Ch 2 Micro

In which of the following cases is the assumption most reasonable? a. To address the benefits of trade, an economist assumes that there are two people and two goods. b. To address the impact of taxes on income distribution, an economist assumes that everyone earns the same income. c. To estimate the speed at which a beach ball falls, a physicist assumes that it falls in a vacuum. d. To address the impact of money growth on inflation, an economist assumes that money is strictly coins.

a

Points on the production possibilities frontier are a. efficient. b. inefficient. c. unattainable. d. normative. e. none of the above.

a

Suppose two economists are arguing about policies that deal with unemployment. One economist says, "The government could lower unemployment by one percentage point if it would just increase government spending by 50 billion dollars." The other economist responds, "That's ridiculous. If the government spent an additional 50 billion dollars, it would reduce unemployment by only one-tenth of 1 percent, and that effect would only be temporary!" These economists a. disagree because they have different scientific judgments. b. disagree because they have different values. c. really don't disagree at all. It just looks that way. d. do none of the above.

a

Which of the following statements regarding the circular-flow diagram is true? a. The factors of production are owned by households. b. If Susan works for IBM and receives a paycheck, the transaction takes place in the market for goods and services. c. If IBM sells a computer, the transaction takes place in the market for factors of production. d. The factors of production are owned by firms. e. None of the above is true.

a

Which of the following will not shift a country's production possibilities frontier outward? a. a reduction in unemployment b. an increase in the capital stock c. an advance in technology d. an increase in the labor force

a

In making which of the following statements is an economist acting more like a scientist? a. The unemployment rate should be reduced because unemployment robs individuals of their dignity. b. A reduction in unemployment benefits will reduce the unemployment rate. c. The rate of inflation should be reduced because it robs the elderly of their savings. d. The state should increase subsidies to universities because the future of our country depends on education.

b

Suppose two economists are arguing about policies that deal with unemployment. One economist says, "The government should fight unemployment because it is the greatest social evil." The other economist responds, "That's ridiculous. Inflation is the greatest social evil." These economists a. disagree because they have different scientific judgments. b. disagree because they have different values. c. really don't disagree at all. It just looks that way. d. do none of the above.

b

Which of the following statements is normative? a. Large government deficits cause an economy to grow more slowly. b. The unemployment rate should be lower. c. Printing too much money causes inflation. d. People work harder if the wage is higher.

b

Economic models are a. usually made of wood and plastic. b. created to duplicate reality. c. built with assumptions. d. useless if they are simple.

c

Positive statements are a. macroeconomic. b. statements of prescription that involve value judgments. c. statements of description that can be tested. d. microeconomic.

c

The scientific method requires that a. scientists use test tubes and have clean labs. b. scientists use precision equipment. c. scientists be objective. d. only correct theories are tested. e. only incorrect theories are tested.

c

Which of the following statements about microeconomics and macroeconomics is not true? a. Macroeconomics is concerned with economy-wide phenomena. b. Microeconomics and macroeconomics cannot be entirely separated. c. The study of very large industries is a topic within macroeconomics. d. Microeconomics is a building block for macroeconomics.

c

Economic growth is depicted by a. a shift in the production possibilities frontier inward. b. a movement from inside the curve toward the curve. c. a movement along a production possibilities frontier toward capital goods. d. a shift in the production possibilities frontier outward.

d

Which of the following is most likely to produce scientific evidence about a theory? a. a lawyer employed by General Motors addressing the impact of air bags on passenger safety b. an economist employed by the AFL/CIO doing research on the impact of trade restrictions on workers' wages c. a radio talk show host collecting data on how capital markets respond to taxation d. a tenured economist employed at a leading university analyzing the impact of bank regulations on rural lending

d

Which of the following is not a factor of production? a. land b. labor c. capital d. money e. All of the above are factors of production.

d