TEST BANK FOR PRINCIPLES OF MACROECONOMICS 9TH CANADIAN EDITION BY SAYRE

TEST BANK FOR PRINCIPLES OF MACROECONOMICS 9TH CANADIAN EDITION BY SAYRE Chapter 01 The Economic Problem Multiple Choice Questions 1. What do economists mean when they say that the economy faces scarcity? A. There are fewer resources available than there were in the 1960s. B. It is quite evident that the world is running out of resources. C. The economy is producing far below its capacity to produce. D. The resources available are not sufficient to produce all that everyone wants. Accessibility: Keyboard Navigation Blooms: Remember Blooms: Understand Difficulty: Easy Learning Objective: 01-03 Demonstrate that because scarcity; choice; and opportunity cost are at the heart of economics; efficiency—both productive and allocative—provides a major cornerstone. Topic: 01-07 Efficiency and Allocation 2. What do economists assume is true about human wants? A. They are easily defined. B. That we are on the verge of being able to satisfy them. C. They are unlimited. D. They haven't changed much over the centuries. Accessibility: Keyboard Navigation Blooms: Remember Blooms: Understand Difficulty: Easy Learning Objective: 01-03 Demonstrate that because scarcity; choice; and opportunity cost are at the heart of economics; efficiency—both productive and allocative—provides a major cornerstone. Topic: 01-07 Efficiency and Allocation   3. Which of the following terms describes the next best alternative that must be sacrificed as a result of making a particular choice? A. Microeconomics. B. Opportunity cost. C. Macroeconomics. D. The law of increasing costs. E. Scarcity. Accessibility: Keyboard Navigation Blooms: Remember Blooms: Understand Difficulty: Easy Learning Objective: 01-03 Demonstrate that because scarcity; choice; and opportunity cost are at the heart of economics; efficiency—both productive and allocative—provides a major cornerstone. Topic: 01-07 Efficiency and Allocation 4. What is the opportunity cost of a particular product? A. The price paid for that product. B. The value put on that product by the person who bought it. C. The value of the next-best alternative that is given up as a result of buying that particular product. D. The combined value of all the other alternatives that are given up as a result of buying that particular product. Accessibility: Keyboard Navigation Blooms: Remember Blooms: Understand Difficulty: Easy Learning Objective: 01-03 Demonstrate that because scarcity; choice; and opportunity cost are at the heart of economics; efficiency—both productive and allocative—provides a major cornerstone. Topic: 01-07 Efficiency and Allocation   5. Gwen had only $10 yesterday. She was uncertain whether to go out for lunch or to buy beer. In the end she bought beer. Which of the following statements is correct? A. The choice of the beer and not lunch is an example of constant costs. B. The cost of buying beer is less than lunch. C. The opportunity cost of beer is lunch. D. The opportunity cost of beer is $10. Accessibility: Keyboard Navigation Blooms: Analyze Blooms: Apply Difficulty: Easy Learning Objective: 01-03 Demonstrate that because scarcity; choice; and opportunity cost are at the heart of economics; efficiency—both productive and allocative—provides a major cornerstone. Topic: 01-07 Efficiency and Allocation 6. Which of the following is correct? A. Scarcity forces choice which involves opportunity costs. B. Choice causes scarcity which involves increasing costs. C. Choice causes scarcity which involves opportunity costs. D. Scarcity forces choice which involves increasing costs. Accessibility: Keyboard Navigation Blooms: Remember Blooms: Understand Difficulty: Easy Learning Objective: 01-03 Demonstrate that because scarcity; choice; and opportunity cost are at the heart of economics; efficiency—both productive and allocative—provides a major cornerstone. Topic: 01-07 Efficiency and Allocation 7. What can we say is true as a result of people engaging in voluntary trade? A. One person gains and the other loses. B. One person gains while there is a neutral effect on the other person. C. Both people gain. D. Neither person gains.   Accessibility: Keyboard Navigation Blooms: Remember Blooms: Understand Difficulty: Easy Learning Objective: 01-04 Explain why greater trade results in more productive economies. Topic: 01-09 The Power of Trade The maximum production possible in Rome and in Cathay are as follows: Rome 40 bread Or 20 figs Cathay 20 bread Or 40 figs 8. If each country is self-sufficient (no trade) and each allocates one half of its resources to producing each of the two products, what will be the output in each country? A. 40 bread and 20 figs in Rome and 20 bread and 40 figs in Cathay. B. 40 bread and 0 figs in Rome and 20 bread and 0 figs in Cathay. C. 0 bread and 20 figs in Rome and 0 bread and 40 figs in Cathay. D. 20 bread and 10 figs in Rome and 10 bread and 20 figs in Cathay. Accessibility: Keyboard Navigation Blooms: Analyze Blooms: Apply Difficulty: Easy Learning Objective: 01-04 Explain why greater trade results in more productive economies. Topic: 01-09 The Power of Trade   9. If each country is self-sufficient (no trade) and each allocates one half of its resources to producing each of the two products, what is the combined output in the two counties? A. 60 bread and 60 figs. B. 60 bread and 0 figs. C. 0 bread and 60 figs. D. 30 bread and 30 figs. Accessibility: Keyboard Navigation Blooms: Analyze Blooms: Apply Difficulty: Easy Learning Objective: 01-04 Explain why greater trade results in more productive economies. Topic: 01-09 The Power of Trade 10. If each country specializes in the production of what it does best and trades with the other, what is the combined output? A. 20 bread and 20 figs. B. 30 bread and 30 figs. C. 40 bread and 40 figs. D. 60 bread and 60 figs. Accessibility: Keyboard Navigation Blooms: Analyze Blooms: Apply Difficulty: Hard Learning Objective: 01-04 Explain why greater trade results in more productive economies. Topic: 01-09 The Power of Trade 11. If each country specializes in the production of what it does best, what are the gains from trade? A. There are no gains. B. 20 bread. C. 20 figs. D. 10 bread and 10 figs. Accessibility: Keyboard Navigation Blooms: Analyze Blooms: Apply Difficulty: Hard Learning Objective: 01-04 Explain why greater trade results in more productive economies. Topic: 01-09 The Power of Trade   12. What fundamental question is implied by the following statement: Should scarce resources be devoted to persuading people to quit smoking or to developing a less harmful form of tobacco? A. What to produce? B. How to produce? C. For whom? D. How much competition? E. How much command? Accessibility: Keyboard Navigation Blooms: Remember Blooms: Understand Difficulty: Easy Learning Objective: 01-05 Explain the three fundamental questions that all societies must address. Topic: 01-11 What to Produce? 13. What fundamental question is implied by the following statement: The appropriate technology in one country can be quite different from the appropriate technology in another country. A. What to produce? B. How to produce? C. For whom? D. How much competition? E. How much command? Accessibility: Keyboard Navigation Blooms: Remember Blooms: Understand Difficulty: Easy Learning Objective: 01-05 Explain the three fundamental questions that all societies must address. Topic: 01-12 How to Produce?   14. What is fundamental question is implied by the following statement: Social policies are needed to ensure that no individual lives in poverty. A. What to produce? B. How to produce? C. For whom? D. How much competition? E. How much command? Accessibility: Keyboard Navigation Blooms: Remember Blooms: Understand Difficulty: Easy Learning Objective: 01-05 Explain the three fundamental questions that all societies must address. Topic: 01-13 For Whom? 15. All of the following except one are considered to be among the three fundamental questions in economics? Which one is the exception? A. What to produce? B. How much competition? C. How to produce? D. For whom?