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b.
False
72. When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other
depends on how much of each good is being produced.
a.
True
b.
False
73. When a production possibilities frontier is bowed outward, the opportunity cost of the first good in terms of the second
good increases as more of the second good is produced.
a.
True
b.
False
74. When a production possibilities frontier is bowed outward, the opportunity cost of the second good in terms of the first
good increases as more of the second good is produced.
a.
True
b.
False
75. A production possibilities frontier has a bowed shape if the opportunity cost is constant at all levels of output.
a.
True
b.
False
76. Economists believe that production possibilities frontiers rarely have a bowed shape.
a.
True
b.
False
77. A production possibilities frontier will be bowed outward if some of the economy’s resources are better suited to
producing one good than another.
a.
True
b.
False
78. The trade-off between the production of one good and the production of another good can change over time because of
technological advances.
a.
True
b.
False
79. A technological advance in the production of the first good increases the opportunity cost of the first good in terms of
the second good.
a.
True
b.
False
80. While the production possibilities frontier is a useful model, it cannot be used to illustrate economic growth.
a.
True
b.
False
81. Economic growth causes a production possibilities frontier to shift outward.
a.
True
b.
False
82. If new government regulations designed to protect wetlands remove very productive farmland from production, then
the production possibilities frontier will shift inward.
a.
True
b.
False
83. Production possibilities frontiers can be used to illustrate scarcity, trade-offs, opportunity cost, efficiency,
unemployment, technological advances, and economic growth.
a.
True
b.
False
84. Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.
a.
True
b.
False
85. Macroeconomics is the study of economy-wide phenomena.
a.
True
b.
False
86. The effects of borrowing by the federal government would be studied by a microeconomist rather than a
macroeconomist.
a.
True
b.
False
87. The effects of foreign competition on the U.S. textile industry would be studied by a microeconomist rather than a
macroeconomist.
a.
True
b.
False
88. A macroeconomist, rather than a microeconomist, would study the effects on a market from two firms merging.
a.
True
b.
False
89. Microeconomics and macroeconomics are closely intertwined.
a.
True
b.
False
90. When economists are trying to explain the world, they are scientists, and when they are trying to help improve the
world, they are policy advisers.
a.
True
b.
False
91. Economists acting as scientists make positive statements, while economists acting as policy advisers make normative
statements.
a.
True
b.
False
92. Normative statements describe how the world is, while positive statements prescribe how the world should be.
a.
True
b.
False
93. Positive statements are descriptive, while normative statements are prescriptive.
a.
True
b.
False
94. Positive statements can be evaluated using data alone, but normative statements cannot.
a.
True
b.
False
95. Evaluating normative statements involves values as well as facts.
a.
True
b.
False
96. "Society would be better off if the welfare system were abolished" is a normative statement, not a positive statement.
a.
True
b.
False
97. "Other things equal, an increase in supply causes a decrease in price" is a normative statement, not a positive
statement.
a.
True
b.
False
98. "Minimum wage laws result in unemployment” is a normative statement, while “the minimum wage should be higher”
is a positive statement.
a.
True
b.
False
99. “The US should not restrict employers from outsourcing work to foreign countries” is a normative statement.
a.
True
b.
False
100. Trade-offs are involved in most policy decisions.
a.
True
b.
False
101. Since 1946, the president of the United States has received guidance from the Council of Economic Advisers.
a.
True
b.
False
102. The Council of Economic Advisers consists of thirty members and a staff of several dozen economists.
a.
True
b.
False
103. The duties of the Council of Economic Advisers are to advise the president of the United States and to determine
U.S. monetary policy.
a.
True
b.
False
104. The Council of Economic Advisers’ Economic Report of the President discusses recent developments in the
economy and presents the council’s analysis of current policy issues.
a.
True
b.
False
105. The President counts among his economic advisors the Congressional Budget Office.
a.
True
b.
False
106. Economists at the U.S. Department of the Treasury help design U.S. coins and paper money.
a.
True
b.
False
107. Economists at the U.S. Department of Justice help enforce the nation’s antitrust laws.
a.
True
b.
False
108. Economists work both inside and outside the administrative branch of the U.S. government.
a.
True
b.
False
109. The Congressional Budget Office, which is staffed by economists, provides Congress with independent evaluations
of policy proposals.
a.
True
b.
False
110. There is only one explanation for why economists give conflicting advice on policy issues, and it is that they have
different values about what policy should try to accomplish.
a.
True
b.
False
111. Economists may disagree about the validity of alternative positive theories about how the world works.
a.
True
b.
False
112. Different values are not a reason for disagreement among economists.
a.
True
b.
False
113. In surveys of professional economists, fourteen propositions were endorsed by an overwhelming majority of
respondents.
a.
True
b.
False
114. Because almost all economists oppose policies that restrict trade among nations, policymakers do not restrict imports
of certain goods.
a.
True
b.
False
115. According to John Maynard Keynes, an economist must possess a rare combination of skills including being a
mathematician, historian, statesman, and philosopher.
a.
True
b.
False
116. In economics, graphs serve two purposes: they offer a way to visually express ideas, and they provide a way of
finding and interpreting patterns when analyzing economic data.
a.
True
b.
False
117. Examples of graphs of a single variable include pie charts, bar graphs, and time-series graphs.
a.
True
b.
False
118. A pie chart is a way to display information regarding two variables.
a.
True
b.
False
119. In the ordered pair (10,30), 10 is the y-coordinate and 30 is the z-coordinate.
a.
True
b.
False
120. In the ordered pair (10,30), 10 is the horizontal location of the point and 30 is the vertical location of the point.
a.
True
b.
False
121. Two variables that have a positive correlation move in the same direction.
a.
True
b.
False
122. Two variables that have a negative correlation move in opposite directions.
a.
True
b.
False
123. When two variables move in opposite directions, the curve relating them is upward sloping, and we say the variables
are positively related.
a.
True
b.
False
124. When two variables move in the same direction, the curve relating them is downward sloping, and we say the
variables are negatively related.
a.
True
b.
False
125. When a variable that is named on an axis of a graph changes, the curve shifts.
a.
True
b.
False
126. When a variable that is not named on either axis of a graph changes, we read the change as a movement along the
curve.
a.
True
b.
False
127. The concept of slope can be used to answer questions about how much one variable responds to changes in another
variable.
a.
True
b.
False
128. The slope of a line is equal to the change in the x-variable divided by the change in the y-variable.
a.
True
b.
False
129. The slope of an upward-sloping line is positive, and the slope of a downward-sloping line is negative.
a.
True
b.
False
130. The slope of a horizontal line is infinite, and the slope of a vertical line is zero.
a.
True
b.
False
131. The slope of a line is the ratio of the vertical distance covered to the horizontal distance covered along the line.
a.
True
b.
False
132. If a line passes through the points (20,5) and (10,10), then the slope of the line is 1/2.
a.
True
b.
False
133. If a line passes through the points (20,5) and (10,10), then the slope of the line is -2.
a.
True
b.
False
134. Changes in one variable on a graph might be caused by the other variable on the graph or by a third omitted variable.
a.
True
b.
False
135. Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.
a.
True
b.
False
136. The broken window fallacy states that when a window breaks and someone spends money to repair it, they have
created new economic activity that would not have otherwise taken place.
a.
True
b.
False
