Test Bank For MacroEconomics 15th Edition by Christopher T.S. Ragan

ISBN-10: 013391044X, ISBN-13: 978-0133910445

Chapter 1   Economic Issues and Concepts

1.1  What Is Economics?

1) Which of the following statements provides the best definition of economics?

1. A) The study of the most equitable distribution of scarce resources.
2. B) The study of the use of scarce resources to satisfy unlimited human wants.
3. C) The study of the production of goods and services.
4. D) The study of the productive capacity of a nation’s factors of production.
5. E) The study of production and increasing its efficiency.

2) Society’s resources are often divided into broad categories. They are

1. A) goods and services.
2. B) factors of consumption.
3. C) land, labour, and capital.
4. D) population and natural resources.
5. E) tangible commodities and intangible commodities.

3) Consider the following list: a worker with training in video gaming technology, 10 hectares of arable land in southern Ontario, a fishing trawler in Nova Scotia, an ice-cream truck at a park in Quebec. Each of these is an example of

1. A) a factor of production.
2. B) a capital resource.
3. C) a commodity.
4. D) goods and services.
5. E) an economic service.

4) A basic underlying point in economics is that

1. A) people have unlimited wants in the face of limited resources.
2. B) there are unlimited resources.
3. C) governments should satisfy the needs of the people.
4. D) people have limited wants in the face of limited resources.
5. E) governments should never interfere in the workings of a market economy.

5) Which of the following best describes the study of economics?

1. A) how to plan an economy
2. B) how to limit human wants so that scarce resources are sufficient
3. C) why resources are scarce
4. D) the allocation of scarce resources among alternative uses
5. E) how to distribute income as equally as possible

6) Economics can best be described as

1. A) the study of how a society ought to allocate its resources.
2. B) the study of the use of scarce resources to satisfy unlimited human wants.
3. C) the application of sophisticated mathematical models to address social problems.
4. D) a normative science.
5. E) the study of how to reduce inflation and unemployment.

7) Scarcity is likely to be

1. A) a problem that will be solved by the proper use of available resources.
2. B) unique to the twentieth century.
3. C) a problem that will always exist.
4. D) a result of the work ethic.
5. E) eliminated with a better understanding of economics.

8) Which of the following statements best describes the economic concept of scarcity?

1. A) Society is not employing all of its available resources in an efficient manner.
2. B) People’s wants can never be satisfied by the available resources.
3. C) Scarcity afflicts only poor countries.
4. D) Too many frivolous goods and services are produced at the expense of socially desirable goods and services.
5. E) Production is efficient, but distribution is inefficient.

9) Which of the following statements best describes the underlying feature in most economic problems?

1. A) People have unlimited wants in the face of limited resources.
2. B) There are unlimited resources.
3. C) Our country is rich; we just don’t realize it.
4. D) People have limited wants in the face of limited resources.
5. E) Governments should never interfere in the workings of a market economy.

10) Because resources are scarce, individuals are required to

1. A) make choices among alternatives.
2. B) use resources inefficiently.
3. C) sacrifice production but not consumption.
4. D) improve distribution but not production.
5. E) improve production but not distribution.

With a budget of $200 million, the government can choose to purchase 4 helicopters or repair 200 km of highway.

FIGURE 1-1

11) Refer to Figure 1-1. For the government, the opportunity cost of one search and rescue helicopter is

1. A) 0 kilometres of highway repair.
2. B) 50 kilometres of highway repair.
3. C) 100 kilometres of highway repair.
4. D) 150 kilometres of highway repair.
5. E) 200 kilometres of highway repair.

12) Refer to Figure 1-1. For the government, the opportunity cost of one kilometre of highway repair is

1. A) 1 search and rescue helicopter.
2. B) 1/2 of a search and rescue helicopter.
3. C) 1/10 of a search and rescue helicopter.
4. D) 1/50 of a search and rescue helicopter.
5. E) 1/100 of a search and rescue helicopter.

13) Refer to Figure 1-1. If the government chooses to allocate all $200 million to highway repair, we can say that

1. A) the opportunity cost of the highway repair is uncertain.
2. B) the opportunity cost of the highway repair is $0.
3. C) the opportunity cost of the highway repair is 4 search and rescue helicopters.
4. D) there is no opportunity cost involved because the government has achieved its objectives.
5. E) there is no opportunity cost involved because the government stayed within its budget.

14) Refer to Figure 1-1. Which of the following combinations of kilometres of highway repair and helicopters is unaffordable, given the government’s budget of $200 million?

1. A) B
2. B) D
3. C) E
4. D) F
5. E) G

With a budget of $500 000, a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination) for use in classrooms.

FIGURE 1-2

15) Refer to Figure 1-2. For the school board, what is the opportunity cost of one additional laptop computer?

1. A) 0 textbooks
2. B) 1/10 of a textbook
3. C) 10 textbooks
4. D) 20 textbooks
5. E) 2000 textbooks