chapter 2- eco 2023

Microeconomics is the study of a. how the economy as a whole works. b. how money affects the economy. c. how individual households and firms make decisions. d. how government affects the economy.

c. how individual households and firms make decisions.

Albert Einstein once made the following observation about science: a. "The whole of science is nothing more than the refinement of everyday thinking." b. "In order to understand science, one must transcend everyday thinking." c. "The whole of science is nothing more than an interesting intellectual exercise." d. "In order to understand science, one must rely solely on abstraction."

a. "The whole of science is nothing more than the refinement of everyday thinking."

Which of the following statements about economic models is correct? a. Because economic models omit many details, they allow us to see what is truly important. b. Economic models seldom incorporate equations or diagrams. c. Economic models are useful, but they should not be used for the purpose of improving public policies. d. Economic models are built to mirror reality exactly.

a. Because economic models omit many details, they allow us to see what is truly important.

According to the circular flow diagram, if Suzy is a worker who delivers flowers for Happy Day Flower Company, she participates a. in the markets for factors of production exchanging labor for income. b. in the markets for factors of production exchanging flowers for revenue. c. in the markets for goods and services exchanging flowers for wages, rent, and proft. d. in the markets for goods and services exchanging labor for income.

a. in the markets for factors of production exchanging labor for income.

The circular-flow diagram is a a. visual model of the economy. b. mathematical model of how the economy works. c. model that shows the effects of government on the economy. d. visual model of the relationships among money, prices, and businesses.

a. visual model of the economy.

Which of the following statements is correct about the roles of economists? a. Economists are best viewed as policy advisers. b. In trying to explain the world, economists are scientists; in trying to improve the world, they are policy advisers. c. Economists are best viewed as scientists. d. In trying to explain the world, economists are policy advisers; in trying to improve the world, they are scientists.

b. In trying to explain the world, economists are scientists; in trying to improve the world, they are policy advisers.

A relatively flat demand curve indicates that a. quantity demanded will adjust only slightly to a price change. b. quantity demanded will adjust significantly to a price change. c. the change in quantity demanded will exactly equal a change in price. d. quantity demanded will not adjust to a price change.

b. quantity demanded will adjust significantly to a price change.

The slope of a fairly flat upward-sloping line will be a a. large negative number. b. small positive number. c. small negative number. d. large positive number.

b. small positive number.

Some, but not all, government economists are employed within the administrative branch of government. Which of the following government agencies employs economists outside of the administrative branch? a. the Department of the Treasury b. the Congressional Budget Office c. the Council of Economic Advisers d. the Department of Labor

b. the Congressional Budget Office

Economists build economic models by a. generating data. b. reviewing statistical forecasts. c. making assumptions. d. conducting controlled experiments in a lab.

c. making assumptions.

A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions. Which of the following is not one of those propositions? a. The United States should not restrict employers from outsourcing work to foreign countries. b. Local and state governments should eliminate subsidies to professional sports franchises. c. The United States should eliminate agricultural subsidies. d. The United States should withdraw from the North American Free Trade Agreement (NAFTA).

d. The United States should withdraw from the North American Free Trade Agreement (NAFTA).

Positive statements are a. claims about how the world should be. b. prescriptive. c. made by economists speaking as policy advisers. d. claims about how the world is.

d. claims about how the world is.

An economy's production of two goods is efficient if a. all members of society consume equal portions of the goods. b. the opportunity cost of producing more of one good is zero. c. the goods are produced using only some of society's available resources. d. it is impossible to produce more of one good without producing less of the other.

d. it is impossible to produce more of one good without producing less of the other.

John Maynard Keynes believed the ideas of economists to be a. academic and without practical application. b. generally incorrect. c. rantings of madmen. d. powerful.

d. powerful.

Economists view normative statements as a. pessimistic, putting the worst possible interpretation on things. b. descriptive, making a claim about how the world is. c. statements about the normal condition of the world. d. prescriptive, making a claim about how the world ought to be.

d. prescriptive, making a claim about how the world ought to be.

To display information on two variables, an economist must use a. a pie chart. b. a bar graph. c. a time-series graph. d. the coordinate system.

d. the coordinate system.