ECO201 Chapter 2 – Flashcards
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Which one of the following relationships is most likely to be stochastic rather than deterministic?
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The relationship between the number of hours students study and their GPAs.
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Suppose Jessica goes to the store to buy fruit. If she only buys mangos, she can buy 6. If she only buys papayas, she can buy 18. Each time she buys one mango she gives up buying 3 papayas. Based on this information, which of the following linear equations is a correct representation of Jessica's budget constraint? (assume P=papayas and M = mangos)
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M = 6 - 1/3P
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Which of the following would most likely be described as "infrastructure" in Lexington?
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Upper Street
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According to the circular flow diagram, if Denny is the owner of a landscaping business and he just received $50 for mowing Mrs. Pendleton's lawn
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Denny acts as a firm who interacted in the markets for goods and services with Mrs. Pendleton.
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When economists are trying to explain the world, they are
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scientists.
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The simple circular-flow diagram is a model that includes only some key players in the real economy. Which of the following key players are omitted from the simple circular-flow model?
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government
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When an economy is operating inside its production possibilities frontier, we know that
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there are unused resources or inefficiencies in the economy.
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Production possibilities frontiers are usually bowed outward. This is because
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resources are specialized; that is, some are better at producing particular goods rather than other goods.
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A production possibilities frontier shifts outward when
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the economy experiences economic growth.
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An economic model is
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a simplified representation of some aspect of the economy.
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The circular-flow diagram illustrates that, in markets for the factors of production
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households are sellers, and firms are buyers.
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A point inside the production possibilities frontier is
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feasible, but not efficient.
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An economy produces hot dogs and hamburgers. If a discovery of the remarkable health benefits of hot dogs were to change consumers' preferences, it would
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move the economy along the production possibilities frontier.
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All of the following topics fall within the study of microeconomics EXCEPT
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the influence of the government budget deficit on economic growth.
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Which of the following is a positive, rather than a normative, statement?
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Law X will reduce national income.
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Brianne is an orientation leader at UK. Part of her job is to help direct students to their residence halls and buildings around campus. In explaining to best way to navigate to the Johnson Center, she hands a new student a map of campus. This map is a type of
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model
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Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that
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the nation is not using all available resources or is using inferior technology or both.
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In the simple circular flow diagram, the flow of money from the markets for goods and services to the firms is called
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revenue
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Which of the following statements best captures the relationship between microeconomics and macroeconomics?
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Microeconomics and macroeconomics are distinct from one another, yet they are closely related.
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Which of the following is an example of using the scientific method with a natural experiment?
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tracking the price of oil when a war in the Middle East interrupts the flow of crude oi
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For economists, historical episodes
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are worthy of study because they serve as valuable substitutes for laboratory experiments.
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The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and
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he available demand for the output.
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Which of the following concepts cannot be illustrated by the production possibilities frontier?
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equality
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What is economic theory?
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a generalization about the abstract of a working economy
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What is an economic model?
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a simple abstract model used to study larger, more complex models
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What is a positive statement?
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a statement that can be proven, disproven. or tested
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What is a normative statement?
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made of opinion and cannot be disproven or proven
