Test Bank for Macroeconomics 15th Edition by Roger A. Arnold

Chapter 01 What Economics Is About

001. The branch of economics that studies the decisions made by individuals and firms is called macroeconomics.

a. True

b. False

ANS: False

002. Macroeconomics deals with issues involving large corporations, while microeconomics exclusively deals with
issues involving small businesses.

a. True

b. False

ANS: False

003. The effect of a decrease in interest rates on economic growth is an example of positive economics.

a. True

b. False

ANS: True

004. Economists use the word utility to describe the satisfaction one receives from a good.

a. True

b. False

ANS: True

005. If variable X rises because of variable Y falling, then X and Y have an inverse relationship.

a. True

b. False

ANS: True

006. In the textbook, economics is defined as the "science of scarcity."

a. True

b. False

ANS: True

007. In economics, capital is defined as a financial asset such as stocks and bonds.

, a. True

b. False

ANS: False

008. A rationing device is a method used to resolve who gets what of available goods and resources.

a. True

b. False

ANS: True

009. When a person is making a decision at the margin he or she is comparing the total benefits from that activity
to the total costs of the proposed action.

a. True

b. False

ANS: False

010. Economists use the terms resource and input as synonyms.

a. True

b. False

ANS: True

011. To an economist, the terms factor and output are synonyms.

a. True

b. False

ANS: False

012. According to economists, one of the four broad categories of resources is money.

a. True

b. False

ANS: False

013. The higher the opportunity cost of doing something, the more likely it will be done.

a. True

b. False

ANS: False

,014. Price is the only rationing device that can be used in a modern economy.

a. True

b. False

ANS: False

015. The resource termed labor consists of the physical, but not the mental, talents that people contribute to the
production process.

a. True

b. False

ANS: False

016. The slope of a straight line is always equal to either 1.0 or -1.0.

a. True

b. False

ANS: False

017. Economists sometimes refer to the resource category land as natural resources.

a. True

b. False

ANS: True

018. Scarcity affects everyone, even billionaires.

a. True

b. False

ANS: True

019. If someone gives you a free ticket to the movies, then there is no opportunity cost involved with going to the
movies.

a. True

b. False

ANS: False

020. Some economic studies have shown that mandatory seat belt laws do not lead to a reduction in traffic
fatalities.

a. True

, b. False

ANS: True

021. The slope of a horizontal line is always equal to zero.

a. True

b. False

ANS: True

022. The slope of a (nonlinear) curve varies from one point to another.

a. True

b. False

ANS: True

023. Scarcity occurs in both wealthy societies and poor societies.

a. True

b. False

ANS: True

024. The higher the opportunity cost of making a new friend, the more likely one is to make a new friend, ceteris
paribus.

a. True

b. False

ANS: False

025. Economists use the terms resource and input as synonyms.

a. True

b. False

ANS: True

026. The author of the textbook defines economics as the

a. science of efficiency.

b. science of scarcity.

c. study of markets.

d. study of human activity.