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Exam 2: Thinking Like an Economist

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Question 281

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When an economist is asked a question like "why is unemployment higher for teenagers than for older workers?" 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.

E) None of the above
F) All of the above

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Question 282

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In the circular-flow diagram,

A) taxes flow from households to firms, and transfer payments flow from firms to households.
B) income payments flow from firms to households, and sales revenue flows from households to firms.
C) resources flow from firms to households, and goods and services flow from households to firms.
D) inputs and outputs flow in the same direction as the flow of dollars, from firms to households.

E) C) and D)
F) B) and D)

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Question 283

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In the circular flow diagram, who owns the factors of production and consumes all of the goods and services produced?

Figure 2-20 Relationship Between Years of Education and Annual Income -Refer to Figure 2-20. According to the graph, the correlation between years of education and annual income is

Figure 2-3 -Refer to Figure 2-3. What do the ovals represent in the figure?

Figure 2-14 Consider the production possibilities curve for a country that can produce sweaters, apples (in bushels), or a combination of the two. -Refer to Figure 2-14. Which point(s) on the graph show unemployment of resources?

Economic models can help us understand reality only when they include all details of the economy.

The country of Gerance produces two goods, cars and wine. Last year, it produced 1,000 cars and 15,000 cases of wine. This year, it produced 1,300 cars and 20,000 cases of wine. Given no other information, which of the following events could not explain this change?

Figure 2-18 Relationship between Price and Restaurant Meals -Refer to Figure 2-18. A movement from point A to point Z is called

Figure 2-23 -Refer to Figure 2-23. Unemployment could cause this economy to produce at point B.

Economic models

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.

Table 2-5 -Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity cost of increasing the production of corn from 400 bushels to 800 bushels?

Figure 2-3 -Refer to Figure 2-3. Which shape refers to the markets for goods and services?

Figure 2-17 -Refer to Figure 2-17. The movement from point B to point C is a(n)

Which of the following is an example of a normative, as opposed to positive, statement?

Figure 2-7 -Refer to Figure 2-7. Unemployment could cause this economy to produce at which point(s) ?

Figure 2-8 -Refer to Figure 2-8. Which point on the graph best represents the fact that, because resources are scarce, not every conceivable outcome is feasible?

Economists at which administrative department analyze data on workers and those looking for work to help formulate labor-market policies?

Figure 2-15 -Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. When society moves from point A to point B,