Test Bank for MacroEconomics 7th Edition By Paul Krugman, Robin Wells

Test Bank for MacroEconomics 7th Edition By Paul Krugman, Robin Wells

Multiple Choice 1. Which of these topics would be studied in macroeconomics? a. changes in airline travelers' vacation plans due to changes in the prices of airline tickets b. the effects of a tax reduction on the profits of Home Depot c. recessions d. unemployment among workers displaced as more firms move to cloud-based applications ANSWER: c 2. The basic concern of microeconomics is to: a. ensure that the government pursues the public good during pandemics. b. make sure small businesses thrive. c. study the choices people make, given unlimited wants. d. determine how unlimited resources can best be used to satisfy limited wants. ANSWER: c 3. How people choose among the alternatives available to them is: a. not part of the study of economics. b. impossible to describe. c. studied in microeconomics. d. unimportant to the study of microeconomics. ANSWER: c 4. Which of these is a microeconomic topic? a. reasons why a consumer buys more cheese b. reasons why inflation is rising c. what the government will do to address unemployment d. the effect of the budget deficit on the rate of interest ANSWER: a 5. Scarcity occurs in economics because: a. we often do not have sufficient resources to achieve our objectives. b. the wants of individual consumers are limited. c. there are poor people even in rich countries. d. taxes keep prices higher than they would otherwise be. ANSWER: a 6. If resources are scarce: a. they are insufficient to provide enough goods and services to satisfy all human material wants and needs. b. there are not enough of them for firms to produce goods and services. c. they are probably overvalued by consumers. Page 1 d. their supply is unlimited. ANSWER: a 7. A central and fundamental theme in economics is that: a. for me to have something, someone else must be willing to give it up. b. the United States is a rich country, but we are simply not aware of it. c. there are not enough resources available to satisfy all the ways a society wants to use them. d. we can build as much as we want, since resources are unlimited. ANSWER: c 8. In a market economy, decisions made by the economy as a whole emerge from many individual choices. Which of these exemplifies this phenomenon? a. The volume of work performed by the American workforce. b. The market demand for oranges. c. Whether a firm is profitable enough to remain in business. d. All of these exemplify this phenomenon. ANSWER: d 9. _____, that is, decisions by an individual about what to do and what not to do, is the basis for economics. a. Opportunity cost b. Utility c. Marginal choice d. Individual choice ANSWER: d 10. _____ forces us to make choices. a. Opportunity cost b. Marginal decision making c. Scarcity d. Market failure ANSWER: c 11. In our interactions with other consumers (or individuals), we are forced to make choices because of: a. utility and demand exploitation. b. efficiency considerations. c. scarcity. d. decisions made at the margin. ANSWER: c 12. Scarcity exists when: a. making choices among two or more alternatives is unnecessary (i.e., there is no opportunity cost). Page 2