Principles of Economics An Asian Edition 1st Edition by N. Gregory Mankiw – Test bank

Principles of Economics An Asian Edition 1st Edition by N. Gregory Mankiw – Test bank

Chapter 6: TF SA-Supply, Demand, and Government Policies

TRUE/FALSE

1. Economic policies often have effects that their architects did not intend or anticipate.

ANS: T

PTS: 1 DIF: 1 REF: 6-0 TOP: Public Policy
MSC: Interpretive

2. Policymakers use taxes both to raise revenue for public purposes and to influence market outcomes.

ANS: T

PTS: 1 DIF: 1 REF: 6-0 TOP: Taxes
MSC: Interpretive

3. Policymakers use taxes only to raise revenues.

ANS: F

PTS: 1 DIF: 2 REF: 6-0 TOP: Taxes
MSC: Interpretive

4. A price ceiling is a legal minimum on the price of a good or service.

ANS: F

PTS: 1 DIF: 1 REF: 6-1 TOP: Price ceilings
MSC: Definitional

5. If a price ceiling of $2 per liter is imposed on petrol and the market equilibrium price is $1.50, the price ceiling is a binding constraint on the market.

ANS: F

PTS: 1 DIF: 2 REF: 6-1 TOP: Price ceilings
MSC: Interpretive

6. If a price ceiling is not binding, it will have no effect on the market.

ANS: T

PTS: 1 DIF: 2 REF: 6-1 TOP: Price ceilings
MSC: Interpretive

7. A legal maximum price at which a good can be sold is a support.

ANS: F

PTS: 1 DIF: 1 REF: 6-1 TOP: Price ceilings
MSC: Definitional

8. A price ceiling is binding only if it is set above the equilibrium price.

ANS: F

PTS: 1 DIF: 1 REF: 6-1 TOP: Price ceilings
MSC: Definitional

9. Economists have attributed the severe shortages of petrol that followed OPEC raising the price of crude oil in the 1970s to government regulations and not OPEC itself.

ANS: T

PTS: 1 DIF: 1 REF: 6-1 TOP: Price ceilings
MSC: Interpretive

10. If a price ceiling is below equilibrium price, the quantity demanded will exceed the quantity supplied.

ANS: T

PTS: 1 DIF: 2 REF: 6-1 TOP: Price ceilings
MSC: Interpretive