TEST BANK for INTRODUCTORY ECONOMICS and INTRODUCTORY MACROECONOMICS and INTRODUCTORY MICROECONOMICS by Michael Veseth JOHN G· MARCIS Kansas State University ACADEMIC PRESS, INC. A Subsidiary of Harcourt Brace Jovanovich, Publishers New York / London / Toronto / Sydney / San Francisco and MICHAEL VESETH University of Puget Sound by Chapter Conversion Table The following table keys the chapter numbers for Introductory Economics to those in each of the companion paperbacks. Corresponding Chapter in Introductory Introductory Macro- Micro-
Introductory Economics Chapter economics economics Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26 Chapter 27 Chapter 28 Chapter 29 Chapter 30 Chapter 31 Chapter 32 Macroeconomic Problems Supply and Demand The Problem of Unemployment Understanding Inflation Measuring Economic Activity Aggregate Demand Aggregate Supply and the Economy Fiscal Policy Money and Banking Money, Credit, and the Economy Monetary versus Fiscal Policy The Monetarists International Trade The Foreign Exchange Market International Economics Problems, Goals, and Trade-Offs Scarcity arid Choice Specialization Demand and Supply: The Micro Side Markets at Work Consumer Choice Production and Cost Producer Choice: Monopoly Producers in Competitive Markets Imperfect Competition Labor Markets Capital and Natural Resource Markets Energy Markets Free Market Choice Market Failures: Externalities Market Failures: Monopolies Scarcity and Choice: The Poverty Problem 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 vii MACROECONOMIC PROBLEMS 1 Roman set numbers in parentheses refer to pages where the material is discussed in both Introductory Economics, andlntroductory Macroeconomics. 1. According to Veseth, which of the following situations is the most likely topic of discussion in a class on "macroeconomics"? (6) a. An increase in the price of hamburgers. B. An increase in the unemployment rate. c. An increase in the production of a par-
ticular company. d. An increase in the number of producers of a product. e. An increase in the wage rate paid construc-
tion workers. 2. According to Veseth, which of the following situations is the most likely topic of discussion in a class on "microeconomics"? (6) a. An increase in governmental taxes. b. An increase in governmental spending. c. An increase in the unemployment rate. D. An increase in the price of a resource used to produce a particular product. e. An increase in the rate of inflation. 3. According to Veseth, in which of the following decades has unemployment been considered the most serious problem? (8, 9) a. The 1950s. B. The 1930s. c. The 1960s. d. The 1940s. e. The 1970s. 4. According to Veseth, during which of the follow-
ing decades has inflation been considered the most serious economic problem? (14-15) a. The 1930s. b. The 1940s. c. The 1950s. d. The 1960s. E. The 1970s. 5. If real gross national product is used as a measure of economic growth, during which of the following decades was economic growth in the United States the greatest? (12-13) a. The 1930s. b. The 1940s. c. The 1950s. D. The 1960s. e. The 1970s. 6. During the decade of the 1960s, economists observed the "Phillips curve phenomenon" in the United States. Which of the following state-
ments, if any, best describes the Phillips curve relationship? (13-14) a. Unemployment can only be reduced by reducing inflation. b. Employment increases as unemployment falls. c. Any policy that increases inflation also increases unemployment. d. As unemployment increases, there is no change in the rate of inflation. E. None of the other responses is correct. 7. One explanation of the Phillips curve which has been proposed is that of the "wage-lag" theory. This theory maintains that inflation can tempo-
rarily reduce unemployment because inflation tends to: (13, 14) a. increase the supply of labor. B. increase business profits. c. cause productivity to lag behind wages. d. increase the purchasing power of the dollar in foreign markets. e. increase the purchase of agricultural pro-
ducts where more workers are needed. 1
Introductory Economics Chapter economics economics Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 21 Chapter 22 Chapter 23 Chapter 24 Chapter 25 Chapter 26 Chapter 27 Chapter 28 Chapter 29 Chapter 30 Chapter 31 Chapter 32 Macroeconomic Problems Supply and Demand The Problem of Unemployment Understanding Inflation Measuring Economic Activity Aggregate Demand Aggregate Supply and the Economy Fiscal Policy Money and Banking Money, Credit, and the Economy Monetary versus Fiscal Policy The Monetarists International Trade The Foreign Exchange Market International Economics Problems, Goals, and Trade-Offs Scarcity arid Choice Specialization Demand and Supply: The Micro Side Markets at Work Consumer Choice Production and Cost Producer Choice: Monopoly Producers in Competitive Markets Imperfect Competition Labor Markets Capital and Natural Resource Markets Energy Markets Free Market Choice Market Failures: Externalities Market Failures: Monopolies Scarcity and Choice: The Poverty Problem 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 vii MACROECONOMIC PROBLEMS 1 Roman set numbers in parentheses refer to pages where the material is discussed in both Introductory Economics, andlntroductory Macroeconomics. 1. According to Veseth, which of the following situations is the most likely topic of discussion in a class on "macroeconomics"? (6) a. An increase in the price of hamburgers. B. An increase in the unemployment rate. c. An increase in the production of a par-
ticular company. d. An increase in the number of producers of a product. e. An increase in the wage rate paid construc-
tion workers. 2. According to Veseth, which of the following situations is the most likely topic of discussion in a class on "microeconomics"? (6) a. An increase in governmental taxes. b. An increase in governmental spending. c. An increase in the unemployment rate. D. An increase in the price of a resource used to produce a particular product. e. An increase in the rate of inflation. 3. According to Veseth, in which of the following decades has unemployment been considered the most serious problem? (8, 9) a. The 1950s. B. The 1930s. c. The 1960s. d. The 1940s. e. The 1970s. 4. According to Veseth, during which of the follow-
ing decades has inflation been considered the most serious economic problem? (14-15) a. The 1930s. b. The 1940s. c. The 1950s. d. The 1960s. E. The 1970s. 5. If real gross national product is used as a measure of economic growth, during which of the following decades was economic growth in the United States the greatest? (12-13) a. The 1930s. b. The 1940s. c. The 1950s. D. The 1960s. e. The 1970s. 6. During the decade of the 1960s, economists observed the "Phillips curve phenomenon" in the United States. Which of the following state-
ments, if any, best describes the Phillips curve relationship? (13-14) a. Unemployment can only be reduced by reducing inflation. b. Employment increases as unemployment falls. c. Any policy that increases inflation also increases unemployment. d. As unemployment increases, there is no change in the rate of inflation. E. None of the other responses is correct. 7. One explanation of the Phillips curve which has been proposed is that of the "wage-lag" theory. This theory maintains that inflation can tempo-
rarily reduce unemployment because inflation tends to: (13, 14) a. increase the supply of labor. B. increase business profits. c. cause productivity to lag behind wages. d. increase the purchasing power of the dollar in foreign markets. e. increase the purchase of agricultural pro-
ducts where more workers are needed. 1
