3.The effect of a decrease in interest rates upon economic growth is an example of positive economics.

Name: Class: Date: Chapter 01 What Economics Is About Copyright Cengage Learning. Poweredby Cognero.Page 1 True / False 1.The branch of economics that studies the decisions made by individuals and firms is called macroeconomics.

• True
• False

ANSWER: False

2.Macroeconomics deals with issues involving large corporations, while microeconomics exclusively deals with issues involving small businesses.

• True
• False

ANSWER: False

3.The effect of a decrease in interest rates upon economic growth is an example of positive economics.

• True
• False

ANSWER: True

4.Economists use the word utility to describe the satisfaction one receives from a good.

• True
• False

ANSWER: True

5.If variable X rises as a result of variable Y falling, then X and Y have an inverse relationship.

• True
• False

ANSWER: True

6.In the textbook, economics is defined as the "science of scarcity."

• True
• False

ANSWER: True

7.In economics, capital is defined as a financial asset such as stocks and bonds.

• True
• False

ANSWER: False

8.A rationing device is a method used to resolve who gets what of available goods and resources.

• True
• False

ANSWER: True

9.When a person is making a decision at the margin he or she is comparing the total benefits from that activity to the total costs of the proposed action.Economics, 14e Roger Arnold, Daniel Arnold, David Arnold (Test Bank All Chapters, 100% Original Verified, A+ Grade) 1 / 4

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• True
• False

ANSWER: False

• Economists use the terms resource and input as synonyms.
• True
• False

ANSWER: True

• To an economist, the terms factor and output are synonyms.
• True
• False

ANSWER: False

• According to economists, one of the four broad categories of resources is money.
• True
• False

ANSWER: False

• The higher the opportunity cost of doing something, the more likely it will be done.
• True
• False

ANSWER: False

• Price is the only rationing device that can be used in a modern economy.
• True
• False

ANSWER: False

• The resource termed labor consists of the physical, but not the mental, talents that people contribute to the production

process.

• True
• False

ANSWER: False

• The slope of a straight line is always equal to either 1.0 or -1.0.
• True
• False

ANSWER: False

• Economists sometimes refer to the resource category land as natural resources.
• True
• False

ANSWER: True

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• Scarcity affects everyone, even billionaires.
• True
• False

ANSWER: True

• If someone gives you a free ticket to the movies, then there is no opportunity cost involved with going to the movies.
• True
• False

ANSWER: False

• Some economic studies have shown that mandatory seat belt laws do not lead to a reduction in traffic fatalities.
• True
• False

ANSWER: True

• The slope of a horizontal line is always equal to zero.
• True
• False

ANSWER: True

• The slope of a (nonlinear) curve varies from one point to another.
• True
• False

ANSWER: True

• Scarcity occurs in both wealthy societies and poor societies.
• True
• False

ANSWER: True

• The higher the opportunity cost of making a new friend, the more likely one is to make a new friend, ceteris paribus.
• True
• False

ANSWER: False

• Economists use the terms resource and input as synonyms.
• True
• False

ANSWER: True

Multiple Choice

• The author of the textbook defines economics as the
• science of efficiency.
• science of scarcity. 3 / 4

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• study of markets.
• study of human activity.

ANSWER: b

• When economists speak of scarcity, they are referring to the
• condition in which society is not employing all its resources in an efficient way.
• condition in which people's wants outstrip the limited resources available to satisfy those wants.
• economic condition that exists in only very poor countries of the world.
• condition in which society produces too many frivolous goods and not enough socially desirable goods.

ANSWER: b

• Which of the following is not one of the four broad categories of resources?
• labor
• government
• capital
• entrepreneurship

ANSWER: b

• Produced goods used as inputs for the production of other goods comprise the resource known as
• natural resources.
• services.
• capital.
• entrepreneurship.

ANSWER: c

• Entrepreneurship is
• the talent for organizing the use of land, labor and capital, among other things.
• skill in influencing government regulators and legislators.
• accumulated technical knowledge in using labor and capital.
• knowledge of the particular natural resources to be found in a given area.

ANSWER: a

• Many years ago, chemists at 3M Corporation were trying to create a super-strong glue. Somehow they got their

molecules twisted and came up with one of the weakest glues ever made. But, rather than pouring it down the drain, they tried coating some paper with it, and the "Post-It Note" was born. In this case, 3M was acting as a(n)

• utility.
• rationer.
• entrepreneur.
• abstraction.

ANSWER: c

• The physical and mental talents people bring to production processes comprise the resource called
• entrepreneurship.
• natural resources.
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