Macroeconomics quiz 2

Which of these statements about economic models is correct? A. all of the above are correct B. for, economists, economic models provide insights about the world C. economic models are built with assumptions D. economic models are often composed of equations and diagrams

A. all of the above are correct

which of the following is an example of a positive, as opposed to a normative, statement? A. the federal reserve bank should increase rates in response to higher-than-expected inflation in the economy B. the unemployment rate last year was lower than any other year in the last century C. congress should agree on lower government spending for the next fiscal year D. the federal government should decrease coverage of unemployment benefits to stimulate the economy out of the recession

B. the unemployment rate last year was lower than any other year in the last century

Joe and Fred are economists. Joe thinks that the wealthiest 10% of the US population should be taxed a rate higher than the rest of society because they can better afford it. Fred thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Joe and Fred A. disagree about the validity of a positive theory. B. must both be incorrect because tax policy is never that simple. C. none of the above is correct D. have different normative views about tax policy.

D. have different normative views about tax policy.

in the circular-flow diagram, which of the following is NOT a factor of production A. land B. entrepreneurial ability C. labor D. money

D. money

In economics, capital refers to

buildings and machines used in the production process

The nation's antitrust laws are enforced by economists at the Department of

justice

Economists speaking like policy advisers make

normative statements

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

positive economic statement

economists speaking like scientists make

positive statements

when economist make normative statements

they are speaking not as scientists but as policy advisers