Economics: Canada in

TEST Bank For

Economics: Canada in

the Global Environment 8th Edition By Michael Parkin 1 / 4

Parkin/Bade, Economics: Canada in the Global Environment, 8e

Copyright © 2013 Pearson Canada Inc. 1 Chapter 1 What Is Economics?

1.1 Definition of Economics

1) In a world characterized by scarcity

• all goods are free.
• opportunity cost is zero.
• we are not limited by time.
• individuals need not work to obtain goods.
• people must make choices among alternatives.

Answer: E

Diff: 1 Type: MC

Topic: Definition of Economics

2) Which of the following is the best definition of economics?

• the study of how a provincial government allocates tax dollars
• the study of how consumers spend their income
• the study of how producers decide what inputs to hire and what outputs to produce
• the study of how individuals, businesses, governments, and entire societies make choices as

they cope with scarcity and the incentives that influence and reconcile those choices

• the study of how consumers and producers meet each other at the market

Answer: D

Diff: 1 Type: MC

Topic: Definition of Economics

3) Which of the following is a microeconomic topic?

• the reasons why a consumer buys less honey
• the reasons why the average price level in a country falls
• the cause of increasing unemployment
• the effect of the government budget deficit on inflation
• the reasons why the labour force in a country decreases

Answer: A

Diff: 1 Type: MC

Topic: Definition of Economics

4) The study of how wages are set for New Brunswick teachers is classified as

• a macroeconomic topic.
• a microeconomic topic.
• economics of social interest.
• economics of private interest.
• normative economics.

Answer: B

Diff: 1 Type: MC

Topic: Definition of Economics 2 / 4

Parkin/Bade, Economics: Canada in the Global Environment, 8e

Copyright © 2013 Pearson Canada Inc. 2 5) Which of the following newspaper headlines concerns a macroeconomic issue?

• Why are people buying more SUVs and fewer minivans?
• How would a tax on e-commerce affect chapters.indigo.ca?
• How would an unexpected freeze in Oxford, Nova Scotia change the price of blueberries in

the Maritimes?

• Why is Japan's economy stagnant?
• Why do grain producers purchase less pesticides?

Answer: D

Diff: 1 Type: MC

Topic: Definition of Economics

6) The branch of economics that studies the choices of individuals and businesses is

• macroeconomics.
• microeconomics.
• positive economics.
• normative economics.
• social economics.

Answer: B

Diff: 1 Type: MC

Topic: Definition of Economics

Source: Study Guide

7) Each of the following would be considered a macroeconomic topic except

• the reasons for a decrease in the unemployment rate.
• the cause of recessions.
• the effect of the government budget deficit on inflation.
• the determination of aggregate income.
• the selection of production techniques.

Answer: E

Diff: 2 Type: MC

Topic: Definition of Economics

8) Complete the following sentence. Macroeconomics

• is primarily concerned with the operation of individual markets in the economy.
• deals mainly with the economic behaviour of households.
• is the only part of economics to deal with government decisions.
• is primarily concerned with the behaviour of the stock market.
• is the study of the national economy and the global economy.

Answer: E

Diff: 2 Type: MC

Topic: Definition of Economics

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Parkin/Bade, Economics: Canada in the Global Environment, 8e

Copyright © 2013 Pearson Canada Inc. 3 9) The determination of prices in individual markets is primarily a concern of

• positive economics.
• negative economics.
• macroeconomics.
• microeconomics.
• descriptive economics.

Answer: D

Diff: 2 Type: MC

Topic: Definition of Economics

10) Which one of the following topics does macroeconomics study?

• decisions of individual firms
• effects of government safety regulations on the price of cars
• the performance of the global economy
• prices of individual goods and services
• effects of taxes on the price of gasoline

Answer: C

Diff: 2 Type: MC

Topic: Definition of Economics

11) Which one of the following topics does microeconomics study?

• reasons for a fall in the price of orange juice
• the effect of a rise in the Canadian dollar on Canada's exports
• effect of interest rates on national economic growth
• effect of the government budget deficit on employment
• determination of total production in a country

Answer: A

Diff: 2 Type: MC

Topic: Definition of Economics

12) Complete the following sentence. Microeconomics is

• not concerned with factors of production.
• concerned with normative issues only.
• concerned with the size of the total amount of income earned by all households in an

economy.

• the branch of economics that studies the choices of individuals and businesses.
• concerned exclusively with the role of the government in the economy.

Answer: D

Diff: 2 Type: MC

Topic: Definition of Economics

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