Question 1

In a certain economy, jam and bread are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more jam and more bread, relative to the quantities of those goods that are being produced now?

Accepted Answer

A)   Unemployed labor is put to work producing jam and bread.
B)   The economy puts its idle capital to work producing jam and bread.
C)   The economy experiences economic growth.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 2

Figure 2-2 
-Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

Accepted Answer

A)   flows of goods and services from households to firms.
B)   flows of inputs from households to firms.
C)   flows of rent payments paid to owners of land.
D)   flows of wages and salaries paid to workers.E) None of the above
F) A) and B)

Question 3

Figure 2-15 
-Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. When society moves from point A to point B,

Accepted Answer

A)   the opportunity cost is the same as when society moves from point B to point C.
B)   it is giving up cars to get sofas.
C)   the opportunity cost is increasing.
D)   it moves from an inefficient point to an efficient point.E) A) and C)
F) B) and D)

Question 4

Figure 2-5 
-Refer to Figure 2-5. The opportunity cost of obtaining 20 additional dryers by moving from point D to point A is

Accepted Answer

A)   0 washers.
B)   20 washers.
C)   40 washers.
D)   None of the above; the economy cannot move from point D to point A.E) A) and B)
F) A) and C)

Question 5

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

Accepted Answer

A)   One economist believes the North American Free Trade Agreement (NAFT
A)   has led to a loss of American jobs; another economist disputes this claim.
B)   One economist believes that when income taxes are cut, people will increase their spending; another economist believes that when income taxes are cut, people will increase their saving.
C)   One economist advises against increases in sales taxes because she thinks such increases are unfair to low- income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people.
D)   One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth.E) None of the above
F) A) and C)

Question 6

Figure 2-19
In the following graph the x-axis shows the number of times a commuter rail train stops at a station per hour and the y-axis shows the number of commuter rail passengers per hour.
Commuter Rail Passengers by Frequency of Service 
-Refer to Figure 2-19. A policymaker observes this graph and concludes that increasing the frequency of commuter rail service is a certain way to get more commuters to choose the commuter rail instead of driving their own cars. You warn the policymaker about making a reverse causality mistake with which of the following statements?

Accepted Answer

A)   Higher gas prices are causing more people to choose the commuter rail over driving.
B)   The service frequency was increased in response to an increase in the number of passengers per hour.
C)   There is a positive relationship between frequency of stops and number of passengers.
D)   None of the above is correct.E) None of the above
F) B) and C)

Question 7

Figure 2-8 
-Refer to Figure 2-8. Point K represents an outcome in which

Accepted Answer

A)   production is inefficient.
B)   some of the economy's resources are unemployed.
C)   the economy is using all of its resources to produce hammers.
D)   the economy is using all of its nails to produce hammers.E) A) and D)
F) None of the above

Question 8

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. The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is

Accepted Answer

The answer of Figure 2-14  Consider the production possibilities...

Question 9

Figure 2-15 
-Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. As the economy moves from point A to point D, is the opportunity cost of cars increasing, constant, or decreasing?

Accepted Answer

The answer of Figure 2-15 
-Refer to Figure 2-15. Consider...

Question 10

Evaluating normative statements involves values as well as facts.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 D)
F) A) and B)

Question 13

The slope of a horizontal line is infinite, and the slope of a vertical line is zero.

Accepted Answer

A) True 
 B)False

Question 14

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

Accepted Answer

A) True 
 B)False

Question 15

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Accepted Answer

A) True 
 B)False

Question 16

In the circular flow diagram, when Brian provides labor through the markets for factors of production to ABC Company, the flow of money he receives in exchange is called

Accepted Answer

The answer of In the circular flow diagram, when Brian...

Question 17

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements about models is correct?

Accepted Answer

A)   The more details a model includes, the better the model.
B)   Models assume away irrelevant details.
C)   Models cannot be used to explain how the economy functions.
D)   Models cannot be used to make predictions.E) B) and D)
F) All of the above

Question 19

Figure 2-3 
-Refer to Figure 2-3. What are two elements not included in this figure that could be included in a more complex model?

Accepted Answer

government...

Question 20

Positive statements are descriptive, while normative statements are prescriptive.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Correct Answer
verified

The slope of a horizontal line is infinite, and the slope of a vertical line is zero.

Correct Answer
verified

Figure 2-5 -Refer to Figure 2-5. The opportunity cost of obtaining 20 additional dryers by moving from point D to point A is

Correct Answer
verified

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Correct Answer
verified

Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. When society moves from point A to point B,

Correct Answer
verified

Figure 2-2 -Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

Correct Answer
verified

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. The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is

Correct Answer
verified

Which of the following statements about models is correct?

Correct Answer
verified

Positive statements are descriptive, while normative statements are prescriptive.

Correct Answer
verified

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

Correct Answer
verified

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 Answer
verified
This diagram should duplicate the essen...
View Answer

In the circular flow diagram, when Brian provides labor through the markets for factors of production to ABC Company, the flow of money he receives in exchange is called

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Figure 2-8 -Refer to Figure 2-8. Point K represents an outcome in which

Correct Answer
verified

Evaluating normative statements involves values as well as facts.

Correct Answer
verified

Figure 2-3 -Refer to Figure 2-3. What are two elements not included in this figure that could be included in a more complex model?

Correct Answer
verified
government...
View Answer

In a certain economy, jam and bread are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more jam and more bread, relative to the quantities of those goods that are being produced now?

Correct Answer
verified

Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. As the economy moves from point A to point D, is the opportunity cost of cars increasing, constant, or decreasing?

Correct Answer
verified

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

Correct Answer
verified

Exam 2: Thinking Like an Economist

Economists acting as scientists make positive statements, while economists acting as policy advisers make normative statements.

Correct AnswerverifiedShow Answer

The slope of a horizontal line is infinite, and the slope of a vertical line is zero.

Correct AnswerverifiedShow Answer

Figure 2-5 -Refer to Figure 2-5. The opportunity cost of obtaining 20 additional dryers by moving from point D to point A is

Correct AnswerverifiedShow Answer

The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations of policy proposals.

Correct AnswerverifiedShow Answer

Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. When society moves from point A to point B,

Correct AnswerverifiedShow Answer

Figure 2-2 -Refer to Figure 2-2. If the outer loop of this circular-flow diagram represents flows of dollars, then the inner loop includes

Correct AnswerverifiedShow Answer

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. The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is

Correct AnswerverifiedShow Answer

Which of the following statements about models is correct?

Correct AnswerverifiedShow Answer

Positive statements are descriptive, while normative statements are prescriptive.

Correct AnswerverifiedShow Answer

All scientific models, including economic models, simplify reality in order to improve our understanding of it.

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, when Brian provides labor through the markets for factors of production to ABC Company, the flow of money he receives in exchange is called

Correct AnswerverifiedShow 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

Correct AnswerverifiedShow Answer

Figure 2-8 -Refer to Figure 2-8. Point K represents an outcome in which

Correct AnswerverifiedShow Answer

Evaluating normative statements involves values as well as facts.

Correct AnswerverifiedShow Answer

Figure 2-3 -Refer to Figure 2-3. What are two elements not included in this figure that could be included in a more complex model?

Correct Answerverifiedgovernment...View AnswerShow Answer

In a certain economy, jam and bread are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more jam and more bread, relative to the quantities of those goods that are being produced now?

Correct AnswerverifiedShow Answer

Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. As the economy moves from point A to point D, is the opportunity cost of cars increasing, constant, or decreasing?

Correct AnswerverifiedShow Answer

Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?

Correct AnswerverifiedShow Answer

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This diagram should duplicate the essen...
View Answer

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government...
View Answer

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Correct Answer
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