Economic Foundations
Test Bank
Course Introduction
Economic Foundations introduces students to the core principles of economics that underpin the functioning of markets and economies. The course covers fundamental concepts such as supply and demand, opportunity cost, market equilibrium, and the role of incentives in shaping individual and collective decision-making. Students will explore the distinction between microeconomics and macroeconomics, evaluate how scarcity influences resource allocation, and analyze the impact of government policies on economic outcomes. Through real-world examples and basic analytical tools, the course provides a solid groundwork for more advanced studies in economics and related fields.
Recommended Textbook
Economics 1st Edition by Dean Karlan
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35 Chapters
4514 Verified Questions
4514 Flashcards
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Page 2
Chapter 1: Economics and Life
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) An economic model:
A)should describe the real world accurately.
B)should accurately predict cause and effect.
C)should make clear assumptions.
D)All of these are true.
Answer: D
Q2) You decided to take a college accounting course to brush up on your knowledge of the language of business.The tuition expense was $500.After the date has expired to receive a refund for the course,you are offered a job that would conflict with your class time.In making the decision to accept or decline the offer,the $500 is:
A)the opportunity cost of the job.
B)the expected gain in pay from taking the accounting course.
C)a sunk cost.
D)a sunk benefit.
Answer: C
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3
Chapter 2: Specialization and Exchange
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104 Flashcards
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Sample Questions
Q1) Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country A,the trade-off of making one tomato is:
A)2 bananas.
B)3 bananas.
C)4 bananas.
D)5 bananas.
Answer: D
Q2) The concepts of comparative advantage,specialization,and trade:
A)can be useful in explaining why countries import and export certain goods.
B)can be useful in explaining why individuals typically work at one job,and buy the other goods and services they need.
C)can be useful in explaining why we allow ourselves to be interdependent on others.
D)All of the statements are true.
Answer: D
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Chapter 3: Markets
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Sample Questions
Q1) An economy where private individuals who are guided by the invisible hand make decisions is known as a:
A)market economy.
B)centrally planned economy.
C)socialist economy.
D)barter economy.
Answer: A
Q2) Consider the market for ride-on lawn mowers and the recent increases in the price of oil.The recent increase in the price of oil makes it more expensive to manufacture ride-on lawn mowers.An increase in the price of oil also makes it more expensive to run a ride-on mower.If the price of oil increases,the demand for ride-on mowers will ______ and the supply will _______.
A)increase;increase
B)decrease;decrease
C)increase;decrease
D)decrease;increase
Answer: B
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Page 5
Chapter 4: Elasticity
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Sample Questions
Q1) If the price effect outweighs the quantity effect of a price decrease,then:
A)total revenue will decrease.
B)the good is price inelastic.
C)the measured elasticity must be greater than 1.
D)All of these are true.
Q2) Assuming elasticity is reported in absolute value,a measured price elasticity of demand of 0.4 would indicate:
A)an elastic demand,meaning the percentage change in quantity demanded will be greater than the percentage change in price.
B)an inelastic demand,meaning the percentage change in quantity demanded will be greater than the percentage change in price.
C)an elastic demand,meaning the percentage change in quantity demanded will be less than the percentage change in price.
D)an inelastic demand,meaning the percentage change in quantity demanded will be less than the percentage change in price.
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Chapter 5: Efficiency
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Sample Questions
Q1) Assume there are three hardware stores in the market for hammers and that all three markets produce a single,standard model hammer.House Depot is an enormous mass producer of hammers and can offer a hammer for sale for a minimum of $7.Lace Hardware is a franchise and can offer the hammer for sale for a minimum of $10.Bob's Hardware store is a family owned and operated,independent hardware store and can offer hammers at a minimum price of $13.
Given the scenario described,if the market price of hammers decreased from $15 to $13,which of the following can be said with certainty?
A)Producer participation in the market would decrease.
B)Total producer surplus would decrease.
C)Only Bob's Hardware will experience a drop in producer surplus.
D)Producer participation in the market will not be affected.
Q2) A seller's willingness to sell:
A)is the maximum price that a seller is willing to accept in exchange for a good or service.
B)is the minimum price that a seller is willing to accept in exchange for a good or service.
C)is their reserved minimum bid-price.
D)must always equal the buyer's willingness to buy.
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Chapter 6: Government Intervention
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Sample Questions
Q1) Does a subsidy to sellers affect the demand curve?
A)Yes,it shifts demand up by the amount of the subsidy.
B)Yes,it shifts demand to the right by the amount of the subsidy.
C)No,the quantity demanded will increase,but the demand curve does not move.
D)No,the quantity demanded will decrease,but the demand curve does not move.
Q2) If the demand curve is more elastic than the supply curve,then:
A)the buyers will bear a greater tax incidence than sellers.
B)the sellers will bear a greater tax incidence than buyers.
C)tax incidence will be shared equally by buyer and seller.
D)None of these is true.
Q3) Because a price ceiling causes:
A)a shortage,rationing must occur.
B)a surplus,rationing must occur.
C)a shortage,a central planner must distribute the goods fairly.
D)a surplus,a central planner must distribute the goods fairly.
Q4) Does a subsidy to buyers affect the demand curve?
A)Yes,it shifts demand up by the amount of the subsidy.
B)Yes,it shifts demand to the right by the amount of the subsidy.
C)No,the quantity demanded will increase,but the demand curve does not move.
D)No,the quantity demanded will decrease,but the demand curve does not move.
Page 8
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Chapter 7: Consumer Behavior
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Sample Questions
Q1) The concept of marginal utility:
A)explains why individuals find it difficult to maximize their total utility.
B)is the change in total utility that comes from consuming one additional unit of a good or service.
C)can only be applied to situations in which individuals can choose among several goods or services.
D)All of these are true.
Q2) Veblen goods:
A)are an excellent example of the individual nature of utility.
B)seem to contradict the individual measure of utility.
C)are goods that people buy more of when their income decreases.
D)None of these is true.
Q3) When economists observe someone make a choice,they assume the individual chooses:
A)what gives him the most utility.
B)what gives him the least utility.
C)what creates the most utility for society.
D)what is the most efficient choice.
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9
Chapter 8: Behavioral Economics: A Closer Look at Decision Making
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Sample Questions
Q1) Rick finds a great Internet deal on an all-inclusive vacation rental in the Tropics for $1200,and immediately places a $1000 nonrefundable deposit on it.He later learns that the dates he planned to go are right in the middle of hurricane season,and it is likely to be miserable and potentially dangerous weather the entire time.Rick decides he cannot waste the $1000 and takes the trip anyway.While sitting in the rain,miserable,Rick realizes he should have been more rational and:
A)ignored his sunk cost of $1000.
B)ignored his sunk cost of $1200.
C)considered his sunk cost of $1000.
D)considered his sunk cost of $200.
Q2) Economists believe:
A)everything has an opportunity cost.
B)everything has a sunk cost.
C)only some things have an opportunity cost.
D)sunk costs are a figment of most people's imagination.
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Page 10
Chapter 9: Game Theory and Strategic Thinking
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Sample Questions
Q1) In the real world,it is likely that wage negotiations:
A)do not drag on for years.
B)drag on for years to see which side is more patient.
C)often end with the company enjoying a larger payoff,since they can afford to be more patient.
D)often end with the worker's enjoying a larger payoff,since they are not losing as much in profit as the company.
Q2) In sequential games,an especially important part of strategic behavior is to:
A)"think forward,work backward."
B)"think backward,work forward."
C)"think forward,act backward."
D)"think backward,act forward."
Q3) While everyone wants a clean environment,it can be very hard to achieve.An approach governments could take to ensure we get that outcome is:
A)create social norms.
B)create and enforce strict laws and heavy fines.
C)influence individual's incentives.
D)All of these are ways governments get the "green" behavior we want.
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11
Chapter 10: Information
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Sample Questions
Q1) Imbalances in information can cause problems between:
A)buyers and sellers.
B)lenders and borrowers.
C)employers and employees.
D)All of these statements are true.
Q2) People:
A)often have good enough information to make acceptable choices.
B)are sometimes truly under-informed in ways that matter.
C)rarely have access to complete information.
D)All of these statements are true.
Q3) Moral hazard:
A)always happens when adverse selection is a problem.
B)never happens when adverse selection is a problem.
C)can happen when adverse selection is a problem.
D)None of these statements is true.
Q4) Moral hazard:
A)is about unrelated characteristics of people.
B)is about the actions of people.
C)occurs before the parties have entered into an agreement.
D)None of these statements is true.
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Chapter 11: Time and Uncertainty
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Sample Questions
Q1) Present value is:
A)how much a certain amount of money that will be obtained in the future is worth today.
B)how much a certain amount of money that you have in the present will be worth in the future.
C)the process of accumulation of additional interest paid on interest that has already been earned.
D)needs to be discounted to be meaningful.
Q2) Insurance companies:
A)profit from the difference between the premiums paid and the expected value of clients' payouts.
B)must charge more than the expected value of payout for the service of managing risk.
C)must charge more than the expected value of payout,otherwise they would go out of business.
D)All of these statements are true.
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13
Chapter 12: The Costs of Production
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Sample Questions
Q1) Tina withdraws $20,000 from her money market account to start up her own house cleaning business.The account earns 3 percent interest.In order to properly account for all costs of her business,Tina must not forget:
A)the opportunity cost of $2,600.
B)the opportunity cost of $600.
C)the fixed cost of $20,600.
D)the fixed cost of $20,600 and the opportunity cost of $600.
Q2) Costs that are "fixed":
A)depend on what timescale you are thinking.
B)are those that will never change.
C)vary with output,but not with resource prices.
D)None of these is true.
Q3) A bracelet making company has three employees,and together they produce 10 bracelets an hour.When a fourth worker joins them,the output for the company is now 11 bracelets an hour.Which of the following is true?
A)Diminishing marginal product has set in.
B)Marginal product is rising.
C)Total product is increasing.
D)None of these is true.
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Page 14
Chapter 13: Perfect Competition
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Sample Questions
Q1) An essential characteristic of a perfectly competitive market is:
A)buyers and sellers have no control over the market price.
B)sellers are selling unique products.
C)buyers have complete control over the market price and sellers have none.
D)sellers have complete control over the market price and buyers have none.
Q2) As long as average revenue remains above average total cost:
A)total revenue will be higher than total cost.
B)the firm will be making profits.
C)price will be greater than average total cost.
D)All of these are true.
Q3) If a firm in a perfectly competitive market faces a market price of $8,and it decides to increase its production from 300 units to 550 units,the firm's total revenue:
A)will increase from $2,400 to $4,400.
B)will decrease from $4,400 to $2,400.
C)will stay the same at $8.
D)will likely rise,but it cannot be determined by how much.
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Chapter 14: Monopoly
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153 Flashcards
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Sample Questions
Q1) With a monopolist's outcome,producer surplus is:
A)higher than that of a competitive market.
B)lower than that of a competitive market.
C)the same as that of a competitive market.
D)Any of these is possible.
Q2) When the monopolist decides to supply a given amount to the market,it will:
A)set the price higher than it would be in perfect competition.
B)set the price higher than what demanders are willing to pay for that amount.
C)only sell that amount if it charges what the demanders are willing to pay for that amount.
D)set the price lower than the demand curve to create a perceived shortage.
Q3) The monopolist's outcome happens at a:
A)lower quantity than the perfectly competitive one.
B)lower price than the perfectly competitive one.
C)higher quantity than the perfectly competitive one.
D)None of these statements is true.
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Chapter 15: Monopolistic Competition and Oligopoly
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Sample Questions
Q1) A number of firms who collude to make collective production decisions about quantities or prices is called:
A)a cartel.
B)a duopoly.
C)market power.
D)a joint monopoly.
Q2) Branding:
A)can be a barrier to entry.
B)guarantees high-quality products.
C)promises the differences in products are completely perceived and not real.
D)All of these statements are true.
Q3) The two types of market structures that are imperfectly competitive are:
A)perfect competition and monopolistic competition.
B)monopolistic competition and oligopoly.
C)oligopoly and monopoly.
D)monopoly and perfect competition.
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Chapter 16: The Factors of Production
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Sample Questions
Q1) For any competitive labor market,changes that decrease the number of workers will:
A)decrease the labor supply and shift the supply curve left.
B)increase the labor supply and shift the supply curve right.
C)decrease the labor supply and shift the supply curve right.
D)increase the labor supply and shift the supply curve left.
Q2) Eli is headed to his job harvesting grapes at a local vineyard.He earns $8 every hour he works there.His friend calls him and asks him to go mountain biking for the next 2 hours instead.Eli cannot decide between the two activities.His indecision implies he values riding his mountain bike for two hours:
A)more than $16.
B)less than $16.
C)at exactly $16.
D)at no more than $8.
Q3) If wages drop below the market equilibrium level in a competitive labor market:
A)firms will demand more labor than workers are willing to supply.
B)firms will be able to offer lower wages and still fill all the jobs they have.
C)unemployment will persist until the wage increases.
D)All of these statements are true.
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18
Chapter 17: International Trade
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Sample Questions
Q1) We might predict that Japan has a comparative advantage compared to Russia in the production of hi-tech electronics because:
A)Japan's climate is more suitable.
B)Japan has more land available to build manufacturing plants on.
C)Japan has more advanced electronics technology.
D)All of these are true.
Q2) Who is likely to be in favor of a country that would be a net-exporter if it moved from autarky to free trade?
A)Domestic producers
B)Domestic consumers
C)Foreign producers
D)None of these is true.
Q3) Import standards on specific countries usually address issues affecting:
A)domestic consumers.
B)domestic producers.
C)foreign production practices.
D)They can be used to address any of these.
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Chapter 18: Externalities
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Sample Questions
Q1) The distribution of surplus gained from private parties solving an externality problem on their own,as described by the Coase theorem,is dependent on:
A)where the initial rights of the parties lie.
B)who has more power to see to enforcement.
C)which party has more negotiating power or wealth.
D)None of these statements is true.
Q2) One problem with the effectiveness of Pigovian taxes is:
A)knowing what the value of the tax should be.
B)knowing whether to impose it on the consumer or producer.
C)identifying those who are affected by the externality.
D)All of these are problems.
Q3) When a positive externality is present in a market,total surplus is:
A)higher when buyers internalize the externality.
B)lower when buyers internalize the externality.
C)higher when buyers only consider private benefits.
D)Any of these statements could be true.
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Chapter 19: Public Goods and Common Resources
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Sample Questions
Q1) To combat the undersupply of public goods,a solution is:
A)for the government to step in and provide it directly.
B)to place a quota on the consumption of the good.
C)to change social norms around consumption of the good.
D)All of these are effective ways to deal with the undersupply of public goods.
Q2) An artificially scarce good is:
A)rival in consumption and excludable.
B)not rival in consumption,but excludable.
C)rival in consumption,but not excludable.
D)not rival in consumption and not excludable.
Q3) Goods that are not rival in consumption,but are excludable are:
A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.
Q4) Goods that are rival in consumption,but not excludable are:
A)a common resource.
B)a private good.
C)a public good.
D)an artificially scarce good.
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Chapter 20: Taxation and the Public Budget
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Sample Questions
Q1) The logistical costs associated with implementing a tax are called the:
A)administrative burden.
B)deadweight loss.
C)total surplus.
D)tax revenue.
Q2) The Social Security system:
A)pays current retirees from funds paid by current employees.
B)pays retirees the money accumulated from the payroll tax collected throughout their working life.
C)pays current retirees from current general government revenues.
D)pays current retirees from general government revenue surpluses they contributed to through taxes.
Q3) Instead of trying to balance the budget every year,it is easier to:
A)balance the budget over the business cycle.
B)allow deficit spending only in times of economic downturn.
C)allow surpluses to build during times of economic booms.
D)All of these statements are true.
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22
Chapter 21: Poverty, Inequality, and Discrimination
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Sample Questions
Q1) An example of a government program aimed at reducing poverty that is universal is:
A)public education.
B)Social Security.
C)Medicare.
D)All of these are universal programs.
Q2) In the United States,the official poverty line is calculated by multiplying:
A)the average expenditure on housing for a family of a given size by 3.
B)the cost of food for a family of a given size by 3.
C)the average expenditure on housing for a family of a given size by 2.
D)the cost of food for a family of a given size by 2.
Q3) A standard way to measure income mobility is to compare:
A)people's income to their parents' income.
B)people's income at the beginning of their work-life to their income when they retire.
C)the education level of people to that of their parents'.
D)None of these is a standard way to measure income mobility.
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Chapter 22: Political Choices
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Sample Questions
Q1) If we think of good governance as a public good created by well-informed voters,we can predict that it will be:
A)undersupplied.
B)oversupplied.
C)in market equilibrium,if left unchecked.
D)in market equilibrium,despite market interference.
Q2) The problem caused when people are often reluctant to voluntarily pay for goods and services that provide benefits for everyone,even for those who don't pay is called the:
A)free-rider problem.
B)drop in the bucket hypothesis.
C)rational ignorance problem.
D)moral hazard problem.
Q3) When a voter chooses to remain ignorant when the opportunity costs of gathering information outweigh the benefits,it is called:
A)rational ignorance.
B)irrational voting.
C)trigger mechanisms.
D)instinct theorem.
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Page 24
Chapter 23: Public Policy and Choice Architecture
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Sample Questions
Q1) Status-quo bias is:
A)a type of mental barrier to saving.
B)a reluctance to make active decisions to change something,even if it is fairly easy to do so.
C)overcome in the SMarT program because saving is the default option.
D)All of these statements are true.
Q2) When people make a decision to not participate in a program unless they actively enroll for it,program participation:
A)is likely to be lower than if people were automatically enrolled and had to actively opt-out of participating.
B)is likely to be higher than if people were automatically enrolled and had to actively opt-out of participating.
C)is likely to be the same as if people were automatically enrolled and had to actively opt-out of participating.
D)is exclusive,which always makes it more attractive to people.
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Chapter 24: Measuring the Wealth of Nations
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Sample Questions
Q1) Negative externalities:
A)can be thought of as "negative output."
B)are final "goods" that do harm to people.
C)are not included in GDP.
D)All of these statements are true.
Q2) The market value of a good or service is:
A)the price at which it is bought and sold.
B)the government's valuation using the CPI.
C)the price at which producers are willing to sell an output.
D)None of these statements is true.
Q3) GNP is:
A)the sum of the market values of all final goods and services produced and capital owned by the permanent residents of a country in a given period of time.
B)gross national product.
C)the value of what is produced by all U.S.companies regardless of their location.
D)All of these statements are true.
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Chapter 25: The Cost of Living
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Sample Questions
Q1) Trade restrictions:
A)increase the cost or difficulty of making exchanges across national borders.
B)discourage people from fully taking advantage of lower prices in other countries.
C)can explain why purchasing power parity doesn't typically hold.
D)All of these statements are true.
Q2) Inflation:
A)hurts everyone in the economy whenever it occurs.
B)hurts everyone in the economy the same.
C)always decreases purchasing power.
D)has very real costs associated with it.
Q3) Which of the following goods is least likely to be in a market basket?
A)Helicopter
B)Gasoline
C)Barbie dolls
D)Breakfast cereal
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Chapter 26: Economic Growth
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Sample Questions
Q1) Having more technology means:
A)that the same inputs will produce more outputs.
B)countries will be able to produce more with the same amount of physical capital.
C)countries will be able to produce more with the same amount of human capital.
D)All of these are true.
Q2) An example of physical capital is:
A)a tractor.
B)a farmer.
C)a high-yield seed varietal.
D)All of these are examples of physical capital.
Q3) Which of the following would not be considered physical capital?
A)An axe
B)Fertile soil
C)A factory
D)A forklift
Q4) When a country continually adds more capital to its existing stock:
A)productivity will increase at a decreasing rate.
B)productivity will decrease at an increasing rate.
C)productivity will decrease at a decreasing rate.
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Chapter 27: Unemployment and the Demand for Labor
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Sample Questions
Q1) The normal level of unemployment that persists in an economy in the long run:
A)is called the natural rate of unemployment.
B)is called the equilibrium rate of unemployment.
C)is never zero.
D)All of these are true.
Q2) Sonia was a great bookkeeper 20 years ago,then left the workforce to stay home and raise her children.Now that they're in college,Sonia looks for another bookkeeping job,but they all require computer skills that she doesn't have.Sonia would be considered:
A)frictionally unemployed.
B)structurally unemployed.
C)real-wage unemployed.
D)seasonally unemployed.
Q3) The employer who has the most unionized workers:
A)is the government.
B)is the airline industry.
C)is the trucking industry.
D)All of these have equal amounts of unionized workers.
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Chapter 28: Aggregate Demand and Aggregate Supply
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Sample Questions
Q1) A temporary decrease in the price of oil would be considered a:
A)short-run supply shock.
B)long-run supply shock.
C)demand shock.
D)The changing price of oil would not affect any of these.
Q2) Consumption:
A)is a major component of aggregate demand.
B)is negatively related to the national price level.
C)measures people's expenditures on real goods and services.
D)All of these are true.
Q3) If a natural disaster were to cause a negative long-run supply shock to the economy,once the economy adjusts,the new equilibrium will be:
A)at a higher price level and lower level of output.
B)at a lower price level and higher level of output.
C)at a higher price level and higher level of output.
D)at a lower price level and lower level of output.
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Chapter 29: Fiscal Policy
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Sample Questions
Q1) The multiplier:
A)measures the effect of government spending or tax cuts on national income.
B)measures the number of times each dollar is spent in the economy.
C)measures the supply of money in the economy.
D)measures the effect of household spending on national income.
Q2) Automatic stabilizers are the:
A)taxes and government spending that affect fiscal policy without specific action from policymakers.
B)fiscal policies that government actively chooses to adopt.
C)expansionary fiscal policies.
D)Keynesian policies.
Q3) If the government undertakes expansionary fiscal policy,it might:
A)increase income taxes.
B)decrease income taxes.
C)decrease government spending.
D)increase corporate income taxes.
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Chapter 30: The Basics of Finance
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Sample Questions
Q1) Which of the following is more liquid?
A)A privately held company's stock
B)A publicly held company's stock
C)A house
D)A rare painting
Q2) The fact that there are fewer and fewer potential investments that will generate returns high enough to make the cost of paying back a loan worthwhile is reflected in the:
A)upward-slope of the supply curve in the market for loanable funds.
B)downward-slope of the supply curve in the market for loanable funds.
C)upward-slope of the demand curve in the market for loanable funds.
D)downward-slope of the demand curve in the market for loanable funds.
Q3) The portion of income that is spent on productive inputs,such as factories,machinery,and inventories,is called:
A)investment.
B)savings.
C)consumption spending.
D)loanable funds.
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Chapter 31: Money and the Monetary System
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Sample Questions
Q1) If fractional reserve banking exists,then:
A)banks need only keep a portion of each deposit on hand.
B)the money multiplier is greater than 1.
C)money can be created in the economy through banks.
D)All of these are true.
Q2) If the economy is in a recession,the Fed could:
A)buy bonds through open market operations to increase spending in the economy.
B)sell bonds through open market operations to increase spending in the economy.
C)increase the discount rate so banks will increase their lending in the economy.
D)increase the reserve requirement to increase confidence in the financial system.
Q3) Hard money:
A)is the least narrow definition of money.
B)includes cash.
C)cannot always be used in transactions immediately,but is accessible.
D)All of these are true.
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Chapter 32: Inflation
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Q1) Suppose the nominal interest rate is 4 percent annually,and you deposit $1,000.Inflation in the economy throughout the year is 5 percent.At the end of the year,you have earned:
A)a real rate of return of 1 percent.
B)an increase in your purchasing power.
C)a nominal increase in your savings of $40.
D)All of these statements are true.
Q2) Demand pull inflation occurs when:
A)the price of a key input increases suddenly.
B)the price level changes in response to changes in the business cycle.
C)the price of necessity goods increases suddenly.
D)the business cycle becomes sporadic and unpredictable.
Q3) If an economy produces 3,000 units of output with a money supply of $500 and a velocity of 9,we know the price level must be:
A)$1.50.
B)$2.
C)$4.50.
D)$9.
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Chapter 33: Financial Crisis
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Sample Questions
Q1) One of the first issuances of stock was offered by the:
A)East India Company.
B)South Seas Company.
C)Apple Company.
D)North Seas Company.
Q2) The level of household debt incurred over the two decades leading up to the 2008 crisis was only sustainable if interest rates:
A)remained low and housing prices remained high.
B)and housing prices both remained high.
C)and housing prices both remained low.
D)remained high and housing prices remained low.
Q3) Markets are a powerful tool for the efficient allocation of:
A)money.
B)scarce resources.
C)bartered goods.
D)All of these statements are true.
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Page 35
Chapter 34: Open-Market Macroeconomics
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Q1) When the U.S.dollar appreciates against a foreign currency,U.S.goods become:
A)more expensive to people abroad,and we expect net exports to decrease.
B)less expensive to people abroad,and we expect net exports to increase.
C)more expensive to people abroad,and we expect net exports to increase.
D)less expensive to people abroad,and we expect net exports to decrease.
Q2) China imports ___________ from the U.S.compared to how many goods the U.S.imports from China.
A)less
B)more
C)about the same
D)practically nothing
Q3) China's high net exports must be balanced by:
A)low net capital outflows.
B)high net capital outflows.
C)high net imports.
D)high net capital inflows.
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Chapter 35: Development Economics
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Sample Questions
Q1) Governments choose to pursue industrial policy to:
A)raise tax revenue.
B)spur economic growth.
C)create publicly owned companies.
D)regulate the growth of certain industries.
Q2) The idea behind clustering is that each part of a network is ___________ productive operating in isolation,so if governments can push each element of the cluster in unison,they should realize ___________ in productivity.
A)far more;huge gains
B)far less;huge losses
C)far less;huge gains
D)far more;huge losses
Q3) Which of the following helps explain why more people don't immigrate to rich countries?
A)It's difficult due to the immigration restrictions of rich countries.
B)The language barrier is too great.
C)Educational degrees are not recognized.
D)The strain of leaving some family behind is too stressful.
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