PRINCIPLES OF MACROECONOMICS MANKIW 7TH EDITION PDF

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N. Gregory Mankiw is Professor of Economics at Harvard University. He began popular introductory textbook Principles of Economics (Cengage Learning). Full file at kaz-news.info Gregory-Mankiw-Test-Bank Thinking Like an Economist Multiple Choice. He is also author of the popular introductory textbook Principles of Economics ( Cengage Learning). Professor Mankiw is a regular participant in academic and.


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Google is proud to partner with libraries to digitize public domain materials and make them widely accessible. Public domain books belong to the public and we . Where can I download free Principles of Economics 7th Edition? can I get the PDF of the Principles of Macroeconomics 7th Canadian Edition by Mankiw?. N. Gregory Mankiw Brief principles of macroeconomics pdf. Pages· · Principles of Macroeconomics Mankiw 7th Edition Test Bank.

Unemployed labor is put to work producing jam and bread. The economy puts its idle capital to work producing jam and bread. The economy experiences economic growth. In a certain economy, toys and greeting cards are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now?

There is a technological advance in the toy industry, but the greeting card industry experiences no such advance. There is a technological advance in the greeting card industry, but the toy industry experiences no such advance. The country of Gerance produces two goods, cars and wine.

Last year, it produced 1, cars and 15, cases of wine. This year, it produced 1, cars and 20, cases of wine. Given no other information, which of the following events could not explain this change? Gerance experienced a reduction in unemployment. Gerance experienced an improvement in car-making technology.

Gerance acquired more resources. Any of these events could explain the change. Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier.

Last year, it produced units of food and 47 machines. This year, it is producing units of food and 52 machines. Which of the following events could not explain the increase in output? Any of these events could explain the increase in output. This year it experienced a technological advance in its machine-making industry.

As a result, this year the society wants to produce units of food and 47 machines. Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry. In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies.

The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food. Suppose an economy only produces two goods, robots and ice cream. Last month, the economy produced 10 robots and gallons of ice cream. This month, the same economy produced 15 robots and gallons of ice cream.

Which of the following statements could explain this change? This month, the economy reduced the unemployment of its resources.

This month, the economy experienced an improvement in technology. This month, the economy experienced an increase in resources d. A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model?

The production possibilities frontier is used to illustrate some basic economic ideas, including a. What is the opportunity cost to Footville of increasing the production of shoes from to ? The opportunity cost of an additional shoes is constant at socks.

The opportunity cost of an additional shoes increases as more socks are produced. What is the opportunity cost to Picnicland of increasing the production of hotdogs from to ? What is the opportunity cost to Picnicland of increasing the production of burgers from to ? At which point is this economy producing its maximum possible quantity of doors? This economy has the ability to produce at which point s?

This economy cannot produce at which point s? Efficient production is represented by which point s? Inefficient production is represented by which point s? Unemployment could cause this economy to produce at which point s? If this economy devotes all of its resources to the production of dryers, then it will produce a.

It is possible for this economy to produce a. All of the above. It is not possible for this economy to produce at point a. This economy cannot currently produce 70 washers and 70 dryers because a.

Suppose this economy is producing at point D. Which of the following statements would best explain this situation? The economy has insufficient resources to produce at a more desirable point. There is widespread unemployment in the economy.

Any of the above statements would be a legitimate explanation for this situation. The opportunity cost of this economy moving from point A to point B is a. The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is a. None of the above; the economy cannot move from point D to point C.

The opportunity cost of obtaining 20 additional dryers by moving from point D to point A is a. None of the above; the economy cannot move from point D to point A. If this economy devotes all of its resources to the production of blankets, then it will produce a. If this economy devotes one-half of its available resources to the production of blankets and the other half to the production of pillows, it could produce a.

A movement from point H to point K could be caused by a. If this economy moves from point F to point G, then which of the following statements is correct? This economy has moved from a point of inefficient production to a point of efficient production.

This economy has experienced economic growth. This economy has experienced an increase in employment. The opportunity cost of this economy moving from point I to point H is a.

The opportunity cost of this economy moving from point I to point F is a. The opportunity cost of this economy moving from point K to point H is a. If this economy devotes all of its resources to the production of engines, then it will produce a.

If this economy moved from point P to point N, then a. It is not possible for this economy to move from point P to point N without additional resources. What is the opportunity cost of moving from point L to point M? What is the opportunity cost of moving from point M to point L?

Point K represents an outcome in which a. Which point on the graph best represents the fact that, because resources are scarce, not every conceivable outcome is feasible?

To reach point L, the economy would have to a. None of the above are correct; the economy will never be able to reach point L. For this economy, as more and more hammers are produced, the opportunity cost of an additional hammer produced, in terms of nails, a. This answer cannot be determined from the graph. Refer to Figure , Panel a. Production at point K is a. Production is a.

The movement from point M to point K could be caused by a. The opportunity cost of moving from point J to point L is a. The opportunity cost of moving from point M to point L is a. The opportunity cost of moving from point K to point L is a. The opportunity cost of one cup of coffee is highest when the economy produces a. To gain 2 donuts by moving from point L to point M, society must sacrifice a.

More than one of the above is correct. Refer to Figure , Panel a and Panel b. Production at point Y is a. The movement from point W to point Y could be caused by a. The opportunity cost of one sofa is highest when the economy produces a.

To gain 2 tractors by moving from point W to point V, society must sacrifice a. The tradeoff between the production of tractors and sofas changes.

Production of 2 tractors and 10 sofas becomes efficient. Production of 6 tractors and 14 sofas becomes possible. The opportunity cost of a sofa is higher at all levels of sofa production. Which of the following events would explain the shift of the production possibilities frontier from A to B?

The economy experienced a technological advance in the production of books. More capital became available in the economy. More labor became available in the economy.

The shift of the production possibilities frontier from A to B illustrates a. Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B? The shift of the production possibilities frontier from A to B can best be described as a. Which of the following combinations of points are both efficient and attainable for this economy? Which of the following statements is true about point G for this economy? Point G is currently unattainable.

Point G is efficient. At point G, more cakes are produced than cookies. There is unemployment at point G. Which points are not currently attainable but could become achievable for this economy if there is an improvement in technology?

One difference between points F and G is that a. Point G is unattainable with current resources, but point F is attainable. All resources are fully employed at point F but there is unemployment at point G.

More output can be produced at point F but no additional output can be produced at point G. This economy produces more cookies at point G than at point F. Table shows one set of production possibilities.

What is the opportunity cost of increasing the production of corn from bushels to bushels? What is the opportunity cost of an increase in the production of wheat from bushels to bushels?

The opportunity cost of a bushel of corn does not depend on how many bushels of wheat are being produced. The opportunity cost of a bushel of corn increases as more corn is produced. The opportunity cost of a bushel of corn decreases as more corn is produced. The opportunity cost of a bushel of wheat decreases as more wheat is produced. Based on the values in the table, the production possibilities frontier is a. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology?

Home is a country that produces two goods, pears and cellular phones. Last year, Home produced bushels of pears and cellular phones. This year it produced bushels of pears and cellular phones.

Given no other information, which of the following events could explain this change? Home experienced increased unemployment. Home experienced a decline in pear-producing technology.

Home experienced an improvement in cellular phone-making technology. Home experienced a reduction in resources. Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50, textiles and computers. This year it produced 45, textiles and computers.

Given no further information, which of the following events could explain this change? Indiadesh decreased unemployment. Indiadesh experienced an improvement in textile-making technology. Indiadesh experienced an improvement in computer-making technology. Indiadesh experienced a reduction in resources. Application Figure Consider the production possibilities curve for a country that can produce sweaters, apples in bushels , or a combination of the two. If this economy devotes all of its available resources to producing apples, then it will produce a.

Which combination of points show production possibilities only achievable with improvements in technology or increases in resources? If this society moves from point U to point V, a.

If this society is producing at point T, a.

The opportunity cost of moving from point U to point R is a. Consider the production possibilities frontier for an economy that produces only sofas and cars. The opportunity cost of each car is a.

When society moves from point A to point B, a. The field of economics is traditionally divided into two broad subfields, a. Knowledge 2. Microeconomics is the study of a. Macroeconomics is the study of a. Knowledge 4.

A microeconomist — as opposed to a macroeconomist — might study a. Which of the following areas of study typifies microeconomics as opposed to macroeconomics? Application 6. Which of the following would likely be studied by a microeconomist rather than a macroeconomist? A macroeconomist — as opposed to a microeconomist — might study the effect of a. A macroeconomist - as opposed to a microeconomist - would study a.

Which of the following areas of study typifies macroeconomics as opposed to microeconomics?

Which of the following would likely be studied by a macroeconomist rather than a microeconomist? Which of the following statements best captures the relationship between microeconomics and macroeconomics? For the most part, microeconomists are unconcerned with macroeconomics, and macroeconomists are unconcerned with microeconomics.

Microeconomists study markets for small products, whereas macroeconomists study markets for large products. Microeconomics and macroeconomics are distinct from one another, yet they are closely related. Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward theoretical studies.

The Economist as Policy Adviser 1. When economists are trying to explain the world, they are a. When economists are trying to help improve the world, they are a. Which of the following statements is correct about the roles of economists? Economists are best viewed as policy advisers. Economists are best viewed as scientists. In trying to explain the world, economists are policy advisers; in trying to improve the world, they are scientists. In trying to explain the world, economists are scientists; in trying to improve the world, they are policy advisers.

For economists, statements about the world are of two types: Normative statements are a. Positive statements are a. Positive statements are not a. Normative statements are not a. A statement describing how the world is a. A statement describing how the world should be a.

One way to characterize the difference between positive statements and normative statements is as follows: Positive statements tend to reflect optimism about the economy and its future, whereas normative statements tend to reflect pessimism about the economy and its future.

Positive statements offer descriptions of the way things are, whereas normative statements offer opinions on how things ought to be. Positive statements involve advice on policy matters, whereas normative statements are supported by scientific theory and observation.

Economists outside of government tend to make normative statements, whereas government- employed economists tend to make positive statements. Economists view positive statements as a. Economists view normative statements as a. Economists speaking like scientists make a.

Economists speaking like policy advisers make a. When economists make positive statements, they are a. When economists make normative statements, they are a. When economists make a. You know an economist has crossed the line from policy adviser to scientist when he or she a. You know an economist has crossed the line from scientist to policy adviser when he or she a.

In principle, we can a. Evaluating statements about how the world should be involves values as well as facts. Positive statements can, in principle, be confirmed or refuted by examining evidence. Normative statements can be judged using data alone. Deciding what is good or bad policy is not just a matter of science. When an economist evaluates a positive statement, he or she is primarily a.

Normative conclusions a. Which of the following is an example of a positive, as opposed to normative, statement? Inflation is more harmful to the economy than unemployment is.

If welfare payments increase, the world will be a better place. Prices rise when the government prints too much money. When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.

When the minimum wage is increased, unemployment is a predictable consequence. The income tax rate should be increased to offset the budget deficit. Increasing government spending is the best way to help the economy move out of a recession. More than one of the above are positive statements.

Which of the following is a positive, as opposed to a normative, statement? Antitrust laws should be used to prevent further concentration in the wireless telephone service market. The wireless telephone service market is too highly concentrated.

Which of the following statements is an example of a positive, as opposed to normative, statement? Americans deserve a cleaner environment. Reducing emissions reduces days missed from school due to asthma. All Americans are entitled to quality health care. Economic policies should focus on improving equality. Which of the following is not an example of a positive, as opposed to normative, statement?

Higher gasoline prices will reduce gasoline consumption. Equality is more important than efficiency. Trade restrictions lower our standard of living. If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money.

Which of the following is an example of a normative, as opposed to positive, statement? Universal health care would be good for U.

An increase in the cigarette tax would cause a decrease in the number of smokers. A decrease in the minimum wage would decrease unemployment. A law requiring the federal government to balance its budget would increase economic growth.

Gasoline prices ought to be lower than they are now. The federal government should raise taxes on wealthy people. The social security system is a good system and it deserves to be preserved as it is. All of the above are normative statements. Reducing tax rates on the wealthy would benefit the nation. If the national saving rate were to increase, so would the rate of economic growth. Following the most recent recession, the economy is recovering at a slower than usual pace.

To stimulate the economy during the most recent recession, the federal government increased spending. In response to the most recent recession, the federal government extended the duration of unemployment benefits. Which of the following is an example of a normative - as opposed to a positive - statement? The discount rate is the interest rate the Federal Reserve charges banks to borrow funds.

The US income tax rate increases with the amount of income earned. The government should increase the tax on gasoline. The US unemployment rate increased to 10 percent in On the other hand, Which of the following is the best explanation for why President Harry Truman once said that he wanted to find a one-armed economist?

President Truman received input from so many economists that he only wanted one view from each. President Truman thought economists should analyze policies but not make or enforce them.

Economists understand that most policy decisions involve trade-offs so they are likely to present multiple views of policies. A one-armed economist would conduct only positive analysis and no normative analysis.

The Council of Economic Advisers a. Duties of the Council of Economic Advisers include a. In addition to advising the president, one duty of the Council of Economic Advisers is to a. The Economic Report of the President a. Economists at which of the following offices help formulate spending plans and regulatory policies?

Office of Management and Budget b. Department of the Treasury c.

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Congressional Budget Office d. Economists at the Department of the Treasury a. The president of the United States receives tax policy advice from economists in the a.

Federal Reserve. Department of Justice. Department of the Treasury. Congressional Budget Office. The design of tax policy is one of the responsibilities of economists who work at the a.

Council of Economic Advisers. A duty of economists at the Department of Labor is to a. Analysis of data on workers and those looking for work is conducted by economists at the a. Office of Management and Budget. Department of Labor. Economists at the Department of Justice a. The nation's antitrust laws are enforced by economists at the Department of a. Health and Human Services. Some, but not all, government economists are employed within the administrative branch of government.

Which of the following government agencies employs economists outside of the administrative branch? Economists who are primarily responsible for advising Congress on economic matters work in which agency? Congress relies on economists at the Congressional Budget Office to a. The President receives economic policy advice from economists at each of the following except a. The Federal Reserve a. Economists hold many positions advising the president and Congress including a.

All of these are possible positions that economists hold. John Maynard Keynes believed the ideas of economists to be a.

One difference between a hypothetical benevolent king implementing the best policy and the president implementing the best policy in the real world is the president has to be concerned about a.

Policymaking in a representative democracy a. The mayor does not implement the policy because it would not be popular with voters. Which of the following statements best describes the scenario? This is a common occurrence. The policymaker knows the best policy but chooses not to institute it for other reasons.

This is an unlikely occurrence. Most of the time, policymakers follow the advice of economists and institute the most efficient policies.

This would never happen. Policymakers always follow the advice of economists. Why Economists Disagree 1. Harry Truman b. George Bernard Shaw c.

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John Maynard Keynes d. President Ronald Reagan once joked that a Trivial Pursuit game designed for economists would a. Economists sometimes give conflicting advice because a. Comprehension 4. The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in a. Sometimes economists disagree because their scientific judgments differ. Which of the following instances best reflects this source of disagreement? One economist believes everyone should pay the same percentage of their income in taxes; another economist believes that wealthier citizens should pay a higher percentage of their income in taxes.

One economist believes that manufacturing firms should face greater regulation to preserve the environment; another economist believes the government should not intervene in free markets.

One economist believes that equality should be valued over efficiency in policy decisions; another economist believes that efficiency should be valued over equality in policy decisions. Differences in scientific judgement between economists are similar to all of the following except a. Sometimes economists disagree because their values differ. One economist believes that when income taxes are cut, people will increase their spending; another economist believes that when income taxes are cut, people will increase their saving.

One economist advises against increases in sales taxes because she thinks such increases are unfair to low- income people; another economist disputes the idea that increases in sales taxes are unfair to low-income people.

One economist believes that, prior to the Civil War, slavery contributed to economic growth in the South; another economist believes that slavery held back the South's economic growth. Comprehension 8. Joe and Fred are economists. Fred thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Joe and Fred a. Which of the following is one of the basic reasons why economists often appear to give conflicting advice to policymakers?

Yi and Avik are both economists. Yi thinks that taxing consumption, rather than income, would result in higher household saving because income that is saved would not be taxed. Avik does not think that household saving would respond much to a change in the tax laws. In this example, Yi and Avik a. Which of the following statements is correct about the extent of disagreement among economists?

There is a great deal of agreement among economists on virtually every economic issue. There is a great deal of agreement among economists on many important economic issues. All disagreements among economists are attributable to differences in their values. All disagreements among economists are attributable to the fact that different economists have different degrees of faith in the validity of alternative economic theories. A survey which sought the opinion of professional economists on fourteen propositions about economic policy found that a.

A survey of professional economists revealed that more than three-fourths of them agreed with a number of statements, including which of the following? Tariffs and import quotas usually reduce general economic welfare. A large federal budget deficit has an adverse effect on the economy. Minimum wage increases unemployment among young and unskilled workers. A survey of professional economists revealed that more than three-fourths of them agreed with fourteen economic propositions.

Which of the following is not one of those propositions? The United States should not restrict employers from outsourcing work to foreign countries. The United States should eliminate agricultural subsidies. Local and state governments should eliminate subsidies to professional sports franchises.

Principles Of Economics, 7th Edition By N. Gregory Mankiw[ Dr. Soc]

A ceiling on rents reduces the quantity and quality of housing available. Fiscal policy has a significant stimulative impact on a less than fully employed economy. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged.

The United States should implement universal health care for its citizens. Almost all economists agree that rent control a. Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually united in their opposition to such policies, probably because a. Policies such as rent control and trade barriers persist a.

Almost all economists agree that tariffs and import quotas a. Almost all economists agree that local and state governments should a. Knowledge Multiple Choice — Section John Maynard Keynes referred to economics as an easy subject, a. How did the influential economist John Maynard Keynes explain his remark that though economics is an easy subject compared with the higher branches of philosophy or pure science, it is a subject at which few excel?

Most people who study economics are not very bright. Good economists must possess a rare combination of gifts. Economics is quite boring; hence, people tend to lose interest in it before mastering it. Good thinkers become frustrated with economics because it does not make use of the scientific method. Comprehension 3. According to economist John Maynard Keynes, a great economist must also be a n a.

John Maynard Keynes described economics as an easy subject at which very few excel. Which of the following is not one of the reasons Keynes gave for why so few people excel at the study of economics? An economist must also be a mathematician, historian, statesman, and philosopher in some degree. An economist must understand symbols and speak in words. An economist must be purposeful and disinterested in a simultaneous mood. An economist must understand environmental science, regulation, and political science.

A Brief Review 1. When developing economic theories, graphs offer a way to visually express ideas that might be less clear if described with equations or words. Graphs are one way of expressing the relationships among variables. When studying the relationship between two economic variables, graphs allow economists to draw indisputable conclusions about causes and effects. When analyzing economic data, graphs provide a powerful way of finding and interpreting patterns.

Which of the following is not an example of a graph of a single variable? Graphs such as bar graphs and pie charts are limited in that they a. Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use a n a. The use of the coordinate system allows a. To display information on two variables, an economist must use a. Comprehension 7.

Which of the following allows you to provide information about the relationship between two variables? An ordered pair is a. The x-coordinate is the a. The x-coordinate of an ordered pair specifies the a.

The first number in any ordered pair is a. The y-coordinate is the a. The y-coordinate of an ordered pair specifies the a. The second number in any ordered pair is a. In the ordered pair 20, 30 , 20 is the a. In the ordered pair 5, 3 , 3 is the a. The point where both x and y are zero is known as the a. The ordered pair that represents the origin on a graph is a.

When two variables have a positive correlation, a. When two variables have a negative correlation, a. When two variables have a negative correlation and the x-variable decreases, a. Comprehension Figure The graph shown is known as a a. Cups of coffee per day and the hours that someone can go without sleep appear to have a.

Taking cause and effect into account, which of the following interpretations would be most reasonable regarding the relationship between coffee and hours without sleep? The less coffee a person drinks per day, the more time he can go without sleep. There is no relationship between how much coffee per day a person drinks and how long he can go without sleep. The more coffee a person drinks per day, the more time he can go without sleep.

The more coffee a person drinks per day, the less time he can go without sleep. When two variables move in opposite directions, the curve relating them is a. When two variables move in the same direction, the curve relating them is a. When a relevant variable that is not named on either axis changes, a. Suppose price is measured along the vertical axis on a graph.

When price changes, there will be a a. A demand curve shows the relationship a. A demand curve shows the relationship between price and a. A demand curve displaying the relationship between the price of cars and the quantity demanded of cars should have a slope that is a. The curves shown are a. The movement from point A to point B is a n a.

The movement from point B to point C is a n a. The movement from point B to point C could have been caused by a. The slope of the curve between points A and B is a. The slope of a line is equal to a. The slope of a line will be a small positive number for a fairly flat upward-sloping line.

The slope of a line will be a large positive number for a steep upward-sloping line. The slope of a line will be a negative number for a downward-sloping line. The slope of a line will be infinite for a horizontal line. Which of the following is correct? A horizontal line has an infinite slope, and a vertical line has a zero slope. A horizontal line has a slope of 1, and a vertical line has a slope of A horizontal line has a zero slope, and a vertical line has an infinite slope.

A horizontal line has a slope of -1, and a vertical line has a slope of 1. The slope of a fairly flat upward-sloping line will be a a. The slope of a steep upward-sloping line will be a a. The slope of a line that passes through the points 20, 30 and 40, 14 is a. The slope of a line that passes through the points 5, 8 and 12, 12 is a.

The slope of a line passing through the points 15, 3 and 10, 6 is a.

A relatively steep demand curve indicates that a. A relatively flat demand curve indicates that a.

In the ordered pair 8, 24 a. The slope of the line containing points Y and Z is a. The slope of the line containing points A and B is a. A movement from point A to point Z is called a.

A movement from point A to point B is called a. Which of the following could result in a movement from point A to point B? Which of the following could result in a movement from point B to point Z? Suppose that someone makes the argument that because empty alcohol containers are found at many accidents, the containers cause accidents. This would be an example of a.

Alfonso has noticed that increases in unemployment insurance claims are associated with recessions, and therefore he advocates limits on unemployment insurance so as to prevent recessions. Mary has noticed that most drug addicts once attended schools, and therefore she advocates getting rid of schools so as to prevent drug addiction.

The reasoning of both Alfonso and Mary suffers from the omitted variable problem. The reasoning of both Alfonso and Mary suffers from the reverse causality problem. Mary's reasoning suffers from the reverse causality problem, and Alfonso's reasoning suffers from the omitted variable problem.

In the early 19th century, the Russian government sent doctors to southern Russian villages to provide assistance during a cholera epidemic.

The villagers noticed that wherever doctors appeared, people died. Therefore, many doctors were chased away from villages, and some were even killed. This reaction to the correlation between doctors and deaths is most likely a problem of a.

The argument that downloads of minivans cause large families is an example of a. Application Figure In the following graph the x-axis shows the number of times a commuter rail train stops at a station per hour and the y-axis shows the number of commuter rail passengers per hour.

Commuter Rail Passengers by Frequency of Service Which of the following conclusions should not be drawn from observing this graph? There is a positive correlation between the frequency of service and the number of passengers.

When there are 5 stops per hour, there are approximately passengers. More stops per hour is associated with more passengers per hour. No other factors besides the frequency of service affect the number of passengers. A policymaker observes this graph and concludes that increasing the frequency of commuter rail service is a certain way to get more commuters to choose the commuter rail instead of driving their own cars.

You warn the policymaker about making a reverse causality mistake with which of the following statements? Higher gas prices are causing more people to choose the commuter rail over driving. The service frequency was increased in response to an increase in the number of passengers per hour.

There is a positive relationship between frequency of stops and number of passengers. The graph above is a a. According to the graph, the correlation between years of education and annual income is a. Senator Smith observes the graph and concludes that people who earn higher incomes attend school for more years. Senator Jones observes the graph and concludes that people who attend school for more years earn higher incomes. Who is correct? Senator Smith is correct. Senator Jones is correct.

It is difficult to say which senator might be correct due to the reverse causality problem. It is difficult to say which senator might be correct due to omitted variable bias. In the ordered pair 3, 6 , 3 is the a.

Between the two ordered pairs 3, 6 and 7, 18 , the slope is a. According to the graph, snowstorms a. Your friend John created the graph above to illustrate that snowstorms are caused by more snowblowers being sold.

You inform him that his interpretation is incorrect due to a. Which of the following could be an omitted variable in the graph? True b. Economists devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories. The scientific method is the dispassionate development and testing of theories about how the world works. The scientific method can be applied to the study of economics.

Foreign Affairs. Mankiw NG, Reis R. Journal of Economic Perspectives. The Economics of Healthcare. Journal of Economic Education. The Tradeoff between Nuance and Clarity. Eastern Economic Journal.

CEA Reflection. So What? American Economic Review: Defending the One Percent. Imperfect Information and Aggregate Supply. Handbook of Monetary Economics. Mankiw NG, Weinzierl M. An Exploration of Optimal Stabilization Policy. Brookings Papers on Economic Activity.

Spreading the Wealth Around: Reflections Inspired by Joe the Plumber. Abstract This essay discusses the policy debate concerning optimal taxation and the distribution of income. The Optimal Taxation of Height: American Economic Journal: Economic Policy. Abstract Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones?

Optimal Taxation in Theory and Practice. Smart Taxes: Mankiw NG, Ball L. Journal of Political Economy. Abstract This paper examines the optimal allocation of risk in an overlapping-generations economy.

Sticky Information in General Equilibrium.To which of the arrows does this transaction directly contribute? The curves shown are a. Publish the theory without testing it. Analysis The slope of a steep upward-sloping line will be a a. There is unemployment at point G. There is no relationship between how much coffee per day a person drinks and how long he can go without sleep. In the ordered pair 5, 3 , 3 is the a. Deciding that A causes B when in fact B causes A is a mistake called omitted variable bias.