TEST BANK
TEST BANK
, Table of Contents
1 The Nature and Method of Economics .................................................................1
2 The Economizing Problem..................................................................................31
3 Individual Markets: Demand and Supply ...........................................................69
3W Applications and Extensions of Supply and Demand Analysis ........................109
4 The Market System ...........................................................................................125
5 The U.S. Economy: Private and Public Sectors ................................................141
6 The United States in the Global Economy ........................................................175
7 Measuring Domestic Output and National Income ..........................................197
8 Introduction to Economic Growth and Instability ............................................229
9 Basic Macroeconomic Relationships ................................................................253
10 The Aggregate Expenditures Model .................................................................289
11 Aggregate Demand and Aggregate Supply ......................................................335
12 Fiscal Policy ......................................................................................................369
13 Money and Banking ..........................................................................................403
14 How Banks and Thrifts Create Money .............................................................433
15 Monetary Policy ................................................................................................455
16 Extending the Analysis of Aggregate Supply ...................................................489
17 Economic Growth .............................................................................................515
18 Deficits, Surpluses, and the Public Debt ...........................................................531
19 Disputes over Macro Theory and Policy...........................................................547
20 Elasticity of Demand and Supply......................................................................575
21 Consumer Behavior and Utility Maximization .................................................611
22 The Costs of Production....................................................................................647
23 Pure Competition ..............................................................................................687
24 Pure Monopoly..................................................................................................731
25 Monopolistic Competition and Oligopoly ........................................................773
26 Technology, R&D, and Efficiency ...................................................................819
27 The Demand for Resources ...............................................................................843
28 Wage Determination .........................................................................................875
29 Rent, Interest, and Profit ...................................................................................909
30 Government and Market Failure .......................................................................929
31 Public Choice Theory and Taxation ..................................................................953
32 Antitrust Policy and Regulation ........................................................................979
33 Agriculture: Economics and Policy ................................................................1001
34 Income Inequality and Poverty .......................................................................1021
35 Labor Market Institutions and Issues: Unionism,
Discrimination, and Immigration ....................................................................1047
36 The Economics of Health Care .......................................................................1077
37 International Trade ..........................................................................................1097
38 Exchange Rates, the Balance of Payments, and Trade Deficits ......................1127
39W The Economics of Developing Countries (Internet-Only Chapter) ................1157
40W Transition Economies: Russia and China (Internet-Only Chapter) ................1177
,CHAPTER 1
The Nature and Method of Economics
Topic Question numbers
1. Economics; economic perspective 1-20
2. Benefits of studying economics 21-23
3. Methodology 24-40
4. Economic policy and goals 41-47
5. Macroeconomics and microeconomics 48-56
6. Positive and normative statements 57-66
7. Logical pitfalls 67-82
Consider This 83-84
Last Word 85-87
True-False 88-100
Appendix
8. Construction and interpretation of graphs 101-155
Multiple Choice Questions
Economics; economic perspective
1. For economists, the word "utility" means:
A) versatility and flexibility.
B) Rationality.
C) pleasure and satisfaction.
D) purposefulness.
Answer: C
2. In economics, the pleasure, happiness, or satisfaction received from a product is called:
A) marginal cost.
B) rational outcome.
C) status fulfillment.
D) utility.
Answer: D
3. When economists say that people act rationally in their self interest, they mean that individuals:
A) look for and pursue opportunities to increase their utility.
B) generally disregard the interests of others.
C) are mainly creatures of habit.
D) are unpredictable.
Answer: A
, Chapter 1: The Nature and Method of Economics
Type: A Topic: 1 E: 3 MI: 3 MA: 3
4. According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover."
According to economists, "Want" exceeds "Have" because:
A) people are greedy.
B) productive resources are limited.
C) human beings are inherently insecure.
D) people are irrational.
Answer: B
Type: A Topic: 1 E: 4 MI: 4 MA: 4
5. According to economists, economic self-interest:
A) is a reality that underlies economic behavior.
B) has the same meaning as selfishness.
C) is more characteristic of men than of women.
D) is usually self-defeating.
Answer: A
Type: A Topic: 1 E: 4 MI: 4 MA: 4
6. When entering a building, Sam diverts his path to go through an open door rather than make the physical
effort to open the closed door that is directly in his path. This is an example of:
A) irrational behavior.
B) a lazy person.
C) marginal benefit-marginal cost analysis.
D) programmed learning.
Answer: C
Type: A Topic: 1 E: 4 MI: 4 MA: 4
7. Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any
money on my financial investment." His economist friend points out that in effect he did lose money,
because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of
deposit instead of the coins. The economist's analysis in this case incorporates the idea of:
A) opportunity costs
B) marginal benefits that exceed marginal costs.
C) imperfect information.
D) normative economics.
Answer: A
Type: A Topic: 1 E: 4-5 MI: 4-5 MA: 4-5
8. There is too little of a good thing when its marginal:
A) benefit exceeds its marginal cost.
B) cost exceeds its marginal benefit.
C) cost equals its marginal benefit.
D) benefit is still positive.
Answer: A
Type: D Topic: 1 E: 3 MI: 3 MA: 3
9. Economics may best be defined as the:
A) interaction between macro and micro considerations.
B) social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of
economic wants.
C) empirical testing of value judgments through the use of logic.
D) use of policy to refute facts and hypotheses.
McConnell/Brue: Economics, 16/e Page 4
TEST BANK
, Table of Contents
1 The Nature and Method of Economics .................................................................1
2 The Economizing Problem..................................................................................31
3 Individual Markets: Demand and Supply ...........................................................69
3W Applications and Extensions of Supply and Demand Analysis ........................109
4 The Market System ...........................................................................................125
5 The U.S. Economy: Private and Public Sectors ................................................141
6 The United States in the Global Economy ........................................................175
7 Measuring Domestic Output and National Income ..........................................197
8 Introduction to Economic Growth and Instability ............................................229
9 Basic Macroeconomic Relationships ................................................................253
10 The Aggregate Expenditures Model .................................................................289
11 Aggregate Demand and Aggregate Supply ......................................................335
12 Fiscal Policy ......................................................................................................369
13 Money and Banking ..........................................................................................403
14 How Banks and Thrifts Create Money .............................................................433
15 Monetary Policy ................................................................................................455
16 Extending the Analysis of Aggregate Supply ...................................................489
17 Economic Growth .............................................................................................515
18 Deficits, Surpluses, and the Public Debt ...........................................................531
19 Disputes over Macro Theory and Policy...........................................................547
20 Elasticity of Demand and Supply......................................................................575
21 Consumer Behavior and Utility Maximization .................................................611
22 The Costs of Production....................................................................................647
23 Pure Competition ..............................................................................................687
24 Pure Monopoly..................................................................................................731
25 Monopolistic Competition and Oligopoly ........................................................773
26 Technology, R&D, and Efficiency ...................................................................819
27 The Demand for Resources ...............................................................................843
28 Wage Determination .........................................................................................875
29 Rent, Interest, and Profit ...................................................................................909
30 Government and Market Failure .......................................................................929
31 Public Choice Theory and Taxation ..................................................................953
32 Antitrust Policy and Regulation ........................................................................979
33 Agriculture: Economics and Policy ................................................................1001
34 Income Inequality and Poverty .......................................................................1021
35 Labor Market Institutions and Issues: Unionism,
Discrimination, and Immigration ....................................................................1047
36 The Economics of Health Care .......................................................................1077
37 International Trade ..........................................................................................1097
38 Exchange Rates, the Balance of Payments, and Trade Deficits ......................1127
39W The Economics of Developing Countries (Internet-Only Chapter) ................1157
40W Transition Economies: Russia and China (Internet-Only Chapter) ................1177
,CHAPTER 1
The Nature and Method of Economics
Topic Question numbers
1. Economics; economic perspective 1-20
2. Benefits of studying economics 21-23
3. Methodology 24-40
4. Economic policy and goals 41-47
5. Macroeconomics and microeconomics 48-56
6. Positive and normative statements 57-66
7. Logical pitfalls 67-82
Consider This 83-84
Last Word 85-87
True-False 88-100
Appendix
8. Construction and interpretation of graphs 101-155
Multiple Choice Questions
Economics; economic perspective
1. For economists, the word "utility" means:
A) versatility and flexibility.
B) Rationality.
C) pleasure and satisfaction.
D) purposefulness.
Answer: C
2. In economics, the pleasure, happiness, or satisfaction received from a product is called:
A) marginal cost.
B) rational outcome.
C) status fulfillment.
D) utility.
Answer: D
3. When economists say that people act rationally in their self interest, they mean that individuals:
A) look for and pursue opportunities to increase their utility.
B) generally disregard the interests of others.
C) are mainly creatures of habit.
D) are unpredictable.
Answer: A
, Chapter 1: The Nature and Method of Economics
Type: A Topic: 1 E: 3 MI: 3 MA: 3
4. According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover."
According to economists, "Want" exceeds "Have" because:
A) people are greedy.
B) productive resources are limited.
C) human beings are inherently insecure.
D) people are irrational.
Answer: B
Type: A Topic: 1 E: 4 MI: 4 MA: 4
5. According to economists, economic self-interest:
A) is a reality that underlies economic behavior.
B) has the same meaning as selfishness.
C) is more characteristic of men than of women.
D) is usually self-defeating.
Answer: A
Type: A Topic: 1 E: 4 MI: 4 MA: 4
6. When entering a building, Sam diverts his path to go through an open door rather than make the physical
effort to open the closed door that is directly in his path. This is an example of:
A) irrational behavior.
B) a lazy person.
C) marginal benefit-marginal cost analysis.
D) programmed learning.
Answer: C
Type: A Topic: 1 E: 4 MI: 4 MA: 4
7. Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any
money on my financial investment." His economist friend points out that in effect he did lose money,
because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of
deposit instead of the coins. The economist's analysis in this case incorporates the idea of:
A) opportunity costs
B) marginal benefits that exceed marginal costs.
C) imperfect information.
D) normative economics.
Answer: A
Type: A Topic: 1 E: 4-5 MI: 4-5 MA: 4-5
8. There is too little of a good thing when its marginal:
A) benefit exceeds its marginal cost.
B) cost exceeds its marginal benefit.
C) cost equals its marginal benefit.
D) benefit is still positive.
Answer: A
Type: D Topic: 1 E: 3 MI: 3 MA: 3
9. Economics may best be defined as the:
A) interaction between macro and micro considerations.
B) social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of
economic wants.
C) empirical testing of value judgments through the use of logic.
D) use of policy to refute facts and hypotheses.
McConnell/Brue: Economics, 16/e Page 4
