Question 1

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

Question 2

Table 2-2
The following table contains some production possibilities for an economy for a given year: 
-Refer to Table 2-2. If the production possibilities frontier is bowed outward, then "?" could be

Accepted Answer

A)   6000.
B)   5500.
C)   5000.
D)   4500.E) All of the above
F) None of the above

Question 3

Between the two ordered pairs (3, 6)  and (7, 18) , the slope is

Accepted Answer

A)   1/3
B)   -3.
C)   3.
D)   -1/3.E) A) and B)
F) B) and C)

Question 4

Figure 2-13 
-Refer to Figure 2-13. Which of the following statements is true about point G for this economy?

Accepted Answer

A)   Point G is currently unattainable.
B)   Point G is efficient.
C)   At point G, more cakes are produced than cookies.
D)   There is unemployment at point G.E) None of the above
F) A) and B)

Question 5

Figure 2-10
Panel (a)  Panel (b)   
-Refer to Figure 2-10, Panel (a) . Production is

Accepted Answer

A)   possible at points V, W, Y, and Z, but efficient only at points V, W, and Z.
B)   possible at points V, W, Y, and Z, but efficient only at point Y.
C)   possible at points U, V, W, and Z, but efficient only at points V, W, and Z.
D)   possible at points U, V, W, and Z, but efficient only at point U.E) A) and B)
F) A) and C)

Question 6

In the simple circular flow diagram, the flow of money from the markets for goods and services to the firms is called

Accepted Answer

A)   spending.
B)   revenue.
C)   income.
D)   wages, rent, and profit.E) All of the above
F) B) and C)

Question 7

What type of statement is a prescriptive statement about how the world ought to be?

Accepted Answer

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

Question 8

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 D)
F) None of the above

Question 9

Figure 2-5 
-Refer to Figure 2-5. Suppose this economy is producing at point D. Which of the following statements would best explain this situation?

Accepted Answer

A)   The economy has insufficient resources to produce at a more desirable point.
B)   The economy's available technology prevents it from producing at a more desirable point.
C)   There is widespread unemployment in the economy.
D)   Any of the above statements would be a legitimate explanation for this situation.E) A) and D)
F) All of the above

Question 10

Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

Accepted Answer

A) True 
 B)False

Question 11

Figure 2-15 
-Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. The opportunity cost of each car is

Accepted Answer

A)   the slope of the production possibilities frontier.
B)   3/2 sofas.
C)   2/3 of a sofa.
D)   Both a and b are correct.E) A) and B)
F) B) and D)

Question 12

Table 2-5 
-Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of an increase in the production of wheat from 700 bushels to 1300 bushels?

Accepted Answer

A)   800 bushels of corn
B)   600 bushels of corn
C)   400 bushels of corn
D)   400 bushels of wheatE) A) and B)
F) All of the above

Question 13

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 C)
F) All of the above

Question 14

Figure 2-9
Panel (a)  Panel (b)   
-Refer to Figure 2-9, Panel (a) . The opportunity cost of moving from point M to point L is

Accepted Answer

A)   2 donuts.
B)   2 donuts and 4 cups of coffee.
C)   4 donuts.
D)   4 cups of coffee.E) A) and B)
F) B) and D)

Question 15

Figure 2-22 
-Refer to Figure 2-22. Is a move from point A to point R considered a shift of the curve or a movement along the curve?

Accepted Answer

The answer of Figure 2-22 
-Refer to Figure 2-22. Is...

Question 16

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

Question 17

You know an economist has crossed the line from policy adviser to scientist when he or she

Accepted Answer

A)   claims that the problem at hand is widely misunderstood by non-economists.
B)   makes positive statements.
C)   talks about values.
D)   makes a claim about how the world should be.E) None of the above
F) All of the above

Question 18

Points inside the production possibilities frontier represent feasible levels of production.

Accepted Answer

A) True 
 B)False

Question 19

Figure 2-14  Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels) , or a combination of the two.
-Refer to Figure 2-14. If this society moves from point U to point V,

Accepted Answer

A)   it gives up 40 bushels of apples to get 80 sweaters.
B)   it gives up 140 bushels of apples to get 80 sweaters.
C)   it gives up 80 sweaters to get 140 bushels of apples.
D)   it gives up 80 sweaters to get 40 bushels of apples.E) B) and C)
F) B) and D)

Question 20

Because it is difficult for economists to use experiments to generate data, they generally must

Accepted Answer

A)   do without data.
B)   substitute assumptions for data when data are unavailable.
C)   rely upon hypothetical data that were previously concocted by other economists.
D)   use whatever data the world gives them.E) C) and D)
F) None of the above

Exam 2: Thinking Like an Economist

Figure 2-10 Panel (a) Panel (b) -Refer to Figure 2-10, Panel (a) . Production is

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Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. The opportunity cost of each car is

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Which of the following is not correct?

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Figure 2-5 -Refer to Figure 2-5. Suppose this economy is producing at point D. Which of the following statements would best explain this situation?

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In the simple circular flow diagram, the flow of money from the markets for goods and services to the firms is called

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Figure 2-14 Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels) , or a combination of the two. -Refer to Figure 2-14. If this society moves from point U to point V,

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Because it is difficult for economists to use experiments to generate data, they generally must

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Figure 2-9 Panel (a) Panel (b) -Refer to Figure 2-9, Panel (a) . The opportunity cost of moving from point M to point L is

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Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.

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

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You know an economist has crossed the line from policy adviser to scientist when he or she

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Between the two ordered pairs (3, 6) and (7, 18) , the slope is

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A production possibilities frontier can shift outward if

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Figure 2-22 -Refer to Figure 2-22. Is a move from point A to point R considered a shift of the curve or a movement along the curve?

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Points inside the production possibilities frontier represent feasible levels of production.

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Figure 2-13 -Refer to Figure 2-13. Which of the following statements is true about point G for this economy?

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What type of statement is a prescriptive statement about how the world ought to be?

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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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Table 2-5 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of an increase in the production of wheat from 700 bushels to 1300 bushels?

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Table 2-2 The following table contains some production possibilities for an economy for a given year: -Refer to Table 2-2. If the production possibilities frontier is bowed outward, then "?" could be

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