ECO Quiz 2

Review Test Submission: Q2, Quiz 2, Chapter 2

Question 1

5 out of 5 points

	When a government program is justified not on its merits but on the number of jobs it will create,
	Selected Answer: b.  it is known as the “broken window fallacy.” Answers: a.  the program is an efficient use of taxpayer dollars. b.  it is known as the “broken window fallacy.” c.  it should be approved only if the unemployment rate is low. d.  taxes should be raised to fund the program.

Question 2

5 out of 5 points

	The “broken window fallacy”
	Selected Answer: d.  is illustrated when a government program is justified not on its merits but on the number of jobs it will create. Answers: a.  has nothing to do with public policy. b.  explains why inflation is so high. c.  is a justification for the government to print more money. d.  is illustrated when a government program is justified not on its merits but on the number of jobs it will create.

Question 3

5 out of 5 points

	Which of the following statements is correct about the extent of disagreement among economists?
	Selected Answer: d.  There is a great deal of agreement among economists on many important economic issues. Answers: a.  All disagreements among economists are attributable to differences in their values. b.  There is a great deal of agreement among economists on virtually every economic issue. c. All disagreements among economists are attributable to the fact that different economists have different degrees of faith in the validity of alternative economic theories. d.  There is a great deal of agreement among economists on many important economic issues.

Question 4

5 out of 5 points

	A survey which sought the opinion of professional economists on fourteen propositions about economic policy found that
	Selected Answer: c.  there was overwhelming endorsement of the propositions among the respondents. Answers: a.  the respondents favored the propositions by a slight margin. b.  the respondents disagreed with the propositions by a slight margin. c.  there was overwhelming endorsement of the propositions among the respondents. d.  the respondents were almost equally divided on the propositions.

Question 5

5 out of 5 points

	Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of disagreement?
	Selected Answer: b. One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people. Answers: a. One economist believes the North American Free Trade Agreement (NAFTA) has led to a loss of American jobs; another economist disputes this claim. b. One economist advises against increases in sales taxes because she thinks such increases are unfair to low-income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people. c. One economist believes that when income taxes are cut, people will increase their spending; another economist believes that when income taxes are cut, people will increase their saving. d. One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth.

Question 6

5 out of 5 points

	When two variables have a negative correlation,
	Selected Answer: b.  they tend to move in opposite directions. Answers: a.  they tend to move in the same direction. b.  they tend to move in opposite directions. c.  the variables’ values are never positive. d.  one variable will move while the other remains constant.

Question 7

5 out of 5 points

	Which of the following is an example of a normative, as opposed to positive, statement?
	Selected Answer: c.  The federal government’s responses to the most recent recession were insufficient. Answers: a.  Following the most recent recession, the economy is recovering at a slower than usual pace. b.  In response to the most recent recession, the federal government extended the duration of unemployment benefits. c.  The federal government’s responses to the most recent recession were insufficient. d.  To stimulate the economy during the most recent recession, the federal government increased spending.

Question 8

5 out of 5 points

	Which of the following is an example of a normative, as opposed to positive, statement?
	Selected Answer: c.  Universal health care would be good for U.S. citizens. Answers: a.  A law requiring the federal government to balance its budget would increase economic growth. b.  A decrease in the minimum wage would decrease unemployment. c.  Universal health care would be good for U.S. citizens. d.  An increase in the cigarette tax would cause a decrease in the number of smokers.

Question 9

5 out of 5 points

	The president of the United States receives tax policy advice from economists in the
	Selected Answer: d.  Department of the Treasury. Answers: a.  Congressional Budget Office. b.  Department of Justice. c.  Federal Reserve. d.  Department of the Treasury.

Question 10

5 out of 5 points

	A production possibilities frontier shifts outward when
	Selected Answer: a.  the economy experiences economic growth. Answers: a.  the economy experiences economic growth. b.  at least one of the basic principles of economics is violated. c.  opportunity costs are lessened. d.  the desires of the economy’s citizens change.

Question 11

5 out of 5 points

	Suppose an economist develops a theory that higher food prices arise from higher gas prices. According to the scientific method, which of the following is the economist’s next step?
	Selected Answer: a.  Collect and analyze data. Answers: a.  Collect and analyze data. b.  Consult with other economists to see they agree with the theory. c.  Publish the theory without testing it. d.  Go to a laboratory and generate data to test the theory.

Question 12

5 out of 5 points

	Table 2-3 Production Possibilities for Footville Shoes Socks 800 0 600 400 400 700 200 900 0 1000 Refer to Table 2-3. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?
	Selected Answer: b.  300 socks Answers: a.  100 socks b.  300 socks c.  200 socks d.  400 socks

Question 13

5 out of 5 points

	The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the
	Selected Answer: c.  amount of the other good that must be given up. Answers: a.  amount of resources that must be devoted to its production. b.  market price of the additional amount produced. c.  amount of the other good that must be given up. d.  number of dollars that must be spent to produce it.

Question 14

5 out of 5 points

	Figure 2-9 Refer to Figure 2-9, Panel (a). Production is
	Selected Answer: a.  possible at points J, K, L, and M, but efficient only at points J, L, and M. Answers: a.  possible at points J, K, L, and M, but efficient only at points J, L, and M. b.  possible at points J, L, M, and N, but efficient only at point N. c.  possible at points J, K, L, and M, but efficient only at point K. d.  possible at points J, L, M, and N, but efficient only at points J, L, and M.

Question 15

5 out of 5 points

	Figure 2-8 Refer to Figure 2-8. Point K represents an outcome in which
	Selected Answer: a.  the economy is using all of its resources to produce hammers. Answers: a.  the economy is using all of its resources to produce hammers. b.  the economy is using all of its nails to produce hammers. c.  some of the economy’s resources are unemployed. d.  production is inefficient.

Question 16

5 out of 5 points

	Figure 2-1 Refer to Figure 2-1. Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?
	Selected Answer: b.  A and B Answers: a.  C only b.  A and B c.  A only d.  C and D

Question 17

5 out of 5 points

	Table 2-5 Corn (in bushels) Wheat (in bushels) 2000 0 1600 700 1200 1300 800 1800 400 2200 0 2500 Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology?
	Selected Answer: c.  1000 bushels of corn and 2000 bushels of wheat Answers: a.  600 bushels of corn and 1800 bushels of wheat b.  1600 bushels of corn and 300 bushels of wheat c.  1000 bushels of corn and 2000 bushels of wheat d.  1400 bushels of corn and 800 bushels of wheat

Question 18

5 out of 5 points

	In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?
	Selected Answer: d.  dollars spent on goods and services Answers: a.  wages, rent, and profit b.  dollars paid to land, labor, and capital c.  goods and services d.  dollars spent on goods and services

Question 19

5 out of 5 points

	Table 2-5 Corn (in bushels) Wheat (in bushels) 2000 0 1600 700 1200 1300 800 1800 400 2200 0 2500 Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in the table, the production possibilities frontier is
	Selected Answer: d.  bowed outward indicating increasing opportunity costs. Answers: a.  bowed inward indicating increasing opportunity costs. b.  a straight line indicating constant opportunity costs. c.  bowed outward indicating decreasing opportunity costs. d.  bowed outward indicating increasing opportunity costs.

Question 20

0 out of 5 points

	Which of the following is not correct?
	Selected Answer: a. Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist’s language. Answers: a. Supply, demand, elasticity, comparative advantage, consumer surplus, and deadweight loss are all terms that are part of the economist’s language. b.  Economists use some familiar words in specialized ways. c.  Economics has its own language and its own way of thinking, but few other fields of study do. d.  The value of the economist’s language lies in its ability to provide you with a new and useful way of thinking about the world in which you live.