Principles of Economics 2e : Comprehensive Test Bank & Exam Prep (Chapters 1-8) complete questions and correct detailed answers (verified answers)

1. In countries like the command economy predominates. A. China and Vietnam B. Cuba and North Korea C. South Africa and Kenya D. Germany and France: B. Cuba and North Korea 2. . In which of the following countries will the national government have the greatest influence with respect to the nation's economy? A. China B. Cuba C. Canada D. Chile: B. Cuba 3. . In a command economy, the either makes most economic deci- sions itself or at least strongly influences how the decisions are made. A. government B. market C. firm D. business sector: A. government 4. Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization? A. division of labor B. international trade C. economies of scale D. command economy: B. international trade 5. . In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers? A. wage levels 1 / 82 Principles of Economics 2e : Comprehensive Test Bank & Exam Prep (Chapters 1-8) complete questions and correct detailed answers (verified answers) B. the macroeconomy 2 / 82 Principles of Economics 2e : Comprehensive Test Bank & Exam Prep (Chapters 1-8) complete questions and correct detailed answers (verified answers) C. the firm's income D. household income: B. the macroeconomy 6. . In a , most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers. A. market-oriented economy B. macroeconomy C. microeconomy D. command economy: A. market-oriented economy 7. Which of the following best denotes the reason for the existence of substan- tial black markets? A. a market-oriented economy B. a command economy C. government laws and rules D. the microeconomy: B. a command economy 8. . Which of the following is generally accepted as a valid criticism of the production of useful goods and services? A. government involvement B. the black market C. environmental pollution D. economic freedom: C. environmental pollution 9. In the first chapter of The Wealth of Nations, Smith introduces the idea of the , which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers. A. division of labor B. interconnected economy C. task economy D. modern economy: A. division of labor 3 / 82 Principles of Economics 2e : Comprehensive Test Bank & Exam Prep (Chapters 1-8) complete questions and correct detailed answers (verified answers) 10. If macroeconomics looks at the economy as a whole, it focuses on which of the following? A. households B. business firms C. unemployed people D. the division of labor: C. unemployed people 11. In the , households work and receive payment from firms. A. financial investment market B. financial capital market C. labor market D. savings market: C. labor market 12. In the , households receive goods and services and pay firms for them. A. labor market B. financial capital market C. goods and services market D. savings market: C. goods and services market 13. Which of the following best describes a monetary policy tool? A. interest rates B. taxes C. household savings D. government spending: A. interest rates 14. . Which of the following best describes a fiscal policy tool? A. government spending B. bank lending C. financial capital markets D. household spending: A. government spending 4 / 82 Principles of Economics 2e : Comprehensive Test Bank & Exam Prep (Chapters 1-8) complete questions and correct detailed answers (verified answers) 15. The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves spending. A. business B. government C. household D. capital market: B. government 16. When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being: A. balanced budget B. prudent monetary policy C. low inflation D. assuring competition between firms v: C. low inflation 17. The basic difference between macroeconomics and microeconomics is: A. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. B. microeconomics concentrates on the behaviour of individual consumers while macroeconomics focuses on the behaviour of firms. C. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. D. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.: C. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. 18. Which of the following is most likely a topic of discussion in macroeconom- ics? A. an increase in the price of a hamburger B. a decrease in the production of DVD players by a consumer electronics 5 / 82 Principles of Economics 2e : Comprehensive Test Bank & Exam Prep (Chapters 1-8) complete questions and correct detailed answers (verified answers) company C. an increase in the wage rate paid to automobile workers D. a decrease in the unemployment rate: D. a decrease in the unemployment rate 19. Which of the following statements most likely lies within the realm of micro- economics? A. Unemployment rises during a recession and falls during an expansion. B. An increase in government spending will increase the aggregate demand for goods and services in the economy. C. A rapid acceleration of the supply of money may create inflation. D. An increase in labor costs will increase the additional cost of producing another bus.: D. An increase in labor costs will increase the additional cost of producing another bus. 20. . Macroeconomic topics do not usually include: A. the profit maximizing decisions of an individual manufacturer. B. the rate of inflation. C. the rate of unemployment. D. economic growth.: A. the profit maximizing decisions of an individual manufacturer. 21. Specialization: A. leads to greater self-sufficiency. B. can lead to an increase in overall production. C. allows workers to develop skills by working on a large number of tasks D. is always the result of an inefficient use of resources: B. can lead to an increase in overall production. 22. In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of: A. all consumers. B. buyers and sellers. C. producers and input suppliers. D. producers and government planning committees.: B. buyers and sellers. 6 / 82 Principles of Economics 2e : Comprehensive Test Bank & Exam Prep (Chapters 1-8) complete questions and correct detailed answers (verified answers) 23. Which of the following statements most likely lies within the realm of macro- economics? A. An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. B. Due to process innovations in computer chip manufacturing, the market supply of computers increased. C. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. D. Anticipating that the benefits would outweigh costs involved, an undergrad- uate student purchases the course textbook.: C. Due to an economic recession, manufacturing firms began implementing layotts of their workforces. 24. Which of the following lies primarily within the realm of macroeconomics? A. a study of the demand for gasoline B. a study of how tax cuts stimulate aggregate production C. an analysis of supply and demand conditions in the electricity market D. a study of the impact of "mad cow" disease on the price of beef worldwide: B. a study of how tax cuts stimulate aggregate production 25. Macroeconomics: A. is concerned with the expansion of a small business into a large corporation. B. is narrower in scope than microeconomics. C. analyzes mergers and acquisitions between firms. D. is concerned with the expansion and contraction of the overall economy.: D. is concerned with the expansion and contraction of the overall economy. 26. The basic difference between macroeconomics and microeconomics is that: A. microeconomics looks at the forest (aggregate markets) while macroeco- nomics looks at the trees (individual markets). B. macroeconomics is concerned with groups of individuals while microeco- nomics is concerned with single countries.