Question 1

Which of the following statements is correct?

Accepted Answer

A)   Few economic models incorporate assumptions.
B)   Different economic models employ different sets of assumptions.
C)   Good economic models attempt to mimic reality as closely as possible.
D)   Economic models, to be accepted, must be tested by conducting experiments.E) A) and B)
F) A) and C)

Question 2

Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Accepted Answer

A)   Indiadesh decreased unemployment.
B)   Indiadesh experienced an improvement in textile-making technology.
C)   Indiadesh experienced an improvement in computer-making technology.
D)   Indiadesh experienced a reduction in resources.E) All of the above
F) A) and C)

Question 3

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because

Accepted Answer

A)   economists have not yet convinced the general public that the policies are undesirable.
B)   economists engage in positive analysis, not normative analysis.
C)   economists have values that are different from the values of most non-economists.
D)   economists' theories are not easily confirmed or refuted in laboratory analysis.E) None of the above
F) B) and D)

Question 4

In the markets for the factors of production in the circular-flow diagram,

Accepted Answer

A)   households are sellers and firms are buyers.
B)   households are buyers and firms are sellers.
C)   households and firms are both buyers.
D)   households and firms are both sellers.E) A) and B)
F) A) and C)

Question 5

Figure 2-8 
-Refer to Figure 2-8. Efficient production is represented by which points) ?

Accepted Answer

A)   J
B)   J, K
C)   J, K, L
D)   J, K, ME) All of the above
F) B) and D)

Question 6

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Accepted Answer

A) True 
 B)False

Question 7

On a bowed production possibilities frontier, as you move down along the curve

Accepted Answer

A)   more of one good must be given up to receive one unit of the other good.
B)   the available production technology does not change.
C)   the opportunity cost increases.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 8

The country of Gerance produces two goods, cars and wine. Last year, it produced 1,000 cars and 15,000 cases of wine. This year, it produced 1,300 cars and 20,000 cases of wine. Given no other information, which of the following events could not explain this change?

Accepted Answer

A)   Gerance experienced a reduction in unemployment.
B)   Gerance experienced an improvement in car-making technology.
C)   Gerance acquired more resources.
D)   Any of these events could explain the change.E) None of the above
F) B) and C)

Question 9

Albert Einstein once made the following observation about science:

Accepted Answer

A)   "The whole of science is nothing more than the refinement of everyday thinking."
B)   "The whole of science is nothing more than an interesting intellectual exercise."
C)   "In order to understand science, one must rely solely on abstraction."
D)   "In order to understand science, one must transcend everyday thinking."E) B) and C)
F) C) and D)

Question 10

Figure 2-18
Relationship between Price and Restaurant Meals 
-Refer to Figure 2-18. Which of the following could result in a movement from point A to point B?

Accepted Answer

A)   a change in income
B)   a change in the cost of producing a restaurant meal
C)   a change in the price of restaurant meals
D)   a change in the price of moviesE) A) and C)
F) A) and B)

Question 11

Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use an)

Accepted Answer

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

Question 12

The Council of Economic Advisers

Accepted Answer

A)   was created in 1776 and consists of three members and a staff of several dozen economists.
B)   was created in 1776 and consists of thirty members and a staff of a dozen economists.
C)   was created in 1946 and consists of three members and a staff of several dozen economists.
D)   was created in 1946 and consists of thirty members and a staff of a dozen economists.E) A) and C)
F) A) and B)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Figure 2-6 
-Refer to Figure 2-6. A movement from point H to point K could be caused by

Accepted Answer

A)   unemployment.
B)   a decrease in society's preference for pillows.
C)   fewer resources available for production of pillows.
D)   All of the above are correct.E) None of the above
F) B) and C)

Question 15

Which of the following allows you to provide information about the relationship between two variables?

Accepted Answer

A)   coordinate system.
B)   pie chart
C)   bar graph
D)   time-series graphE) A) and B)
F) All of the above

Question 16

Almost all economists agree that local and state governments should

Accepted Answer

A)   eliminate subsidies to professional sports franchises.
B)   increase subsidies to professional sports franchises.
C)   copy economic policy from Washington, D.C.
D)   prevent companies from outsourcing work.E) A) and D)
F) A) and C)

Question 17

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

Question 18

Economists often find it worthwhile to make assumptions that do not necessarily describe the real world.

Accepted Answer

A) True 
 B)False

Question 19

An economic outcome is said to be efficient if the economy is

Accepted Answer

A)   using all of the scarce resources it has available.
B)   conserving on resources, rather than using all available resources.
C)   getting all it can get from the scarce resources it has available.
D)   able to produce more than what is currently being produced without additional resources.E) B) and D)
F) B) and C)

Question 20

Among economic models, the circular-flow diagram is unusual in that it

Accepted Answer

A)   drastically simplifies the real world.
B)   features more than one type of market.
C)   features flows of dollars.
D)   does not involve mathematics.E) A) and B)
F) A) and C)

Exam 2: Thinking Like an Economist

Which of the following allows you to provide information about the relationship between two variables?

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On a bowed production possibilities frontier, as you move down along the curve

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Figure 2-8 -Refer to Figure 2-8. Efficient production is represented by which points) ?

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Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use an)

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An economic outcome is said to be efficient if the economy is

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Which of the following statements is correct?

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In the markets for the factors of production in the circular-flow diagram,

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Almost all economists agree that local and state governments should

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Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100 computers. Given no further information, which of the following events could explain this change?

Correct AnswerverifiedShow Answer

Among economic models, the circular-flow diagram is unusual in that it

Correct AnswerverifiedShow Answer

Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. Which of the following could result in a movement from point A to point B?

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The Council of Economic Advisers

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Albert Einstein once made the following observation about science:

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Unemployment would cause an economy to

Correct AnswerverifiedShow Answer

Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because

Correct AnswerverifiedShow Answer

Economists often find it worthwhile to make assumptions that do not necessarily describe the real world.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The country of Gerance produces two goods, cars and wine. Last year, it produced 1,000 cars and 15,000 cases of wine. This year, it produced 1,300 cars and 20,000 cases of wine. Given no other information, which of the following events could not explain this change?

Correct AnswerverifiedShow Answer

The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.

Correct AnswerverifiedShow Answer

Figure 2-6 -Refer to Figure 2-6. A movement from point H to point K could be caused by

Correct AnswerverifiedShow Answer

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