Question 1

The opportunity cost of something is what you give up to get it.

Accepted Answer

A) True 
 B)False

Question 2

In the ordered pair (20, 30) , 20 is the

Accepted Answer

A)  the x-coordinate.
B)  the horizontal location of the point.
C)  the y-coordinate.
D)  Both a and b are correct.

Question 3

Figure 2-16 
-Refer to Figure 2-16. Cups of coffee per day and the hours that someone can go without sleep appear to have

Accepted Answer

A)  a positive correlation.
B)  a negative correlation.
C)  a random correlation.
D)  no correlation.

Question 4

Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

Accepted Answer

A) True 
 B)False

Question 5

Evaluating normative statements involves values as well as facts.

Accepted Answer

A) True 
 B)False

Question 6

In the circular-flow diagram, which of the following items represents a payment for a factor of production?

Accepted Answer

A)  interest
B)  capital
C)  spending by households on goods
D)  spending by households on services

Question 7

In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?

Accepted Answer

A)  goods and services
B)  dollars paid to land, labor, and capital
C)  dollars spent on goods and services
D)  wages, rent, and profit

Question 8

Figure 2-16 
-Refer to Figure 2-16. The graph shown is known as a

Accepted Answer

A)  time-series graph.
B)  bar graph.
C)  scatterplot.
D)  pie chart.

Question 9

Figure 2-1 
-Refer to Figure 2-1. Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

Accepted Answer

A)  A only
B)  A and B
C)  C only
D)  C and D

Question 10

The ordered pair that represents the origin on a graph is

Accepted Answer

A)  (1, 1) .
B)  (0, 0) .
C)  (-1, -1) .
D)  (  ) .

Question 11

The scientific method is applicable to studying

Accepted Answer

A)  natural sciences, but not social sciences.
B)  social sciences, but not natural sciences.
C)  both natural sciences and social sciences.
D)  None of the above is correct.

Question 12

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.

Question 13

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 14

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Accepted Answer

A)  have no questions but hundreds of answers.
B)  have 100 questions and 3,000 answers.
C)  have 1,000 questions but no answers.
D)  never produce a winner.

Question 15

Figure 2-17 
-Refer to Figure 2-17. The slope of the curve between points A and B is

Accepted Answer

A)  -5
B)  -1/5
C)  1/5
D)  5

Question 16

When two variables have a positive correlation,

Accepted Answer

A)  they tend to move in opposite directions.
B)  they tend to move in the same direction.
C)  one variable will move while the other remains constant.
D)  the variables' values are never negative.

Question 17

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

Accepted Answer

A)  The growth rate of the economy last year was higher than any other year in the last decade.
B)  The federal government reduced spending in the last quarter of the fiscal year.
C)  The Federal Reserve Bank adjusted interest rates in response to the lower-than-expected growth rate of the economy.
D)  The federal government should decrease unemployment benefits to stimulate the economy out of the recession.

Question 18

The first number in any ordered pair is

Accepted Answer

A)  the x-coordinate.
B)  the y-coordinate.
C)  the vertical location of the point.
D)  the slope.

Question 19

Table 2-3
Production Possibilities for Footville 
-Refer to Table 2-3. Which of the following statements is correct?

Accepted Answer

A)  The opportunity cost of an additional 200 shoes is constant at 200 socks.
B)  The opportunity cost of an additional 200 shoes is constant at 300 socks.
C)  Footville's production possibilities frontier is a straight, downward-sloping line.
D)  The opportunity cost of an additional 200 shoes increases as more socks are produced.

Question 20

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

Accepted Answer

A) True 
 B)False

Exam 2: Thinking Like an Economist

President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would

Correct AnswerverifiedShow Answer

The opportunity cost of something is what you give up to get it.

Correct AnswerverifiedShow Answer

The first number in any ordered pair is

Correct AnswerverifiedShow Answer

Evaluating normative statements involves values as well as facts.

Correct AnswerverifiedShow Answer

The scientific method is applicable to studying

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

The ordered pair that represents the origin on a graph is

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

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Figure 2-1 -Refer to Figure 2-1. Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

Correct AnswerverifiedShow Answer

In the ordered pair (20, 30) , 20 is the

Correct AnswerverifiedShow Answer

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

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When two variables have a positive correlation,

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Figure 2-17 -Refer to Figure 2-17. The slope of the curve between points A and B is

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Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.

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Figure 2-16 -Refer to Figure 2-16. Cups of coffee per day and the hours that someone can go without sleep appear to have

Correct AnswerverifiedShow Answer

In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?

Correct AnswerverifiedShow Answer

In the circular-flow diagram, which of the following items represents a payment for a factor of production?

Correct AnswerverifiedShow Answer

The circular flow model is not used anymore because it fails to perfectly replicate real world situations.

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Table 2-3 Production Possibilities for Footville -Refer to Table 2-3. Which of the following statements is correct?

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Figure 2-16 -Refer to Figure 2-16. The graph shown is known as a

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