Question 1

Figure 2-15
Relationship between Price and Cups of Coffee 
-Refer to Figure 2-15.The slope of the line containing points Y and Z is

Accepted Answer

A)   -0.5.
B)   -1.
C)   -2.
D)   -4.E) A) and C)
F) C) and D)

Question 2

Figure 2-14 
-Refer to Figure 2-14.Points A,B,and D represent efficient outcomes for this economy.

Accepted Answer

A) True 
 B)False

Question 3

An example of a price that changes only infrequently is the price of

Accepted Answer

A)   stocks on the New York Stock Exchange.
B)   crude oil.
C)   residential real estate.
D)   magazines sold at newsstands.E) A) and B)
F) B) and D)

Question 4

Suppose that someone makes the argument that because empty alcohol containers are found at many accidents,the containers cause accidents.This would be an example of

Accepted Answer

A)   sound logic.
B)   reverse causality.
C)   omitted variables.
D)   bias.E) B) and D)
F) None of the above

Question 5

The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good.

Accepted Answer

A) True 
 B)False

Question 6

Figure 2-11 
-Refer to Figure 2-11.Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

Accepted Answer

A)   a decrease in unemployment
B)   a technological advance in the consumer goods industries
C)   a general technological advance
D)   an increase in the availability of capital-producing resourcesE) B) and C)
F) A) and B)

Question 7

Almost all economists agree that rent control

Accepted Answer

A)   has no effect on the rental income of landlords.
B)   allows the market for housing to work more efficiently.
C)   adversely affects the availability and quality of housing.
D)   is a very inexpensive way to help the most needy members of society.E) A) and C)
F) None of the above

Question 8

Points inside the production possibilities frontier represent feasible levels of production.

Accepted Answer

A) True 
 B)False

Question 9

Figure 2-15
Relationship between Price and Cups of Coffee 
-Refer to Figure 2-15.The slope of the line containing points A and B is

Accepted Answer

A)   -1/2.
B)   -2.
C)   1/2.
D)   2.E) C) and D)
F) None of the above

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Figure 2-7 
-Refer to Figure 2-7.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 C)
F) A) and B)

Question 12

Which of the following concepts cannot be illustrated by the production possibilities frontier?

Accepted Answer

A)   efficiency
B)   opportunity cost
C)   equality
D)   trade-offsE) A) and D)
F) B) and C)

Question 13

Economists,like mathematicians,physicists,and biologists,

Accepted Answer

A)   make use of the scientific method.
B)   try to address their subject with a scientist's objectivity.
C)   devise theories,collect data,and then analyze these data in an attempt to verify or refute their theories.
D)   All of the above are correct.E) C) and D)
F) B) and D)

Question 14

The Council of Economic Advisers' Economic Report of the President discusses recent developments in the economy and presents the council's analysis of current policy issues.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The president of the United States receives tax policy advice from economists in the

Accepted Answer

A)   Federal Reserve.
B)   Department of Justice.
C)   Department of the Treasury.
D)   Congressional Budget Office.E) A) and B)
F) None of the above

Question 17

The circular-flow diagram is a

Accepted Answer

A)   visual model of the economy.
B)   visual model of the relationships among money,prices,and businesses.
C)   model that shows the effects of government on the economy.
D)   mathematical model of how the economy works.E) A) and C)
F) B) and C)

Question 18

Figure 2-6 
-Refer to Figure 2-6.Efficient production is represented by which point(s) ?

Accepted Answer

A)   A,B
B)   A,B,C,F,G
C)   C,F,G
D)   DE) All of the above
F) B) and D)

Question 19

The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered along the line.

Accepted Answer

A) True 
 B)False

Question 20

Normative statements are

Accepted Answer

A)   prescriptive,whereas positive statements are descriptive.
B)   descriptive,whereas positive statements are prescriptive.
C)   backward-looking,whereas positive statements are forward-looking.
D)   forward-looking,whereas positive statements are backward-looking.E) A) and D)
F) A) and C)

Exam 2: Thinking Like an Economist

The Council of Economic Advisers' Economic Report of the President discusses recent developments in the economy and presents the council's analysis of current policy issues.

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Figure 2-14 -Refer to Figure 2-14.Points A,B,and D represent efficient outcomes for this economy.

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

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Suppose that someone makes the argument that because empty alcohol containers are found at many accidents,the containers cause accidents.This would be an example of

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Economists,like mathematicians,physicists,and biologists,

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Which of the following concepts cannot be illustrated by the production possibilities frontier?

Correct AnswerverifiedShow Answer

Normative statements are

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The president of the United States receives tax policy advice from economists in the

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Figure 2-11 -Refer to Figure 2-11.Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

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The production possibilities frontier shows the opportunity cost of one good as measured in terms of the other good.

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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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An example of a price that changes only infrequently is the price of

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Figure 2-15 Relationship between Price and Cups of Coffee -Refer to Figure 2-15.The slope of the line containing points A and B is

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Figure 2-15 Relationship between Price and Cups of Coffee -Refer to Figure 2-15.The slope of the line containing points Y and Z is

Correct AnswerverifiedShow Answer

Almost all economists agree that rent control

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The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered along the line.

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Figure 2-7 -Refer to Figure 2-7.Point K represents an outcome in which

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The circular-flow diagram is a

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Points inside the production possibilities frontier represent feasible levels of production.

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Figure 2-6 -Refer to Figure 2-6.Efficient production is represented by which point(s) ?

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