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1-221
422.
Which pitfall to sound economic reasoning is reflected in a person's view that
"pharmaceutical and oil companies are price-gouging the consumers"?
A.
faulty definition
423.
Which pitfall to sound economic reasoning is illustrated when a person comments that
"capitalists focus only on profits and don't care about their workers"?
A. abstraction
424.
A person observes that consumer prices often fall when a nation experiences
economic growth. The person then concludes that falling consumer prices lead to
1-222
economic growth. This would be an example of
A.
the fallacy of composition.
425.
You observe that when stock prices rise, interest rates soon fall, and therefore
conclude that higher stock prices lead to lower interest rates. This would be an example
of
A.
the fallacy of composition.
426.
Increasing the share of your income that you save is good for you. Therefore, it would
be good for the whole economy if everyone saved more. This exemplifies the
A. post hoc fallacy.
1-223
427.
Which of the following illustrates the fallacy of composition?
A.
Whatever goes up must come down.
428.
The post hoc, ergo propter hoc fallacy consists of
A. using an example to "prove" a different point.
True / False Questions
429.
Economics is the social science concerned with the best use of scarce resources to
achieve maximum satisfaction of economic wants.
1-224
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-
Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Di f fi cu lt y:
01 Easy
Learning Objective: 01-01 Define economics and the features of the economic perspective.
Test Bank: II
Topic:
The Economic Perspective
430.
When firms give away "freebies" like free apps, free checking accounts, free maps,
or free toothbrushes, they are contradicting economists’ contention that "there is no
free
lunch."
431.
Marginal analysis is the valuation of insignificant or small benefits from doing things.
432.
Rational behavior implies that different people faced with similar choices will make
the same decisions.
433.
Economic analysis is primarily concerned with marginal changes from the status quo, as
a result of a certain action or decision.
434.
The study of economics is not useful for consumers, because economic analysis focuses
only on businesses and the economy.
435.
The scientific method does not apply to economics, because economics studies human
behavior, which cannot be generalized.
436.
Economic principles are value judgments about what the economy should be like or the
way the economic world ought to be.
437.
If falling gasoline prices are good for the consumers, then they must be good everyone
in the economy.
438.
Macroeconomics is concerned with the study of the nationwide market for specific
goods like oranges.
439.
The study of global businesses such as Apple Inc is one major focus of macroeconomic
analysis.
440.
The comment that "taxes must be reduced for the good of the economy" is an example
of a normative economic statement.
441.
"The role of government in the economy should be kept to a minimum" is an example of
a positive economic statement.
1-228
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-
Hill Education.
Learning Objective: 01-03 Distinguish microeconomics from macroeconomics and positive
economics from normative economics.
Test Bank: II
Topic:
Theories, Principles, and Models
442.
The economizing problem for individuals arises from the conflict between having
relatively unlimited time and relatively limited jobs to do.
443.
The budget line shows the various incomes that an individual can earn from different
jobs.
444.
The fundamental economic problem faced by a society is that productive resources are
so varied and versatile that it is hard to decide what to do with them.
445.
The resource category called "land" includes forests, animals, and water resources.
446.
When economists talk about the capital resources in the economy, they are referring to
the amount of money circulating in the economy.
447.
The quantity or supply of land resources available to a nation is pretty much fixed and
cannot increase over time.
448.
Entrepreneurship refers to a new college graduate who is looking for a job with a large
company.
449.
If economic resources were perfectly adaptable to alternative uses, then there would be
constant opportunity costs along the production possibilities curve.
450.
If the marginal benefits are greater than the marginal cost of an activity, then society
should allocate fewer resources to this activity.
1-231
451.
If society has overallocated resources to a particular activity, then the marginal benefits
of the activity would be less than the marginal costs.
452.
A nation's production possibilities curve shows the maximum combinations of
resources that a nation can use.
453.
A reduction in the unemployment rate will cause the nation's production possibilities
curve to shift outward.
1-232
454.
Economic growth is shown as an increase in production from inside the production
possibilities curve out toward a point on the possibilities curve.
455.
An increase in immigration would shift the production possibilities curve to the left.
456.
A nation's consumption is strictly limited by its production possibilities, even with
specialization and international trade.
1-233
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-
Hill Education.
FALSE
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Diffi cu lty:
02 Medium
Learning Objective: 01-07 Explain how economic growth and international trade increase
consumption possibilities.
Test Bank: II
Topic:
Unemployment, Growth, and the Future
Multiple Choice Questions
457.
If two variables are directly related, the relationship will have a graph that
A.
is a straight line.
458.
If an inverse relationship exists between two variables, then
D.
both variables increase over time.
1-234
459.
If A decreases, then B will also decrease. The graph relating the two variables A and B
is
A.
vertical.
460.
In a relationship between two variables, the "independent variable" refers to the
A.
one measured on the vertical axis, in the convention of mathematics.
461.
The "other things equal" assumption is employed when
A. the graph of a given relationship is shifting up or down.
462.
The slope of a graph that shows a direct relationship is
C.
possibly zero.
D.
either zero or infinite.
463.
The slope of a graph with "income" on the horizontal axis and "saving" on the vertical
axis is +0.2. This means that if
A.
income is $100, then saving is $20.
1-236
464.
The question below is based on the following four sets of data-pairs: (1) A and B, (2)
C and D, (3) E and F, and (4) G and H. In each set, the independent variable is in
the left
column and the dependent variable is in the right column.
(1)
(2)
(3)
(4)
A
B
C
D
E
F
G
H
0
6
2
10
0
12
0
3
7
5
3
20
1
10
2
5
14
4
4
30
2
8
4
7
21
3
5
40
3
6
6
9
Which of the four sets of data pairs show an inverse relationship between the independent
and dependent variable?
D.
2 and 4
465.
The question below is based on the following four sets of data-pairs: (1) A and B, (2)
C and D, (3) E and F, and (4) G and H. In each set, the independent variable is in
the left
column and the dependent variable is in the right column.
(1)
(2)
(3)
(4)
A
B
C
D
E
F
G
H
0
6
2
10
0
12
0
3
7
5
3
20
1
10
2
5
14
4
4
30
2
8
4
7
21
3
5
40
3
6
6
9
The slope of the linear graph that pictures data set 2 above is
A. .10.
466.
The question below is based on the following four sets of data-pairs: (1) A and B, (2)
C and D, (3) E and F, and (4) G and H. In each set, the independent variable is in
the left
column and the dependent variable is in the right column.
(1)
(2)
(3)
(4)
A
B
C
D
E
F
G
H
0
6
2
10
0
12
0
3
7
5
3
20
1
10
2
5
14
4
4
30
2
8
4
7
21
3
5
40
3
6
6
9
The vertical intercept is 6 in which of the above data sets?
D.
4
1-238
467
.
The question below is based on the following four sets of data-pairs: (1) A and B, (2)
C and D, (3) E and F, and (4) G and H. In each set, the independent variable is in
the left
column and the dependent variable is in the right column.
(1)
(2)
(3)
(4)
A
B
C
D
E
F
G
H
0
6
2
10
0
12
0
3
7
5
3
20
1
10
2
5
14
4
4
30
2
8
4
7
21
3
5
40
3
6
6
9
The linear equation for the relationship in data set 3 above is
D. E = 12 −2 F.
468.
In constructing the demand graph to show how the price of a good price affects how
much of it the buyers will buy, the convention that economists follow is to measure
price
on the
A.
horizontal axis because it is the independent variable.
1-239
469.
A relationship illustrated by an upward-sloping graph means that a(n)
D.
increase in the value of one variable causes no change in the other variable.
470.
In a graph of the relationship between income and saving, economists generally
consider
A.
income to be the independent variable and place it on the vertical axis.
471.
In a graph showing the relationship between variables X and Y, ceteris paribus means
