Test Bank for Macroeconomics 9e 9th Edition by Glenn Hubbard, Anthony Patrick O'Brien. Full Chapters test bank are included with answers (Chapter 1 to 18)
PART 1: INTRODUCTION
Economics: Foundations and Models
Appendix: Using Graphs and Formulas
Trade-offs, Comparative Advantage, and the Mark...
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Macroeconomics, 9e (Hubbard)
Chapter 1 Economics: Foundations and Models 24/7 Customer Support ✅
1.1 Three Key Economic Ideas
1) The CHIPS and Science Act of 2022 included $53 billion in federal government assistance to private
firms willing to construct new semiconductor factories in the United States or to expand existing
factories. Several companies, including Intel and GlobalFoundries indicated they would take advantage
of the assistance and build new factories in the United States. This is an example of these U.S.
manufacturing firms reacting to which of the three key economic ideas?
A) Firms aNempt to maximize revenues.
B) Optimal decisions are made at the margin.
C) Firms are allocatively efficient.
D) People respond to economic incentives.
Answer: D
Diff: 2
Topic: Scarcity
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: Chapter Opener: Should Apple Manufacture the iPhone in the United States?
2) The study of economics arises due to
A) money.
B) scarcity.
C) greed.
D) resources.
Answer: B
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
3) Scarcity refers to the situation in which
A) unlimited wants exceed limited resources.
B) unlimited resources exceed limited wants.
C) a country's population is larger than its resource base.
D) a nation's poverty level increases faster than its population.
Answer: A
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
1
,4) The basic economic problem of scarcity
A) has always existed and will continue to exist.
B) will eventually disappear as technology continues to advance.
C) is a problem only in developing economies.
D) does not apply to the wealthy in society.
Answer: A
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
5) Economics is the study of the ________ people make to aNain their goals, given their ________
resources.
A) purchases; unlimited
B) choices; scarce
C) income; available
D) decisions; household
Answer: B
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
6) What is an economic model?
A) It is a description of an economic issue that includes all possible related information.
B) It is a description of an economic issue based on official government information.
C) It is a detailed version of some aspect of economic life used to analyze an economic issue.
D) It is a simplified version of some aspect of economic life used to analyze an economic issue.
Answer: D
Diff: 1
Topic: Economic Models
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
2
,7) The term "market" in economics refers to
A) a place where money changes hands.
B) a legal institution where exchange can take place.
C) a group of buyers and sellers of a product and the arrangement by which they come together to trade.
D) an organization which sells goods and services.
Answer: C
Diff: 1
Topic: Markets
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
8) Economists assume that
A) individuals behave in unpredictable ways.
B) consumer behavior is explained by the existence of unlimited resources.
C) people put other people's interests ahead of their own.
D) optimal decisions are made at the margin.
Answer: D
Diff: 1
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
9) Which of the following best describes an assumption economists make about human behavior?
A) They assume that individuals act rationally all the time in all circumstances.
B) They assume that rational behavior is useful in explaining choices people make even though people
may not behave rationally all the time.
C) They assume that people take into account the question of fairness in all decisions they make.
D) They assume that individuals act randomly.
Answer: B
Diff: 2
Topic: People Are Rational
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
3
, 10) Economists assume that rational people
A) never use all available information as they act to achieve their goals.
B) undertake activities that benefit others and hurt themselves.
C) only weigh the benefits and costs of the most desirable alternative actions.
D) respond to economic incentives.
Answer: D
Diff: 2
Topic: People Are Rational
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
11) Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes
that consumers and firms always make the correct decision. But we know that everyone's human, and we
all make mistakes." Do you agree with her comment?
A) Yes, I agree with her. One cannot make predictions about economic behavior because in reality people
make incorrect choices in many situations.
B) I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that
economic agents behave rationally, meaning they make the best decisions given their knowledge of the
costs and benefits.
C) Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more
reliable predictions.
D) I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine
the moral implications of these decisions.
Answer: B
Diff: 2
Topic: People Are Rational
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
4
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