Test Bank for ECON MACRO, 7th Edition by William A. McEachern | Complete Chapters
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Macroeconomics
Test Bank for ECON MACRO, 7e 7th Edition by William A. McEachern| Complete Chapters are included (Chapter 1 to 21) with answers. Every chapter has Multiple Choice Questions and True False.
Chapter 1: The Art and Science of Economic Analysis
Chapter 2: Economic Tools and Economic Systems
Chapte...
Test Bank for ECON MACRO, 7th Edition by William A. McEachern
Chap 01 ECON MACRO 7e
Answers Included ✅
Indicate whether the statement is true or false.
1. Economic theory allows economists to predict the behavior of a specific person or firm.
a. True
b. False
2. Most of the disagreement among economists involves normative debates.
a. True
b. False
3. The assumption of rational self-interest does not rule out the possibility of concern for other individuals.
a. True
b. False
4. A rational decision maker compares the expected marginal cost to the expected marginal benefit of any activity.
a. True
b. False
5. Resources are used only in the production of goods, not services.
a. True
b. False
6. A rational individual would make charitable contributions only if such contributions receive favorable tax
treatment.
a. True
b. False
7. Discussions about the housing market in New York City is a microeconomics topic.
a. True
b. False
8. Economic choice results from scarcity.
a. True
b. False
9. Profit is the payment made for land resources.
a. True
b. False
10. In economics, money is an example of capital.
a. True
b. False
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Chap 01 ECON MACRO 7e
11. The fallacy of composition is the error of believing that a cause-and-effect relationship exists between two
events that are associated in time.
a. True
b. False
12. Aleksi is thinking about buying a new condo. Rational self-interest demands that he do exhaustive research to
acquire every bit of information possible about her potential options.
a. True
b. False
13. Most real economic choices involve small (or marginal) changes rather than all-or-nothing decisions.
a. True
b. False
14. Rational self-interest is equivalent to pure selfishness.
a. True
b. False
15. Secondary effects are consequences of economic actions that develop slowly over time as people react to
events.
a. True
b. False
16. One problem with rent control is that policymakers often ignore its secondary effects.
a. True
b. False
17. The association-is-causation fallacy is the error of assuming that what is true for one member of a group must
be true for the group.
a. True
b. False
18. As a scientist, an economist's main professional objective is to become wealthy.
a. True
b. False
19. Rent is the payment received by resource owners for the use of their natural resources.
a. True
b. False
20. An economic model will produce poor predictions if it includes assumptions.
a. True
b. False
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Chap 01 ECON MACRO 7e
21. Profit is the payment received by resource owners for the use of their capital.
a. True
b. False
22. Resources consist of labor and natural resources.
a. True
b. False
23. Normative economic statements are claims based on opinions and value judgement.
a. True
b. False
24. The ceteris paribus assumption is the other-things-constant assumption.
a. True
b. False
25. College graduates with history or literature as their major tend to earn more than those who choose more
quantitative disciplines like economics.
a. True
b. False
26. Most economists consider a theory a good one if it predicts well.
a. True
b. False
27. Economists often focus on average behavior because it is easier to predict.
a. True
b. False
28. An economist would classify 500 shares of stock in General Mills, Inc. as capital.
a. True
b. False
29. A rational individual gives more to charity when such contributions receive favorable tax treatment.
a. True
b. False
30. Considering both product markets and resource markets, most economic decision makers participate in the
economy as both buyers and sellers.
a. True
b. False
31. "There should be less discrimination against women" is an example of a positive economic statement.
a. True
b. False
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, Name: Class: Date:
Chap 01 ECON MACRO 7e
32. Scarcity occurs when the amount people desire is less than the amount available at a zero price.
a. True
b. False
33. Economic decision makers will continue to acquire information only as long as the expected additional benefit
exceeds the expected additional cost of the information.
a. True
b. False
34. A marginal adjustment refers only to a minor change.
a. True
b. False
35. Labor is the physical and mental effort used to produce goods and services.
a. True
b. False
36. It is always rational to acquire more information before making a decision.
a. True
b. False
37. Economics is as much an art as it is a science.
a. True
b. False
38. Labor and capital are exchanged in the resource market.
a. True
b. False
39. The ceteris paribus assumption is a behavioral assumption.
a. True
b. False
40. Economics is best defined as how people use scarce resources to satisfy unlimited wants.
a. True
b. False
41. A good economic theory brings clarity to chaos.
a. True
b. False
42. Economics is the only social science and the only business discipline for which the Nobel Prize is awarded.
a. True
b. False
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