CH2: Thinking like an economist

Question 1

An economic model is

Answer 1

A simplified representation of some aspect of the economy

Question 2

The circular-flow diagram illustrates that, in markets for the factors of production,

Answer 2

Households are sellers, and firms are buyers

Question 3

A point inside the production possibilities frontier is

Answer 3

Feasible but not efficient

Question 4

All of the following topics fall within the study of microeconomics EXCEPT

Answer 4

The influence of the governemnt budget deficit on economic growth

Question 5

Which if the following is a positive, rather than a normative, statement?

Answer 5

Law X will reduce national income

Question 6

The following parts of government regularly rely on the advice of economists:

Answer 6

Department of Treasury, Office of Management and Budget, Department of Justice

Question 7

Economists may disagree because they have different

Answer 7

Hunches about the validity of alternative theories, judgements about the size of key parameters, politics philosophies about the goals of public policy

Question 8

Most economists believe that tariffs are

Answer 8

A poor way to raise general economic well-being