Friday, December 17, 2010

Chapter 2 Review

1. D - Economic theories represent irrefutable facts.

2. C - simplify economic theories, so as to make it possible to answer economic questions.

3. D - all of the other options are true.

4. C - the model describes two circular flows: one for inputs and one for resources.

5. B - dollars in the economy are used over and over in an endless cycle.

6. A - Any point along the PPF represents an efficient level of production.

7.B - shift of the PPF away from the origin.

8. C - how households and firms make decisions and how they interact in markets.

9. B - The government should increase spending during recessions, so that the economy recovers quickly.

10. D - all the other options are true.

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