Test Bank for Macroeconomics, 4th Canadian Edition Krugman (All Chapters included)
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Microeconomics
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Complete Test Bank for Macroeconomics, 4th Canadian Edition by Paul Krugman; Robin Wells; Iris Au; Jack Parkinson ; ISBN13: 9781319245474. (Full Chapters included Chapter 1 to 18)....Chapter 1 First Principles
Chapter 2 Economic Models: Trade-offs and Trade
Chapter 3 Supply and Demand
Chapter 4 ...
Macroeconomics
4th Canadian Edition by Paul Krugman
Complete Chapters Test Bank
are included (Ch 1 to 18)
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** All Chapters included
,Name: Class: Date:
Chap_01_4ce
Indicate the answer choice that best completes the statement or answers the question.
1. A trade-off occurs when:
a. a firm decides to produce soap instead of shampoo.
b. governments use taxes to transfer incomes to lower income earners.
c. universities select applicants for admission.
d. a farm uses a machine, instead of a horse and plow, to till the soil.
2. Scarcity exists when:
a. making choices among two or more alternatives is unnecessary (i.e., there is no opportunity cost).
b. individuals can have as much of any good as they wish without giving up anything else.
c. individuals can have more of a good only by giving up something else.
d. the trade-off that arises because resources are limited is not a consideration.
3. Which statement presents one of the five principles for understanding how individual choices interact?
a. There are only marginal gains from trade.
b. Markets move toward equilibrium.
c. Resources should be used as efficiently as possible to achieve individual goals.
d. Overall spending sometimes gets out of line with the economy’s productive capacity.
4. If all of the opportunities to make someone better off (without making someone else worse off) have been
exploited, an economy is
a. equitable.
b. inefficient.
c. marginally optimal.
d. efficient.
5. A precipitous decline in spending often leads to:
a. a recession.
b. equity.
c. equilibrium.
d. efficiency.
6. King Taco charges the same price for everything on its menu: $5 will buy a taco, a burrito, or nachos. You
buy the burrito and think that if you had not purchased the burrito, you would have purchased the taco. The
opportunity cost of the burrito is:
a. $5.
b. your forgone enjoyment of the taco.
c. $5 and your forgone enjoyment of the taco.
d. $5 and your forgone enjoyment of the taco and the nachos.
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, Name: Class: Date:
Chap_01_4ce
7. Suppose one parent picks up his child from day care, while the other parent stays home to make dinner. This
is an example of the principle that:
a. markets move toward equilibrium.
b. government policies can change spending.
c. there are gains from trade.
d. markets usually lead to efficiency.
8. Suppose schools in the province of Nova Scotia offered cash bonuses to students who scored high on the
provincial standardized exams (Nova Scotia Examinations, taken in grade 10 covering mathematics and
English). The cash bonuses are motivated by which economic principle?
a. Choices are necessary because resources are scarce.
b. The true cost of something is its opportunity cost.
c. “How much” is a decision at the margin.
d. People usually respond to incentives, exploiting opportunities to make themselves better off.
9. Savannah’s grandparents are excited about finally paying off their car because, as they say, “Our cost of
driving is now zero.” Savannah should explain to them the economic concept of:
a. marginal analysis: if the additional cost of driving is zero, then their additional benefit is also zero.
b. opportunity cost: by driving the car, they are giving up the opportunity to sell it, buy a smaller one, and
pocket the difference.
c. efficiency: if their cost of driving is now zero, they should let Savannah and her sisters drive the car
whenever they want. Savannah is better off, and her grandparents aren’t hurt.
d. equity: it is unfair that some people are still paying their car loans, while others are not.
10. Tara had a DVD rental shop, but the store went out of business because no one rents DVDs from stores
anymore. Which economic principle does this statement BEST represent?
a. Choices are necessary because resources are scarce.
b. People usually respond to incentives, exploiting opportunities to make themselves better off.
c. Markets move toward equilibrium.
d. One person’s spending is another person’s income.
11. The penthouse apartment in most high-rise apartment buildings usually costs more to rent than other
apartments. This BEST illustrates the economic concept of:
a. specialization.
b. scarcity.
c. equilibrium.
d. opportunity cost.
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