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, TABLE OF CONTENTS
Test Bank: Principles of Macroeconomics, 3rd Edition
Authors: Betsey Stevenson, Justin Wolfers
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PART I: FOUNDATIONS OF ECONOMICS
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Chapter 1. The Four Core Principles of Economics
Chapter 2. Demand and Consumer Choice
VI
Chapter 3. Supply and Producer Choice
Chapter 4. Equilibrium: Where Supply Meets Demand
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PART II: ANALYZING MARKETS
Chapter 5. Welfare Economics: Evaluating Market Efficiency and Market Failure
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Chapter 6. Comparative Advantage and Gains From Trade
Chapter 7. International Trade
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Chapter 8. Inequality, Poverty, and Social Insurance
PART III: MACROECONOMIC FOUNDATIONS AND THE LONG RUN
Chapter 9. Sizing Up the Economy Using GDP
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Chapter 10. Economic Growth
Chapter 11. Unemployment
Chapter 12. Inflation and Money
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PART IV: MICRO FOUNDATIONS OF MACROECONOMICS
Chapter 13. Consumption and Saving
Chapter 14. Investment
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Chapter 15. The Financial Sector: Banks, Bonds, and Stocks
Chapter 16. International Finance and the Exchange Rate
PART V: THE BUSINESS CYCLE
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Chapter 17. Tracking the Business Cycle
?
Chapter 18. Linking Interest Rates and Output Using IS-MP Analysis
Chapter 19. The Phillips Curve and Inflation
Chapter 20. The Fed Model: Putting it All Together
Chapter 21. Aggregate Demand and Aggregate Supply
, PART VI: MACROECONOMIC POLICY
Chapter 22. Monetary Policy
Chapter 23. Government Spending, Taxes, and Fiscal Policy
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, Name: Class: Date:
Chapter 1
1. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
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plans. Plan A keeps one location open with certainty. Plan B has a one-in-three chance of saving all three
locations but a two-in-three chance of saving no locations. The second consultant also offers two plans. Plan C
will result in losing two locations with certainty. Plan D has a two-in-three chance of losing all locations but a one-
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in-three chance of losing no locations. If the franchisee chooses Plan A, she should also choose Plan:
a. No plan results in the same outcome as Plan A.
b. B.
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c. C.
d. D.
A
ANSWER: c
2. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
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breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to four of his least profitable
locations. He meets with two consultants to discuss potential plans. The first consultant offers two plans. Plan A
will result in losing two locations with certainty. Plan B has a three-in-four chance of losing all locations but a one-
in-four chance of losing no locations. The second consultant also offers two plans. Plan C keeps two locations
AP
open with certainty. Plan D has a one-in-four chance of saving all four locations but a three-in-four chance of
saving no locations. If the franchisee chooses Plan B, he should also choose Plan:
a. No plan results in the same outcome as Plan B.
b. B.
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c. C.
d. D.
ANSWER: d
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3. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A will result in losing two locations with certainty. Plan B has a two-in-three chance of losing all
locations but a one-in-three chance of losing no locations. The second consultant also offers two plans. Plan C
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keeps one location open with certainty. Plan D has a one-in-three chance of saving all three locations but a two-
in-three chance of saving no locations. If the franchisee applies the cost-benefit principle, which combination of
plans reflects a consistent decision?
a. Plan C and Plan A
?
b. Plan B and Plan A
c. Plan D and Plan A
?
d. Plan C and Plan B
ANSWER: a
ED
OV
PR
AP
A?_
UVI
ST
, TABLE OF CONTENTS
Test Bank: Principles of Macroeconomics, 3rd Edition
Authors: Betsey Stevenson, Justin Wolfers
ST
PART I: FOUNDATIONS OF ECONOMICS
U
Chapter 1. The Four Core Principles of Economics
Chapter 2. Demand and Consumer Choice
VI
Chapter 3. Supply and Producer Choice
Chapter 4. Equilibrium: Where Supply Meets Demand
A
PART II: ANALYZING MARKETS
Chapter 5. Welfare Economics: Evaluating Market Efficiency and Market Failure
?_
Chapter 6. Comparative Advantage and Gains From Trade
Chapter 7. International Trade
AP
Chapter 8. Inequality, Poverty, and Social Insurance
PART III: MACROECONOMIC FOUNDATIONS AND THE LONG RUN
Chapter 9. Sizing Up the Economy Using GDP
PR
Chapter 10. Economic Growth
Chapter 11. Unemployment
Chapter 12. Inflation and Money
OV
PART IV: MICRO FOUNDATIONS OF MACROECONOMICS
Chapter 13. Consumption and Saving
Chapter 14. Investment
ED
Chapter 15. The Financial Sector: Banks, Bonds, and Stocks
Chapter 16. International Finance and the Exchange Rate
PART V: THE BUSINESS CYCLE
?
Chapter 17. Tracking the Business Cycle
?
Chapter 18. Linking Interest Rates and Output Using IS-MP Analysis
Chapter 19. The Phillips Curve and Inflation
Chapter 20. The Fed Model: Putting it All Together
Chapter 21. Aggregate Demand and Aggregate Supply
, PART VI: MACROECONOMIC POLICY
Chapter 22. Monetary Policy
Chapter 23. Government Spending, Taxes, and Fiscal Policy
ST
U
VI
A ?_
AP
PR
OV
ED
??
, Name: Class: Date:
Chapter 1
1. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
ST
plans. Plan A keeps one location open with certainty. Plan B has a one-in-three chance of saving all three
locations but a two-in-three chance of saving no locations. The second consultant also offers two plans. Plan C
will result in losing two locations with certainty. Plan D has a two-in-three chance of losing all locations but a one-
U
in-three chance of losing no locations. If the franchisee chooses Plan A, she should also choose Plan:
a. No plan results in the same outcome as Plan A.
b. B.
VI
c. C.
d. D.
A
ANSWER: c
2. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
?_
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to four of his least profitable
locations. He meets with two consultants to discuss potential plans. The first consultant offers two plans. Plan A
will result in losing two locations with certainty. Plan B has a three-in-four chance of losing all locations but a one-
in-four chance of losing no locations. The second consultant also offers two plans. Plan C keeps two locations
AP
open with certainty. Plan D has a one-in-four chance of saving all four locations but a three-in-four chance of
saving no locations. If the franchisee chooses Plan B, he should also choose Plan:
a. No plan results in the same outcome as Plan B.
b. B.
PR
c. C.
d. D.
ANSWER: d
OV
3. International House of Pancakes (IHOP) is a U.S.-based multinational restaurant chain that specializes in
breakfast food. Due to declining sales, an IHOP franchisee must consider closing up to three of her least
profitable locations. She meets with two consultants to discuss potential plans. The first consultant offers two
plans. Plan A will result in losing two locations with certainty. Plan B has a two-in-three chance of losing all
locations but a one-in-three chance of losing no locations. The second consultant also offers two plans. Plan C
ED
keeps one location open with certainty. Plan D has a one-in-three chance of saving all three locations but a two-
in-three chance of saving no locations. If the franchisee applies the cost-benefit principle, which combination of
plans reflects a consistent decision?
a. Plan C and Plan A
?
b. Plan B and Plan A
c. Plan D and Plan A
?
d. Plan C and Plan B
ANSWER: a
