This file is copyright 2023, Rice University. All Rights Reserved.
,Chapter 1 Test Bank
Multiple Choice Questions
1. In countries like _____________ the command economy predominates.
A. China and Vietnam
B. Cuba and North Korea
C. South Africa and Kenya
D. Germany and France
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
2. In which of the following countries will the national government have the greatest
influence with respect to the nation's economy?
A. China
B. Cuba
C. Canada
D. Chile
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
3. In a command economy, the __________ either makes most economic decisions
itself or at least strongly influences how the decisions are made.
A. government
B. market
C. firm
D. business sector
Answer: A
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
4. Because of their relatively small national economies, which of the following is most
likely considered to be the most important factor for Belgium, Korea, and Canada to take
full advantage of specialization?
A. division of labour
B. international trade
C. economies of scale
D. command economy
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
5. In a discussion of economics, which of the following would exert the most influence on
an individual firm's decision to hire workers?
A. wage levels
B. the macroeconomy
C. the firm's income
D. household income
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Analyze
6. In a _______________________, most economic decisions about what to produce,
how to produce it, and for whom to produce it are made by buyers and sellers.
A. market-oriented economy
B. macroeconomy
C. microeconomy
D. command economy
Answer: A
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
7. Which of the following best denotes the reason for the existence of substantial black
markets?
A. a market-oriented economy
B. a command economy
C. government laws and rules
D. the microeconomy
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
8. Which of the following is generally accepted as a valid criticism of the production of
useful goods and services?
A. government involvement
B. the black market
C. environmental pollution
D. economic freedom
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Evaluate
9. In the first chapter of The Wealth of Nations, Smith introduces the idea of the
__________, which means the way in which the work required to produce a good or
service is divided into a number of tasks that are performed by different workers.
A. division of labor
B. interconnected economy
C. task economy
D. modern economy
Answer: A
This file is copyright 2023, Rice University. All Rights Reserved.
,Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
10. If macroeconomics looks at the economy as a whole, it focuses on which of the
following?
A. households
B. business firms
C. unemployed people
D. the division of labor
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
11. In the ____________, households work and receive payment from firms.
A. financial investment market
B. financial capital market
C. labor market
D. savings market
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
12. In the ______________, households receive goods and services and pay firms for
them.
A. labor market
B. financial capital market
C. goods and services market
D. savings market
Answer: C
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
13. Which of the following best describes a monetary policy tool?
A. interest rates
B. taxes
C. household savings
D. government spending
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
14. Which of the following best describes a fiscal policy tool?
A. government spending
B. bank lending
C. financial capital markets
D. household spending
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
15. The two main tools of macroeconomic policy include monetary policy, and fiscal
policy, which involves __________ spending.
A. business
B. government
C. household
D. capital market
Answer: B
Reference:
Explanation:
This file is copyright 2023, Rice University. All Rights Reserved.
,Type: Multiple Choice Difficulty: Easy Category: Remember
16. When nations desire a healthy macroeconomy, they typically focus on three goals,
one of these being:
A. balanced budget
B. prudent monetary policy
C. low inflation
D. assuring competition between firms
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
17. The basic difference between macroeconomics and microeconomics is:
A. microeconomics concentrates on individual markets while macroeconomics focuses
primarily on international trade.
B. microeconomics concentrates on the behaviour of individual consumers while
macroeconomics focuses on the behaviour of firms.
C. microeconomics concentrates on the behaviour of individual consumers and firms
while macroeconomics focuses on the performance of the entire economy.
D. microeconomics explores the causes of inflation while macroeconomics focuses on
the causes of unemployment.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
18. Which of the following is most likely a topic of discussion in macroeconomics?
A. an increase in the price of a hamburger
B. a decrease in the production of DVD players by a consumer electronics company
C. an increase in the wage rate paid to automobile workers
D. a decrease in the unemployment rate
Answer: D
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
19. Which of the following statements most likely lies within the realm of
microeconomics?
A. Unemployment rises during a recession and falls during an expansion.
B. An increase in government spending will increase the aggregate demand for goods
and services in the economy.
C. A rapid acceleration of the supply of money may create inflation.
D. An increase in labor costs will increase the additional cost of producing another bus.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Analyze
20. Macroeconomic topics do not usually include:
A. the profit maximizing decisions of an individual manufacturer.
B. the rate of inflation.
C. the rate of unemployment.
D. economic growth.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
21. Macroeconomics primarily examines:
A. the behaviour of individual households and firms.
B. how prices are determined within individual markets.
C. broad issues such as national output, employment and inflation.
D. the output levels that maximize the profits of business firms
Answer: C
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
22. Specialization:
A. leads to greater self-sufficiency.
B. can lead to an increase in overall production.
C. allows workers to develop skills by working on a large number of tasks
D. is always the result of an inefficient use of resources
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
23. In a market-oriented economy, the amount of a good that is produced is primarily
decided by the interaction of:
A. all consumers.
B. buyers and sellers.
C. producers and input suppliers.
D. producers and government planning committees.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
24. Which of the following statements most likely lies within the realm of
macroeconomics?
A. An increase in the price of automobiles will lead to a decrease in the quantity of
automobiles demanded.
B. Due to process innovations in computer chip manufacturing, the market supply of
computers increased.
C. Due to an economic recession, manufacturing firms began implementing layoffs of
their workforces.
D. Anticipating that the benefits would outweigh costs involved, an undergraduate
student purchases the course textbook.
Answer: C
This file is copyright 2023, Rice University. All Rights Reserved.
, Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Analyze
25. Which of the following lies primarily within the realm of macroeconomics?
A. a study of the demand for gasoline
B. a study of how tax cuts stimulate aggregate production
C. an analysis of supply and demand conditions in the electricity market
D. a study of the impact of "mad cow" disease on the price of beef worldwide
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
26. Macroeconomics:
A. is concerned with the expansion of a small business into a large corporation.
B. is narrower in scope than microeconomics.
C. analyzes mergers and acquisitions between firms.
D. is concerned with the expansion and contraction of the overall economy.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
27. The basic difference between macroeconomics and microeconomics is that:
A. microeconomics looks at the forest (aggregate markets) while macroeconomics looks
at the trees (individual markets).
B. macroeconomics is concerned with groups of individuals while microeconomics is
concerned with single countries.
C. microeconomics is concerned with the trees (individual markets) while
macroeconomics is concerned with the forest (aggregate markets).
D. macroeconomics is concerned with generalization while microeconomics is
concerned with specialization.
This file is copyright 2023, Rice University. All Rights Reserved.
,Chapter 1 Test Bank
Multiple Choice Questions
1. In countries like _____________ the command economy predominates.
A. China and Vietnam
B. Cuba and North Korea
C. South Africa and Kenya
D. Germany and France
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
2. In which of the following countries will the national government have the greatest
influence with respect to the nation's economy?
A. China
B. Cuba
C. Canada
D. Chile
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
3. In a command economy, the __________ either makes most economic decisions
itself or at least strongly influences how the decisions are made.
A. government
B. market
C. firm
D. business sector
Answer: A
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
4. Because of their relatively small national economies, which of the following is most
likely considered to be the most important factor for Belgium, Korea, and Canada to take
full advantage of specialization?
A. division of labour
B. international trade
C. economies of scale
D. command economy
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
5. In a discussion of economics, which of the following would exert the most influence on
an individual firm's decision to hire workers?
A. wage levels
B. the macroeconomy
C. the firm's income
D. household income
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Analyze
6. In a _______________________, most economic decisions about what to produce,
how to produce it, and for whom to produce it are made by buyers and sellers.
A. market-oriented economy
B. macroeconomy
C. microeconomy
D. command economy
Answer: A
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
7. Which of the following best denotes the reason for the existence of substantial black
markets?
A. a market-oriented economy
B. a command economy
C. government laws and rules
D. the microeconomy
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
8. Which of the following is generally accepted as a valid criticism of the production of
useful goods and services?
A. government involvement
B. the black market
C. environmental pollution
D. economic freedom
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Evaluate
9. In the first chapter of The Wealth of Nations, Smith introduces the idea of the
__________, which means the way in which the work required to produce a good or
service is divided into a number of tasks that are performed by different workers.
A. division of labor
B. interconnected economy
C. task economy
D. modern economy
Answer: A
This file is copyright 2023, Rice University. All Rights Reserved.
,Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
10. If macroeconomics looks at the economy as a whole, it focuses on which of the
following?
A. households
B. business firms
C. unemployed people
D. the division of labor
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
11. In the ____________, households work and receive payment from firms.
A. financial investment market
B. financial capital market
C. labor market
D. savings market
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
12. In the ______________, households receive goods and services and pay firms for
them.
A. labor market
B. financial capital market
C. goods and services market
D. savings market
Answer: C
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
13. Which of the following best describes a monetary policy tool?
A. interest rates
B. taxes
C. household savings
D. government spending
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
14. Which of the following best describes a fiscal policy tool?
A. government spending
B. bank lending
C. financial capital markets
D. household spending
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
15. The two main tools of macroeconomic policy include monetary policy, and fiscal
policy, which involves __________ spending.
A. business
B. government
C. household
D. capital market
Answer: B
Reference:
Explanation:
This file is copyright 2023, Rice University. All Rights Reserved.
,Type: Multiple Choice Difficulty: Easy Category: Remember
16. When nations desire a healthy macroeconomy, they typically focus on three goals,
one of these being:
A. balanced budget
B. prudent monetary policy
C. low inflation
D. assuring competition between firms
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
17. The basic difference between macroeconomics and microeconomics is:
A. microeconomics concentrates on individual markets while macroeconomics focuses
primarily on international trade.
B. microeconomics concentrates on the behaviour of individual consumers while
macroeconomics focuses on the behaviour of firms.
C. microeconomics concentrates on the behaviour of individual consumers and firms
while macroeconomics focuses on the performance of the entire economy.
D. microeconomics explores the causes of inflation while macroeconomics focuses on
the causes of unemployment.
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
18. Which of the following is most likely a topic of discussion in macroeconomics?
A. an increase in the price of a hamburger
B. a decrease in the production of DVD players by a consumer electronics company
C. an increase in the wage rate paid to automobile workers
D. a decrease in the unemployment rate
Answer: D
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
19. Which of the following statements most likely lies within the realm of
microeconomics?
A. Unemployment rises during a recession and falls during an expansion.
B. An increase in government spending will increase the aggregate demand for goods
and services in the economy.
C. A rapid acceleration of the supply of money may create inflation.
D. An increase in labor costs will increase the additional cost of producing another bus.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Analyze
20. Macroeconomic topics do not usually include:
A. the profit maximizing decisions of an individual manufacturer.
B. the rate of inflation.
C. the rate of unemployment.
D. economic growth.
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
21. Macroeconomics primarily examines:
A. the behaviour of individual households and firms.
B. how prices are determined within individual markets.
C. broad issues such as national output, employment and inflation.
D. the output levels that maximize the profits of business firms
Answer: C
Reference:
This file is copyright 2023, Rice University. All Rights Reserved.
,Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
22. Specialization:
A. leads to greater self-sufficiency.
B. can lead to an increase in overall production.
C. allows workers to develop skills by working on a large number of tasks
D. is always the result of an inefficient use of resources
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
23. In a market-oriented economy, the amount of a good that is produced is primarily
decided by the interaction of:
A. all consumers.
B. buyers and sellers.
C. producers and input suppliers.
D. producers and government planning committees.
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
24. Which of the following statements most likely lies within the realm of
macroeconomics?
A. An increase in the price of automobiles will lead to a decrease in the quantity of
automobiles demanded.
B. Due to process innovations in computer chip manufacturing, the market supply of
computers increased.
C. Due to an economic recession, manufacturing firms began implementing layoffs of
their workforces.
D. Anticipating that the benefits would outweigh costs involved, an undergraduate
student purchases the course textbook.
Answer: C
This file is copyright 2023, Rice University. All Rights Reserved.
, Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Analyze
25. Which of the following lies primarily within the realm of macroeconomics?
A. a study of the demand for gasoline
B. a study of how tax cuts stimulate aggregate production
C. an analysis of supply and demand conditions in the electricity market
D. a study of the impact of "mad cow" disease on the price of beef worldwide
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Analyze
26. Macroeconomics:
A. is concerned with the expansion of a small business into a large corporation.
B. is narrower in scope than microeconomics.
C. analyzes mergers and acquisitions between firms.
D. is concerned with the expansion and contraction of the overall economy.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
27. The basic difference between macroeconomics and microeconomics is that:
A. microeconomics looks at the forest (aggregate markets) while macroeconomics looks
at the trees (individual markets).
B. macroeconomics is concerned with groups of individuals while microeconomics is
concerned with single countries.
C. microeconomics is concerned with the trees (individual markets) while
macroeconomics is concerned with the forest (aggregate markets).
D. macroeconomics is concerned with generalization while microeconomics is
concerned with specialization.
This file is copyright 2023, Rice University. All Rights Reserved.
