(Test Bank) Essentials of Economics

Mankiw, 8

Business

Test Bank

8th Edition

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Test Bank for Essentials of Economics, The downloadable file consists of 1495 pages, and the total size of the file is 20.96 MB. Purchase now only for highly discounted price.

Author(s): Mankiw

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Page 1 1. The English word that comes from the Greek word for "one who manages a household" is a. market. b. consumer. c. producer. d. economy. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 001.01.0 - MC - MANK08 2. The word “economy” comes from the Greek word oikonomos , which means a. “environment.” b. “production.” c. “one who manages a household.” d. “one who makes decisions.” ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 002.01.0 - MC - MANK08 3. Resources are a. scarce for households but plentiful for economies. b. plentiful for households but scarce for economies. c. scarce for households and scarce for economies. d. plentiful for households and plentiful for economies. ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 003.01.0 - MC - MANK08 4. In considering how to allocate its scarce resources among its various members, a household considers Page 2 a. each member’s abilities. b. each member’s efforts. c. each member’s desires. d. All of the above are correct. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 004.01.0 - MC - MANK08 5. Fundamentally, economics deals with a. scarcity. b. money. c. poverty. d. banking. ANSWER: a DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 005.01.0 - MC - MANK08 6. Which of the following is correct? a. The word economy comes from the Greek word for “rational thinker.” b. Economists study the management of scarce resources. c. Because economists believe that people pursue their best interests, they are not interested in how people interact. d. All of the above are correct. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.024 - Classify the different functions an economist may serve. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 006.01.0 - MC - MANK08 Page 3 7. The overriding reason why households and societies face many decisions is that a. resources are scarce. b. goods and services are not scarce. c. incomes fluctuate with business cycles. d. people, by nature, tend to disagree. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 007.01.0 - MC - MANK08 8. A society allocates its scarce resources to various uses. These scarce resources include a. land. b. people. c. machines. d. All of the above are correct. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 008.01.0 - MC - MANK08 9. The phenomenon of scarcity stems from the fact that a. most economies’ production methods are not very good. b. in most economies, wealthy people consume disproportionate quantities of goods and services. c. governments restrict production of too many goods and services. d. resources are limited. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 009.01.0 - MC - MANK08 Page 4 10. Approximately what percentage of the world's economies experience scarcity? a. 10% b. 40% c. 85% d. 100% ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 010.01.0 - MC - MANK08 11. When a society cannot produce all the goods and services people wish to have, the economy is experiencing a. scarcity. b. surpluses. c. inefficiencies. d. inequalities. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 011.01.0 - MC - MANK08 12. Which of the following products would be considered scarce? a. bread b. baseballs autographed by Babe Ruth c. motorcycles d. All of the above are correct. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Comprehension Page 5 CUSTOM ID: 012.01.0 - MC - MAN K08 13. In the broadest sense, economics is the study of a. production methods. b. how society manages its scarce resources. c. how households decide who performs which tasks. d. the interaction of business and government. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 013.01.0 - MC - MANK08 14. The study of how society manages its scarce resources is most closely associated with which field of study? a. environmental studies b. economics c. management d. accounting ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 014.01.0 - MC - MANK08 15. In most societies, resources are allocated by a. a single central planner. b. a small number of central planners. c. those firms that use resources to provide goods and services. d. the combined actions of millions of households and firms. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Economic systems Page 6 KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 015.01.0 - MC - MANK08 16. Coal is considered to be a non-renewable energy source. Which of the following statements is correct? a. Coal is an unlimited resource. b. Coal is a scarce resource. c. Coal is a non-scarce resource. d. Coal is not a resource. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Application CUSTOM ID: 016.01.0 - MC - MANK08 17. Which of the following is not an example of scarcity? a. Only some people can afford to buy a BMW automobile. b. Every individual in society cannot attain the highest standard of living to which he or she might aspire. c. Miranda has more oranges in her orchard than she will ever use. d. Each member of a household cannot get everything he or she wants. ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Application CUSTOM ID: 017.01.0 - MC - MANK08 18. Economics is the study of how society manages its a. limited wants and unlimited resources. b. unlimited wants and unlimited resources. c. limited wants and limited resources. d. unlimited wants and limited resources. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. Page 7 TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 018.01.0 - MC - MANK08 19. Which of the following is a decision that economists study? a. how much people work b. what people buy c. how much money people save d. All of the above are correct. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.024 - Classify the different functions an economist may serve. TOPICS: Economic thinking KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 019.01.0 - MC - MANK08 20. Which of the following is an example of something economists study? a. Mitch chooses to work overtime to earn extra income for his family. b. Megan sells her physics textbook from last semester to her roommate for half the price of a new textbook. c. The unemployment rate in the United States has fallen by two percentage points in the last few years. d. All of the above are correct. ANSWER: d DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.024 - Classify the different functions an economist may serve. TOPICS: Economic thinking KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 020.01.0 - MC - MANK08 21. What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have? a. inefficiency b. inequality c. scarcity d. market failure ANSWER: c DIFFICULTY: Easy Page 8 LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Scarcity KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 021.01.0 - MC - MANK08 22. Which of the following is a subject that economists study? a. the growth in average income b. the fraction of the population that cannot find work c. the rate at which prices are rising d. All of the above are correct. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.024 - Classify the different functions an economist may serve. TOPICS: Economic thinking KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 022.01.0 - MC - MANK08 23. A variety of fuels can be used to generate electricity. Considering only the availability of the fuel and not the cost of converting it into electricity, which of the following fuels is most scarce? a. wind power b. solar energy c. fossil fuel d. hydro -power ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Scarcity KEYWORDS: BLOOM'S: Application CUSTOM ID: 023.01.0 - MC - MANK08 24. Which of the following is not subject to scarcity? a. water b. steel c. diamonds d. none of the above ANSWER: d DIFFICULTY: Moderate Page 9 LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Scarcity KEYWORDS: BLOOM'S: Application 1. The adage, "There is no such thing as a free lunch," means a. even people on welfare have to pay for food. b. the cost of living is always increasing. c. people face tradeoffs. d. all costs are included in the price of a product. ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 001.01.1 - MC - MANK08 2. The adage, "There is no such thing as a free lunch," is used to illustrate the principle that a. goods are scarce. b. people face tradeoffs. c. income must be earned. d. households face many decisions. ANSWER: b DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 002.01.1 - MC - MANK08 3. The phrase “no such thing as a free lunch” means a. people must face tradeoffs. b. rational people think at the margin. c. people respond to incentives. d. trade can make everyone better off. ANSWER: a DIFFICULTY: Easy Page 10 LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 003.01.1 - MC - MANK08 4. Which of the following statements best represents the principle represented by the adage, "There is no such thing as a free lunch"? a. Michelle can attend the concert only if she takes her sister with her. b. Michael is hungry and homeless. c. Andrea must repair the tire on her bike before she can ride it to class. d. Dani must decide between going to Florida or Brazil for spring break. ANSWER: d DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Application CUSTOM ID: 004.01.1 - MC - MANK08 5. Which of the following examples does not illustrate the principle represented by the adage, "There is no such thing as a free lunch"? a. Melissa needs to pay her rent and her electric bill. b. Kevin must choose between buying a new flat screen television and buying his textbooks for this semester. c. Robert must decide between studying for his psychology exam and working at his part-time job. d. Lisa can spend her money on a new smart phone or on a weekend trip. ANSWER: a DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Application CUSTOM ID: 005.01.1 - MC - MANK08 6. The principle that "people face tradeoffs" applies to a. individuals. b. families. Page 11 c. societies. d. All of the above are correct. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Application CUSTOM ID: 006.01.1 - MC - MANK08 7. Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustra tes the basic principle that a. people respond to incentives. b. rational people think at the margin. c. people face tradeoffs. d. improvements in efficiency sometimes come at the expense of equality. ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 007.01.1 - MC - MANK08 8. Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that a. trade can make everyone better off. b. people face trade -offs. c. rational people think at the margin. d. decisions made at the margin are not particularly important. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 008.01.1 - MC - MANK08 Page 12 9. John is an athlete. He has $120 to spend and wants to buy either a heart rate monitor or new running shoes. Both the heart rate monitor and running shoes cost $120, so he can only buy one. This illustrates the principle that a. trade can make everyone better off. b. people face trade -offs. c. rational people think at the margin. d. people respond to incentives. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 009.01.1 - MC - MANK08 10. Lawrence is a photographer. He has $230 to spend and wants to buy either a flash for his camera or a new tripod. Both the flash and tripod cost $230, so he can only buy one. This illustrates the principle that a. trade can make everyone better off. b. people face trade -offs. c. rational people think at the margin. d. people respond to incentives. ANSWER: b DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 010.01.1 - MC - MANK08 11. Guns and butter are used to represent the classic societal tradeoff between spending on a. durable and nondurable goods. b. imports and exports. c. national defense and consumer goods. d. law enforcement and agriculture. ANSWER: c DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. Page 13 TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 011.01.1 - MC - MANK08 12. A tradeoff exists between a clean environment and a higher level of income in that a. studies show that individuals with higher levels of income pollute less than low-income individuals. b. efforts to reduce pollution typically are not completely successful. c. laws that reduce pollution raise costs of production and reduce incomes. d. employing individuals to clean up pollution causes increases in employment and income. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Application CUSTOM ID: 012.01.1 - MC - MANK08 13. While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulations come at the cost of reducing the incomes of the regulated firms’ owners, workers, and customers. This statement illustrates the principle that a. trade can make everyone better off. b. rational people think at the margin. c. people face tradeoffs. d. people respond to incentives. ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Application CUSTOM ID: 013.01.1 - MC - MANK08 14. When society requires that firms reduce pollution, there is a. a tradeoff because of reduced incomes to the firms' owners and workers. b. a tradeoff only if some firms are forced to close. c. no tradeoff, since the cost of reducing pollution falls only on the firms affected by the requirements. d. no tradeoff, since everyone benefits from reduced pollution. Page 14 ANSWER: a DIFFICULTY: Challenging LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Tradeoffs KEYWORDS: BLOOM'S: Application CUSTOM ID: 014.01.1 - MC - MANK08 15. Economists use the word equality to describe a situation in which a. each member of society has the same income. b. each member of society has access to abundant quantities of goods and services, regardless of his or her income. c. society is getting the maximum benefits from its scarce resources. d. society's resources are used efficiently. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Equality KEYWORDS: BLOOM'S: Comprehension CUSTOM ID: 015.01.1 - MC - MANK08 16. Efficiency means that a. society is conserving resources in order to save them for the future. b. society's goods and services are distributed equally among society's members. c. society's goods and services are distributed fairly, though not necessarily equally, among society's members. d. society is getting the maximum benefits from its scarce resources. ANSWER: d DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Efficiency KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 016.01.1 - MC - MANK08 17. The property of society getting the most it can from its scarce resources is called a. efficiency. b. equality. Page 15 c. externality. d. productivity. ANSWER: a DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Efficiency KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 017.01.1 - MC - MANK08 18. Efficiency a. and equality both refer to how much a society can produce with its resources. b. and equality both refer to how fairly the benefits from using resources are distributed between members of a society. c. refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society. d. refers to how evenl y the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources ANSWER: c DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works. TOPICS: Economic thinking Efficiency KEYWORDS: BLOOM'S: Knowledge CUSTOM ID: 018.01.1 - MC - MANK08 19. The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that a. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources. b. equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits. c. equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits. d. equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs. ANSWER: a DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making that determine how an economy generally works.