sometimes give conflicting advice because

Accepted Answer

A)  graduate students in economics are encouraged to argue with each other.
B)  economists have different values and scientific judgment.
C)  economists acting as scientists do not like to agree with economists acting as policy advisers.
D)  economics is more of a belief system than a science.E) B) and C)
F) All of the above

Question 8

Which of the following is an example of a normative, as opposed to positive, statement?

Accepted Answer

A)  Universal health care would be good for U.S. citizens.
B)  An increase in the cigarette tax would cause a decrease in the number of smokers.
C)  A decrease in the minimum wage would decrease unemployment.
D)  A law requiring the federal government to balance its budget would increase economic growth.E) None of the above
F) B) and D)

Question 9

In the circular-flow diagram, firms produce

Accepted Answer

A)  goods and services using factors of production.
B)  output using inputs.
C)  factors of production using goods and services.
D)  Both (a)  and (b)  are correct.E) A) and D)
F) A) and C)

Question 10

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

Accepted Answer

A) True 
 B)False

Question 11

An example of a price that changes only infrequently is the price of

Accepted Answer

A)  stocks on the New York Stock Exchange.
B)  crude oil.
C)  residential real estate.
D)  magazines sold at newsstands.E) B) and D)
F) B) and C)

Question 12

Trade-offs are involved in most policy decisions.

Accepted Answer

A) True 
 B)False

Question 13

Figure 2-22 
-Refer to Figure 2-22. How are price and quantity related in this graph?

Accepted Answer

negatively...

Question 14

A macroeconomist - as opposed to a microeconomist - would study

Accepted Answer

A)  the effects of rent control on housing in New York City.
B)  the effects of foreign competition on the US auto industry.
C)  the effects of borrowing by the federal government.
D)  the effects of raising the gasoline tax on transit ridership.E) A) and B)
F) None of the above

Question 15

The ordered pair that represents the origin on a graph is

Accepted Answer

A)  (1, 1) .
B)  (0, 0) .
C)  (-1, -1) .
D)  ( ) ) E) All of the above
F) B) and D)

Question 16

Which markets are represented in the simple circular-flow diagram?

Accepted Answer

A)  markets for goods and services and markets for financial assets
B)  markets for factors of production and markets for financial assets
C)  markets for goods and services and markets for factors of production
D)  markets for goods and services and markets for imports and exportsE) A) and B)
F) C) and D)

Question 17

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Accepted Answer

A)  a controlled experiment that lead to the formulation of a scientific theory.
B)  being in the right place at the right time.
C)  an idea whose time had come.
D)  the interplay between observation and theory in science.E) A) and C)
F) C) and D)

Question 18

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

Accepted Answer

A) True 
 B)False

Question 19

Who would be more likely to study the effects of foreign competition on the accounting industry, a macroeconomist or a microeconomist?

Accepted Answer

The answer of Who would be more likely to study...

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.

Correct AnswerverifiedShow Answer

Which markets are represented in the simple circular-flow diagram?

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

Is the following a positive or normative statement? The United States government should mandate that every citizen purchases health insurance.

Correct AnswerverifiedShow Answer

Economists sometimes give conflicting advice because

Correct AnswerverifiedShow Answer

In the circular-flow diagram, firms produce

Correct AnswerverifiedShow Answer

Figure 2-22 -Refer to Figure 2-22. How are price and quantity related in this graph?

Correct Answerverifiednegatively...View AnswerShow Answer

Sir Isaac Newton's development of the theory of gravity after observing an apple fall from a tree is an example of

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Trade-offs are involved in most policy decisions.

Correct AnswerverifiedShow Answer

When economists make

Correct AnswerverifiedShow Answer

An example of a price that changes only infrequently is the price of

Correct AnswerverifiedShow Answer

Economists at the U.S. Department of Justice help enforce the nation's antitrust laws.

Correct AnswerverifiedShow Answer

The ordered pair that represents the origin on a graph is

Correct AnswerverifiedShow Answer

The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.

Correct AnswerverifiedShow Answer

Which of the following is an example of a normative, as opposed to positive, statement?

Correct AnswerverifiedShow Answer

A macroeconomist - as opposed to a microeconomist - would study

Correct AnswerverifiedShow Answer

A positive economic statement such as "Pollution taxes decrease the quantity of pollution firms generate"

Correct AnswerverifiedShow Answer

Who would be more likely to study the effects of foreign competition on the accounting industry, a macroeconomist or a microeconomist?

Correct AnswerverifiedShow Answer

The design of tax policy is one of the responsibilities of economists who work at the

Correct AnswerverifiedShow Answer

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negatively...
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