Test bank for principles of macroeconomics 4th canadian edition by frank

Page of 36 This chapter has 203 questions Scroll down to see and select individual questions or narrow the list using the checkboxes below questions at random and keep in order  Learning Objective: 01-07 Distinguish positive economics from welfare economics - (11) Multiple Choice Questions - (203) Odd Numbered - (102) Learning Objective: 01-08 Define an economic naturalist - (4) Even Numbered - (101) Level of Learning: Analysis - (4) Difficulty: Difficult - (54) Level of Learning: Application - (114) Difficulty: Easy - (78) Level of Learning: Comprehension - (46) Difficulty: Medium - (71) Level of Learning: Data Analysis - (1) Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics - (17) Level of Learning: Knowledge - (38) Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics - (6) Type: Calculation - (56) Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost - (56) Type: Data Analysis - (20) Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle - (22) Type: Graphical - (3) Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions - (78) Type: Word Problem - (124) Learning Objective: 01-06 Explain how data are used to evaluate economic theories - (9) Economics is best defined as the study of prices and quantities inflation and interest rates → how people make choices under the conditions of scarcity, and the results of the choices how to make money wages and incomes Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem Which of the following is a macroeconomic issue? Planning a price increase for daily bus fare → Predicting inflation rates for next year Determining how many permits should be issued for single homes in Montreal Negotiation a wage increase for faculty at local university Identifying the best location for future department stores in Ontario Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Application Multiple Choice Question Type: Word Problem Which of the following is a macroeconomic statement? Unionized workers for Ford went on strike for higher wages The price of wheat doubled in the past month Forest fires destroyed thousands of hectares in Western Canada The demand for smart phones increased by 10% this year → National output fell by 1% last year Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Application Multiple Choice Question Type: Word Problem Which of the following is a macroeconomic statement? Severe drought in the prairies has increased the price of wheat Technological improvements have lowered prices in the automobile industry The provincial government of British Columbia has increased tuition fees → The unemployment rate in Canada is expected to decline over the next two years Hurricanes in Florida lead to greater exports of soft wood lumber from Canada to the U.S Difficulty: Medium Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Application Multiple Choice Question Type: Word Problem Which of the following is a microeconomic statement? Interest rates in Canada are directly linked to interest rates in the United States → The Competition Bureau accuses oil companies of illegally fixing gas prices The government negotiated a trade agreement with the European Union The unemployment rate increased by 1.5% this year National output fell by 1% last year Multiple Choice Question Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Application Type: Word Problem Full file at https://TestbankDirect.eu/ Page of 36 Which of the following is a microeconomic statement? Tariff barriers hurt all Canadians Inflation will remain low for the next two years Inflation and unemployment will remain low for the next two years → Increased gasoline prices have raised taxi fares by 10% National output remained constant last year Difficulty: Medium Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Application Multiple Choice Question Type: Word Problem The distinguishing feature of microeconomics is studying choices the performance of national economics the overall price level → choices made by individuals or groups in the context of individual markets how to improve the performance of national economies Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem Macroeconomics is distinguished by its concentration on choices → the performance of national economies and ways to improve upon that performance individual markets the level of prices in specific markets abstract models Difficulty: Medium Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem The study of individual choices and group behaviour in individual markets defines → microeconomics economics the scarcity principle macroeconomics the cost-benefit principle Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 10 The study of national economies, and policies to improve their performance, is known as microeconomics economics → macroeconomics intereconomics intraeconomics Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 11 Which of the following decisions would NOT be part of microeconomics? What university major to select How to make the largest profit Whether to study or watch TV tonight How will an early frost in Prince Edward Island affect the price of potatoes → Should the federal budget always be balanced Difficulty: Medium Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Application Multiple Choice Question Type: Word Problem 12 Which of the following questions would NOT be part of macroeconomics? What caused the Great Depression? At what rate does the Canadian economy typically grow? → Did the sharp increase in gasoline prices alter SUV sales? Full file at https://TestbankDirect.eu/ Page of 36 How does government spending affect the economy? Do trends exist in the national rate of unemployment? Difficulty: Medium Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Application Multiple Choice Question Type: Word Problem 13 Macroeconomics differs from microeconomics in that the concept of scarcity applies to the latter but does not apply to the former → the latter studies individual markets while the former studies groups of markets, including the whole economy rational decisions are relevant to the former but not the latter the former is the study of how people make choices under conditions of scarcity while the latter is concerned with the results of those choices for society the former explains such concepts as how prices are determined in markets while the latter explains the overall price level Difficulty: Medium Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 14 Microeconomics includes the study of inflation unemployment economic growth → the distribution of income the national aggregate output Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 15 How the price mechanism allocates resources in particular markets is a topic in → microeconomics macroeconomics welfare economics entrepreneurial economics positive economics Difficulty: Medium Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 16 The study of macroeconomics includes the choices made by individual consumers the production decisions of firms the causes of poverty → the determinants of the national unemployment rate individual markets Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 17 The focus of microeconomics is the study of national economies trends in consumer purchases the total value of national output → individuals and firms the determinants of the unemployment rate Difficulty: Easy Learning Objective: 01-01 Define economics; microeconomics; and macroeconomics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 18 The Scottish economist who wrote "The Wealth of Nations" was → Adam Smith Alfred Marshall David Hume John Maynard Keynes John Stuart Mill Full file at https://TestbankDirect.eu/ Page of 36 Multiple Choice Question Difficulty: Easy Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics Level of Learning: Knowledge Type: Word Problem 19 The economist often considered the "father of macroeconomics" is _ Adam Smith Alfred Marshall David Hume → John Maynard Keynes John Stuart Mill Difficulty: Easy Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 20 Even today, microeconomic concepts developed by _ remain influential Adam Smith → Alfred Marshall David Hume John Maynard Keynes John Stuart Mill Difficulty: Easy Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 21 A rational person is someone that is reasonable makes choices that are easily understood → possesses clear objectives and behaves logically to achieve them does not believe what experts claim is highly cynical Difficulty: Easy Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 22 An economic model is a representation of economic reality that highlights all possible variables and the relationships among them → highlights particular variables and the relationships among them predicts how government actions influence the private sector illustrates the difference between economic and non-economic theories focuses strictly on welfare economics Difficulty: Easy Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 23 When economists make predictions using the framework of a given economic model, it is usually based on personal experiences → important relationships between particular variables mathematical abstractions political implications the profit-maximizing objective Difficulty: Easy Learning Objective: 01-02 Identify John Maynard Keynes; Alfred Marshall; and Adam Smith; and state briefly the influence of each of them had on economics Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 24 The scarcity problem indicates that no matter how much one has, it is never enough compared to 100 years ago, individuals have less time today → with limited resources, having more of "this" means having less of "that." because trade-offs must be made, resources are therefore scarce the wealthier a person is, the fewer trade-offs he must make Full file at https://TestbankDirect.eu/ Page of 36 Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 25 The logical implication of the scarcity problem is that one will never be satisfied with what one has as wealth increases, making trade-offs becomes less necessary as wealth decreases, making trade-offs becomes less necessary → choices must be made resources need to be made unlimited Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 26 If all the world's resources were to magically increase 100-fold, then → the scarcity problem would still govern behaviour economics would no longer be relevant the scarcity problem would disappear everyone would be satisfied trade-offs would become unnecessary Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity Full file at https://TestbankDirect.eu/ cost Level of Learning: Application Multiple Choice Question Type: Word Problem 27 The principle of scarcity applies to the poor exclusively nations exclusively all consumers all firms → everyone; consumers, firms, governments, and nations Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 28 If a campus organization provides a free lunch to all students who show up, then the scarcity problem has been violated → the scarcity problem still applies to the decision to allocate the time to go and eat the lunch is completely without cost no trade-offs are involved it is a free lunch because no price was charged Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 29 Forest is a mountain man living in complete isolation in northern British Columbia He is completely self-sufficient through hunting, fishing, and farming He has not been in the city to buy anything in five years One can infer the scarcity problem does not apply to Forest Forest is not required to make choices → the scarcity problem still applies because more hunting means less fishing and so on Forest is very satisfied Forest knew the Prime Minister Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 30 The scarcity problem applies to → all decisions only market decisions, e.g., buying a car only non-market decisions, e.g., watching a sunset only the poor Full file at https://TestbankDirect.eu/ Page of 36 only the wealthy Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 31 Benny has one hour before bedtime and he can either watch TV or listen to a new CD He chooses to listen to the CD The scarcity problem's influence on Benny is seen in the decision to listen to music the decision not to watch TV → the fixed amount of time before bed the decision to choose between TV and music Benny's taste in music Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 32 The cost-benefit principle indicates that an action should be taken if the total benefits exceed the total costs if the extra benefits are positive if the average benefits exceed the average costs if the resulting economic surplus is zero Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank → if the extra benefits are greater than the extra costs Full file at https://TestbankDirect.eu/ Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 33 Choosing to study for an exam until the extra benefit (improved score) equals the extra cost (mental fatigue) is not rational → an application of the cost-benefit principle an application of the scarcity principle the relevant opportunity cost less desirable than studying for the entire evening Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 34 For a given question to be considered an economic question, it would need to involve explicit prices making a choice money and income limited resources → limited resources and making a choice Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 35 The range of topics, or issues, that fit within the definition of economics is limited to market activities, e.g., buying soap limited to individuals and firms → extremely wide, requiring only the ideas of choice and scarcity limited to governments and nations very limited Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 36 The scarcity problem indicates and the cost-benefit principle indicates → that choices must be made; how to make the choices how to make the choices; that choices must be made that choices must be made; just one of many possible ways to make the choices Full file at https://TestbankDirect.eu/ Page of 36 that choices must be made; that the choices will be poor that choices must be made; that the costs can never outweigh the benefits of the choices Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 37 If there were no scarcity, it implies that benefits must be greater than costs all human desires would be irrelevant → costs would be irrelevant market prices must be low everyone probably has lots of money Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 38 The fact that even a rich country like Canada faces the economic problem of scarcity implies that scarcity must be a problem related to the use of land and labour in Canada scarcity must be the result of mismanagement of natural resources by Canadian businesses scarcity must be largely due to the inefficiency of the government in Canada wantsBank and human desires in Canada exceed available resources → Test for Principles of Macroeconomics 4th Canadian Edition by Frank Canada is not a rich country after all Full file at https://TestbankDirect.eu/ Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 39 Scarcity exists in the world today because → human wants and desires are insatiable average households are too poor there is not enough money in the world people always make the wrong choices we are always producing the wrong things Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 40 Whether studying the size of the Canadian economy or the number of children a couple will choose to have, the unifying concept is wants are limited, resources are limited, and thus trade-offs must be made → wants are unlimited, resources are limited, and thus trade-offs must be made wants are unlimited, resources are limited to some but not to others, and thus some people must make tradeoffs wants are unlimited, resources are unlimited, and thus no trade-offs need to be made wants are unlimited, resources are limited, and thus government needs to more Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 41 With banking machines, it is possible to retrieve cash from the bank at any time 100 years ago, one could only get cash from the bank during business hours, say, am to pm The difference is because flexibility was not valued 100 years ago it was impossible to provide 24 hour a day service 100 years ago → the cost of providing 24 hour a day service is much lower today the government forced banks to become more convenient cash is a more popular means of making payments today Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 42 Deciding to pursue an activity as long as the extra benefits are at least equal to the extra costs defines the Full file at https://TestbankDirect.eu/ Page of 36 → cost-benefit principle scarcity principle No-Free-Lunch principle marginal principle extra principle Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 43 The existence of the cost-benefit principle stems from the limited nature of wants → the trade-offs the scarcity problem indicates must be made the necessity of government intervention opportunity costs the unlimited nature of resources Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 44 Imagine a world with unlimited resources, including time On that planet, personal strife not exist.of Macroeconomics 4th Canadian Edition by Frank Test Bank forwould Principles the scarcity problem would not apply but the cost-benefit principle would cost-benefit principle would be irrelevant because trade-offs would be unnecessary → the Full file at https://TestbankDirect.eu/ the scarcity problem would still apply the discipline of economics would be more important Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 45 When economists say there is no such thing as a free lunch, they mean that we must pay money for everything we get it is against the law to accept goods or services without paying for them when we eat lunch, our time has no value each day we decide to eat lunch is another day we must pay out money → every choice we make involves a trade-off Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 46 The concept of scarcity applies both to Bill Gates and a homeless person because both have the same legal rights they have the same access to the markets for goods and services → there are only 24 hours in the day for both of them they are both consumers both must breathe air in order to live Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 47 The cost-benefit principle states that an action should be taken only if the total benefit is at least as great as the total cost implies that the cost of all alternatives should be included when choosing among alternatives → states that an action should be taken only if the extra benefit is at least as great as the extra cost states that an action should be taken only if the average benefit is greater than the average cost states that an action should be taken only if the extra benefit is less than the extra cost Multiple Choice Question Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Knowledge Type: Word Problem Full file at https://TestbankDirect.eu/ Page of 36 48 The Web site for this textbook can be viewed simultaneously by thousands of students around the world without paying money to view it Does this suggest that the concept of scarcity does not apply to Web sites? No, because each of the students incurs an opportunity cost, measured by the next best alternative to viewing → the Web site Yes, because an additional student viewing the Web site does not prevent another student from viewing it Yes, because the students not have to pay money to view the Web site and thus they not have to forgo something else to view it No, because the more students who view it, the slower the transmission of the information to each of the students Yes, because the technology of the internet has made the principles of economics outdated Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Word Problem 49 In applying the cost-benefit principle, one should calculate the total cost and total benefit, and choose that quantity of an activity where they are equal average cost and average benefit, and choose that quantity of an activity where the average benefit exceeds the average cost by the greatest amount total cost and total benefit, and choose that quantity of an activity where the total cost exceeds the total benefit by the greatest amount marginal cost and marginal benefit, and choose that quantity of an activity where the marginal benefit at least → equals the marginal cost marginal cost, total cost, marginal benefit, and marginal cost, and choose that quantity of an activity where the marginal costfor equals the total cost and the marginal benefit the total benefit by Frank Test Bank Principles of Macroeconomics 4thequals Canadian Edition Difficulty: Difficult Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 50 In an economic sense, scarcity means that there are limited resources available, so consumers never have to make choices unlimited resources available, so consumers never have to make choices not many products available to consumers → limited resources available, so consumers have to make choices unlimited resources available, so consumers have to make choices Full file at https://TestbankDirect.eu/ Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 51 The fundamental problem that is studied in economics is that consumers have limited wants in the face of unlimited resources markets should function without government interference Canada is too wealthy → consumers have unlimited wants in the face of limited resources there are unlimited resources Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 52 The core problem of economics is that unemployment is too high that governments not spend enough money on education understanding the Great Depression → the scarcity problem determining the best price for oil Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 53 The scarcity problem refers to the fact that consumers not have to make choices consumers have limited wants in the face of unlimited resources there are not many products available to consumers Full file at https://TestbankDirect.eu/ Page 10 of 36 → consumers have unlimited needs and wants, but there are limited resources there are unlimited resources available so consumers never have to make choices Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 54 The cost-benefit principle states that a consumer will be better off to follow a particular course of action, only if the total benefits increase total costs decrease total costs remain unchanged → extra benefits from taking the action are at least equal to the extra costs total benefits not decrease Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 55 To determine the best course of action, one needs to consider the benefits the costs neither the benefits nor the costs both the benefits and the costs.of Macroeconomics 4th Canadian Edition by Frank → Test Bank for Principles either the benefits or the costs, but not both Full file at https://TestbankDirect.eu/ Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 56 The opportunity cost of an activity is the value of an alternative forgone → the next-best alternative forgone the least-best alternative forgone the difference between the chosen activity and the next-best alternative forgone the alternative one would have preferred to choose Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 57 Amy is thinking about going to the movies tonight A ticket costs $7 and she will have to cancel her dog-sitting job that pays $30 The total cost of seeing the movie is $7 $30 → $37 $37 minus the benefit of seeing the movie indeterminate Difficulty: Medium Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Application Multiple Choice Question Type: Calculation 58 Cost-benefit analysis can help to shed light in the decision-making process → even if we can at times describe costs and benefits in vague qualitative form only even if we have absolutely no information at all only if we know the precise dollar value of all costs and benefits only if we know the maximum dollar value of all costs and benefits only if we have information on all the relevant market data Difficulty: Easy Learning Objective: 01-03 State and explain the problem of scarcity and its relation to opportunity cost Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 59 Applying the cost-benefit principle to the issues of large class sizes and recent tuition hikes in Canadian universities and colleges will help to find a fair solution to the problems of such increases Full file at https://TestbankDirect.eu/ Page 22 of 36 $2,850 $2,800 $700 $750 Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Multiple Choice Question Type: Calculation 122.If Brenda works for 10 hours she can sell 15 insurance contracts, and if she works for 11 hours she can sell 18 insurance contracts The marginal benefit of the 11th hour of Brenda's work equals 18 insurance contracts 15 insurance contracts 33 insurance contracts insurance contract insurance contracts → Difficulty: Easy Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Multiple Choice Question Type: Calculation 123.Refer to the graph below Rodney has taken two trips to New York City at an average cost of $400 per trip Which of the following is true? Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank Full file at https://TestbankDirect.eu/ → Rodney is rational Rodney took too many trips We cannot determine whether Rodney is rational given the available information Rodney took too few trips Rodney took the optimal number of trips Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Level of Learning: Application Multiple Choice Question Type: Graphical 124.Dividing the total cost of N units of an activity by N reveals the average benefit marginal cost units per cost average cost → additional cost Difficulty: Easy Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 125.The average cost of 20 units of an activity is the total cost of 20 units of the activity divided by 20 → 20 divided by the total cost of 20 units of the activity extra cost of 20 units of the activity divided by 20 reciprocal of the total cost of 20 units of the activity change in total cost of the activity Difficulty: Easy Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Multiple Choice Question Type: Word Problem 126.Dividing the total benefit of N units of an activity by N quantifies the average benefit → marginal benefit average cost units per benefit additional benefit Full file at https://TestbankDirect.eu/ Page 23 of 36 Difficulty: Easy Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 127.The average benefit of an activity is the total benefit of the activity times the number of units total benefit of the activity divided by the number of units → number of units divided by the total benefit of the activity number of units times the total benefit of the activity reciprocal of the total benefits of the activity Difficulty: Easy Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Knowledge Multiple Choice Question Type: Word Problem The following table shows the relationship between the speed of a computer's CPU and the benefits and costs Assume that all other features of the computer are the same, i.e., CPU speed is the only source of variation Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank Full file at https://TestbankDirect.eu/ Reference: 01-128 128.The marginal benefit of upgrading from a GHz computer to a GHz computer is $1,500 $500 → $50 $5 $100 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-128 Type: Calculation 129.The total benefit of a GHz computer is $400 $500 $800 $1,900 → $2,200 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-128 Type: Calculation 130.The total cost of a GHz computer is $1,000 → $900 $300 $200 $100 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-128 Type: Calculation 131.The marginal cost of upgrading from a GHz to a GHz computer is $600 $500 $400 → $200 $100 Multiple Choice Question Reference: 01-128 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Full file at https://TestbankDirect.eu/ Page 24 of 36 Level of Learning: Application Type: Calculation 132.Choosing the GHz computer would be inefficient because the extra benefit is less than the extra cost → the extra benefit is equal to the extra cost it is impossible to tell the difference compared to a GHz computer it will be surpassed by a GHz computer very soon the total cost exceeds the total benefit Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Level of Learning: Application Reference: 01-128 Type: Calculation The following table shows the total benefit from painting 0, 1, 2, 3, or rooms in a home Reference: 01-133 133.What is the marginal benefit of painting the second room? $0 $200 Test Bank for Principles of Macroeconomics $300 $400 → Full file at https://TestbankDirect.eu/ $500 4th Canadian Edition by Frank Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-133 Type: Calculation 134.What is the marginal benefit of painting the third room? $0 $200 $300 → $400 $500 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-133 Type: Calculation 135.What is the marginal benefit of painting the fourth room? $0 $200 → $300 $400 $500 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-133 Type: Calculation 136.If the marginal cost is constant at $250, what is the optimal number of rooms to paint? → Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Level of Learning: Application Reference: 01-133 Type: Calculation 137.If the marginal benefit is constant at $350, what is the optimal number of rooms to paint? → Full file at https://TestbankDirect.eu/ Page 25 of 36 Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Level of Learning: Application Reference: 01-133 Type: Calculation The following table provides the costs (Cost A and Cost B) and the benenfits associated with each unit of activity Reference: 01-138 138.The total cost of units of the activity is $260 $100 → $90 $10 indeterminate Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-138 Type: Calculation Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank 139.The average cost of units of the activity is $2 Full file at https://TestbankDirect.eu/ $10 $18 $20 → $50 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-138 Type: Calculation 140.Which of the following tends to diminish continuously with increasing units of the activity? Total Cost A Average (per unit) Cost A → Total Cost B Average Cost B Total Benefit Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Comprehension Reference: 01-138 Type: Calculation 141.If the activity in question is yearly fishing trips, which of the following is the most appropriate example of Cost A? Worms and tackle for fishing Expenses, such as gasoline, for car trips Food and drinks bought during trips An annual fishing licence → Hourly wages on hired help for launching the boat each trip for the year Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Comprehension Reference: 01-138 Type: Data Analysis 142.If the activity in question is yearly fishing trips, which of the following is the most appropriate example of Cost A? A new, durable sun hat and a new fishing rod → Worms and tackle for fishing Food and drinks during trips Cold beer and bottled water bought during trips Expenses on boat launching and marine gasoline Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Comprehension Reference: 01-138 Type: Data Analysis 143.If the activity in question is yearly fishing trips, which of the following is an appropriate example of Cost B? Money spent on a new, durable summer hat Full file at https://TestbankDirect.eu/ Page 26 of 36 → The annual parking fee at the fishing port Money spent on repairing the fishing boat Money spent on worms and tackle An annual fishing licence Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Comprehension Reference: 01-138 Type: Data Analysis 144.If the activity in question is annual skiing trips for an expert skier, which of the following is the most appropriate example for Cost B? Ski-lift tickets at different resorts → Money spent on a new ski outfit A new ski hat Wages that the ski resort spent on ski-lift operators Expenses on a winter tune up for the skier's car Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Comprehension Reference: 01-138 Type: Data Analysis 145.If the activity in question is ski trips for a novice skier, which of the following is the most appropriate example of Cost A? Ski rental each trip Purchase of second-hand skis → Ski lift tickets Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank Food and drinks bought at the ski resort Full file at ski-lift https://TestbankDirect.eu/ Wages for the operator Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Comprehension Reference: 01-138 Type: Data Analysis 146.The additional cost of consuming three rather than two units of activity is $10 $20 → $30 $40 $50 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-138 Type: Calculation 147.The additional benefit of consuming two rather than just one unit of activity is $50 → $100 $110 $150 $180 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-138 Type: Calculation 148.Consider the Benefit column As additional units of the activity are undertaken, which of the following statements is the most appropriate? The benefit is rising by increasing marginal amounts The benefit is rising by decreasing marginal amounts → The benefit is rising by constant marginal amounts The benefit is changing erratically with no obvious pattern The benefit is falling by constant marginal amounts Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Comprehension Reference: 01-138 Type: Data Analysis 149.From the second unit of activity, the marginal benefit exceeds the marginal cost by $10 $20 $40 → $50 Full file at https://TestbankDirect.eu/ Page 27 of 36 $150 Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-138 Type: Calculation 150.Which of the following statements is correct? → The total benefit exceeds the total cost for all units of activity Each of the five units of activity yields the same total benefit Each of the five units of activity yields the same average benefit Each additional unit of activity yields the same marginal benefit Each additional unit of activity yields more and more additional benefit Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Comprehension Reference: 01-138 Type: Data Analysis 151.The average benefit of units of activity is $41 → $50 $60 $75 $100 Difficulty: Medium Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Full file at https://TestbankDirect.eu/ Reference: 01-138 Type: Calculation 152.The average benefit of units of activity is $41 $50 $60 → $75 $100 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-138 Type: Calculation Sharon, a marketing major, has her first economics test and her first finance test to take tomorrow and she has four hours tonight to allocate to studying the two subjects The data below show her scores on the two tests based on the time spent studying (Hint: Studying economics for hours means studying finance for hours.) Reference: 01-153 153.The benefit of spending an extra hour studying economics is the resulting test score the resulting increase in the test score → the resulting test score divided by hours spent studying increasing constant Difficulty: Easy Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-153 Type: Data Analysis 154.The cost of spending an extra hour studying economics is falling the resulting test score in finance constant the resulting decrease in the finance test score → missing an hour's worth of TV Difficulty: Easy Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Type: Data Analysis Multiple Choice Question Reference: 01-153 155.The sequence of marginal benefits from the 1st to the 4th hour of economics studying is 12, 4.5, 1, -5 Full file at https://TestbankDirect.eu/ Page 28 of 36 → 77, 86, 89, 91 26, 14, 5, 12, 21, 24, 26 12, 9, 3, Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Type: Calculation Multiple Choice Question Reference: 01-153 156.The sequence of marginal costs from the 1st to the 4th hour of economics studying is 30, 29, 27, 20 79, 77, 70, 50 1, 2, 7, 20 → -1, -2, -7, -20 1, 3, 10, 30 Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-153 Type: Calculation 157.To efficiently allocate her hours of study time, Sharon should seek to maximize the economics test score difference in the two test scores finance test score Banktest forscores Principles of Macroeconomics 4th Canadian Edition by Frank combined → Test economics test score first and then the finance test score Full file at https://TestbankDirect.eu/ Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Level of Learning: Application Reference: 01-153 Type: Data Analysis 158.To maximize her combined test scores, Sharon should study economics for hours and finance for hours → 2; 1; 3; 0; 4; Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Level of Learning: Application Reference: 01-153 Type: Calculation 159.Spending hours on economics and hour on finance would be because the best use of resources; the economics score is higher not the best use of resources; the improvement in economics is points but the decline in finances is points → the best use of resources; the finance score is still passing not the best use of resources; the economics score exceeds the finance score the best use of resources; she really understands economics Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Level of Learning: Application Reference: 01-153 Type: Calculation Reference: 01-160 160.Total donations raised by three employees are $43,899 $45,000 $48,911 $51,963 → $57,721 Multiple Choice Question Reference: 01-160 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Full file at https://TestbankDirect.eu/ Page 29 of 36 Level of Learning: Application Type: Calculation 161.The average benefit (average donation) with employees is $13,222 $15,000 → $16,748 $18,883 $19,915 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-160 Type: Calculation 162.The total labour cost of employees is $21,500 $22,000 $38,000 → $43,121 $44,750 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-160 Type: Calculation 163.The average labour cost for of 3Principles employees isof Macroeconomics 4th Canadian Edition by Frank Test Bank $6,000 $6,500 Full file at https://TestbankDirect.eu/ $7,675 $8,750 $9,000 → Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-160 Type: Calculation 164.The President of What's A Matter U decides to hire fundraisers as long as the average benefit exceeds the average cost, resulting in employees being hired and a "net benefit" (total donations minus total labour costs) of → 5; $17,082 5; $67,082 4; $60,000 4; $22,000 5; $38,000 Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-160 Type: Calculation 165.The Dean of Finance at What's A Matter U argues that the best number of fundraisers to hire is where average labour costs are the lowest This would mean employee(s) and a "net benefit" (total donations minus total labour costs) of 1; $36,000 1; $22,000 → 2; $21,213 2; $8,500 1; $8,000 Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Application Type: Calculation Multiple Choice Question Reference: 01-160 166.The marginal benefit (extra donations) of the 2nd employee is $42,426 $21,213 $12,426 → $11,337 $9,766 Multiple Choice Question Reference: 01-160 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Full file at https://TestbankDirect.eu/ Page 30 of 36 Level of Learning: Application Type: Calculation 167.The marginal labour cost (extra labour cost) of the 4th employee is $9,500 $10,000 $10,750 $11,000 → $12,000 Difficulty: Medium Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-160 Type: Calculation 168.The Chairman of the Economics Department at What's A Matter U says that fundraisers should be hired as long as their marginal donations exceed their marginal labour costs Following this criterion, employees are hired and the "net benefit" (total donations minus total labour costs) is 1; $22,000 2; $25,426 → 3; $25,426 2; $3,476 2; $42,426 Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Level Learning: Application Test Bank for Principles of Macroeconomics 4th Canadian Edition byofFrank Reference: 01-160 Type: Calculation 169.The "net benefit" donations minus total labour costs) from hiring fundraisers is largest when employees Full(total file at https://TestbankDirect.eu/ are hired → Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Level of Learning: Application Reference: 01-160 Type: Calculation 170.In general, to make optimal decisions, one needs information on the average benefits and marginal costs marginal benefits and marginal costs → marginal benefits and average costs average benefits and average costs benefits and costs, which can be either average or marginal Difficulty: Easy Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Level of Learning: Application Multiple Choice Question Type: Word Problem 171.When units of an activity are chosen, the average benefits are $13 and the average costs are $12 One can infer that more units should be chosen is the optimal amount fewer units should be chosen total benefits are less than total costs insufficient information is available to judge if units are optimal or not → Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Level of Learning: Application Multiple Choice Question Type: Data Analysis 172.When making a decision, the important costs to identify and consider are the costs and the costs opportunity; marginal → opportunity; variable sunk; marginal marginal; average marginal; fixed Multiple Choice Question Difficulty: Easy Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Full file at https://TestbankDirect.eu/ Page 31 of 36 Level of Learning: Comprehension Type: Word Problem Jason studied hours for his first History test and his test score was 85; hours for his second History test and scored 90; and hours for his third History test and scored 95 He also studied hours for his first Math test and his test score was 68; hours for his second Math test and scored 78; and hours for his third Math test and scored 88 Reference: 01-173 173.The average benefit per hour studied for the History tests was and the average benefit per hour studied for the Math tests was _ 15; 13 → 5; 10 90; 78 13; 15 10: Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-173 Type: Calculation 174.The marginal benefit of the last hour of History studied was and the marginal benefit of the last hour of Math studied was _ 15; 13 5; 10 → 90; 78 13; 15 10: 5Bank for Principles of Macroeconomics 4th Canadian Edition by Frank Test Difficulty: Difficult Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Multiple Choice Question Level of Learning: Application Reference: 01-173 Type: Calculation 175.Which of the following costs should be included when analyzing choices within a cost-benefit framework? Average costs Sunk costs Marginal costs → Sunk costs and marginal costs Average costs and opportunity costs Full file at https://TestbankDirect.eu/ Difficulty: Medium Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 176.You have just purchased a car for $20,000 and realized that you still have to pay for insurance, licence, monthly parking and gasoline The marginal cost of driving an additional kilometre is the additional money that you have to spend on insurance, licence, monthly parking and gasoline insurance, licence, monthly parking and gasoline plus the $20,000 purchase price of the car insurance and licence monthly parking and gasoline gasoline → Difficulty: Easy Learning Objective: 01-05 State how three pitfalls can undermine rational economic decisions Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 177.Chuck offers $122,000 for a house The seller turns down the offer but says she will sell the house for $129,000 However, Chuck refuses to pay the higher price If both Chuck and the seller are rational, then marginal analysis implies that the marginal benefit to the house to → Chuck must be less than $129,000 Chuck must be greater than $129,000 Chuck must be greater than $122,000 the seller must be less than $129,000 the seller must be less than $122,000 Difficulty: Difficult Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Level of Learning: Application Multiple Choice Question Type: Data Analysis Full file at https://TestbankDirect.eu/ Page 32 of 36 The figure above shows the marginal benefit of additional minutes in a cell-phone plan The marginal cost is constant at $0.10 per minute Reference: 01-178 178.It is optimal to buy more cell-phone time as long as marginal benefit exceeds marginal cost → marginal cost exceeds marginal benefit average benefit exceeds average cost average cost exceeds average benefit marginal benefit exceeds zero Test Bank Learning for Principles of Macroeconomics 4th Canadian Edition by Frank Difficulty: Easy Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Full file at https://TestbankDirect.eu/ Reference: 01-178 179.What is the optimal number of minutes to purchase? 100 200 300 400 → Level of Learning: Application Type: Graphical Difficulty: Medium Learning Objective: 01-04 Explain how a rational decision maker applies the cost-benefit principle Multiple Choice Question Level of Learning: Application Reference: 01-178 Type: Graphical 180.The Latin expression for "all else equal" is ad infinitum carpe diem ceteris paribus → de facto prima facie Difficulty: Easy Learning Objective: 01-06 Explain how data are used to evaluate economic theories Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 181.The Latin expression "ceteris paribus": is essential in collecting data identifying sunk costs evaluating theories → recognizing scarcity developing spurious relationships Difficulty: Easy Learning Objective: 01-06 Explain how data are used to evaluate economic theories Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 182.The branch of economics that involves the application of statistical techniques to economic data is macroeconomics microeconomics positive economics welfare economics econometrics → Multiple Choice Question Difficulty: Easy Learning Objective: 01-06 Explain how data are used to evaluate economic theories Full file at https://TestbankDirect.eu/ Page 33 of 36 Level of Learning: Comprehension Type: Word Problem 183.Econometrics is the branch of economics that studies individual choices under scarcity studies the performance of national economies examines the role of opportunity costs in rational behaviour → applies statistical techniques to economic data offers cause-and-effect relationships which can be confirmed or refuted by data Difficulty: Easy Learning Objective: 01-06 Explain how data are used to evaluate economic theories Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 184.To avoid spurious correlation, one must recognize that what is true for a part must also be true for the whole what is true for a part is not necessarily true for the whole because one event precedes another, the first event necessarily caused the second because one event precedes another, the first event did not necessarily cause the second → correlation implies causation Difficulty: Easy Learning Objective: 01-06 Explain how data are used to evaluate economic theories Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 185.To avoid spurious correlation, one must recognize that Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank what is true for a part must also be true for the whole what trueat forhttps://TestbankDirect.eu/ a part is not necessarily true for the whole Fullisfile because two variables move together, one causes the other because two variables move together, one does not necessarily causes the other → correlation implies causation Difficulty: Easy Learning Objective: 01-06 Explain how data are used to evaluate economic theories Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 186.If two variables move together but are otherwise unrelated, we have a fallacy of composition an econometric model a spurious correlation → an efficiency problem evidence of a weak correlation but strong causation Difficulty: Easy Learning Objective: 01-06 Explain how data are used to evaluate economic theories Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 187.To avoid the fallacy of composition, one must recognize that what is true for a part must also be true for the whole what is true for a part is not necessarily true for the whole → because one event precedes another, the first event necessarily caused the second because one event precedes another, the first event did not necessarily cause the second correlation implies causation Difficulty: Easy Learning Objective: 01-06 Explain how data are used to evaluate economic theories Level of Learning: Comprehension Multiple Choice Question Type: Word Problem 188.Which of the following is an example of the fallacy of composition? If one bar offers cheaper drinks, it will increase its revenue; therefore, if all bars offer cheaper drinks, all bars → will increase their revenue If one shop hires more employees, it will provide better service; therefore, if all shops hire more employees, all shops will provide better service If one bookstore stocks more books, it will have a better selection; therefore, if all bookstores stock more books, all bookstores will have a better selection If one TV station cuts down on commercials, it can provide more programming; therefore, if all TV stations cut down on commercials, all TV stations can provide more programming If one factory buys more equipment, it can produce more; therefore, if all factories buy more equipment, all factories can produce more Multiple Choice Question Difficulty: Difficult Learning Objective: 01-06 Explain how data are used to evaluate economic theories Full file at https://TestbankDirect.eu/ Page 34 of 36 Level of Learning: Application Type: Word Problem 189."The Canadian government should not interfere with the free market system at all Individuals should be allowed to fend for themselves." This statement is an example of cost-benefit analysis an economic model spurious correlation positive economic analysis normative economic analysis → Difficulty: Medium Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Application Multiple Choice Question Type: Word Problem 190.Which of the following statements is an example of positive economics? The minimum wage should be increased to allow minimum-wage workers to earn decent incomes In a free market environment, wages should be set by the market A higher minimum wage will reduce the number of workers hired → A higher minimum wage will be fairer to skilled workers A higher minimum wage is good for the economy Difficulty: Medium Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Application Multiple Choice Question Type: Word Problem Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank 191.The statement, "The Canadian Government should increase the operating grants to all Canadian universities and colleges," is an exampleFull of file at https://TestbankDirect.eu/ an empirical statement a positive statement a value-free statement a normative statement → an unfair statement Difficulty: Medium Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Application Multiple Choice Question Type: Word Problem 192.Which of the following statements is an example of positive economics? Unemployment is a more serious problem than inflation because we all need to work for money to survive Inflation is a more serious problem than unemployment, because we not want our income to shrink with rising prices Immigration is bad for the economy because we allow new immigrants to get some of the better jobs Growth in income should be accomplished through government intervention If wages increase, firms may have to fire some of their workers → Difficulty: Medium Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Application Multiple Choice Question Type: Word Problem 193.We not expect economists to agree on economic issues that involve positive analysis normative analysis → microeconomic analysis cost and benefit analysis factual analysis Difficulty: Medium Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Comprehension Type: Word Problem Multiple Choice Question 194.Welfare economics reflects society's ethical standards economic analysis based on facts society's ethical standards and economic analysis based on facts → value-free observations on economic relationships subjective values Multiple Choice Question Difficulty: Easy Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Knowledge Type: Word Problem Full file at https://TestbankDirect.eu/ Page 35 of 36 195.Economic analysis that is concerned with both facts and ethical standards is called _ positive economics normative economics econometrics welfare economics → ceteris paribus Difficulty: Easy Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 196.Ethical or value standards are important for the analysis of positive economics the fallacy of composition econometrics spurious correlation welfare economics → Difficulty: Easy Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 197."We should support government intervention because the market produces undesirable outcomes" is an example of positive economics normative Bankeconomics for Principles of Macroeconomics 4th Canadian Edition by Frank → Test comparative economics Full file at https://TestbankDirect.eu/ negative economics formative economics Difficulty: Easy Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 198."Reducing the price of prescription drugs in Canada may reduce the quantity of these drugs available" is an example of positive economics → normative economics comparative economics classical economics neoclassical economics Difficulty: Easy Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 199."Economic development reduces environmental quality and should be restricted" is an example of positive economics normative economics → comparative economics neoclassical economics classical economics Difficulty: Easy Learning Objective: 01-07 Distinguish positive economics from welfare economics Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 200.The number of Canadian households with access to the Internet is growing rapidly As an economic naturalist, one could predict that when a major purchase is being considered, families will collect as much information as humanly possible beforehand always buy online never buy online collect more information beforehand because the cost of finding and acquiring it is lower → collect more information beforehand because the benefit of information is now larger Difficulty: Medium Learning Objective: 01-08 Define an economic naturalist Level of Learning: Application Type: Word Problem Multiple Choice Question 201.An economic naturalist is described as someone who uses economic arguments to protect forests and wetlands from development has a natural talent for drawing graphs applies economic insights to everyday life → Full file at https://TestbankDirect.eu/ Page 36 of 36 studies the process of natural selection in a marginal cost and marginal benefit framework is considered a mainstream economist Difficulty: Medium Learning Objective: 01-08 Define an economic naturalist Level of Learning: Knowledge Multiple Choice Question Type: Word Problem 202.With ATMs it is possible to retrieve cash from the bank at any time One hundred years ago, one could only get cash from the bank during business hours, say, am to pm The difference is because flexibility was not valued 100 years ago it was impossible to provide 24 hour a day service 100 years ago the cost of providing 24 hour a day service is much lower today → government forced banks to become more convenient the value of money has increased in the past century Difficulty: Medium Learning Objective: 01-08 Define an economic naturalist Level of Learning: Application Multiple Choice Question Type: Word Problem 203.Every time you go to the grocery store, you try to choose the shortest line But all of the lines always seem to be the same length Why? Everyone else is trying to choose the shortest line, too → The store manager tells the cashiers to speed up or slow down to maintain equal line lengths The union tells the cashiers to speed up or slow down to maintain equal line lengths The cashiers all work at the same speed Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank The cashiers not have an incentive to work faster, Full file at https://TestbankDirect.eu/ Multiple Choice Question Full file at https://TestbankDirect.eu/ Difficulty: Medium Learning Objective: 01-08 Define an economic naturalist Level of Learning: Application Type: Word Problem ... in the two test scores finance test score Banktest forscores Principles of Macroeconomics 4th Canadian Edition by Frank combined → Test economics test score first and then the finance test score... features of the computer are the same, i.e., CPU speed is the only source of variation Test Bank for Principles of Macroeconomics 4th Canadian Edition by Frank Full file at https://TestbankDirect.eu/... time spent at the party the score of the test the cost of the textbook university Test Banktuition for Principles of Macroeconomics 4th Canadian Edition by Frank Difficulty: Easy Learning Objective: