Question 31. 31. The famous observation that households and firms interacting in

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Question 31. 31. The famous observation that households and firms interacting in markets act as if they are guided by an “invisible hand” that leads them to desirable market outcomes comes from whose 1776 book? (Points : 5) David Ricardo Thorstein Veblen John Maynard Keynes Adam Smith Question 32. 32. Which of the following transactions does not take place in the markets for factors of production in the circu-lar-flow diagram? (Points : 5) a landowner leases land to a farmer a farmer hires a teenager to help with harvest a construction company rents trucks for its business a woman buys corn for dinner Question 33. 33. Which of the following is an example of something economists study? (Points : 5) Kate chooses to work overtime to earn extra income for her family. Ryan sells his economics textbook from last semester to his roommate for half the price of a new textbook. The unemployment rate in the United States is at its highest level in over fifty years. All of the above are correct. Question 34. 34. A production possibilities frontier shifts outward when (Points : 5) the economy experiences economic growth. the desires of the economy’s citizens change. at least one of the basic principles of economics is violated. opportunity costs are lessened. Question 35. 35. In the short run, which of the following is not correct? (Points : 5) Increasing the money supply increases the demand for goods and services. Increasing the money supply encourages firms to hire more workers. Lowering the money supply leads to a higher level of unemployment. Policies that encourage higher employment will also induce a lower rate of inflation. Question 36. 36. Which of the following principles is not one of the four principles of individual decisionmaking? (Points : 5) People face tradeoffs. Trade can make everyone better off. People respond to incentives. Rational people think at the margin. Question 37. 37. When a species of fish dies off due to pollution in a river where it once lived, this is an example of (Points : 5) a market failure caused by an externality. a market failure caused by market power. a market failure caused by equality. There is no market failure in this case. Question 38. 38. If the rent for apartments in New York City were fixed below the current price, then we would expect (Points : 5) an increase in the number of people wanting to rent apartments in New York City. a decrease in the number of people wanting to rent apartments in New York City. an increase in the number of apartments available for rent in New York City. None of the above is correct. Question 39. 39. When an economy is operating inside its production possibilities frontier, we know that (Points : 5) there are unused resources or inefficiencies in the economy. all of the economy’s resources are fully employed. economic growth would have to occur in order for the economy to move to a point on the frontier. in order to produce more of one good, the economy would have to give up some of the other good. Question 40. 40. For economists, statements about the world are of two types: (Points : 5) assumptions and theories. true statements and false statements. specific statements and general statements. positive statements and normative statements.

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Answers:

31. The famous observation that households and firms interacting in markets act as if they are guided by an “invisible hand” that leads them to desirable market outcomes comes from whose 1776 book?

Adam Smith

32. Which of the following transactions does not take place in the markets for factors of production in the circular flow diagram?

a woman buys corn for dinner

33. Which of the following is an example of something economists study?

All of the above are correct.

34. A production possibilities frontier shifts outward when

the economy experiences economic growth.

35. In the short run, which of the following is not correct?

Policies that encourage higher employment will also induce a lower rate of inflation.

36. Which of the following principles is not one of the four principles of individual decision making?

Trade can make everyone better off.

37. When a species of fish dies off due to pollution in a river where it once lived, this is an example of

a market failure caused by an externality.

38. If the rent for apartments in New York City were fixed below the current price, then we would expect

an increase in the number of people wanting to rent apartments in New York City.

39. When an economy is operating inside its production possibilities frontier, we know that

there are unused resources or inefficiencies in the economy.

40. For economists, statements about the world are of two types:

positive statements and normative statements.

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