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1) All economic questions are about
A) how to make money.
B) what to produce.
C) how to cope with scarcity.
D) how to satisfy all our wants.
Answer: C
2) Economics is best defined as the study of how people, businesses, governments, and societies
A) choose abundance over scarcity.
B) make choices to cope with scarcity.
C) use their infinite resources.
D) attain wealth.
Answer: B
3) As an economic concept, scarcity applies to
A) both money and time.
B) money but not time.
C) time but not money.
D) neither time nor money.
Answer: A
4) Macroeconomics differs from microeconomics in that:
A) macroeconomics studies the decisions of individuals.
B) microeconomics looks at the economy as a whole.
C) macroeconomics studies the behavior of government while microeconomics looks at private corporations.
D) macroeconomics focuses on the national economy and the global economy.
Answer: D
5) Which of the following is a macroeconomic issue?
A) The purchasing decisions that an individual consumer makes.
B) The effect of increasing the money supply on inflation.
C) The hiring decisions that a business makes.
D) The effect of an increase in the tax on cigarettes on cigarette sales.
Answer: B
6) Which of the following are considered factors of production used to produce goods and services?
I. Land
II. Labor
III. Capital
IV. Entrepreneurship
A) I and II only
B) I and III only
C) I, II and III only
D) I, II, III and IV
Answer: D
7) In economics, the term "land" means
A) only land that is used in agricultural production.
B) land, mineral resources, and nature's other bounties.
C) land that is devoted to economic pursuits.
D) land used for agricultural and urban purposes.
Answer: B
8) The slope of the line shown in the above figure is
A) 3/4.
B) 2/3.
C) 1 1/3.
D) 1 3/4.
Answer: C
9) Which of the following is a positive statement?
A) An unemployment rate of 9 percent is a national disgrace.
B) Unemployment is a more important problem than inflation.
C) When the national unemployment rate is 9 percent, the unemployment rate for inner-city youth is often close to 40 percent.
D) Unemployment and inflation are equally important problems.
Answer: C
10) Marginal benefit is the benefit ________ one more unit of the good and ________ of the good increases.
A) of producing; increases as production
B) of producing; decreases as production
C) from consuming; increases as consumption
D) from consuming; decreases as consumption
Answer: D
11) A point inside a production possibilities frontier
A) could indicate that resources are misallocated.
B) is more efficient than a point on the production possibilities frontier.
C) reflects the fact that more technology needs to be developed to fully employ all resources.
D) implies that too much labor and not enough capital is being used.
Answer: A
12) Moving from one point on the production possibilities frontier to another ________.
A) involves a tradeoff but does not incur an opportunity cost
B) involves an opportunity cost but no tradeoff
C) involves a tradeoff and incurs an opportunity cost
D) involves no tradeoff but it does incur an opportunity cost
Answer: C
13) The fact that individual productive resources are NOT equally useful in all activities
A) implies that a production possibilities frontier will be bowed outward.
B) implies that gain from specialization and trade is unlikely.
C) follows from the law of demand.
D) implies a linear production possibilities frontier.
Answer: A
Production possibilities
Possibility
|
Pizza
(per hour)
|
Soda
(cases per hour)
|
A
|
0
|
100
|
B
|
1
|
95
|
C
|
2
|
80
|
D
|
3
|
60
|
E
|
4
|
35
|
F
|
5
|
0
|
14) In the above table, the production of 3 pizzas and 80 cases of soda is
A) impossible unless more resources become available or technology improves.
B) feasible but would involve unemployed or misallocated resources.
C) possible only if the economy produces with maximum efficiency.
D) possible only if there is inflation.
Answer: A
15) In the above figure, which of the following is TRUE regarding the movements from point A to B and from point C to D?
I. The movement from point A to B shows that the economy has chosen to produce 100 more jets.
II. The movement from point C to D shows that the economy has chosen to produce 100 more jets.
III. The movement from point A to B and from point C to D have the same opportunity cost.
A) I and II
B) I and III
C) II and III
D) I, II and III
Answer: A
16) When economic growth occurs, the
A) economy moves along its production possibilities frontier
B) production possibilities frontier shifts outward
C) production possibilities frontier becomes steeper
D) production possibilities frontier shifts outward but no longer limits the amount that can be produced.
Answer: B
17) Comparative advantage is
A) the ability to perform an activity at a lower opportunity cost than anyone else.
B) the ability to perform an activity at a higher opportunity cost than anyone else.
C) the ability to perform an activity at a zero opportunity cost.
D) another name for absolute advantage.
Answer: A
18) A person who has an absolute advantage in the production of all goods will
A) also have a comparative advantage in the production of all goods.
B) not be able to gain from specialization and exchange.
C) have a production possibilities frontier with a constant slope.
D) have a comparative advantage in the production of some goods but not in the production of others.
Answer: D
20) 
19) In the figure above, Joe is producing at point A. Joe's opportunity cost of producing one shirt is
A) 5/3 of a pair of pants per shirt.
B) 3/5 of a pair of pants per shirt.
C) 5 pairs of pants per shirt.
D) 2 pairs of pants per shirt.
Answer: D
20) According to the principle of comparative advantage, if the United States trades with Mexico, most likely,
A) the United States will benefit and Mexico will lose.
B) the United States will lose and Mexico will benefit.
C) neither of the countries will benefit.
D) both countries will benefit.
Answer: D
21) If the price of a candy bar is $1 and the price of a fast food meal is $5, then the
A) relative price of a candy bar is 5 fast food meals per candy bar.
B) money price of a candy bar is 1/5 of a fast food meal per candy bar.
C) relative price of a fast food meal is 5 candy bars per fast food meal.
D) money price of a fast food meal is 1/5 of a candy bar per fast food meal.
Answer: C
22) Wants, as opposed to demands,
A) are the unlimited desires of the consumer
B) are the goods the consumer plans to acquire.
C) are the goods the consumer has acquired.
D) depend on the price.
Answer: A
23) The "income effect" in the market for aspirin means that
A) aspirin are generally taken by people with higher than average incomes.
B) a decrease in the price of a substitute good like acetaminophen will make aspirin takers feel a little poorer than they were before.
C) an increase in the price of aspirin will reduce the total purchasing power of aspirin takers, making them able to afford fewer aspirin.
D) an increase in the price of aspirin will cause headache sufferers to look for a lower priced remedy.
Answer: C
24) The "law of demand" refers to the fact that, all other things remaining the same, when the price of a good rises
A) the demand curve shifts rightward.
B) the demand curve shifts leftward.
C) there is a movement down along the demand curve to a larger quantity demanded.
D) there is a movement up along the demand curve to a smaller quantity demanded.
Answer: D
25) Which of the following shifts the supply curve of broccoli?
A) an increase in income
B) a newly discovered increase in the nutritional value of broccoli
C) a newly discovered link between broccoli consumption and tooth decay
D) the destruction of much of this year's broccoli crop by hurricanes
Answer: D
26) Autoworkers negotiate a wage increase; how does this change affect the supply of cars?
A) It decreases the supply.
B) It increase the supply.
C) It causes no change.
D) There is not enough information to tell if the change increases, decreases, or has no effect on the supply of cars
Answer: A
27) In 2006, the base price of a Hummer SUV was about $30,000. By 2008 as gasoline prices increased,
A) the demand curve for Hummers shifted leftward and Hummer prices decreased.
B) the demand curve for Hummers shifted rightward and Hummer prices increased.
C) there was a movement down along the Hummer demand curve.
D) there was a movement up along the Hummer supply curve.
Answer: A
28)
Price (dollars per disc)
|
Quantity demanded
|
Price (dollars per disc)
|
Quantity supplied
|
4
|
36,000
|
4
|
4,000
|
8
|
32,000
|
8
|
8,000
|
12
|
28,000
|
12
|
12,000
|
16
|
24,000
|
16
|
16,000
|
20
|
20,000
|
20
|
20,000
|
24
|
16,000
|
24
|
24,000
|
28
|
12,000
|
28
|
28,000
|
32
|
8,000
|
32
|
32,000
|
36
|
4,000
|
36
|
36,000
|
The above table gives the demand and supply schedules for compact discs. If the price of a compact disc is $28, there is a ____ and the price of a compact disc will ____.
A) shortage; rise
B) shortage; fall
C) surplus; rise
D) surplus; fall
Answer: D
29) The above figures show the market for oranges. Which figure shows the effect of changing consumer preferences for more orange juice and less coffee in the morning?
A) Figure A
B) Figure B
C) Figure C
D) Figure D
Answer: A
30) The demand for ice-cream cones is and the supply of ice-cream cones is . The equilibrium price of cone is
A) $20
B) $4
C) $40
D) None of the above.
Answer: B
31) Doubling counting in GDP accounting is avoided by not including
A) net exports.
B) intermediate goods.
C) illegal activities.
D) depreciation.
Answer; B
32) An increase in exports of goods or services with no change in imports of goods or services
A) decreases GDP.
B) increases GDP.
C) may increase or decrease GDP depending on whether it is the export of goods or the export of services that increased.
D) has no effect on GDP.
Answer: B
33). The accumulated loss of output that results from a slowdown in the growth rate of GDP per person is called the
A) Keynsian gap.
B) Okun gap.
c) Lucas wedge.
D) unemployment wedge.
Answer: C
34)
Year
|
Price level
|
Nominal GDP
|
1989
|
100
|
$1,600
|
1999
|
150
|
$3,000
|
2009
|
300
|
$6,000
|
In the above table using 1989 as the base year, what was real GDP in 1999?
$1,600
$2,000
$2,400
$3,000
Answer : B
35) An economy recovering from a recession
A) moves up from its trough to a period of expansion.
B) moves up from its peak to a period of expansion.
C) moves down from its trough to a period of depression.
D) moves down from its peak to a period of expansion.
Answer: A
36) Which of the following is NOT included in real GDP?
A) production of services, such as the services of hair dressers
B) production of goods that last less than a year, such as production of hot dogs
C) production that takes place in the underground economy
D) production of goods that last more than a year, such as a pair of roller blades
Answer: C
37) If we compare the U.S. GDP and the Chinese GDP,
A) real GDP per person is about the same in the two countries.
B) U.S. real GDP per person is less than China's real GDP per person once we adjust for currency differences.
C) China's real GDP per person is less than real GDP per person in the United States.
D) real U.S. GDP per person was much larger than China's real GDP per person when purchasing power parity prices are used but is less than China's real GDP per person when exchange rate prices are used.
Answer: C
38) Using the above figure, during which month was the price for crude oil the highest?
A) July
B) December
C) May
D) October
Answer: B
39) Inflation climbed steadily from 1952 to 1972. A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show
A) the rate of inflation as a horizontal line.
B) that inflation was following a decreasing trend line.
C) that inflation had a positive trend.
D) that inflation had a negative trend.
Answer: C
40) The chain-weighted output index method of measuring real GDP is based on
A) using current prices rather than base year prices
B) averaging the market value of the expenditures over a two year period and then comparing with a base period.
C) using the prices of two adjacent years to calculate the growth rate of real GDP.
D) averaging the nominal and real measures of GDP to come up with a more accurate figure.
Answer: C
41) Which of the following is TRUE regarding the social cost if unemployment?
I. The costs of unemployment are spread equally across economic classes.
II Prolonged unemployment causes a loss of human capital.
III Because of unemployment benefit, there is no loss of income to an unemployed worker.
I only.
B) II only.
C) I and II.
D) I and III.
Answer: B
42) The labor force is defined as
A) all people aged 16 and over and not institutionalized.
B) the entire population.
C) those employed and unemployed.
D) only those with jobs.
Answer: C
43) The difference between nominal GDP and real GDP is that real GDP eliminates the effects from
A) depreciation.
B) inflation.
C) the unemployment rate.
D) changes in productivity.
Answer: B
44) At full employment.
A) Real GDP equals potential GDP.
B) the unemployment rate is zero.
C) real GDP is above potential GDP.
D) the business cycle is at its peak.
Answer: A
45) Which of the following is NOT included in the working-age population?
A) discouraged workers
B) people waiting to be called back to a job after being laid off
C) retirees under the age of 55
D) people in prison
Answer: D
46) A sustained increase in the price level is defined as
A) a recession.
B) a growth boom.
C) inflation.
D) an expansion.
Answer: C
47 ) The cost of inflation to society includes
the opportunity costs of resources used by people to protect themselves against inflation.
II. the diversion of productive resources to forecasting inflation.
A) I only
B) II only
C) both I and II
D) neither I nor II
Answer: C
48)
2010
|
2011
|
Item
|
Quantity
|
Price
|
Price
|
Movie
tickets
|
4
|
$5.00
|
$7.50
|
Bags of popcorn
|
2
|
$3.00
|
$3.00
|
Drinks of soda
|
4
|
$1.00
|
$1.50
|
The information in the table above gives the 2010 reference base period market basket and prices used to construct the CPI for a small nation. It also has the 2011 prices. What is the value of the CPI for the reference base period, 2010?
A) 140
B) 133
C) 100
D) 75
Answer: C
49} If the CPI in 2011 is 220 and is 200 in 2010, the annual inflation rate between the two years is
A) 5 percent.
B) 10 percent.
C) 20 percent.
D) 2 percent.
Answer: B
50) The bias in the CPI is one that
A) overstates inflation.
B) underestimates inflation.
C) about half the time overstates and about half the time understates the inflation rate.
D) cannot be measured or estimated.
Answer: A
Do you live in NYC?
Is your home starting to look a bit messy and dirty?
Have it professionally cleaned by my company!
Check us out or refer us to someone you may know that may need our services.
nationalpremiercleaning.com
If you have any test reviews, homeworks, guides, anything school related that you think can be posted on this website, reach out to me at makingschooleasier@gmail.com
Do you live in NYC?
Is your home starting to look a bit messy and dirty?
Have it professionally cleaned by my company!
Check us out or refer us to someone you may know that may need our services.
nationalpremiercleaning.com
If you have any test reviews, homeworks, guides, anything school related that you think can be posted on this website, reach out to me at makingschooleasier@gmail.com