1. “If all economists were laid end to end, they would not reach a conclusion.” Who made this whimsical observation?
a.
Harry Truman
b.
George Bernard Shaw
c.
John Maynard Keynes
d.
Ronald Reagan
2. President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would
a.
b.
c.
d.
3. Economists sometimes give conflicting advice because
a.
graduate students in economics are encouraged to argue with each other.
b.
economists have different values and scientific judgment.
c.
economists acting as scientists do not like to agree with economists acting as policy advisers.
d.
economics is more of a belief system than a science.
4. The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in
a.
opinions and education.
b.
opinions and values.
c.
scientific judgments and education.
d.
scientific judgments and values.
5. Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects
this source of disagreement?
a.
One economist believes everyone should pay the same percentage of their income in taxes; another economist
believes that wealthier citizens should pay a higher percentage of their income in taxes.
b.
One economist believes that manufacturing firms should face greater regulation to preserve the environment;
another economist believes the government should not intervene in free markets.
c.
One economist believes that equality should be valued over efficiency in policy decisions; another economist
believes that efficiency should be valued over equality in policy decisions.
d.
One economist believes the government should tax a household’s income; another economist believes the
government should tax a household’s consumption.
6. Differences in scientific judgment between economists are similar to all of the following except
a.
astronomers debating whether the sun or earth was at the center of the solar system.
b.
meteorologists debating the existence of global warming.
c.
two politicians arguing about the fairness of the tax code.
d.
explorers debating whether or not the earth was flat before the time of Christopher Columbus.
7. Sometimes economists disagree because their values differ. Which of the following instances best reflects this source of
disagreement?
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 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.
c.
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.
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.
8. Joe and Fred are economists. Joe thinks that the wealthiest 10% of the US population should be taxed a rate higher than
the rest of society because they can better afford it. Fred thinks that everyone should be taxed at the same rate because that
is the fairest scenario and the wealthy should not be penalized for their success. In this example, Joe and Fred
a.
disagree about the validity of a positive theory.
b.
have different normative views about tax policy.
c.
must both be incorrect because tax policy is never that simple.
d.
None of the above is correct.
9. Which of the following is one of the basic reasons why economists often appear to give conflicting advice to
policymakers?
a.
similar opinions about the validity of economic theories
b.
significant differences in education
c.
differences in personal values
d.
a reliance on normative statement for research theories
10. Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher
household saving because income that is saved would not be taxed. Avik does not think that household saving would
respond much to a change in the tax laws. In this example, Yi and Avik
a.
hold different normative views about the tax system.
b.
disagree about the validity of a positive theory.
c.
have a fundamental misunderstanding of the tax system.
d.
More than one of the above is correct.
11. Which of the following statements is correct about the extent of disagreement among economists?
a.
There is a great deal of agreement among economists on virtually every economic issue.
b.
There is a great deal of agreement among economists on many important economic issues.
c.
All disagreements among economists are attributable to differences in their values.
d.
All disagreements among economists are attributable to the fact that different economists have different
degrees of faith in the validity of alternative economic theories.
12. A survey which sought the opinion of professional economists on fourteen propositions about economic policy found
that
a.
the respondents were almost equally divided on the propositions.
b.
the respondents favored the propositions by a slight margin.
c.
the respondents disagreed with the propositions by a slight margin.
d.
there was overwhelming endorsement of the propositions among the respondents.
13. A survey of professional economists revealed that more than three-fourths of them agreed with a number of
statements, including which of the following?
a.
Tariffs and import quotas usually reduce general economic welfare.
b.
A large federal budget deficit has an adverse effect on the economy.
c.
Minimum wage increases unemployment among young and unskilled workers.
d.
All of the above are correct.
14. 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.
The United States should withdraw from the North American Free Trade Agreement (NAFTA).
c.
The United States should eliminate agricultural subsidies.
d.
Local and state governments should eliminate subsidies to professional sports franchises.
15. 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.
A ceiling on rents reduces the quantity and quality of housing available.
b.
Fiscal policy has a significant stimulative impact on a less than fully employed economy.
c.
The gap between Social Security funds and expenditures will become unsustainably large within the next fifty
years if current policies remain unchanged.
d.
The United States should implement universal health care for its citizens.
16. Almost all economists agree that rent control
a.
has no effect on the rental income of landlords.
b.
allows the market for housing to work more efficiently.
c.
adversely affects the availability and quality of housing.
d.
is a very inexpensive way to help the most needy members of society.
17. Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their
opposition to such policies, probably because
a.
economists have not yet convinced the general public that the policies are undesirable.
b.
economists engage in positive analysis, not normative analysis.
c.
economists have values that are different from the values of most non-economists.
d.
economists’ theories are not easily confirmed or refuted in laboratory analysis.
18. Policies such as rent control and trade barriers persist
a.
because economists are about evenly divided as to the merits of those policies.
b.
because almost all economists agree that those policies have no discernible economic effects.
c.
because almost all economists agree that those policies are desirable.
d.
despite the fact that almost all economists agree that those policies are undesirable.
19. Almost all economists agree that tariffs and import quotas
a.
reduces general economic welfare.
b.
increases general economic welfare.
c.
have no effect on general economic welfare.
d.
stimulate a less than fully employed economy.
20. Almost all economists agree that local and state governments should
a.
eliminate subsidies to professional sports franchises.
b.
increase subsidies to professional sports franchises.
c.
copy economic policy from Washington, D.C.
d.
prevent companies from outsourcing work.