Chapter

2, exercises

Ques1on 1:
Which of the following do economists o=en use as a subs1tute for laboratory
experiments?

a. natural experiments oered by history
b. eld-generated experiments and simula1ons
c. studies conducted by biologists and physicists
d. assump1ons and predic1ons

Ques1on 2:
Which of the following statements is most relevant to the circular-ow diagram?

a. Households are sellers in the resource market and the product market.
b. Firms are buyers in the product market.
c. Households are sellers in the resource market.
d. Firms are sellers in the resource market.

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Ques1on 3:

Which of the following statements is most relevant to an economy that is
producing eciently?

a. In order to produce more of one good, less of another good can be produced.
b. More of both goods can be produced.
c. It is possible to produce more of one good without producing less of another.
d. More of a good cannot be produced.

Ques1on 4:

Which of the following is an example of an economist ac1ng as a policy adviser
rather than a scien1st?

a. explaining just the facts
b. making posi1ve statements
c. being unable to reach a conclusion
d. making norma1ve statements





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Ques1on 5:

According to most economists, which of the following is the eect of rent control
programs?

a. improvement in the availability and quality of rental accommoda1on
b. increase in the eciency of the housing market
c. reduc1on of the availability and quality of rental housing
d. help the most needy members of society very inexpensively


Ques1on 6:

Which of the following statements best illustrates the concept of posi1ve
economics?

a. When the money supply grows at a faster rate, the average price level will
rise.
b. A system of wage subsidies should be used to reduce poverty.
c. The economy should grow at a faster rate.
d. The rate of ina1on should be lowered.




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Ques1on 7:

Which of the following best describes an economic model?

a. as confusing as possible
b. as complex as possible
c. a simplica1on of reality
d. designed for the general public


Ques1on 8:

Which of the following best describes the primary study of microeconomics?

a. how households and rms make decisions, and how they interact in the
market
b. economy-wide phenomena
c. ina1on, unemployment, and economic growth
d. the impact of government ac1ons on the economy







Copyright 2014 by Nelson Educa1on Ltd.

Ques1on 9:

What kind of informa1on does a produc1on possibili1es fron1er illustrate?

a. the prices at which alterna1ve goods will be produced
b. the input combina1ons that allow a country to produce a given amount of
output
c. the tax revenue a government receives at various tax rates
d. the various combina1ons of two goods a country can produce given the
available factors of produc1on and the available produc1on technology
Ques1on 10:

Which of the following would be of concern to a microeconomist?

a. The na1on's unemployment rate is higher today than in the past.
b. The unemployment rate is higher in Canada than in Mexico.
c. The rate of economic growth will increase in the future.
d. Import restric1ons on sugar will raise the price of sugar.






Copyright 2014 by Nelson Educa1on Ltd.

Ques1on 11:

Which of the following best explains the curved shape of the produc1on
possibili1es fron1er?

a. the fact that some resources are be^er suited for some types of produc1on
than are other resources
b. constant cost produc1on
c. scarcity
d. economic growth


Ques1on 12:

Which of the following is a common source of disagreement among economists?

a. the lack of fads in economics
b. the lack of dierences in values
c. dierences in scien1c judgments
d. percep1ons of reality are always correct






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Ques1on 13:

What kind of statements does posi1ve economics deal with exclusively?

a. statements that favourably describe a situa1on
b. statements that pertain to facts
c. statements that describe the past
d. statements that are always true


Ques1on 14:

According to the text, what are assump1ons used for in economics?

a. to make all economic predic1ons relevant
b. to make all economic predic1ons irrelevant
c. to make the world easier to understand
d. to shi= the blame to someone else








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Ques1on 15:

Which of the following is part of the scien1c method?

a. recommending policies to improve economic outcomes
b. using assump1ons in model building
c. developing theories, gathering data, and determining whether the theories are
consistent with the data
d. paying close a^en1on to the natural experiments oered by history


Ques1on 16:

The circular-ow diagram is a visual model of how the government directs and
controls the economy of a na1on.

True
False





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Ques1on 17:

In the market for factors of produc1on, households buy factors of produc1on, and
rms sell factors of produc1on.

True
False



Ques1on 18:

Macroeconomics is the study of economy-wide phenomena, including ina1on,
unemployment, and economic growth.

True
False





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Ques1on 19:

A norma1ve statement describes how the world ought to be.

True
False



Ques1on 20:

When economists try to predict the number of workers a rm will employ, they
are involved in macroeconomics.

True
False






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Ques1on 21:

Answer the following ques1ons based on the informa1on in the table below for
the economy of a country in a given year. All gures are in millions.

Combina1ons(points) Computers(per year) Grain(tonnes per year)
A



16



0
B



14



4
C



12



7
D



9



10
E



5



12
F



0



13

a. If this economy is producing at point C, what is the opportunity cost of moving
to point B?

b. Supposing this economy is currently producing 5 million computers and 10
million tonnes of grain, would this be ecient?




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Ques1on 22:

What is the slope of a line?



Ques1on 23:

Use the data below to answer the ques1ons that follow:
Y X
8 10
6 20
4 30
2 40

a. Calculate the slope for every change in the Y and X variables.
b. What type of rela1onship is there between these two variables?






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Ques1on 24:

What is an economic model?

Ques1on 25:

What is the circular-ow diagram?
















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