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ECON Macro Principles of Macroeconomics 1st Canadian Edition by Moir OShaughnessy - Test Bank
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,Name Clas Dat: s: e:
Chapter 01 - The Art and Science of Economic Analysis
1. What is the meaning of unlimited wants?
a. that people always desire more of at least one good
b. that each person has an unlimited desire for every good
c. that selfish people are NOT concerned about other people
d. that people buy goods without regard to what they can afford
ANSWER: a
2. What statement describes the reality of scarcity?
a. There are NOT enough jobs available to all people.
b. There are NOT enough resources to satisfy people’s unlimited wants.
c. There are NOT enough resources to satisfy people’s limited wants.
d. There are NOT enough taxes to fund daycare spaces.
ANSWER: b
3. Which of the following best describes when scarcity occurs?
a. when resources are unlimited
b. when there is a shortage, so buyers cannot obtain the goods they want
c. when there is a surplus, so sellers cannot sell the goods they produce
d. when resources are insufficient to satisfy unlimited wants
ANSWER: d
4. Why does economic scarcity exist?
a. because people have wants that are unlimited relative to the availability of resources to satisfy those wants
b. because governments have the means to provide as many services as it decides to
c. because individuals do NOT have to make choices
d. because NOT everyone has unlimited wants
ANSWER: a
5. What occurs when people’s wants are unlimited but resources are scarce?
a. Only rich people get everything they want.
b. People must make choices.
c. More services are available than goods.
d. More goods are available than services.
ANSWER: b
6. Which of the following describes the economic reality of scarcity?
a. It exists only in countries that are NOT highly industrialized.
b. It is likely to disappear as production increases.
c. It is sure to disappear as technology improves.
d. It will exist as long as resources are available in limited amounts.
ANSWER: d
7. Some people can become completely saturated with a service, such as television. When it comes to making choices,
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,Name Clas Dat
: s: e:
Chapter 01 - The Art and Science of Economic Analysis
what does this saturation suggest?
a. that wants are limited.
b. that desires for a single commodity can be satisfied, but then the focus will switch to other goods and services
c. that a highly productive economy may someday be able to satisfy all human desires
d. that scarcity of services does NOT exist
ANSWER: b
8. Which of the following is the best definition of the study of economics?
a. the study of how individuals decide to use scarce resources in an attempt to satisfy their unlimited wants
b. the study of how to make money
c. the study of how the government should deal with unemployment and inflation
d. the study of how to run a business
ANSWER: a
9. Which of the following is the best definition of economics?
a. how to get rich by playing the stock market
b. how to reduce people’s wants, given the scarcity of resources
c. how rational government officials determine what goods should be produced
d. how people use limited resources to try to satisfy unlimited wants
ANSWER: d
10. Which of the following best defines economics?
a. an investigation of the quantities and prices of the various goods produced by the nations of the world
b. a study of why inflation and unemployment periodically plague the Canadian economy
c. an analysis of how individuals and societies deal with the problem of scarcity
d. an examination of the role of money in the economy
ANSWER: c
11. What does economics study?
a. how individuals amass personal fortunes in the stock market
b. how individuals and nations deal with the problem of scarcity
c. how money plays a role in the economy
d. how goods and services are distributed throughout the world
ANSWER: b
12. Which of the following best describes economics?
a. It is the study of choice when scarcity exists.
b. It is the study of the production of goods and services.
c. It is the science of money.
d. It is the art of spending money wisely.
ANSWER: a
13. Canada has an abundant supply of fresh water. Why would an economist consider water in Canada to be a scarce
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, Name Clas Dat
: s: e:
Chapter 01 - The Art and Science of Economic Analysis
resource?
a. because water is necessary for human life
b. because pollution will eventually destroy all life in the Great Lakes
c. because water is limited relative to people’s unlimited wants
d. because water commands a very high price
ANSWER: c
14. Which of the following is the best definition of economics?
a. It studies human behaviour when scarcity exists and choices must be made.
b. It provides the only reasonable explanation of how people make decisions.
c. It can accurately explain all human behaviour because it is based on the assumption of rationality.
d. It is the only social science that can explain the existence and behaviour of public institutions.
ANSWER: a
15. What are resources such as land and labour used for?
a. to produce goods and services
b. to consume goods and services
c. to help facilitate exchange
d. to provide for an improved financial system
ANSWER: a
16. In economics, what is the definition of natural resources?
a. the buildings, equipment, and human skills used to produce goods and services
b. the time and the physical and mental efforts used to produce goods and services
c. the imagination required to develop a new product or process
d. all gifts of nature used to produce goods and services NOT considered scarce because they are NOT produced
by society
ANSWER: d
17. In economics, what is the definition of capital?
a. natural resources, such as water, oil, and iron ore
b. the natural, unskilled abilities of people
c. the buildings, equipment, and human skills used to produce goods and services
d. money and other financial assets
ANSWER: c
18. Which of the following would an economist classify as capital?
a. 100 shares of Microsoft stock
b. a $50 bill
c. a credit card
d. a lawyer’s office computer
ANSWER: d
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