Question 1

A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not an example of a graph of a single variable?

Accepted Answer

A)   a pie chart
B)   a bar graph
C)   a time-series graph
D)   a scatterplotE) B) and D)
F) None of the above

Question 3

Points outside the production possibilities frontier represent infeasible levels of production.

Accepted Answer

A) True 
 B)False

Question 4

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 D)
F) B) and C)

Question 5

An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

Accepted Answer

A) True 
 B)False

Question 6

In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often impractical to

Accepted Answer

A)   make use of theory and observation.
B)   rely upon the scientific method.
C)   conduct laboratory experiments.
D)   find articles or books that were written before 1900.E) A) and B)
F) All of the above

Question 7

Since 1946, the president of the United States has received guidance from a group comprised of three members and a staff of a few dozen economists known as the

Accepted Answer

Council of...

Question 8

Policies such as rent control and trade barriers persist

Accepted Answer

A)   because economists are about evenly divided as to the merits of those policies.
B)   because almost all economists agree that those policies have no discernible economic effects.
C)   because almost all economists agree that those policies are desirable.
D)   despite the fact that almost all economists agree that those policies are undesirable.E) B) and D)
F) B) and C)

Question 9

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

Question 10

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)   Gasoline prices ought to be lower than they are now.
B)   The federal government should raise taxes on wealthy people.
C)   The social security system is a good system and it deserves to be preserved as it is.
D)   All of the above are normative statements.E) B) and C)
F) C) and D)

Question 12

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) B) and D)
F) A) and B)

Question 13

Macroeconomics is the study of economy-wide phenomena.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not correct?

Accepted Answer

A)   When developing economic theories, graphs offer a way to visually express ideas that might be less clear if described with equations or words.
B)   Graphs are one way of expressing the relationships among variables.
C)   When studying the relationship between two economic variables, graphs allow economists to draw indisputable conclusions about causes and effects.
D)   When analyzing economic data, graphs provide a powerful way of finding and interpreting patterns.E) A) and D)
F) C) and D)

Question 15

When a production possibilities frontier is bowed outward, the opportunity cost of the second good in terms of the first good increases as more of the second good is produced.

Accepted Answer

A) True 
 B)False

Question 16

Use the following Figure to answer the question : 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 B to point Z?

Accepted Answer

A)   a change in the price of a restaurant meal
B)   a change in the number of restaurant meals demanded
C)   a change in income
D)   Both a and b are correct.E) B) and C)
F) C) and D)

Question 17

Use the following Figure to answer the question : Figure 2-11 
-Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates

Accepted Answer

A)   simultaneous technological advances in the book and DVD industries.
B)   a reallocation of resources away from the production of DVDs and toward the production of books.
C)   economic growth.
D)   All of the above are correct.E) C) and D)
F) A) and D)

Question 18

Use the following Figure to answer the question : Figure 2-7 
-Refer to Figure 2-7. This economy cannot produce at which points) ?

Accepted Answer

A)   L, M
B)   N, O, P, Q
C)   N, O, P
D)   QE) All of the above
F) C) and D)

Question 19

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Accepted Answer

A)   Harry Truman
B)   George Bernard Shaw
C)   John Maynard Keynes
D)   Ronald ReaganE) A) and B)
F) A) and C)

Question 20

When two variables have a positive correlation,

Accepted Answer

A)   when the x-variable increases, the y-variable decreases.
B)   when the x-variable decreases, the y-variable increases.
C)   when the x-variable increases, the y-variable increases.
D)   More than one of the above is correct.E) C) and D)
F) All of the above

Exam 2: Thinking Like an Economist

When a production possibilities frontier is bowed outward, the opportunity cost of the second good in terms of the first good increases as more of the second good is produced.

Correct AnswerverifiedShow Answer

Macroeconomics is the study of economy-wide phenomena.

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : 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 B to point Z?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

When two variables have a positive correlation,

Correct AnswerverifiedShow Answer

"If all economists were laid end to end, they would not reach a conclusion." Who made this whimsical observation?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow 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

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

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : Figure 2-7 -Refer to Figure 2-7. This economy cannot produce at which points) ?

Correct AnswerverifiedShow Answer

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

Correct AnswerverifiedShow Answer

Policies such as rent control and trade barriers persist

Correct AnswerverifiedShow Answer

Which of the following is not an example of a graph of a single variable?

Correct AnswerverifiedShow Answer

The Economic Report of the President

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : Figure 2-11 -Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates

Correct AnswerverifiedShow Answer

A technological advance in the production of the first good increases the opportunity cost of the first good in terms of the second good.

Correct AnswerverifiedShow Answer

Since 1946, the president of the United States has received guidance from a group comprised of three members and a staff of a few dozen economists known as the

Correct AnswerverifiedCouncil of...View AnswerShow Answer

An outcome is said to be efficient if an economy is conserving the largest possible quantity of its scarce resources while still meeting the basic needs of society.

Correct AnswerverifiedShow Answer

Points outside the production possibilities frontier represent infeasible levels of production.

Correct AnswerverifiedShow Answer

In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often impractical to

Correct AnswerverifiedShow Answer

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Council of...
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