Question 1

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

Question 2

Figure 2-3 
-Refer to Figure 2-3. What does the arrow going from oval A to rectangle 2 represent in the figure?

Accepted Answer

goods and ...

Question 3

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 B)

Question 4

Which of the following is an example of using the scientific method with a natural experiment?

Accepted Answer

A)   measuring how long it takes a marble to fall from a ten story building
B)   comparing plant growth with and without a soil additive
C)   tracking the price of oil when a war in the Middle East interrupts the flow of crude oil
D)   observing the reaction when two chemicals are mixed togetherE) C) and D)
F) B) and C)

Question 5

In conducting their research, economists often substitute historical events and historical episodes for

Accepted Answer

A)   theories and observations.
B)   laboratory experiments.
C)   models.
D)   assumptions.E) A) and D)
F) B) and C)

Question 6

Which of the following statements applies to economics, as well as to other sciences such as physics?

Accepted Answer

A)   Experiments are considered valid only when they are conducted in a laboratory.
B)   Good theories do not need to be tested.
C)   Real-world observations often lead to theories.
D)   Economics, as well as other sciences, is concerned primarily with abstract concepts.E) A) and B)
F) A) and C)

Question 7

In the markets for the factors of production in the circular-flow diagram, households are buyers and firms are sellers.

Accepted Answer

A) True 
 B)False

Question 8

Economic models are built with

Accepted Answer

A)   recommendations concerning public policies.
B)   facts about the legal system.
C)   assumptions.
D)   statistical forecasts.E) B) and C)
F) A) and D)

Question 9

Just like models constructed in other areas of science, economic models

Accepted Answer

A)   incorporate assumptions that contradict reality.
B)   incorporate all details of the real world.
C)   complicate reality.
D)   avoid the use of diagrams and equations.E) A) and D)
F) C) and D)

Question 10

Economic models

Accepted Answer

A)   are constructed to mirror reality as closely as possible, and in this respect economic models are no different from other scientific models.
B)   are constructed to mirror reality as closely as possible, and in this respect economic models are very different from other scientific models.
C)   are simplifications of reality, and in this respect economic models are no different from other scientific models.
D)   are simplifications of reality, and in this respect economic models are very different from other scientific models.E) B) and D)
F) B) and C)

Question 11

Economists hold many positions advising the president and Congress including

Accepted Answer

A)   being a member of the Council of Economic Advisers.
B)   helping to enforce antitrust laws at the Department of Justice.
C)   conducting research at the Congressional Budget Office.
D)   All of these are possible positions that economists hold.E) All of the above
F) B) and D)

Question 12

What type of statement is a descriptive statement about how the world is?

Accepted Answer

The answer of What type of statement is a descriptive...

Question 13

Economists make assumptions to

Accepted Answer

A)   mimic the methodologies employed by other scientists.
B)   minimize the number of experiments that yield no useful datb.
C)   minimize the likelihood that some aspect of the problem at hand is being overlooked.
D)   focus their thinking on the essence of the problem at hand.E) C) and D)
F) A) and B)

Question 14

Figure 2-3 
-Refer to Figure 2-3. What is the name of the model depicted in the figure?

Accepted Answer

The answer of Figure 2-3 
-Refer to Figure 2-3. What...

Question 15

The slope of a fairly flat upward-sloping line will be a

Accepted Answer

A)   small positive number.
B)   large positive number.
C)   small negative number.
D)   large negative number.E) B) and D)
F) C) and D)

Question 16

Figure 2-2 
-Refer to Figure 2-2. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then

Accepted Answer

A)   households are represented by Box A.
B)   firms are represented by Box C.
C)   firms are represented by Box A.
D)   firms are sellers in Box B.E) All of the above
F) B) and C)

Question 17

Figure 2-7 
-Refer to Figure 2-7. Inefficient production is represented by 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 18

Almost all economists agree that rent control

Accepted Answer

A)   has no effect on the rental income of landlords.
B)   allows the market for housing to work more efficiently.
C)   adversely affects the availability and quality of housing.
D)   is a very inexpensive way to help the most needy members of society.E) All of the above
F) A) and D)

Question 19

The y-coordinate of an ordered pair specifies the

Accepted Answer

A)   diagonal location of the point.
B)   vertical location of the point.
C)   horizontal location of the point.
D)   quadrant location in which the point is located.E) B) and C)
F) A) and D)

Question 20

In the circular-flow diagram,

Accepted Answer

A)   taxes flow from households to firms, and transfer payments flow from firms to households.
B)   income payments flow from firms to households, and sales revenue flows from households to firms.
C)   resources flow from firms to households, and goods and services flow from households to firms.
D)   inputs and outputs flow in the same direction as the flow of dollars, from firms to households.E) None of the above
F) A) and D)

Exam 2: Thinking Like an Economist

Economists hold many positions advising the president and Congress including

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Figure 2-2 -Refer to Figure 2-2. If the owners of land, labor, and capital are represented by Box B of this circular-flow diagram, then

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In the circular-flow diagram, firms produce

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Economic models are built with

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Figure 2-7 -Refer to Figure 2-7. Inefficient production is represented by which point(s) ?

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Almost all economists agree that rent control

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Figure 2-3 -Refer to Figure 2-3. What does the arrow going from oval A to rectangle 2 represent in the figure?

Correct Answerverifiedgoods and ...View AnswerShow Answer

Economic models

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The y-coordinate of an ordered pair specifies the

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In the markets for the factors of production in the circular-flow diagram, households are buyers and firms are sellers.

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Just like models constructed in other areas of science, economic models

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Which of the following is an example of using the scientific method with a natural experiment?

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In conducting their research, economists often substitute historical events and historical episodes for

Correct AnswerverifiedShow Answer

The slope of a fairly flat upward-sloping line will be a

Correct AnswerverifiedShow Answer

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

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Figure 2-3 -Refer to Figure 2-3. What is the name of the model depicted in the figure?

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What type of statement is a descriptive statement about how the world is?

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Which of the following statements applies to economics, as well as to other sciences such as physics?

Correct AnswerverifiedShow Answer

Economists make assumptions to

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In the circular-flow diagram,

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goods and ...
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