Economic Policies and their Impact

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According to the text, what is the essence of science in economics?

The development and testing of theories about how the world works (correct)

The simplification of the complex world

The conducting of experiments

The use of theory and observation

According to the text, why do economists face challenges in conducting experiments?

Economists do not use theory and observation like other scientists

Economists do not use the scientific method

Economists do not pay attention to natural experiments offered by history

Conducting experiments is often difficult and sometimes impossible in economics (correct)

According to the text, what role do assumptions play in economics?

Assumptions are only used to study long-run effects

Assumptions can simplify the complex world and make it easier to understand (correct)

Assumptions are only used to study short-run effects

Assumptions are not important in economic thinking

According to the text, what is the art in scientific thinking in economics?

Deciding which assumptions to make Signup and view all the answers

According to the text, why do economists use different assumptions?

To answer different questions Signup and view all the answers

According to the text, what do economists pay close attention to?

Natural experiments offered by history Signup and view all the answers

According to the text, what is the role of economists in addressing their subject?

To address their subject with a scientist's objectivity Signup and view all the answers

Which of the following is an example of a positive statement in economics?

A fall in interest rates will reduce the savings rate. Signup and view all the answers

Which of the following is an example of a normative statement in economics?

Government should increase tax on demerit goods like cigarettes. Signup and view all the answers

What percentage of economists agree that a ceiling on rents reduces the quantity and quality of housing available?

93% Signup and view all the answers

What percentage of economists agree that tariffs and import quotas usually reduce general economic welfare?

93% Signup and view all the answers

What percentage of economists agree that flexible and floating exchange rates offer an effective international monetary arrangement?

90% Signup and view all the answers

What percentage of economists agree that fiscal policy has a significant stimulative impact on a less than fully employed economy?

90% Signup and view all the answers

What percentage of economists agree that economic growth in developed countries like the United States leads to greater levels of well-being?

88% Signup and view all the answers

Which of the following is a purpose of graphs?

To visually express ideas that might be less clear if described with equations or words Signup and view all the answers

What is the coordinate system used to display two variables on a single graph called?

Ordered pairs Signup and view all the answers

When two variables move in opposite directions, the curve on a graph is

Downward sloping Signup and view all the answers

What is the ratio of the vertical distance covered to the horizontal distance covered called?

Slope Signup and view all the answers

In the given graph, what is the slope of the demand curve between the points (21 novels, $6) and (13 novels, $8)?

-1/4 Signup and view all the answers

What does a fairly flat upward-sloping line indicate?

A small positive slope Signup and view all the answers

What does a steep upward-sloping line indicate?

A large positive slope Signup and view all the answers

What does a downward sloping line indicate?

A negative slope Signup and view all the answers

What is the slope of a horizontal line?

Zero Signup and view all the answers

Which of the following best describes the circular flow diagram?

A diagram that shows the flow of resources from households to firms and of products from firms to households Signup and view all the answers

What does the production possibilities frontier represent?

The combinations of output that the economy can possibly produce given the available factors of production and the available production technology Signup and view all the answers

Which of the following is an example of an inefficient level of production?

A point inside the production possibilities frontier Signup and view all the answers

What does the slope of the production possibilities frontier represent?

The opportunity cost of manufactured goods in terms of agricultural goods Signup and view all the answers

What is the opportunity cost of producing 1 unit of agricultural goods in terms of manufactured goods?

4/5 units of manufactured goods Signup and view all the answers

What is the opportunity cost of producing 1 unit of manufactured goods in terms of agricultural goods?

5/4 units of agricultural goods Signup and view all the answers

What does technological advancement lead to?

The production possibilities frontier shifting outward Signup and view all the answers

Positive statements are ______ statements dealing with matter of fact or they question about how things actually are.

objective Signup and view all the answers

Normative statements are ______ or value judgment.

opinion Signup and view all the answers

Economists may have different ______ - Different normative views about what policy should try to accomplish.

values Signup and view all the answers

A ceiling on rents reduces the quantity and quality of ______ available.

housing Signup and view all the answers

Tariffs and import quotas usually reduce general economic ______.

welfare Signup and view all the answers

Flexible and floating exchange rates offer an effective international ______ arrangement.

monetary Signup and view all the answers

Economic growth in developed countries like the United States leads to greater levels of ______.

well-being Signup and view all the answers

According to the text, what is the essence of science in economics?

the scientific method Signup and view all the answers

According to the text, what do economists pay close attention to?

natural experiments Signup and view all the answers

According to the text, why do economists use different assumptions?

to answer different questions Signup and view all the answers

What does a fairly flat upward-sloping line indicate?

a small change in one variable is associated with a large change in the other variable Signup and view all the answers

What does a steep upward-sloping line indicate?

a large change in one variable is associated with a small change in the other variable Signup and view all the answers

What does a downward sloping line indicate?

a decrease in one variable is associated with a decrease in the other variable Signup and view all the answers

Which of the following best describes the circular flow diagram?

a visual model of how the economy is organized Signup and view all the answers

Graphs serve two purposes: – Visually express ideas that might be less clear if described with ______ or words

equations Signup and view all the answers

The coordinate system – Display two variables on a single graph (ex: price and quantity) – Ordered pairs of points x-coordinate – Horizontal location y-coordinate – Vertical ______

location Signup and view all the answers

Negatively related variables – The two variables move in direction – Downward sloping

opposite, curve Signup and view all the answers

Positively related variables – The two variables move in the direction – Upward sloping

same, curve Signup and view all the answers

Calculating Slope: – Ratio of the vertical distance covered – To the horizontal distance Δ (delta) → change in a variable Δ y → change in y Δ x → change in

covered, x Signup and view all the answers

To calculate the slope of the demand curve, we can look at the changes in the x- and y-coordinates as we move from the point (21 novels, $6) to the point (13 novels, $8). The slope of the line is the ratio of the change in the y-coordinate (–2) to the change in the x-coordinate (+8), which equals ______

-1/4 Signup and view all the answers

Types of Slope – Fairly flat upward-sloping line Slope is a small positive – Steep upward-sloping line Slope is a large positive – Downward sloping line Slope is a number – Horizontal line: slope is – Vertical line: infinite __

number, positive, negative, zero, slope Signup and view all the answers

According to the text, what role do assumptions play in economics? ______

assumptions Signup and view all the answers

What does the production possibilities frontier ______?

represent Signup and view all the answers

According to the circular flow diagram, households are and firms are .

Signup and view all the answers

According to the circular flow diagram, households are and firms are .

Signup and view all the answers

According to the circular flow diagram, households are and firms are .

buyers, sellers Signup and view all the answers

The ______ of the production possibilities frontier measures the opportunity cost of manufactured goods in terms of agricultural goods. This opportunity cost varies, depending on how much of the two goods the economy is producing.

slope Signup and view all the answers

The economy can produce any combination on or inside the frontier. Inefficient levels of production: Points inside the production possibilities frontier. Ex: Point X (the resources may get wasted, left idle or misallocated) Efficient levels of production: The economy is getting all it can from the scarce resources available Points on the production possibilities frontier. Ex: Point A, B and C Unattainable levels of production: Points outside the frontier are not feasible given the economy’s resources. Ex: Point Y

inside, outside Signup and view all the answers

What is the opportunity cost of producing 1 unit of manufactured goods in terms of agricultural goods?

5/4 units of agricultural goods Signup and view all the answers

Technological advancement…… – Leads the production possibilities frontier to shift ______.

outward Signup and view all the answers

To produce 1 unit of agricultural goods: 25 units of agricultural goods = 20 units of manufactured goods 25 units of agricultural goods /25 = 20 units of manufactured goods /25 1 units of agricultural good = 4/5 units of manufactured goods Opportunity cost in terms of manufactured goods To produce 1 unit of manufactured goods: 20 units of manufactured goods = 25 units of agricultural goods 20 units of manufactured goods /20 = 25 units of agricultural goods /20 1 units of manufactured good = ______ units of agricultural goods

5/4 Signup and view all the answers

Opportunity cost in terms of agricultural goods To produce 1 unit of agricultural goods: 25 units of agricultural goods = 20 units of manufactured goods 25 units of agricultural goods /25 = ______ units of manufactured goods /25 1 units of agricultural good = 4/5 units of manufactured goods

20 Signup and view all the answers

Economic Policies and their Impact

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Questions and Answers

According to the text, what is the essence of science in economics?

According to the text, why do economists face challenges in conducting experiments?

According to the text, what role do assumptions play in economics?

According to the text, what is the art in scientific thinking in economics?

According to the text, why do economists use different assumptions?

According to the text, what do economists pay close attention to?

According to the text, what is the role of economists in addressing their subject?

Which of the following is an example of a positive statement in economics?

Which of the following is an example of a normative statement in economics?

What percentage of economists agree that a ceiling on rents reduces the quantity and quality of housing available?

What percentage of economists agree that tariffs and import quotas usually reduce general economic welfare?

What percentage of economists agree that flexible and floating exchange rates offer an effective international monetary arrangement?

What percentage of economists agree that fiscal policy has a significant stimulative impact on a less than fully employed economy?

What percentage of economists agree that economic growth in developed countries like the United States leads to greater levels of well-being?

Which of the following is a purpose of graphs?

What is the coordinate system used to display two variables on a single graph called?

When two variables move in opposite directions, the curve on a graph is

What is the ratio of the vertical distance covered to the horizontal distance covered called?

In the given graph, what is the slope of the demand curve between the points (21 novels, $6) and (13 novels, $8)?

What does a fairly flat upward-sloping line indicate?

What does a steep upward-sloping line indicate?

What does a downward sloping line indicate?

What is the slope of a horizontal line?

Which of the following best describes the circular flow diagram?

What does the production possibilities frontier represent?

Which of the following is an example of an inefficient level of production?

What does the slope of the production possibilities frontier represent?

What is the opportunity cost of producing 1 unit of agricultural goods in terms of manufactured goods?

What is the opportunity cost of producing 1 unit of manufactured goods in terms of agricultural goods?

What does technological advancement lead to?

Positive statements are ______ statements dealing with matter of fact or they question about how things actually are.

Normative statements are ______ or value judgment.

Economists may have different ______ - Different normative views about what policy should try to accomplish.

A ceiling on rents reduces the quantity and quality of ______ available.

Tariffs and import quotas usually reduce general economic ______.

Flexible and floating exchange rates offer an effective international ______ arrangement.

Economic growth in developed countries like the United States leads to greater levels of ______.

According to the text, what is the essence of science in economics?

According to the text, what do economists pay close attention to?

According to the text, why do economists use different assumptions?

What does a fairly flat upward-sloping line indicate?

What does a steep upward-sloping line indicate?

What does a downward sloping line indicate?

Which of the following best describes the circular flow diagram?

Graphs serve two purposes: – Visually express ideas that might be less clear if described with ______ or words

The coordinate system – Display two variables on a single graph (ex: price and quantity) – Ordered pairs of points x-coordinate – Horizontal location y-coordinate – Vertical ______

Negatively related variables – The two variables move in ______ direction – Downward sloping ______

Positively related variables – The two variables move in the ______ direction – Upward sloping ______

Calculating Slope: – Ratio of the vertical distance covered – To the horizontal distance ______ Δ (delta) → change in a variable Δ y → change in y Δ x → change in ______

Types of Slope – Fairly flat upward-sloping line Slope is a small positive ______ – Steep upward-sloping line Slope is a large positive ______ – Downward sloping line Slope is a ______ number – Horizontal line: slope is ______ – Vertical line: infinite ______

According to the text, what role do assumptions play in economics? ______

What does the production possibilities frontier ______?

According to the circular flow diagram, households are ______ and firms are ______.

According to the circular flow diagram, households are ______ and firms are ______.

According to the circular flow diagram, households are ______ and firms are ______.

The ______ of the production possibilities frontier measures the opportunity cost of manufactured goods in terms of agricultural goods. This opportunity cost varies, depending on how much of the two goods the economy is producing.

What is the opportunity cost of producing 1 unit of manufactured goods in terms of agricultural goods?

Technological advancement…… – Leads the production possibilities frontier to shift ______.

Opportunity cost in terms of agricultural goods To produce 1 unit of agricultural goods: 25 units of agricultural goods = 20 units of manufactured goods 25 units of agricultural goods /25 = ______ units of manufactured goods /25 1 units of agricultural good = 4/5 units of manufactured goods

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Negatively related variables – The two variables move in direction – Downward sloping

Positively related variables – The two variables move in the direction – Upward sloping

Calculating Slope: – Ratio of the vertical distance covered – To the horizontal distance Δ (delta) → change in a variable Δ y → change in y Δ x → change in

Types of Slope – Fairly flat upward-sloping line Slope is a small positive – Steep upward-sloping line Slope is a large positive – Downward sloping line Slope is a number – Horizontal line: slope is – Vertical line: infinite __

According to the circular flow diagram, households are and firms are .

According to the circular flow diagram, households are and firms are .

According to the circular flow diagram, households are and firms are .