Question 1

The Economic Report of the President

Accepted Answer

A)   discusses recent developments in the economy and presents analysis of current policy issues.
B)   is written by the Council of Economic Advisers.
C)   is the responsibility of the economists at the Office of Management and Budget.
D)   Both a and b are correct.E) A) and C)
F) A) and D)

Question 2

Economists face an obstacle that many other scientists do not face. What is that obstacle?

Accepted Answer

A)   It is often difficult to formulate theories in economics.
B)   It is often impractical to perform experiments in economics.
C)   Economics cannot be addressed objectively; it must be addressed subjectively.
D)   The scientific method cannot be applied to the study of economics.E) None of the above
F) A) and C)

Question 3

Figure 2-7 
-Refer to Figure 2-7. What is the opportunity cost of moving from point L to point M?

Accepted Answer

A)   zero
B)   15 tvs
C)   20 engines and 15 tvs
D)   20 enginesE) C) and D)
F) B) and C)

Question 4

A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an example of a normative, as opposed to positive, statement?

Accepted Answer

A)   Following the most recent recession, the economy is recovering at a slower than usual pace.
B)   To stimulate the economy during the most recent recession, the federal government increased spending.
C)   In response to the most recent recession, the federal government extended the duration of unemployment benefits.
D)   The federal government's responses to the most recent recession were insufficient.E) All of the above
F) B) and D)

Question 6

"Prices rise when the quantity of money rises rapidly" is an example of a

Accepted Answer

A)   negative economic statement.
B)   positive economic statement.
C)   normative economic statement.
D)   statement that contradicts one of the basic principles of economics.E) A) and C)
F) All of the above

Question 7

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

Accepted Answer

A)   the effect of foreign direct investment on economic growth
B)   the effect of a sales tax on the cigarette industry
C)   the effect of an investment tax credit on the economy's capital stock
D)   the effect of a war on government spendingE) A) and C)
F) A) and D)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Who said, "The whole of science is nothing more than the refinement of everyday thinking"?

Accepted Answer

A)   Isaac Newton
B)   Albert Einstein
C)   Adam Smith
D)   Benjamin FranklinE) A) and B)
F) B) and C)

Question 10

Figure 2-4 
-Refer to Figure 2-4. This economy has the ability to produce at which point(s) ?

Accepted Answer

A)   Q, R, T, U
B)   R, T, U
C)   R, U
D)   TE) A) and B)
F) A) and C)

Question 11

For economists, substitutes for laboratory experiments often come in the form of

Accepted Answer

A)   natural experiments offered by history.
B)   untested theories.
C)   "rules of thumb" and other such conveniences.
D)   reliance upon the wisdom of elders in the economics profession.E) All of the above
F) None of the above

Question 12

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 B)
F) B) and D)

Question 13

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) B) and C)
F) None of the above

Question 14

Economists at which of the following offices help formulate spending plans and regulatory policies?

Accepted Answer

A)   Office of Management and Budget
B)   Department of the Treasury
C)   Congressional Budget Office
D)   The Federal ReserveE) C) and D)
F) B) and D)

Question 15

An ordered pair is

Accepted Answer

A)   the process of checking calculations twice before placing them on a graph.
B)   two numbers that can be represented by a single point on a graph.
C)   two numbers that are represented by two points on a graph.
D)   two points on a graph that are of equal distance from the origin.E) All of the above
F) A) and D)

Question 16

A model can be accurately described as a

Accepted Answer

A)   theoretical abstraction with very little value.
B)   device that is useful only to the people who created it.
C)   realistic and carefully constructed theory.
D)   simplification of reality.E) None of the above
F) A) and B)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is an example of a normative, as opposed to positive, statement?

Accepted Answer

A)   If the price of a product decreases, people's willingness to buy that product will increase.
B)   Reducing tax rates on the wealthy would benefit the nation.
C)   If the national saving rate were to increase, so would the rate of economic growth.
D)   The elimination of trade restrictions would increase an economy's standard of living.E) C) and D)
F) None of the above

Question 19

In the markets for goods and services in the circular-flow diagram,

Accepted Answer

A)   households provide firms with savings for investment.
B)   households provide firms with labor, land, and capital.
C)   firms provide households with output.
D)   firms provide households with profit.E) B) and D)
F) A) and D)

Question 20

Figure 2-2 
-Refer to Figure 2-2. Boxes A and B of this circular-flow diagram represent

Accepted Answer

A)   firms and households.
B)   households and government.
C)   the markets for goods and services and the markets for financial assets.
D)   the markets for goods and the markets for services.E) All of the above
F) A) and B)

Exam 2: Thinking Like an Economist

A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.

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Economists face an obstacle that many other scientists do not face. What is that obstacle?

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

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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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A model can be accurately described as a

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For economists, substitutes for laboratory experiments often come in the form of

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Who said, "The whole of science is nothing more than the refinement of everyday thinking"?

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The Economic Report of the President

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"Prices rise when the quantity of money rises rapidly" is an example of a

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Figure 2-7 -Refer to Figure 2-7. What is the opportunity cost of moving from point L to point M?

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Figure 2-4 -Refer to Figure 2-4. This economy has the ability to produce at which point(s) ?

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

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Economists at which of the following offices help formulate spending plans and regulatory policies?

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In the markets for goods and services in the circular-flow diagram,

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An ordered pair is

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Figure 2-2 -Refer to Figure 2-2. Boxes A and B of this circular-flow diagram represent

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Which of the following is an example of a normative, as opposed to positive, statement?

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Economists hold many positions advising the president and Congress including

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Which of the following is an example of a normative, as opposed to positive, statement?

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Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

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