lOMoARcPSD|4845562
Contact:
Test Item File to Accompany
Principles of
Macroeconomics - Test
Item File 1
Ninth Edition
by
Case / Fair / Oster
Prentice Hall
c.2009
10/29/08
Downloaded by robert barake ()
, lOMoARcPSD|4845562
Contents
Chapterȱ1ȱ TheȱScopeȱandȱMethodȱofȱEconomics ...........................................................................1ȱ
Chapterȱ2ȱ TheȱEconomicȱProblem:ȱScarcityȱandȱChoice.............................................................28ȱ
Chapterȱ3ȱ Demand,ȱSupply,ȱandȱMarketȱEquilibrium................................................................55ȱ
Chapterȱ4ȱ DemandȱandȱSupplyȱApplications ..............................................................................95ȱ
Chapterȱ5ȱ IntroductionȱtoȱMacroeconomics ...............................................................................116ȱ
Chapterȱ6ȱ MeasuringȱNationalȱOutputȱandȱNationalȱIncome .................................................139ȱ
Chapterȱ7ȱ Unemployment,ȱInflation,ȱandȱLongȬRunȱGrowth .................................................169ȱ
Chapterȱ8ȱ AggregateȱExpenditureȱandȱEquilibriumȱOutput ...................................................199ȱ
Chapterȱ9ȱ TheȱGovernmentȱandȱFiscalȱPolicy............................................................................239ȱ
Chapterȱ10ȱ TheȱMoneyȱSupplyȱandȱtheȱFederalȱReserveȱSystem..............................................278ȱ
Chapterȱ11ȱ MoneyȱDemandȱandȱtheȱEquilibriumȱInterestȱRate ................................................307ȱ
Chapterȱ12ȱ AggregateȱDemandȱinȱtheȱGoodsȱandȱMoneyȱMarkets..........................................340ȱ
Chapterȱ13ȱ AggregateȱSupplyȱandȱtheȱEquilibriumȱPriceȱLevel ...............................................383ȱ
Chapterȱ14ȱ TheȱLaborȱMarketȱinȱtheȱMacroeconomy .................................................................419ȱ
Chapterȱ15ȱ PolicyȱTiming,ȱDeficitȱTargeting,ȱandȱStockȱMarketȱEffects ..................................455ȱ
Chapterȱ16ȱ HouseholdȱandȱFirmȱBehaviorȱinȱtheȱMacroeconomy:ȱAȱFurtherȱLook ..............493ȱ
Chapterȱ17ȱ LongȬRunȱGrowth........................................................................................................535ȱ
Chapterȱ18ȱ DebatesȱinȱMacroeconomics:ȱMonetarism,ȱNewȱClassicalȱTheory,ȱȱ
ȱ andȱSupplyȬSideȱEconomics .......................................................................................566ȱ
Chapterȱ19ȱ InternationalȱTrade,ȱComparativeȱAdvantage,ȱandȱProtectionism.......................598ȱ
Chapterȱ20ȱ OpenȬEconomyȱMacroeconomics:ȱTheȱBalanceȱofȱPaymentsȱ
ȱ andȱExchangeȱRates .....................................................................................................635ȱ
Chapterȱ21ȱ EconomicȱGrowthȱinȱDevelopingȱandȱTransitionalȱEconomies ............................667ȱ
Downloaded by robert barake ()
, lOMoARcPSD|4845562
Chapterȱ1 TheȱScopeȱandȱMethodȱofȱEconomics
1.1 WhyȱStudyȱEconomics?
1 MultipleȱChoice
1) WhichȱofȱtheȱfollowingȱisȱNOTȱlistedȱinȱtheȱbookȱasȱaȱreasonȱtoȱstudyȱeconomics?
A) toȱlearnȱaȱwayȱofȱthinking B) toȱunderstandȱsocietyȱandȱglobalȱaffairs
C) toȱbeȱanȱinformedȱvoter D) toȱlearnȱhowȱtoȱmakeȱlotsȱofȱmoney
Answer: D
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
2) Amongȱtheȱfundamentalȱconceptsȱinȱeconomicsȱare
A) opportunityȱcost. B) marginalism.
C) efficientȱmarkets. D) allȱofȱtheȱabove
Answer: D
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
3) Whichȱofȱtheȱfollowingȱisȱtheȱbestȱdefinitionȱofȱeconomics?
A) theȱstudyȱofȱhowȱindividualsȱandȱsocietiesȱchooseȱtoȱuseȱtheȱscarceȱresourcesȱthatȱnature
andȱpreviousȱgenerationsȱhaveȱprovided
B) theȱstudyȱofȱhowȱconsumersȱspendȱtheirȱincome
C) theȱstudyȱofȱhowȱbusinessȱfirmsȱdecideȱwhatȱinputsȱtoȱhireȱandȱwhatȱoutputsȱtoȱproduce
D) theȱstudyȱofȱhowȱtheȱfederalȱgovernmentȱallocatesȱtaxȱdollars
Answer: A
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Definition
4) TheȱriseȱofȱtheȱmodernȱfactoryȱsystemȱinȱEnglandȱduringȱtheȱlateȱeighteenthȱandȱearly
nineteenthȱcenturiesȱisȱknownȱasȱthe
A) GreatȱMigration. B) IndustrialȱRevolution.
C) WealthȱofȱNations. D) DarkȱAges.
Answer: B
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
1
Downloaded by robert barake ()
, lOMoARcPSD|4845562
5) WhichȱofȱtheȱfollowingȱstatementsȱisȱNOTȱcorrect?
A) Economicsȱisȱaȱbehavioralȱscience.
B) Inȱlargeȱmeasure,ȱeconomicsȱisȱtheȱstudyȱofȱhowȱpeopleȱmakeȱchoices.
C) Ifȱpovertyȱwasȱeliminatedȱthereȱwouldȱbeȱnoȱreasonȱtoȱstudyȱeconomics.
D) Economicȱanalysisȱcanȱbeȱusedȱtoȱexplainȱhowȱbothȱindividualsȱandȱsocietiesȱmake
decisions.
Answer: C
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
6) Theȱstudyȱofȱeconomics
A) isȱaȱveryȱnarrowȱendeavor.
B) isȱaȱwayȱofȱanalyzingȱdecision-makingȱprocessesȱcausedȱbyȱscarcity.
C) isȱconcernedȱwithȱprovingȱthatȱcapitalismȱisȱbetterȱthanȱsocialism.
D) focusesȱonȱhowȱaȱbusinessȱshouldȱfunction.
Answer: B
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Definition
7) Sunkȱcostsȱare
A) costsȱthatȱcannotȱbeȱavoided,ȱbecauseȱtheyȱhaveȱalreadyȱbeenȱincurred.
B) theȱcostsȱofȱwhatȱweȱgiveȱupȱwhenȱweȱmakeȱaȱchoiceȱorȱaȱdecision.
C) theȱadditionalȱcostsȱofȱproducingȱanȱadditionalȱunitȱofȱaȱproduct.
D) theȱadditionalȱcostsȱofȱconsumingȱanȱadditionalȱunitȱofȱaȱproduct.
Answer: A
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Definition
8) Supposeȱthatȱȱyouȱpurchasedȱaȱticketȱtoȱaȱjazzȱfestivalȱforȱ$100ȱaȱmonthȱago.ȱLastȱweek
someoneȱinvitedȱyouȱtoȱaȱhockeyȱgameȱonȱtheȱsameȱnightȱasȱtheȱjazzȱfestival.ȱYouȱwouldȱmuch
ratherȱgoȱtoȱtheȱhockeyȱgameȱthanȱtheȱjazzȱfestival.ȱYouȱhaveȱtriedȱunsuccessfullyȱtoȱsellȱthe
jazzȱfestivalȱticket.ȱWhichȱofȱtheȱfollowingȱstatementsȱregardingȱthisȱsituationȱisȱcorrect?
A) Theȱ$100ȱyouȱpaidȱforȱtheȱjazzȱfestivalȱticketȱisȱrelevantȱtoȱtheȱdecision,ȱasȱthisȱrepresents
theȱopportunityȱcostȱofȱattendingȱtheȱhockeyȱgame.
B) Youȱshouldȱbaseȱyourȱdecisionȱonȱwhetherȱorȱnotȱtheȱhockeyȱgameȱwillȱprovideȱyouȱwith
moreȱthanȱ$100ȱinȱsatisfaction.
C) Theȱ$100ȱyouȱpaidȱforȱtheȱjazzȱfestivalȱticketȱshouldȱbeȱirrelevantȱinȱyourȱdecision
making,ȱbecauseȱitȱisȱaȱsunkȱcost.
D) Theȱ$100ȱjazzȱfestivalȱticketȱshouldȱbeȱirrelevantȱinȱyourȱdecisionȱmaking,ȱbecauseȱit
representsȱtheȱmarginalȱcostȱofȱattendingȱtheȱhockeyȱgame.
Answer: C
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Conceptual
AACSB: ReflectiveȱThinking
2
Downloaded by robert barake ()
Contact:
Test Item File to Accompany
Principles of
Macroeconomics - Test
Item File 1
Ninth Edition
by
Case / Fair / Oster
Prentice Hall
c.2009
10/29/08
Downloaded by robert barake ()
, lOMoARcPSD|4845562
Contents
Chapterȱ1ȱ TheȱScopeȱandȱMethodȱofȱEconomics ...........................................................................1ȱ
Chapterȱ2ȱ TheȱEconomicȱProblem:ȱScarcityȱandȱChoice.............................................................28ȱ
Chapterȱ3ȱ Demand,ȱSupply,ȱandȱMarketȱEquilibrium................................................................55ȱ
Chapterȱ4ȱ DemandȱandȱSupplyȱApplications ..............................................................................95ȱ
Chapterȱ5ȱ IntroductionȱtoȱMacroeconomics ...............................................................................116ȱ
Chapterȱ6ȱ MeasuringȱNationalȱOutputȱandȱNationalȱIncome .................................................139ȱ
Chapterȱ7ȱ Unemployment,ȱInflation,ȱandȱLongȬRunȱGrowth .................................................169ȱ
Chapterȱ8ȱ AggregateȱExpenditureȱandȱEquilibriumȱOutput ...................................................199ȱ
Chapterȱ9ȱ TheȱGovernmentȱandȱFiscalȱPolicy............................................................................239ȱ
Chapterȱ10ȱ TheȱMoneyȱSupplyȱandȱtheȱFederalȱReserveȱSystem..............................................278ȱ
Chapterȱ11ȱ MoneyȱDemandȱandȱtheȱEquilibriumȱInterestȱRate ................................................307ȱ
Chapterȱ12ȱ AggregateȱDemandȱinȱtheȱGoodsȱandȱMoneyȱMarkets..........................................340ȱ
Chapterȱ13ȱ AggregateȱSupplyȱandȱtheȱEquilibriumȱPriceȱLevel ...............................................383ȱ
Chapterȱ14ȱ TheȱLaborȱMarketȱinȱtheȱMacroeconomy .................................................................419ȱ
Chapterȱ15ȱ PolicyȱTiming,ȱDeficitȱTargeting,ȱandȱStockȱMarketȱEffects ..................................455ȱ
Chapterȱ16ȱ HouseholdȱandȱFirmȱBehaviorȱinȱtheȱMacroeconomy:ȱAȱFurtherȱLook ..............493ȱ
Chapterȱ17ȱ LongȬRunȱGrowth........................................................................................................535ȱ
Chapterȱ18ȱ DebatesȱinȱMacroeconomics:ȱMonetarism,ȱNewȱClassicalȱTheory,ȱȱ
ȱ andȱSupplyȬSideȱEconomics .......................................................................................566ȱ
Chapterȱ19ȱ InternationalȱTrade,ȱComparativeȱAdvantage,ȱandȱProtectionism.......................598ȱ
Chapterȱ20ȱ OpenȬEconomyȱMacroeconomics:ȱTheȱBalanceȱofȱPaymentsȱ
ȱ andȱExchangeȱRates .....................................................................................................635ȱ
Chapterȱ21ȱ EconomicȱGrowthȱinȱDevelopingȱandȱTransitionalȱEconomies ............................667ȱ
Downloaded by robert barake ()
, lOMoARcPSD|4845562
Chapterȱ1 TheȱScopeȱandȱMethodȱofȱEconomics
1.1 WhyȱStudyȱEconomics?
1 MultipleȱChoice
1) WhichȱofȱtheȱfollowingȱisȱNOTȱlistedȱinȱtheȱbookȱasȱaȱreasonȱtoȱstudyȱeconomics?
A) toȱlearnȱaȱwayȱofȱthinking B) toȱunderstandȱsocietyȱandȱglobalȱaffairs
C) toȱbeȱanȱinformedȱvoter D) toȱlearnȱhowȱtoȱmakeȱlotsȱofȱmoney
Answer: D
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
2) Amongȱtheȱfundamentalȱconceptsȱinȱeconomicsȱare
A) opportunityȱcost. B) marginalism.
C) efficientȱmarkets. D) allȱofȱtheȱabove
Answer: D
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
3) Whichȱofȱtheȱfollowingȱisȱtheȱbestȱdefinitionȱofȱeconomics?
A) theȱstudyȱofȱhowȱindividualsȱandȱsocietiesȱchooseȱtoȱuseȱtheȱscarceȱresourcesȱthatȱnature
andȱpreviousȱgenerationsȱhaveȱprovided
B) theȱstudyȱofȱhowȱconsumersȱspendȱtheirȱincome
C) theȱstudyȱofȱhowȱbusinessȱfirmsȱdecideȱwhatȱinputsȱtoȱhireȱandȱwhatȱoutputsȱtoȱproduce
D) theȱstudyȱofȱhowȱtheȱfederalȱgovernmentȱallocatesȱtaxȱdollars
Answer: A
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Definition
4) TheȱriseȱofȱtheȱmodernȱfactoryȱsystemȱinȱEnglandȱduringȱtheȱlateȱeighteenthȱandȱearly
nineteenthȱcenturiesȱisȱknownȱasȱthe
A) GreatȱMigration. B) IndustrialȱRevolution.
C) WealthȱofȱNations. D) DarkȱAges.
Answer: B
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
1
Downloaded by robert barake ()
, lOMoARcPSD|4845562
5) WhichȱofȱtheȱfollowingȱstatementsȱisȱNOTȱcorrect?
A) Economicsȱisȱaȱbehavioralȱscience.
B) Inȱlargeȱmeasure,ȱeconomicsȱisȱtheȱstudyȱofȱhowȱpeopleȱmakeȱchoices.
C) Ifȱpovertyȱwasȱeliminatedȱthereȱwouldȱbeȱnoȱreasonȱtoȱstudyȱeconomics.
D) Economicȱanalysisȱcanȱbeȱusedȱtoȱexplainȱhowȱbothȱindividualsȱandȱsocietiesȱmake
decisions.
Answer: C
Diff:ȱ1
Topic: WhyȱStudyȱEconomics?
Skill: Fact
6) Theȱstudyȱofȱeconomics
A) isȱaȱveryȱnarrowȱendeavor.
B) isȱaȱwayȱofȱanalyzingȱdecision-makingȱprocessesȱcausedȱbyȱscarcity.
C) isȱconcernedȱwithȱprovingȱthatȱcapitalismȱisȱbetterȱthanȱsocialism.
D) focusesȱonȱhowȱaȱbusinessȱshouldȱfunction.
Answer: B
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Definition
7) Sunkȱcostsȱare
A) costsȱthatȱcannotȱbeȱavoided,ȱbecauseȱtheyȱhaveȱalreadyȱbeenȱincurred.
B) theȱcostsȱofȱwhatȱweȱgiveȱupȱwhenȱweȱmakeȱaȱchoiceȱorȱaȱdecision.
C) theȱadditionalȱcostsȱofȱproducingȱanȱadditionalȱunitȱofȱaȱproduct.
D) theȱadditionalȱcostsȱofȱconsumingȱanȱadditionalȱunitȱofȱaȱproduct.
Answer: A
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Definition
8) Supposeȱthatȱȱyouȱpurchasedȱaȱticketȱtoȱaȱjazzȱfestivalȱforȱ$100ȱaȱmonthȱago.ȱLastȱweek
someoneȱinvitedȱyouȱtoȱaȱhockeyȱgameȱonȱtheȱsameȱnightȱasȱtheȱjazzȱfestival.ȱYouȱwouldȱmuch
ratherȱgoȱtoȱtheȱhockeyȱgameȱthanȱtheȱjazzȱfestival.ȱYouȱhaveȱtriedȱunsuccessfullyȱtoȱsellȱthe
jazzȱfestivalȱticket.ȱWhichȱofȱtheȱfollowingȱstatementsȱregardingȱthisȱsituationȱisȱcorrect?
A) Theȱ$100ȱyouȱpaidȱforȱtheȱjazzȱfestivalȱticketȱisȱrelevantȱtoȱtheȱdecision,ȱasȱthisȱrepresents
theȱopportunityȱcostȱofȱattendingȱtheȱhockeyȱgame.
B) Youȱshouldȱbaseȱyourȱdecisionȱonȱwhetherȱorȱnotȱtheȱhockeyȱgameȱwillȱprovideȱyouȱwith
moreȱthanȱ$100ȱinȱsatisfaction.
C) Theȱ$100ȱyouȱpaidȱforȱtheȱjazzȱfestivalȱticketȱshouldȱbeȱirrelevantȱinȱyourȱdecision
making,ȱbecauseȱitȱisȱaȱsunkȱcost.
D) Theȱ$100ȱjazzȱfestivalȱticketȱshouldȱbeȱirrelevantȱinȱyourȱdecisionȱmaking,ȱbecauseȱit
representsȱtheȱmarginalȱcostȱofȱattendingȱtheȱhockeyȱgame.
Answer: C
Diff:ȱ2
Topic: WhyȱStudyȱEconomics?
Skill: Conceptual
AACSB: ReflectiveȱThinking
2
Downloaded by robert barake ()
