Chapter 2 Quiz

In making which of the following statements is an economist acting more like a scientist?

A reduction in unemployment benefits will reduce the unemployment rate

The scientific method requires that

scientists be objective

Positive statements are

statements of description that can be tested

Which of the following issues is related to microeconomics?

the impact of oil prices on auto production

Which of the following statements regarding the circular-flow diagram is true?

The factors of production are owned by households

Which of the following statements about microeconomics and macroeconomics is not true?

The study of very large industries is a topic within macroeconomics

Which of the following statements is normative?

The unemployment rate should be lower

In which of the following cases is the assumption most reasonable?

To address the benefits of trade, an economist assumes that there are two people and two goods

Which of the following will not shift a country's production possibilities frontier outward?

a reduction in unemployment

Economic growth is depicted by

a shift in the production possibilities frontier outward

Which of the following is most likely to produce scientific evidence about a theory?

a tenured economist employed at a leading university analyzing the impact of bank regulations on rural lending

Economic models are

built with assumptions

Which of the following is not a factor of production?

money

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, "Hogwash. 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

disagree because they have different scientific judgments

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, "Hogwash. Inflation is the greatest social evil." These economists

disagree because they have different values

Points on the production possibilities frontier are

efficient