Test Bank
,Test Bank For International Economics
5th Edition By Robert C. Feenstra,
Alan M. Taylor
,DOWNLOAD THE Test Bank for Essentials of Economics 5th Edition Krugman
Name: Class: Date:
Chapter 02: Economic Models: Trade-offs and Trade
1. A simplified representation that is used to study a real situation is called a(n):
a. model.
b. production possibility frontier.
c. assumption.
d. trade-off.
ANSWER: a
2. The models that economists construct:
a. usually make simplifying assumptions.
b. often rely on physical constructs, such as those used by architects.
c. rarely use mathematical equations or graphs.
d. attempt to precisely replicate the real world.
ANSWER: a
3. When building a model, economists:
a. simplify reality to highlight what really matters.
b. attempt to duplicate reality in all of its complexity.
c. ignore the facts and instead try to determine what the facts should be.
d. are careful to avoid the scientific method.
ANSWER: a
4. The models used in economics:
a. are always limited to variables that are directly related.
b. are essentially not reliable because they are not testable in the real world.
c. are of necessity unrealistic and not related to the real world.
d. emphasize basic relationships by abstracting from complexities in the everyday world.
ANSWER: d
5. Economic models are:
a. set up and used to precisely mirror reality.
b. useless if they are simple.
c. made generally of wood, plastic, and/or metal.
d. potentially useful in forming economic policy.
ANSWER: d
6. The importance of an economic model is that it allows us to:
a. build a complex and accurate model of how the economy should work.
b. build an accurate mathematical model of every aspect of the economy.
c. focus on the effects of only one change at a time.
d. avoid opportunity costs.
ANSWER: c
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, DOWNLOAD THE Test Bank for Essentials of Economics 5th Edition Krugman
Name: Class: Date:
Chapter 02: Economic Models: Trade-offs and Trade
7. In constructing a model, economists:
a. might use a computer simulation.
b. avoid making any assumptions.
c. assume that all relevant factors are constantly changing.
d. are prohibited from using mathematics.
ANSWER: a
8. A simplified version of reality that is used to clarify economic situations is called a(n):
a. economic fact.
b. current event.
c. model.
d. scarce resource.
ANSWER: c
9. An economic model:
a. is useful for explaining past economic conditions but not for predicting future outcomes.
b. often leads to faulty conclusions because of the ceteris paribus assumption.
c. allows nothing to change in the economic situation that is being described.
d. is a simplified version of reality used to understand real-world economic conditions.
ANSWER: d
10. The financial meltdown of 2008-2009:
a. was accurately predicted by an economic model.
b. was due to excessive investment in Internet companies.
c. was the result of the breakup of the European Union.
d. resulted partially from a faulty economic model.
ANSWER: d
11. A mortgage-backed security is an asset that:
a. only homeowners are allowed to purchase.
b. provides earnings to its owner based on payments made by people on their home loans.
c. the Federal Reserve uses to implement monetary policy.
d. is an important part of the circular-flow diagram.
ANSWER: b
12. Before 2000, the mortgage-backed securities market was relatively small because:
a. economic models predicted that they were bad investments.
b. they were illegal in many states.
c. the complexity of these securities made them hard to price properly.
d. it was difficult to obtain the foreign currencies that were required for purchasing them.
Copyright Macmillan Learning. Powered by Cognero. Page 2
mynursytest.store
,Test Bank For International Economics
5th Edition By Robert C. Feenstra,
Alan M. Taylor
,DOWNLOAD THE Test Bank for Essentials of Economics 5th Edition Krugman
Name: Class: Date:
Chapter 02: Economic Models: Trade-offs and Trade
1. A simplified representation that is used to study a real situation is called a(n):
a. model.
b. production possibility frontier.
c. assumption.
d. trade-off.
ANSWER: a
2. The models that economists construct:
a. usually make simplifying assumptions.
b. often rely on physical constructs, such as those used by architects.
c. rarely use mathematical equations or graphs.
d. attempt to precisely replicate the real world.
ANSWER: a
3. When building a model, economists:
a. simplify reality to highlight what really matters.
b. attempt to duplicate reality in all of its complexity.
c. ignore the facts and instead try to determine what the facts should be.
d. are careful to avoid the scientific method.
ANSWER: a
4. The models used in economics:
a. are always limited to variables that are directly related.
b. are essentially not reliable because they are not testable in the real world.
c. are of necessity unrealistic and not related to the real world.
d. emphasize basic relationships by abstracting from complexities in the everyday world.
ANSWER: d
5. Economic models are:
a. set up and used to precisely mirror reality.
b. useless if they are simple.
c. made generally of wood, plastic, and/or metal.
d. potentially useful in forming economic policy.
ANSWER: d
6. The importance of an economic model is that it allows us to:
a. build a complex and accurate model of how the economy should work.
b. build an accurate mathematical model of every aspect of the economy.
c. focus on the effects of only one change at a time.
d. avoid opportunity costs.
ANSWER: c
Copyright Macmillan Learning. Powered by Cognero. Page 1
mynursytest.store
, DOWNLOAD THE Test Bank for Essentials of Economics 5th Edition Krugman
Name: Class: Date:
Chapter 02: Economic Models: Trade-offs and Trade
7. In constructing a model, economists:
a. might use a computer simulation.
b. avoid making any assumptions.
c. assume that all relevant factors are constantly changing.
d. are prohibited from using mathematics.
ANSWER: a
8. A simplified version of reality that is used to clarify economic situations is called a(n):
a. economic fact.
b. current event.
c. model.
d. scarce resource.
ANSWER: c
9. An economic model:
a. is useful for explaining past economic conditions but not for predicting future outcomes.
b. often leads to faulty conclusions because of the ceteris paribus assumption.
c. allows nothing to change in the economic situation that is being described.
d. is a simplified version of reality used to understand real-world economic conditions.
ANSWER: d
10. The financial meltdown of 2008-2009:
a. was accurately predicted by an economic model.
b. was due to excessive investment in Internet companies.
c. was the result of the breakup of the European Union.
d. resulted partially from a faulty economic model.
ANSWER: d
11. A mortgage-backed security is an asset that:
a. only homeowners are allowed to purchase.
b. provides earnings to its owner based on payments made by people on their home loans.
c. the Federal Reserve uses to implement monetary policy.
d. is an important part of the circular-flow diagram.
ANSWER: b
12. Before 2000, the mortgage-backed securities market was relatively small because:
a. economic models predicted that they were bad investments.
b. they were illegal in many states.
c. the complexity of these securities made them hard to price properly.
d. it was difficult to obtain the foreign currencies that were required for purchasing them.
Copyright Macmillan Learning. Powered by Cognero. Page 2
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