Test Bank all Chapters, Answer at the

Principles of Macroeconomics, 8th Canadian Edition, 8e Gregory Mankiw, Ronald Kneebone, Kenneth McKenzie

(Test Bank all Chapters, Answer at the end of each Chapter)

• / 4

Name:

Class:

Date:

ch 1

Copyright Cengage Learning. Powered by Cognero. Page 1

Indicate whether the statement is true or false.

• Inflation decreases the value of money.
• True
• False
• True
• False

• Because taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society’s

resources.

• True
• False
• True
• False

• A marginal change is a small incremental adjustment to an existing plan of action.
• True
• False
• True
• False

• Market failure refers to a situation in which the market does not allocate resources efficiently.
• True
• False
• True
• False

• The cost of an action is measured in terms of foregone opportunities.
• True
• False
• True
• False

• Equity means everyone in the economy should receive an equal share of the goods and services produced.
• True
• False
• True
• False

• Trade allows each person to specialize in the activities he or she does best, thus increasing each individual’s

productivity.

• True
• False
• True
• False

• Productivity is the primary determinant of a country’s living standards.
• True 2 / 4

Name:

Class:

Date:

ch 1

Copyright Cengage Learning. Powered by Cognero. Page 2

• False
• True
• False

• The government can potentially improve market outcomes if market inequalities or market failure exist.
• True
• False
• True
• False

• If the average cost of transporting a passenger on the bus from Peterborough to Toronto is $35, it would be irrational

for the railroad to allow any passenger to ride for less than $35.

• True
• False
• True
• False

• Trade with any nation can be mutually beneficial.
• True
• False
• True
• False

• With careful planning, we can usually get something that we like without having to give up something else that we

like.

• True
• False
• True
• False

• Economics is the study of how fairly goods and services are distributed within society.
• True
• False
• True
• False

• Tuition is the single-largest cost of attending college for most students.
• True
• False
• True
• False

• A market economy cannot produce a socially desirable outcome because individuals are motivated by their own

selfish interests.

• True
• False
• True
• False
• / 4

Name:

Class:

Date:

ch 1

Copyright Cengage Learning. Powered by Cognero. Page 3

• Government spending is the primary source of inflation.
• True
• False
• True
• False

• A rational decision maker takes an action if and only if the marginal cost exceeds the marginal benefit.
• True
• False
• True
• False

• Equity refers to how the pie is divided, and efficiency refers to the size of the economic pie.
• True
• False
• True
• False

• Productivity is defined as the quantity of goods and services produced from each hour of a worker’s time.
• True
• False
• True
• False

• The tenth principle of economics shows the short-run tradeoff between inflation and economic growth.
• True
• False
• True
• False

• Scarcity means that there is less of a good or resource available than people wish to have.
• True
• False
• True
• False

Indicate the answer choice that best completes the statement or answers the question.

• What is an example of an externality?
• the impact of bad weather on the income of ski hill owners
• the impact of government spending on employment insurance on the people that are unemployed
• the impact of pollution from a power plant on the health of people in the vicinity of the power plant
• the impact of increases in health care costs on the health of individuals in society

• In the former Soviet Union, producers were paid for meeting output targets, not for selling products. Under those

circumstances, what were the economic incentives for producers?

• / 4