Test Bank for Principles of Macroeconomics 10e 10th Edition by N. Gregory Mankiw. Full Chapters test banks are included with answers (Chapter 1 to 24 included)
Part I: INTRODUCTION.
1. Ten Principles of Economics.
2. Thinking Like an Economist.
3. Interdependence and the Gains from Trade.
Pa...
Thank you very much for your honest review. We are delighted to hear that you had a pleasant experience with us and we look forward to serving you further on your educational journey.
Seller
Follow
Tutor247
Reviews received
Content preview
Complete Chapters ✅
Chap 01 10e Mankiw Answers Included ✅
Indicate whether the statement is true or false.
1. 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
2. With careful planning, we can usually get something that we like without having to give up something else that
we like.
a. True
b. False
3. The opportunity cost of working out for one hour is the value of the next-best activity that you could have done
in that hour.
a. True
b. False
4. Trade can make everyone better off except in the case where one person is better at doing everything.
a. True
b. False
5. Using income tax revenue to fund the welfare system illustrates the conflict between efficiency and equality.
a. True
b. False
6. 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
7. An individual deciding how to allocate one's limited time is dealing with both scarcity and trade-offs.
a. True
b. False
8. Suppose one county in Missouri decides it wants to reduce alcohol consumption, so the county passes a law that
raises the price of a bottle of beer by $1. As a result, people drive to other counties to drink alcohol, which
results in an increase in drunk driving. This illustrates the principle that people respond to incentives.
a. True
b. False
9. The cost of an action is measured in terms of foregone opportunities.
a. True
b. False
Page 1
,Name: Class: Date:
Chap 01 10e Mankiw
10. The opportunity cost of working one hour is the sum of the values you would have received from all other
activities you could have done in that hour.
a. True
b. False
11. Equality refers to how the pie is divided, and efficiency refers to the size of the economic pie.
a. True
b. False
12. Efficiency means everyone in the economy should receive an equal share of the goods and services produced.
a. True
b. False
13. In the short-run, society faces a tradeoff between inflation and unemployment.
a. True
b. False
14. Trade allows each person to specialize in the activities he or she does best, thus increasing each individual's
productivity.
a. True
b. False
15. If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be
irrational for the railroad to allow any passenger to ride for less than $75.
a. True
b. False
16. Government policies that improve equality usually increase efficiency at the same time.
a. True
b. False
17. Market power and externalities are two possible causes of market failure.
a. True
b. False
18. Economics is the study of how society allocates its unlimited resources.
a. True
b. False
19. Economics is exclusively the study of how evenly goods and services are distributed within society.
a. True
b. False
20. Inflation is the primary determinant of a country's living standards.
a. True
b. False
Page 2
,Name: Class: Date:
Chap 01 10e Mankiw
21. A rational decision maker takes an action if and only if the marginal benefit exceeds the marginal cost.
a. True
b. False
22. If wages for accountants rose, then accountants’ leisure time would have a lower opportunity cost.
a. True
b. False
23. A market economy cannot produce a socially desirable outcome because individuals are motivated by their own
selfish interests.
a. True
b. False
24. A rational decision maker takes an action if and only if the marginal cost exceeds the marginal benefit.
a. True
b. False
25. The business cycle refers to fluctuations in economic activity such as employment and production.
a. True
b. False
26. The government can potentially improve market outcomes if market inequalities or market failure exists.
a. True
b. False
27. In the long run the primary effect of increasing the quantity of money is higher prices.
a. True
b. False
28. Inflation measures the increase in the quantity of goods and services produced from each hour of a worker’s
time.
a. True
b. False
29. The classic tradeoff between “guns and butter” states that when a society spends more on national defense, it
has less to spend on consumer goods to raise the standard of living.
a. True
b. False
30. A marginal change is a small incremental adjustment to an existing plan of action.
a. True
b. False
31. A tax on gasoline is an incentive that encourages people to drive smaller and more fuel-efficient cars.
a. True
b. False
Page 3
, Name: Class: Date:
Chap 01 10e Mankiw
32. Equality means distributing society’s resources in the most efficient manner.
a. True
b. False
33. Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.
a. True
b. False
34. Scarcity means that there is less of a good or resource available than people wish to have.
a. True
b. False
35. Tuition is the single-largest cost of attending college for most students.
a. True
b. False
36. Market failure refers to a situation in which the market does not allocate resources efficiently.
a. True
b. False
37. The invisible hand ensures that economic prosperity is distributed equally.
a. True
b. False
38. Economists study how people make decisions.
a. True
b. False
39. To say people respond to incentives means that people may alter their decisions when the costs and benefits of
an action change.
a. True
b. False
40. Inflation increases the value of money.
a. True
b. False
41. 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
42. One way that governments can improve market outcomes is to ensure that individuals are able to own and
exercise control over their scarce resources.
a. True
b. False
Page 4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Tutor247. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R550,54. You're not tied to anything after your purchase.
