Ch.2: Thinking Like An Economist Flashcards
____ 1. By scientific method we mean
the dispassionate development and testing of theories about how the world works.
____ 2. The use of theory and observation is more difficult in economics than in sciences such as physics due to the
difficulty in
actually performing an experiment in an economic system.
____3.Because it is difficult for economists to use experiments to generate data, they generally must
use whatever data the world gives them.
____ 4. When testing theories, economists
must make do with whatever data the world gives them.
___ 5. For economists, substitutes for laboratory experiments are often
natural experiments offered by history.
____ 6. When studying the effects of public policy changes, economists
may make different assumptions for the long run and the short run.
- The foundation stones from which economic models are built are
c. assumptions.
____ 8. Factors of production are
inputs into the production process.
- The two loops in the circular-flow diagram represent the flow of
inputs and outputs and the flow of dollars.
____ 10. According to a simple circular-flow diagram, households and firms interact in
two types of markets.
____ 11. In the simple circular-flow diagram, markets consist of
the market for goods and services and the market for factors of production.
____ 12. Refer to Figure 2-2. Firms are sellers in
the goods and services market.
____ 13. Refer to Figure 2-3. The economy can produce at which point or points?
B, D, E
____ 14. Refer to Figure 2-3. The economy CANNOT produce at which point or points?
b. C
___ 15. Refer to Figure 2-7. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?
an increase in the overall level of technology in the economy
____ 16. The field of economics is traditionally divided into two broad subfields,
d. microeconomics and macroeconomics.
____ 17. A microeconomist might study each of the following EXCEPT
d. the effect on the economy when unemployment rates change.
____ 18. A macroeconomist would study each of the following EXCEPT the
impact of minimum-wage laws on employment in the fast food industry.
____ 19. Which of the following is an example of a positive statement?
Prices rise when the government prints too much money.
____ 20. Economists from the Treasury Department provide
d. advice on tax policy to the President.
____ 21. When economists are speaking as policy advisors, they are more likely to use
a. normative statements.
____ 22. Economists in which department help enforce antitrust laws?
b. Department of Justice
____ 23. Tax policy is designed by the
Department of Treasury.
____ 24. A duty of the Department of Labor is to
analyze data on workers.
____ 25. In the early 19th century, the Russian government sent doctors to southern Russian villages to provide
assistance during a cholera epidemic. The villagers noticed that wherever doctors appeared, people died.
Therefore, many doctors were chased away from villages, and some were even killed. This reaction to the
correlation between doctors and deaths is most likely a problem of
b. reverse causality.
____ 26. John Maynard Keynes referred to economics as an easy subject,
at which very few excel.
____ 27. George Bernard Shaw, among others, has criticized economists because
they seem to give conflicting advice to policymakers.
____ 28. The 3 propositions about which most economists agree most often are (in order from first to third)
rent control, tariffs and quotas, and floating exchange rates.
____ 29. Tariffs and quotas are
- policies that restrict trade.
- opposed by almost all economists.
Both a and c are correct.
____ 30. A coordinate system is used to
allow economists to show two variables on a single graph.
____ 31. Refer to Figure 2-9. The graph shown is known as a
c. scatterplot.
____ 32. Refer to Figure 2-9. What would you say about the relationship between coffee and hours without sleep?
The more coffee a person drinks per day, the longer he can go without sleep.
____ 33. Refer to Figure 2-9. The curves shown are
b. demand curves.
____ 34. Refer to Figure 2-10. The movement from point A to point B is a
movement along the curve.
____ 35. The slope of a fairly flat upward-sloping line will be a
small positive number.
____ 36. Which of the following statements about slope is NOT correct?
b. Slope can be computed by delta x/delta y.
____ 37. Which of the following is NOT a problem associated with graphing in economics?
the ability to show a relationship between 2 variables
____ 38. When a relevant variable that is not named on either axis changes,
the curve will shift.
____ 39. When a variable on an axis of a graph changes, the curve
will not shift.
____ 40. The single most important purpose of your textbook is to teach you
the economist’s way of thinking.
