Test Bank for Essentials of Economics, 10th Edition by N. Gregory Mankiw
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Course
International Economics
Institution
International Economics
Test Bank for Essentials of Economics,10e 10th Edition by N. Gregory Mankiw. Complete Chapters (Chap 1 to 24) test bank are included with answers.
Part I: INTRODUCTION.
1. Ten Principles of Economics.
2. Thinking Like an Economist.
3. Interdependence and the Gains from Trade.
Part II: HOW MA...
Indicate whether the statement is true or false.
1. Efficiency means everyone in the economy should receive an equal share of the goods and services produced.
a. True
b. False
ANSWER: False
2. Market power and externalities are two possible causes of market failure.
a. True
b. False
ANSWER: True
3. The fact that people are willing to pay much more for a diamond, which is not needed for survival, than they are
willing to pay for a cup of water, which is needed for survival, is an example of irrational behavior.
a. True
b. False
ANSWER: False
4. Government policies that improve equality usually increase efficiency at the same time.
a. True
b. False
ANSWER: False
5. Inflation measures the increase in the quantity of goods and services produced from each hour of a worker’s
time.
a. True
b. False
ANSWER: False
6. The invisible hand ensures that economic prosperity is distributed equally.
a. True
b. False
ANSWER: False
7. An increase in the marginal cost of an activity necessarily means that people will no longer engage in any of
that activity.
a. True
b. False
ANSWER: False
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,Name: Class: Date:
Chapter 01 10e Mankiw
8. Trade can make everyone better off except in the case where one person is better at doing everything.
a. True
b. False
ANSWER: False
9. Communist countries worked on the premise that government officials were in the best position to allocate the
economy’s scarce resources.
a. True
b. False
ANSWER: True
10. Variations in the standard of living across countries is due almost entirely to differences in each nation’s total
output of goods and services.
a. True
b. False
ANSWER: False
11. The government can potentially improve market outcomes if market inequalities or market failure exists.
a. True
b. False
ANSWER: True
12. A market economy cannot produce a socially desirable outcome because individuals are motivated by their own
selfish interests.
a. True
b. False
ANSWER: False
13. A tax on gasoline is an incentive that encourages people to drive smaller and more fuel-efficient cars.
a. True
b. False
ANSWER: True
14. Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.
a. True
b. False
ANSWER: True
Page 2
, Name: Class: Date:
Chapter 01 10e Mankiw
15. Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.
a. True
b. False
ANSWER: True
16. Inflation and unemployment both increase as the money supply increases.
a. True
b. False
ANSWER: False
17. The cost of an action is measured in terms of foregone opportunities.
a. True
b. False
ANSWER: True
18. A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost.
a. True
b. False
ANSWER: True
19. In the short-run, society faces a tradeoff between inflation and unemployment.
a. True
b. False
ANSWER: True
20. Market failure occurs when no individual has the ability to substantially influence market prices.
a. True
b. False
ANSWER: False
21. Productivity is defined as the quantity of goods and services produced from each unit of labor input.
a. True
b. False
ANSWER: True
22. Economists study how people make decisions.
a. True
b. False
ANSWER: True
Page 3
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