Econ 101/1211 Chapter 2 (Thinking like an Economist) 1. Why do economists sometimes offer conflicting advice to policy makers? A. Economists sometimes disagree because they have different hunches about the validity of alternative theories or about the size of important parameters that measure how economic variables are related B. Economists may disagree about the validity of alternative positive theories about how the world works C. Economists may have different values and therefore different normative views about what policy should try to accomplish D. All of the above 2. Microeconomics is the study of: A. economy wide phenomena, including inflation, unemployment, and economic growth B. how society manages its scarce resources C. how to induce a person to act D. how households and firms make decisions and how they interact in specific markets 3. Positive statement is defined as: A claims that attempt to describe the world as it is B. claim statement about the present C. claims that attempt to prescribe how the world should be D. claim statement about the future 4. Which of the following in not a factor of production A. Land B. Money C. labor D. capital 5. The circular flow is : A, a visual model of the economy that shows how government restrict production of too many goods and services B. is a flow that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology C. a visual model of the economy that shows how dollars flow through markets among houscholds and firms D. is a flow that allocates resources through decentralized decisions of many firms and households as they interact in markets for goods and services