Chapter 2: Review

Question 1

What statement about the PPF is not true?

Accepted Answer

The PPF is always shown by a straight line.

Question 2

What type of statements state facts and describe how the world is?

Accepted Answer

Positive statements.

Question 3

Why do economists not agree with one another at times?

Accepted Answer

Because of differences in scientific judgment.

Question 4

What law does a convex production possibilities frontier show?

Accepted Answer

The law of decreasing opportunity costs.

Question 5

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

Accepted Answer

True

Question 6

The money received in exchange for labor is known as

Accepted Answer

wages

Question 7

Economists as Policy Advisors use mainly normative statements.

Accepted Answer

True

Question 8

The Production Possibilities Frontier(PPF) is also known as the Production Possibilities Curve(PPC)?

Accepted Answer

True

Question 9

An increase in productivity will lead to an improvement in the standard of living. What type of statement is this?

Accepted Answer

Positive statement.

Question 10

Why do we use model in economics?

Accepted Answer

To simplify the real world.

Question 11

If an economy's production possibilities curve is a straight line, what can be said about its opportunity costs?

Accepted Answer

They are constant.

Question 12

The circular flow diagram is an example of an economic model?

Accepted Answer

2

Question 13

Economists always agree with each other.

Accepted Answer

False

Question 14

Companies, businesses, factories are known as firms in the circular flow diagram.

Accepted Answer

True

Question 15

What type of PPF shows the law of constant opportunity costs?

Accepted Answer

A straight line PPF.

Question 16

Which of the following assumptions are true for the Production Possibilities Frontier?

Accepted Answer

The economy makes only two goods.

Question 17

Who sells in the market for factors of production?

Accepted Answer

Households

Question 18

What does the Production Possibilities Frontier show?

Accepted Answer

How much an economy can produce with its existing resources.

Question 19

What type of Economist would make the following statement: "The government should print more money."

Accepted Answer

An Economist as a Policy Advisor.

Question 20

Households are _____ in the resource market.

Accepted Answer

sellers.

Question 21

What law does a concave production possibilities frontier show?

Accepted Answer

The law of increasing opportunity costs.

Question 22

Microeconomics can be defined as

Accepted Answer

The supply and demand of producers and consumers.

Question 23

What is the major difference in the application of the scientific theory in Natural Sciences versus in Social Sciences?

Accepted Answer

Social Sciences do not experiment, they observe.

Question 24

When an economy adopts a more efficient technology, its production possibilities frontier shifts inwards.

Accepted Answer

Outward (right/up)

Question 25

There are thee major steps in the scientific method

Accepted Answer

False

Question 26

A thing that is accepted as true or certain without proof is known as

Accepted Answer

An Assumption.

Question 27

Which of the following is an assumption made in the circular flow diagram?

Accepted Answer

There is no government.

Question 28

Which of the following are factors of production?

Accepted Answer

Land, labor, capital, entrepreneurship.

Question 29

The circular flow diagram is an example of an economic model?

Accepted Answer

True

Question 30

If an economy is producing inside its Production Possibilities Curve, what can be said?

Accepted Answer

There is inefficient production and a waste of resources.

Question 31

Who demands goods and services in the goods and services market?

Accepted Answer

Households

Chapter 2: Review

Questions 31

Chapter 2: Review

Questions 31