Chapter 2/Thinking Like an Economist ❖ 41
197. Refer to Figure 2-8, Panel (a). The opportunity cost of moving from point J to point L is
a.
2 donuts.
b.
2 donuts and 2 cups of coffee.
c.
2 cups of coffee.
d.
6 cups of coffee.
198. Refer to Figure 2-8, Panel (a). The opportunity cost of moving from point M to point L is
a.
2 donuts.
b.
2 donuts and 4 cups of coffee.
c.
4 donuts.
d.
4 cups of coffee.
199. Refer to Figure 2-8, Panel (a). The opportunity cost of moving from point K to point L is
a.
0 cups of coffee.
b.
1 donut.
c.
2 donuts.
d.
4 cups of coffee.
200. Refer to Figure 2-8, Panel (a). The opportunity cost of one cup of coffee is highest when the economy pro-
duces
a.
0 cups of coffee.
b.
2 cups of coffee.
c.
4 cups of coffee.
d.
6 cups of coffee.
201. Refer to Figure 2-8, Panel (a). In order to gain 2 donuts by moving from point L to point M, society must
sacrifice
a.
efficiency.
b.
employment.
c.
4 cups of coffee.
d.
More than one of the above is correct.
42 ❖ Chapter 2/Thinking Like an Economist
202. Refer to Figure 2-8, Panel (a) and Panel (b). A shift of the economy’s production possibilities frontier from
Panel (a) to Panel (b) could be caused by
a.
unemployment.
b.
an improvement in donut production technology.
c.
an improvement in coffee production technology.
d.
an improvement in both donut and coffee production technology.
203. Refer to Figure 2-8, Panel (a) and Panel (b). Which of the following is not a result of the shift of the econ-
omy’s production possibilities frontier from Panel (a) to Panel (b)?
a.
the tradeoff between the production of donuts and coffee changes
b.
the opportunity cost of a cup of coffee is higher at all levels of coffee production
c.
production of 4 donuts and 2 cups of coffee becomes possible
d.
production of 1 donut and 4 cups of coffee becomes efficient
Figure 2-9
Panel (a)
Panel (b)
A
B
C
D
F
computers
1 2 3 4 5 6 printers
1
2
3
4
5
6
7
8
9
10
11
12
13
computers
1 2 3 4 5 6 7 8 9 printers
1
2
3
4
5
6
7
8
9
10
11
12
13
204. Refer to Figure 2-9, Panel (a). Production at point B is
a.
impossible and inefficient.
b.
impossible but efficient.
c.
possible but inefficient.
d.
possible and efficient.
Chapter 2/Thinking Like an Economist ❖ 43
205. Refer to Figure 2-9, Panel (a). Production is
a.
possible at points A, B, C, and D, but efficient only at points A, C, and D.
b.
possible at points A, B, C, and D, but efficient only at point B.
c.
possible at points A, C, D, and F, but efficient only at points A, C, and D.
d.
possible at points A, C, D, and F, but efficient only at point F.
206. Refer to Figure 2-9, Panel (a). The movement from point C to point B could be caused by
a.
economic growth.
b.
unemployment.
c.
an improvement in efficiency.
d.
an advance in production technology.
207. Refer to Figure 2-9, Panel (a). The opportunity cost of one computer is highest when the economy produces
a.
0 computers.
b.
6 computers.
c.
10 computers.
d.
12 computers.
208. Refer to Figure 2-9, Panel (a). In order to gain 2 printers by moving from point C to point D, society must
sacrifice
a.
6 computers.
b.
employment.
c.
efficiency.
d.
More than one of the above is correct.
209. Refer to Figure 2-9, Panel (a) and Panel (b). A shift of the economy’s production possibilities frontier from
Panel (a) to Panel (b) could be caused by
a.
unemployment.
b.
an improvement in computer production technology.
c.
an improvement in printer production technology.
d.
an improvement in both computer and printer production technology.
44 ❖ Chapter 2/Thinking Like an Economist
210. Refer to Figure 2-9, Panel (a) and Panel (b). Which of the following is not a result of the shift of the econ-
omy’s production possibilities frontier from Panel (a) to Panel (b)?
a.
the tradeoff between the production of printers and computers changes
b.
production of 2 printers and 5 computers becomes efficient
c.
production of 6 printers and 7 computers becomes possible
d.
the opportunity cost of a computer is higher at all levels of computer production
Figure 2-10
books
A
B
DVDs
211. Refer to Figure 2-10. Which of the following events would explain the shift of the production possibilities
frontier from A to B?
a.
The economy’s citizens developed an enhanced taste for books.
b.
The economy experienced a technological advance in the production of books.
c.
More capital became available in the economy.
d.
More labor became available in the economy.
212. Refer to Figure 2-10. The shift of the production possibilities frontier from A to B illustrates
a.
simultaneous technological advances in the book and DVD industries.
b.
a reallocation of resources away from the production of DVDs and toward the production of books.
c.
economic growth.
d.
All of the above are correct.
Chapter 2/Thinking Like an Economist ❖ 45
Figure 2-11
goods
goods
A B
consumer
capital
213. Refer to Figure 2-11. Which of the following would most likely have caused the production possibilities
frontier to shift outward from A to B?
a.
a decrease in unemployment
b.
a technological advance in the consumer goods industries
c.
a general technological advance
d.
an increase in the availability of capital-producing resources
214. Refer to Figure 2-11. The shift of the production possibilities frontier from A to B can best be described as
a.
a downturn in the economy.
b.
economic growth.
c.
an enhancement of equality.
d.
an improvement in the allocation of resources.
46 ❖ Chapter 2/Thinking Like an Economist
Figure 2-12
A
D
H
B
C
F
G
10 20 30 40 50 60 70 80 pillows
10
20
30
40
50
60
70
80
90
100 blankets
215. Refer to Figure 2-12. Which of the following combinations of points are both efficient and attainable for this
economy?
a.
B, C
b.
A, D, H
c.
A, B, C, D, H
d.
F, G
216. Refer to Figure 2-12. Which of the following statements is true about point B for this economy?
a.
Point B is currently unattainable.
b.
Point B is efficient.
c.
At point B, more pillows are produced than blankets.
d.
There is unemployment at point B.
217. Refer to Figure 2-12. Which points are not currently attainable but could become achievable for this economy
if there is an improvement in technology?
a.
D, H
b.
B, C
c.
F, G
d.
A, B
218. Refer to Figure 2-12. One difference between points A and B is that
a.
Point B is unattainable with current resources, but point A is attainable.
b.
All resources are fully employed at point A but there is unemployment at point B.
c.
More output can be produced at point A but no additional output can be produced at point B.
d.
This economy produces more blankets at point B than at point A.
Chapter 2/Thinking Like an Economist ❖ 47
Table 2-5
Cookies (in dozens)
Coffee (in pounds)
1000
0
800
350
600
650
400
800
200
1000
0
1150
219. Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of in-
creasing the production of cookies from 200 dozen to 400 dozen?
a.
100 pounds of coffee
b.
200 pounds of coffee
c.
300 pounds of coffee
d.
400 pounds of coffee
220. Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of an
increase in the production of coffee from 350 pounds to 650 pounds?
a.
400 dozen cookies
b.
300 dozen cookies
c.
200 dozen cookies
d.
200 pounds of coffee
221. Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following statements is
correct?
a.
The opportunity cost of a dozen cookies does not depend on how many pounds of coffee are being
produced.
b.
The opportunity cost of a dozen cookies increases as more cookies are produced.
c.
The opportunity cost of a dozen cookies decreases as more cookies are produced.
d.
The opportunity cost of a pound of coffee decreases as more coffee is produced.
222. 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
a.
bowed outward indicating increasing opportunity costs.
b.
bowed outward indicating decreasing opportunity costs.
c.
a straight line indicating constant opportunity costs.
d.
bowed inward indicating decreasing opportunity costs.
48 ❖ Chapter 2/Thinking Like an Economist
223. Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following combinations
of cookies and coffee is not currently attainable but would be attainable if there was an improvement in overall
production technology?
a.
800 dozen cookies and 150 pounds of coffee
b.
700 dozen cookies and 400 pounds of coffee
c.
500 dozen cookies and 850 pounds of coffee
d.
300 dozen cookies and 900 pounds of coffee
224. Home is a country that produces two goods, pears and cellular phones. Last year, Home produced 450 bushels
of pears and 1050 cellular phones. This year it produced 450 bushels of pears and 2000 cellular phones. Given
no other information, which of the following events could explain this change?
a.
Home experienced increased unemployment.
b.
Home experienced a decline in pear-producing technology.
c.
Home experienced an improvement in cellular phone-making technology.
d.
Home experienced a reduction in resources.
225. Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 500
textiles and 1300 computers. This year it produced 450 textiles and 1100 computers. Given no further infor-
mation, which of the following events could explain this change?
a.
Indiadesh decreased unemployment.
b.
Indiadesh experienced an improvement in textile-making technology.
c.
Indiadesh experienced an improvement in computer-making technology.
d.
Indiadesh experienced a reduction in resources.
226. The field of economics is traditionally divided into two broad subfields,
a.
national economics and international economics.
b.
consumer economics and producer economics.
c.
private sector economics and public sector economics.
d.
microeconomics and macroeconomics.
227. Microeconomics is the study of
a.
how money affects the economy.
b.
how individual households and firms make decisions.
c.
how government affects the economy.
d.
how the economy as a whole works.
Chapter 2/Thinking Like an Economist ❖ 49
228. Macroeconomics is the study of
a.
individual decision makers.
b.
international trade.
c.
economy-wide phenomena.
d.
markets for large products.
229. A microeconomist — as opposed to a macroeconomist — might study
a.
the effect of borrowing by the federal government on the inflation rate.
b.
the effect of rising oil prices on employment in the airline industry.
c.
changes in the nation’s unemployment rate over short periods of time.
d.
alternative policies to promote higher living standards throughout the nation.
230. Which of the following areas of study typifies microeconomics as opposed to macroeconomics?
a.
the impact of minimum-wage laws on employment in the fast food industry
b.
the effect of changes in household saving rates on the growth rate of national income
c.
the impact of faster money growth on the rate of inflation
d.
a comparison of alternative tax policies and their respective impacts on the rate of the nation’s
economic growth
231. Which of the following would likely be studied by a microeconomist rather than a macroeconomist?
a.
the effect of foreign direct investment on economic growth
b.
the effect of a sales tax on the cigarette industry
c.
the effect of an investment tax credit on the economy’s capital stock
d.
the effect of a war on government spending
232. A macroeconomist — as opposed to a microeconomist — might study
a.
the effect of agricultural price support programs on the cotton industry
b.
the effect on U.S. steel producers of an import quota imposed on foreign steel
c.
the effect of an increasing inflation rate on national living standards
d.
the effect of an increase in the price of imported coffee beans on the U.S. coffee industry
233. Which of the following areas of study typifies macroeconomics as opposed to microeconomics?
a.
the effects of rent control on the availability of housing in New York City
b.
the economic impact of tornadoes on cities and towns in Oklahoma
c.
how tariffs on shoes affects the shoe industry
d.
the effect on the economy of changes in the nation’s unemployment rate
50 ❖ Chapter 2/Thinking Like an Economist
234. Which of the following would likely be studied by a macroeconomist rather than a microeconomist?
a.
the effect of an increase in the alcohol tax on the market for beer
b.
the effect of foreign competition on the domestic auto industry
c.
the effect of a price war in the airline industry
d.
the effect of an increase in the minimum wage on an economy’s overall rate of unemployment
235. Which of the following statements best captures the relationship between microeconomics and macroeconom-
ics?
a.
For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists
are unconcerned with microeconomics.
b.
Microeconomists study markets for small products, whereas macroeconomists study markets for
large products.
c.
Microeconomics and macroeconomics are distinct from one another, yet they are closely related.
d.
Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward
theoretical studies.
236. A macroeconomist – as opposed to a microeconomist – would study
a.
the effects of rent control on housing in New York City.
b.
the effects of foreign competition on the US auto industry.
c.
the effects of borrowing by the federal government.
d.
the effects of raising the gasoline tax on transit ridership.
THE ECONOMIST AS POLICY ADVISER
1. When economists are trying to explain the world, they are
a.
scientists.
b.
policy advisers.
c.
in the realm of microeconomics rather than macroeconomics.
d.
in the realm of normative economics rather than positive economics.
2. When economists are trying to help improve the world, they are
a.
in the realm of positive economics rather than normative economics.
b.
in the realm of macroeconomics rather than microeconomics.
c.
scientists.
d.
policy advisers.
Chapter 2/Thinking Like an Economist ❖ 51
3. Which of the following statements is correct about the roles of economists?
a.
Economists are best viewed as policy advisers.
b.
Economists are best viewed as scientists.
c.
In trying to explain the world, economists are policy advisers; in trying to improve the world, they
are scientists.
d.
In trying to explain the world, economists are scientists; in trying to improve the world, they are
policy advisers.
4. When an economist is asked a question like “why is unemployment higher for teenagers than for older work-
ers?” the economist
a.
is asked to explain the cause of an economic event.
b.
is asked to recommend a policy to improve economic outcomes.
c.
is asked as a policy adviser.
d.
does not have enough information to respond.
5. For economists, statements about the world are of two types:
a.
assumptions and theories.
b.
true statements and false statements.
c.
specific statements and general statements.
d.
positive statements and normative statements.
6. Normative statements are
a.
prescriptive, whereas positive statements are descriptive.
b.
descriptive, whereas positive statements are prescriptive.
c.
backward-looking, whereas positive statements are forward-looking.
d.
forward-looking, whereas positive statements are backward-looking.
7. Positive statements are
a.
prescriptive.
b.
claims about how the world should be.
c.
claims about how the world is.
d.
made by economists speaking as policy advisers.
52 ❖ Chapter 2/Thinking Like an Economist
8. Normative statements are
a.
descriptive.
b.
claims about how the world should be.
c.
claims about how the world is.
d.
made by economists speaking as scientists.
9. Positive statements are not
a.
descriptive.
b.
prescriptive.
c.
claims about how the world is.
d.
made by economists speaking as scientists.
10. Normative statements are not
a.
descriptive.
b.
prescriptive.
c.
claims about how the world should be.
d.
made by economists speaking as policy advisers.
11. A statement describing how the world is
a.
is a normative statement.
b.
is a positive statement.
c.
would only be made by an economist speaking as a policy adviser.
d.
would only be made by an economist employed by the government.
12. A statement describing how the world should be
a.
is a normative statement.
b.
is a positive statement.
c.
would only be made by an economist speaking as a scientist.
d.
would only be made by an economist employed by the government.
Chapter 2/Thinking Like an Economist ❖ 53
13. One way to characterize the difference between positive statements and normative statements is as follows:
a.
Positive statements tend to reflect optimism about the economy and its future, whereas normative
statements tend to reflect pessimism about the economy and its future.
b.
Positive statements offer descriptions of the way things are, whereas normative statements offer
opinions on how things ought to be.
c.
Positive statements involve advice on policy matters, whereas normative statements are supported
by scientific theory and observation.
d.
Economists outside of government tend to make normative statements, whereas government–
employed economists tend to make positive statements.
14. Economists view positive statements as
a.
affirmative, justifying existing economic policy.
b.
optimistic, putting the best possible interpretation on things.
c.
descriptive, making a claim about how the world is.
d.
prescriptive, making a claim about how the world ought to be.
15. Economists view normative statements as
a.
prescriptive, making a claim about how the world ought to be.
b.
descriptive, making a claim about how the world is.
c.
statements about the normal condition of the world.
d.
pessimistic, putting the worst possible interpretation on things.
16. Economists speaking like scientists make
a.
normative statements.
b.
prescriptive statements.
c.
claims about how the world is.
d.
claims about how the world should be.
17. Economists speaking like policy advisers make
a.
positive statements.
b.
descriptive statements.
c.
claims about how the world is.
d.
claims about how the world should be.
54 ❖ Chapter 2/Thinking Like an Economist
18. Economists speaking like scientists make
a.
positive statements.
b.
prescriptive statements.
c.
claims about how the world should be.
d.
More than one of the above is correct.
19. Economists speaking like policy advisers make
a.
claims about how the world is.
b.
descriptive statements.
c.
normative statements.
d.
More than one of the above is correct.
20. When economists make positive statements, they are
a.
speaking as scientists.
b.
speaking as policy advisers.
c.
making claims about how the world should be.
d.
revealing that they are very conservative in their views of how the world works.
21. When economists make normative statements, they are
a.
speaking as scientists.
b.
speaking as policy advisers.
c.
making claims about how the world is.
d.
revealing that they are very liberal in their views of how the world works.
22. When economists make
a.
positive statements, they are speaking not as policy advisers but as scientists.
b.
positive statements, they are speaking not as scientists but as forecasters.
c.
normative statements, they are speaking not as policy advisers but as scientists.
d.
normative statements, they are speaking not as policy advisers but as model-builders.
23. When economists make
a.
positive statements, they are speaking not as scientists but as policy advisers.
b.
positive statements, they are speaking not as scientists but as forecasters.
c.
normative statements, they are speaking not as scientists but as policy advisers.
d.
normative statements, they are speaking not as policy advisers but as model-builders.
Chapter 2/Thinking Like an Economist ❖ 55
24. You know an economist has crossed the line from policy adviser to scientist when he or she
a.
claims that the problem at hand is widely misunderstood by non-economists.
b.
makes positive statements.
c.
talks about values.
d.
makes a claim about how the world should be.
25. You know an economist has crossed the line from scientist to policy adviser when he or she
a.
claims that the problem at hand is widely misunderstood by non-economists.
b.
talks about the evidence.
c.
makes normative statements.
d.
makes a claim about how the world is.
26. A positive economic statement such as “Pollution taxes decrease the quantity of pollution generated by firms”
a.
would likely be made by an economist acting as a policy advisor.
b.
would require values and data in order to be evaluated.
c.
would require data but not values in order to be evaluated.
d.
could not be evaluated by economists acting as scientists.
27. A normative economic statement such as “The minimum wage should be abolished”
a.
would likely be made by an economist acting as a scientist.
b.
would require values and data in order to be evaluated.
c.
would require data but not values in order to be evaluated.
d.
could not be evaluated by economists acting as policy advisers.
28. In principle, we can
a.
ignore positive statements when choosing among various public policy alternatives.
b.
ignore normative statements when choosing among various public policy alternatives.
c.
confirm or refute positive statements by examining evidence.
d.
confirm or refute normative statements by examining evidence.
29. Which of the following is not correct?
a.
Evaluating statements about how the world should be involves values as well as facts.
b.
Positive statements can, in principle, be confirmed or refuted by examining evidence.
c.
Normative statements can be judged using data alone.
d.
Deciding what is good or bad policy is not just a matter of science.
56 ❖ Chapter 2/Thinking Like an Economist
30. When an economist evaluates a positive statement, he or she is primarily
a.
examining evidence.
b.
evaluating values as well as facts.
c.
acting as a policy adviser.
d.
concerned with making a sound decision on how the world ought to be.
31. Normative conclusions
a.
come from positive analysis alone.
b.
are based on ignorance of positive analysis.
c.
involve value judgments.
d.
reflect the economist’s role as scientist.
32. Which of the following is an example of a positive, as opposed to normative, statement?
a.
Inflation is more harmful to the economy than unemployment is.
b.
If welfare payments increase, the world will be a better place.
c.
Prices rise when the government prints too much money.
d.
When public policies are evaluated, the benefits to the economy of improved equality should be
considered more important than the costs of reduced efficiency.
33. Which of the following is an example of a positive, as opposed to normative, statement?
a.
Income tax rates should not have been cut as they were a few years ago.
b.
The quantity of money has grown too slowly in recent years.
c.
When the quantity of money grows rapidly, inflation is a predictable consequence.
d.
All of the above are positive statements.
34. Which of the following statements is an example of a positive, as opposed to normative, statement?
a.
Americans deserve a cleaner environment.
b.
Reducing emissions reduces days missed from school due to asthma.
c.
All Americans are entitled to quality health care.
d.
Economic policies should focus on improving equality.
35. “Allowing all individuals access to Medicare and Medicaid for health insurance is the fair thing to
do” is an example of a
a.
contradiction in economic theory.
b.
positive economic statement.
c.
negative economic statement.
d.
normative economic statement.
Chapter 2/Thinking Like an Economist ❖ 57
36. “Prices rise when the quantity of money rises rapidly” is an example of a
a.
negative economic statement.
b.
positive economic statement.
c.
normative economic statement.
d.
statement that contradicts one of the basic principles of economics.
37. Which of the following is not an example of a positive, as opposed to normative, statement?
a.
Higher gasoline prices will reduce gasoline consumption.
b.
Equality is more important than efficiency.
c.
Trade restrictions lower our standard of living.
d.
If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money.
38. Which of the following is an example of a normative, as opposed to positive, statement?
a.
Universal health care would be good for U.S. citizens.
b.
An increase in the cigarette tax would cause a decrease in the number of smokers.
c.
A decrease in the minimum wage would decrease unemployment.
d.
A law requiring the federal government to balance its budget would increase economic growth.
39. Which of the following is an example of a normative, as opposed to positive, statement?
a.
Gasoline prices ought to be lower than they are now.
b.
The federal government should raise taxes on wealthy people.
c.
The social security system is a good system and it deserves to be preserved as it is.
d.
All of the above are normative statements.
40. Which of the following is an example of a normative, as opposed to positive, statement?
a.
If the price of a product decreases, people’s willingness to buy that product will increase.
b.
Reducing tax rates on the wealthy would benefit the nation.
c.
If the national saving rate were to increase, so would the rate of economic growth.
d.
The elimination of trade restrictions would increase an economy’s standard of living.
41. Which of the following is an example of a normative, as opposed to positive, statement?
a.
The price of gasoline came down sharply during the second half of 2006.
b.
If the government were to set a maximum legal price on gasoline, then there would be a shortage of
gasoline.
c.
Income taxes should be reduced.
d.
The federal government obtains much of its revenue from income taxes.
58 ❖ Chapter 2/Thinking Like an Economist
42. Which of the following is an example of a normative – as opposed to a positive – statement?
a.
The discount rate is the interest rate the Federal Reserve charges banks to borrow funds.
b.
The US income tax rate increases with the amount of income earned.
c.
The government should increase the tax on gasoline.
d.
The US unemployment rate increased to 10 percent in 2009.
43. President Truman once said the wanted to find a one–armed economist because when he asked his economists
for advice, they always answered, “On the one hand, … On the other hand, …” Truman’s observation that
economists’ advice is not always straightforward
a.
is rooted in the principle that people face tradeoffs.
b.
indicates that economists recognize that there are opportunity costs associated with policy
decisions.
c.
confirms that economists are not suited to be presidential advisers.
d.
More than one of the above is correct.
44. The Council of Economic Advisers
a.
was created in 1776 and consists of three members and a staff of several dozen economists.
b.
was created in 1776 and consists of thirty members and a staff of a dozen economists.
c.
was created in 1946 and consists of three members and a staff of several dozen economists.
d.
was created in 1946 and consists of thirty members and a staff of a dozen economists.
45. The Council of Economic Advisers
a.
was created in 1946.
b.
advises the president of the United States on economic policy matters.
c.
writes the annual Economic Report of the President.
d.
All of the above are correct.
46. Duties of the Council of Economic Advisers include
a.
advising the president and writing the annual Economic Report of the President.
b.
implementing the president’s tax policies.
c.
tracking the behavior of the nation’s money supply.
d.
All of the above are correct.
Chapter 2/Thinking Like an Economist ❖ 59
47. In addition to advising the president, one duty of the Council of Economic Advisors is to
a.
prepare the federal budget.
b.
write government regulations.
c.
advise Congress on economic matters.
d.
write the annual Economic Report of the President.
48. The Economic Report of the President
a.
discusses recent developments in the economy and presents analysis of current policy issues.
b.
is written by the Council of Economic Advisers.
c.
is the responsibility of the economists at the Office of Management and Budget.
d.
Both a and b are correct.
49. Economists at which of the following offices help formulate spending plans and regulatory policies?
a.
Office of Management and Budget
b.
Department of the Treasury
c.
Congressional Budget Office
d.
The Federal Reserve
50. Economists at the Department of the Treasury
a.
design U.S. currency and coins.
b.
provide Congress with the annual budget.
c.
enforce the U.S. antitrust laws.
d.
provide advice on tax policy to the President.
51. The president of the United States receives tax policy advice from economists in the
a.
Federal Reserve.
b.
Department of Justice.
c.
Department of the Treasury.
d.
Congressional Budget Office.
52. The design of tax policy is one of the responsibilities of economists who work at the
a.
Council of Economic Advisers.
b.
Federal Reserve.
c.
Department of the Treasury.
d.
Congressional Budget Office.
60 ❖ Chapter 2/Thinking Like an Economist
53. A duty of economists at the Department of Labor is to
a.
analyze data on workers.
b.
schedule federal holidays.
c.
enforce the nation’s antitrust laws.
d.
All of the above are correct.
54. Analysis of data on workers and those looking for work is conducted by economists at the
a.
Office of Management and Budget.
b.
Department of Labor.
c.
Congressional Budget Office.
d.
Department of the Treasury.
55. Economists at the Department of Justice
a.
track the behavior of the nation’s money supply.
b.
advise Congress on economic matters.
c.
help enforce the nation’s antitrust laws.
d.
prepare the federal budget.
56. The nation’s antitrust laws are enforced by economists at the Department of
a.
Labor.
b.
Health and Human Services.
c.
Justice.
d.
Treasury.
57. Some, but not all, government economists are employed within the administrative branch of government.
Which of the following government agencies employs economists outside of the administrative branch?
a.
the Department of Labor
b.
the Department of the Treasury
c.
the Congressional Budget Office
d.
the Council of Economic Advisers
58. Economists who are primarily responsible for advising Congress on economic matters work in which agency?
a.
the Federal Reserve
b.
the Congressional Budget Office
c.
the Department of the Treasury
d.
the Department of Commerce