Question 1

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Accepted Answer

A)   For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics.
B)   Microeconomists study markets for small products, whereas macroeconomists study markets for large products.
C)   Microeconomics and macroeconomics are distinct from one another, yet they are closely related.
D)   Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies.E) A) and D)
F) B) and C)

Question 2

Economists work both inside and outside the administrative branch of the U.S. government.

Accepted Answer

A) True 
 B)False

Question 3

Economists use some familiar terms in specialized ways

Accepted Answer

A)   to make the subject sound more complex than it is.
B)   because every respectable field of study has its own language.
C)   to provide a new and useful way of thinking about the world.
D)   because it was too difficult to come up with new terms.E) C) and D)
F) B) and D)

Question 4

Which of the following is an example of a capital input?

Accepted Answer

A)   a computer
B)   a share of stock
C)   an hour of a worker's time
D)   $50,000E) All of the above
F) B) and C)

Question 5

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

Accepted Answer

A)   is rooted in the principle that people face tradeoffs.
B)   indicates that economists recognize that there are opportunity costs associated with policy decisions.
C)   confirms that economists are not suited to be presidential advisers.
D)   More than one of the above is correct.E) A) and D)
F) None of the above

Question 6

Figure 2-7 
-Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

Accepted Answer

A)   0 engines and 40 tvs.
B)   10 engines and 35 tvs.
C)   40 engines and 0 tvs.
D)   40 engines and 40 tvs.E) All of the above
F) C) and D)

Question 7

Who would be more likely to study the effects of government spending on the unemployment rate, a macroeconomist or a microeconomist?

Accepted Answer

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

Question 8

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 9

The institution that sets the nation's monetary policy is called the

Accepted Answer

The answer of The institution that sets the nation's monetary...

Question 10

Economists view positive statements as

Accepted Answer

A)   affirmative, justifying existing economic policy.
B)   optimistic, putting the best possible interpretation on things.
C)   descriptive, making a claim about how the world is.
D)   prescriptive, making a claim about how the world ought to be.E) A) and B)
F) A) and C)

Question 11

When an economy is operating inside its production possibilities frontier, we know that

Accepted Answer

A)   there are unused resources or inefficiencies in the economy.
B)   all of the economy's resources are fully employed.
C)   economic growth would have to occur in order for the economy to move to a point on the frontier.
D)   in order to produce more of one good, the economy would have to give up some of the other good.E) B) and C)
F) C) and D)

Question 12

Analysis of data on workers and those looking for work is conducted by economists at the

Accepted Answer

A)   Office of Management and Budget.
B)   Department of Labor.
C)   Congressional Budget Office.
D)   Department of the Treasury.E) B) and C)
F) None of the above

Question 13

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Accepted Answer

A)   opinions and education.
B)   opinions and values.
C)   scientific judgments and education.
D)   scientific judgments and values.E) A) and B)
F) All of the above

Question 14

Figure 2-3 
-Refer to Figure 2-3. Which of the following is an activity undertaken by the actors in rectangle 2?

Accepted Answer

A)   produce and sell goods and services
B)   hire and use factors of production
C)   own and sell factors of production
D)   exchange goods and services between firms and householdsE) A) and D)
F) A) and B)

Question 15

In the circular-flow diagram, in the markets for

Accepted Answer

A)   goods and services, households and firms are both sellers.
B)   goods and services, households are buyers and firms are sellers.
C)   the factors of production, households are buyers and firms are sellers.
D)   the factors of production, households and firms are both buyers.E) B) and D)
F) All of the above

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)   The United States should not restrict employers from outsourcing work to foreign countries.
B)   The United States should withdraw from the North American Free Trade Agreement NAFT
A)  .
C)   The United States should eliminate agricultural subsidies.
D)   Local and state governments should eliminate subsidies to professional sports franchises.E) A) and B)
F) None of the above

Question 17

In the circular-flow diagram,

Accepted Answer

A)   factors of production flow from government to firms.
B)   goods and services flow from households to firms.
C)   income paid to the factors of production flows from firms to households.
D)   spending on goods and services flows from firms to households.E) All of the above
F) C) and D)

Question 18

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

negatively...

Question 20

The essence of science is

Accepted Answer

A)   the laboratory experiment.
B)   the scientific method.
C)   the study of nature, but not the study of society.
D)   All of the above are correct.E) All of the above
F) A) and B)

Exam 2: Thinking Like an Economist

Figure 2-3 -Refer to Figure 2-3. Which of the following is an activity undertaken by the actors in rectangle 2?

Correct AnswerverifiedShow Answer

Analysis of data on workers and those looking for work is conducted by economists at the

Correct AnswerverifiedShow Answer

The institution that sets the nation's monetary policy is called the

Correct AnswerverifiedShow Answer

The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in

Correct AnswerverifiedShow Answer

President Truman once said he wanted to find a one-armed economist because when he asked his economists for advice, they always answered, "On the one hand, ... On the other hand, ..." Truman's observation that economists' advice is not always straightforward

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

Who would be more likely to study the effects of government spending on the unemployment rate, a macroeconomist or a microeconomist?

Correct AnswerverifiedShow Answer

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

The essence of science is

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Economists work both inside and outside the administrative branch of the U.S. government.

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Figure 2-7 -Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce

Correct AnswerverifiedShow Answer

Which of the following statements best captures the relationship between microeconomics and macroeconomics?

Correct AnswerverifiedShow Answer

In the circular-flow diagram,

Correct AnswerverifiedShow Answer

Which of the following is an example of a capital input?

Correct AnswerverifiedShow Answer

Economists use some familiar terms in specialized ways

Correct AnswerverifiedShow Answer

In the circular-flow diagram, in the markets for

Correct AnswerverifiedShow Answer

When an economy is operating inside its production possibilities frontier, we know that

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Economists view positive statements as

Correct AnswerverifiedShow Answer

Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.

Correct AnswerverifiedShow Answer

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negatively...
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goods and ...
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