b. It is difficult to conduct experiments in economic matters.
2. Economists use assumptions in order to:
c. simplify economic theories, so as to make it possible to answer economic questions.
3. Economic models are:
d. all of the other options are true
4. All of the following are characteristics of the Circular Flow Model of the economy, EXCEPT:
c. the model describes two circular flows: one for inputs and one for resources.
5. The circular flow model of the economy demonstrates that:
a. the economy actually has only two sectors: firms and households.
6. Which of the following is true regarding the Production Possibilities Frontier Model of the economy?
a. Any point along the PPF represents an efficient level of production
7. Economic growth in the economy can be portrayed in the Production Possibilities Frontier model as a:
b. shift of the PPF away from the origin.
8. Microeconomics is the study of:
c. how households and firms make decisions and how they interact in markets.
9. Which of the following is an example of a normative statement?
b. The government should increase spending during recessions, so that the economy recovers quickly.
10. Economists tend to disagree with each because:
d. all the other options are true
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