Thinking Like an Economist

What is the primary role of an economist when they act as a scientist?

What is the main purpose of using assumptions in economic models?

In the circular-flow diagram presented in Chapter 2, which two types of decision makers are included?

In the markets for the factors of production within the circular-flow diagram, what role do households play?

What does a point inside the production possibilities frontier (PPF) represent?

In the example from Figure 2 (page 26), what is the opportunity cost of producing 100 additional cars if the economy moves from point A to point B?

The field of economics is traditionally divided into which two broad subfields?

Which of the following statements is a positive statement, not a normative one?

Why do economists sometimes offer conflicting advice to policymakers?

What does a bowed-outward shape of a production possibilities frontier indicate?

What does the Council of Economic Advisers do?

Which of the following is an example of a microeconomic topic?

In the appendix on graphing, what is a scatterplot used for?

If an increase in one variable is associated with a decrease in another variable, the two variables are said to have a:

Using the data from Table A-1 (page 42) for Emma, with an income of 30,000 dollars, what happens to her quantity of novels demanded when the price falls from 8 dollars to 6 dollars?

According to the appendix on graphing, what is the 'omitted variable' problem?

What does a technological advance in the computer industry do to the production possibilities frontier for an economy that produces cars and computers?

What is the slope of Emma's demand curve for novels, based on the calculation in Figure A-5 on page 45?

According to President Harry Truman's famous quote about wanting a 'one-armed economist,' why do economists often give advice 'on the one hand... On the other hand...'?

If a city's crime rate and the size of its police force are positively correlated, what is a possible 'reverse causality' explanation for this?

What is the key distinction between the scientific judgment and the values of an economist when they disagree on a policy?

In the circular-flow diagram on page 25, the outer loop represents the flow of dollars. What does the flow of money from households to firms represent?

What does it mean for an outcome to be 'efficient' on a production possibilities frontier?

In the appendix, what is the key difference between a movement along a curve and a shift of a curve?

Why do economists often have to 'make do with whatever data the world happens to give them'?

In the circular-flow diagram tour on page 51, a dollar bill spent on a cup of coffee at Starbucks becomes what for the firm?

According to the textbook, why is the advice from an economist who says that all policy decisions are easy not to be trusted?

What is the key factor that determines a shift in the demand curve for a good?

According to Table 1 on page 36, which proposition receives the highest level of agreement among economists?

A society that produces food and clothing is experiencing a severe drought. How would this event be depicted on its production possibilities frontier?

In the circular-flow diagram on page 25, firms purchase inputs such as labor, land, and capital in which market?

An economist who states, 'The government should increase its spending on education to improve living standards,' is speaking as a:

What does the slope of a production possibilities frontier measure?

According to the appendix, which type of graph is best suited for showing how U.S. national income was derived from various sources in a single year?

If a policy change causes an increase in Emma's income from 30,000 dollars to 40,000 dollars, how does this affect her demand curve for novels?

Why must economists, like physicists, make assumptions?

If two variables on a scatterplot graph generally move in the same direction, they have a:

The production possibilities frontier is useful for illustrating all of the following concepts EXCEPT:

What is the most likely reason economists disagree on whether the government should tax income or consumption?

What is the essential tradeoff that the scientific method in economics involves?

In the circular-flow diagram, what flows from firms to households through the markets for goods and services?

If an economy is producing at a point on its production possibilities frontier, what can be said about the opportunity cost of producing more of one good?

Which statement best describes the difference between the roles of policy advisers and scientists in economics?

If a bar graph on page 40 shows the average income in four countries, what does the height of each bar represent?

An economist observes that cities with more libraries also have higher crime rates. Concluding that libraries cause crime is a potential error due to:

What is the primary function of the inner loop in the circular-flow diagram?

A point outside the production possibilities frontier is considered:

If two political parties in a debate over a new budget both move their proposals closer to the budget preferred by the voter exactly in the middle of the distribution, this outcome is predicted by the:

Which of these is NOT one of the desirable properties of a voting system that Kenneth Arrow identified?

According to the 'Perception versus Reality' section, why do policies like rent control persist despite strong opposition from economists?