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ECON 1010 Study Guide - Government Budget Balance, Pearson Education, Canadian Dollar


Department
Economics
Course Code
ECON 1010
Professor
Edward Haltrecht

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Economics: Canada in the Global Environment, 7e (Parkin)
Chapter 1 What Is Economics?
1.1 Definition of Economics
1) In a world characterized by scarcity
A) all goods are free.
B) opportunity cost is zero.
C) we are not limited by time.
D) individuals need not work to obtain goods.
E) people must make choices among alternatives.
Answer: E
Diff: 1
Topic: Definition of Economics
2) Which of the following is the best definition of economics?
A) The study of how a provincial government allocates tax dollars.
B) The study of how consumers spend their income.
C) The study of how producers decide what inputs to hire and what outputs to produce.
D) 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.
E) The study of how consumers and producers meet each other at the market.
Answer: D
Diff: 1
Topic: Definition of Economics
3) Which of the following is a microeconomic topic?
A) the reasons why a consumer buys less honey
B) the reasons why the average price level in a country falls
C) the cause of increasing unemployment
D) the effect of the government budget deficit on inflation
E) the reasons why the labour force in a country decreases
Answer: A
Diff: 1
Topic: Definition of Economics
4) The study of how wages are set for New Brunswick teachers is classified as
A) a macroeconomic topic.
B) a microeconomic topic.
C) economics of social interest.
D) economics of private interest.
E) normative economics.
Answer: B
Diff: 1
Topic: Definition of Economics
1
© 2010 Pearson Education Canada

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5) Which of the following newspaper headlines concerns a macroeconomic issue?
A) Why are people buying more SUVs and fewer minivans?
B) How would a tax on e-commerce affect chapters.indigo.ca?
C) How would an unexpected freeze in Oxford, Nova Scotia change the price of blueberries in
the Maritimes?
D) Why is Japan's economy stagnant?
E) Why do grain producers purchase less pesticides?
Answer: D
Diff: 1
Topic: Definition of Economics
6) The branch of economics that studies the choices of individuals and businesses is
A) macroeconomics.
B) microeconomics.
C) positive economics.
D) normative economics.
E) social economics.
Answer: B
Diff: 1
Topic: Definition of Economics
Source: Study Guide
7) Each of the following would be considered a macroeconomic topic except
A) the reasons for a decrease in the unemployment rate.
B) the cause of recessions.
C) the effect of the government budget deficit on inflation.
D) the determination of aggregate income.
E) the selection of production techniques.
Answer: E
Diff: 2
Topic: Definition of Economics
8) Complete the following sentence. Macroeconomics
A) is primarily concerned with the operation of individual markets in the economy.
B) deals mainly with the economic behaviour of households.
C) is the only part of economics to deal with government decisions.
D) is primarily concerned with the behaviour of the stock market.
E) is the study of the national economy and the global economy.
Answer: E
Diff: 2
Topic: Definition of Economics
2
© 2010 Pearson Education Canada

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9) The determination of prices in individual markets is primarily a concern of
A) positive economics.
B) negative economics.
C) macroeconomics.
D) microeconomics.
E) descriptive economics.
Answer: D
Diff: 2
Topic: Definition of Economics
10) Which one of the following topics does macroeconomics study?
A) decisions of individual firms
B) effects of government safety regulations on the price of cars
C) the performance of the global economy
D) prices of individual goods and services
E) effects of taxes on the price of gasoline
Answer: C
Diff: 2
Topic: Definition of Economics
11) Which one of the following topics does microeconomics study?
A) reasons for a fall in the price of orange juice
B) the effect of a rise in the Canadian dollar on Canada's exports
C) effect of interest rates on national economic growth
D) effect of the government budget deficit on employment
E) determination of total production in a country
Answer: A
Diff: 2
Topic: Definition of Economics
12) Complete the following sentence. Microeconomics is
A) not concerned with factors of production.
B) concerned with normative issues only.
C) concerned with the size of the total amount of income earned by all households in an
economy.
D) the branch of economics that studies the choices of individuals and businesses.
E) concerned exclusively with the role of the government in the economy.
Answer: D
Diff: 2
Topic: Definition of Economics
3
© 2010 Pearson Education Canada
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