Test Bank for ECON MACRO, 7th Edition by William A. McEachern | Complete Chapters

Test Bank for ECON MACRO, 7th Edition by William A. McEachern


Chap 01 ECON MACRO 7e
Answers Included ✅
Indicate whether the statement is true or false.
1. Economic theory allows economists to predict the behavior of a specific person or firm.
a. True
b. False

2. Most of the disagreement among economists involves normative debates.
a. True
b. False

3. The assumption of rational self-interest does not rule out the possibility of concern for other individuals.
a. True
b. False

4. A rational decision maker compares the expected marginal cost to the expected marginal benefit of any activity.
a. True
b. False

5. Resources are used only in the production of goods, not services.
a. True
b. False

6. A rational individual would make charitable contributions only if such contributions receive favorable tax
treatment.
a. True
b. False

7. Discussions about the housing market in New York City is a microeconomics topic.
a. True
b. False

8. Economic choice results from scarcity.
a. True
b. False

9. Profit is the payment made for land resources.
a. True
b. False

10. In economics, money is an example of capital.
a. True
b. False




Page 1

,Name: Class: Date:

Chap 01 ECON MACRO 7e

11. The fallacy of composition is the error of believing that a cause-and-effect relationship exists between two
events that are associated in time.
a. True
b. False

12. Aleksi is thinking about buying a new condo. Rational self-interest demands that he do exhaustive research to
acquire every bit of information possible about her potential options.
a. True
b. False

13. Most real economic choices involve small (or marginal) changes rather than all-or-nothing decisions.
a. True
b. False

14. Rational self-interest is equivalent to pure selfishness.
a. True
b. False

15. Secondary effects are consequences of economic actions that develop slowly over time as people react to
events.
a. True
b. False

16. One problem with rent control is that policymakers often ignore its secondary effects.
a. True
b. False

17. The association-is-causation fallacy is the error of assuming that what is true for one member of a group must
be true for the group.
a. True
b. False

18. As a scientist, an economist's main professional objective is to become wealthy.
a. True
b. False

19. Rent is the payment received by resource owners for the use of their natural resources.
a. True
b. False

20. An economic model will produce poor predictions if it includes assumptions.
a. True
b. False




Page 2

,Name: Class: Date:

Chap 01 ECON MACRO 7e

21. Profit is the payment received by resource owners for the use of their capital.
a. True
b. False

22. Resources consist of labor and natural resources.
a. True
b. False

23. Normative economic statements are claims based on opinions and value judgement.
a. True
b. False

24. The ceteris paribus assumption is the other-things-constant assumption.
a. True
b. False

25. College graduates with history or literature as their major tend to earn more than those who choose more
quantitative disciplines like economics.
a. True
b. False

26. Most economists consider a theory a good one if it predicts well.
a. True
b. False

27. Economists often focus on average behavior because it is easier to predict.
a. True
b. False

28. An economist would classify 500 shares of stock in General Mills, Inc. as capital.
a. True
b. False

29. A rational individual gives more to charity when such contributions receive favorable tax treatment.
a. True
b. False

30. Considering both product markets and resource markets, most economic decision makers participate in the
economy as both buyers and sellers.
a. True
b. False

31. "There should be less discrimination against women" is an example of a positive economic statement.
a. True
b. False


Page 3

, Name: Class: Date:

Chap 01 ECON MACRO 7e

32. Scarcity occurs when the amount people desire is less than the amount available at a zero price.
a. True
b. False

33. Economic decision makers will continue to acquire information only as long as the expected additional benefit
exceeds the expected additional cost of the information.
a. True
b. False

34. A marginal adjustment refers only to a minor change.
a. True
b. False

35. Labor is the physical and mental effort used to produce goods and services.
a. True
b. False

36. It is always rational to acquire more information before making a decision.
a. True
b. False

37. Economics is as much an art as it is a science.
a. True
b. False

38. Labor and capital are exchanged in the resource market.
a. True
b. False

39. The ceteris paribus assumption is a behavioral assumption.
a. True
b. False

40. Economics is best defined as how people use scarce resources to satisfy unlimited wants.
a. True
b. False

41. A good economic theory brings clarity to chaos.
a. True
b. False

42. Economics is the only social science and the only business discipline for which the Nobel Prize is awarded.
a. True
b. False




Page 4