Economic Policy Analysis
Mock Exam
Course Introduction
Economic Policy Analysis examines the principles and methods used to evaluate and design public policies that influence economic outcomes. The course covers the theoretical frameworks and empirical techniques necessary to assess the effectiveness, efficiency, and equity of government interventions in markets. Topics include cost-benefit analysis, the impact of taxation and government spending, regulation, social welfare programs, and international economic policy. Students will learn to critically analyze policy proposals using quantitative and qualitative tools, interpret policy impacts on different stakeholders, and communicate findings to diverse audiences.
Recommended Textbook
Macroeconomics 5th Edition by R. Glenn Hubbard
Available Study Resources on Quizplus
19 Chapters
4854 Verified Questions
4854 Flashcards
Source URL: https://quizplus.com/study-set/3590
Page 2
Chapter 1: Economics: Foundations and Models
Available Study Resources on Quizplus for this Chatper
211 Verified Questions
211 Flashcards
Source URL: https://quizplus.com/quiz/71289
Sample Questions
Q1) Suppose the extra cost for a plumber to keep her shop open for one extra hour is $145.Then,the plumber should not stay open for the extra hour if she can only generate additional revenue of $145 for that hour.
A)True
B)False Answer: False
Q2) If it costs Vijay $150 to design 5 websites and $175 to design 6 websites,then $175 is the marginal cost of producing the 6th Websites.
A)True
B)False Answer: False
Q3) What is the difference between physical capital and human capital?
Answer: Physical capital includes manufactured goods which are used to produce other goods and services.Human capital refers to the accumulated education,training and skills that workers possess.
Q4) Every society faces trade-offs.Explain the concept of trade-offs.
Answer: Trade-offs refer to the idea that,because of scarcity,producing more of one good or service means producing less of another good or service.
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Trade-Offs,comparative Advantage,and the Market System
Available Study Resources on Quizplus for this Chatper
239 Verified Questions
239 Flashcards
Source URL: https://quizplus.com/quiz/71278
Sample Questions
Q1) A critical function of the government in facilitating the operation of a market economy is
A)producing goods and services for low income households.
B)setting up and enforcing private property rights.
C)ensuring an equal distribution of income to all citizens.
D)controlling the market prices of food items.
Answer: B
Q2) If a country is producing efficiently and is on the production possibilities frontier,the only way to produce more of one good is with an advance in technology.
A)True
B)False
Answer: False
Q3) Refer to Figure 2-4.A movement from ________ could occur because of additional government restrictions toward allowing immigrant labor.
A)X to W
B)Y to X
C)V to W
D)W to X
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
Available Study Resources on Quizplus for this Chatper
233 Verified Questions
233 Flashcards
Source URL: https://quizplus.com/quiz/71277
Sample Questions
Q1) If an increase in income leads to an decrease in the demand for salami,then salami is
A)an inferior good.
B)a neutral good.
C)a necessity.
D)a normal good.
Answer: A
Q2) If the demand for a product decreases and the supply of the same product increases,the equilibrium quantity will increase.
A)True
B)False
Answer: False
Q3) What is a surplus? What is a shortage?
Answer: A surplus is a situation in which the quantity supplied is greater than the quantity demanded.A shortage is a situation in which the quantity demanded is greater than the quantity supplied.
Q4) Explain the difference between substitutes and complements.
Answer: Substitutes are goods and services that can be used for the same purpose.Complements are goods and services that are used together.
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Economic Efficiency, government Price Setting, and Taxes
Available Study Resources on Quizplus for this Chatper
211 Verified Questions
211 Flashcards
Source URL: https://quizplus.com/quiz/71276
Sample Questions
Q1) If the quantity of nail polish supplied is represented by the equation Q<sub>S</sub> = -3 + 2P then the corresponding price of nail polish is represented by the equation
A)P = 0.5Q<sub>S</sub> + 1.5.
B)P = 2Q<sub>S</sub> + 6.
C)P = 2Q<sub>S</sub> - 6.
D)P = 1.5 - 0.5Q<sub>S.</sub>
Q2) Refer to Table 4-1.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of one of the bottles is $95 dollars,total consumer surplus will be
A)$0.
B)$35.
C)$80.
D)$95.
Q3) Refer to Figure 4-1.If the market price is $3.00,what is Kendra's consumer surplus?
A)$6.50
B)$5.50
C)$2.50
D)$0.50
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: The Economics of Health Care
Available Study Resources on Quizplus for this Chatper
164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/71275
Sample Questions
Q1) All of the following are ways in which health insurance companies can potentially reduce adverse selection except
A)by insuring only large groups of people.
B)by lowering the co-payments and deductibles on the policies they issue.
C)by refusing to insure some applicants,for example based on prior health conditions.
D)by finding out as much information about a person applying for insurance,for example requiring a medical examination.
Q2) Refer to the Article Summary.Even if insurance companies were more efficient and brought administrative costs down,consumers would ________ the full cost of medical treatment.This would result in the market equilibrium price and quantity of medical services being ________ than the efficient equilibrium price and quantity.
A)pay less than; less than
B)pay more than; less than C)pay more than; more than D)pay less than; more than
Q3) How might a company that offers to handle all paperwork involved with a health insurance claim for a flat fee face the problem of adverse selection?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Firms,the Stock Market,and Corporate Governance
Available Study Resources on Quizplus for this Chatper
276 Verified Questions
276 Flashcards
Source URL: https://quizplus.com/quiz/71274
Sample Questions
Q1) Dividing the dividend payment by the stock's closing market price determines the A)coupon payment.
B)dividend yield.
C)price-earnings ratio.
D)selling price of the stock.
Q2) Briefly describe the Sarbanes-Oxley Act and explain why it was passed.
Q3) ________ is called an implicit cost,while ________ is called an explicit cost.
A)An accounting cost; an economic cost
B)A nonmonetary opportunity cost; a cost that involves spending money
C)A production cost; a sales cost
D)An actual cost; a hypothetical cost
Q4) Who owns a corporation?
A)the board of directors
B)the stockholders
C)the employees
D)the CEO
Q5) Purchasing a firm's stock in an IPO can be risky because financial information may not be fully disclosed.
A)True
B)False
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Comparative Advantage and the Gains From International Trade
Available Study Resources on Quizplus for this Chatper
190 Verified Questions
190 Flashcards
Source URL: https://quizplus.com/quiz/71273
Sample Questions
Q1) In the United States during the Great Depression,tariffs were ________ than they were following World War II,and ________ than they are today.
A)higher; higher
B)higher; lower
C)lower; higher
D)lower; lower
Q2) Refer to Table 7-4.
a.Which country has an absolute advantage in the production of light bulbs and flash drives?
b.Which country has a comparative advantage in the production of light bulbs?
c.Which country has a comparative advantage in the production of flash drives?
Q3) Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil.We can conclude that
A)Honduras also has an absolute advantage in producing bananas relative to Brazil.
B)Honduras has a lower opportunity cost of producing bananas relative to Brazil.
C)Brazil has an absolute disadvantage in producing bananas relative to Honduras.
D)Labor costs are higher for banana producers in Brazil than in Honduras.
Q4) What was the GATT,why was it established,and why and with what was it replaced?
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: GDP: Measuring Total Production and Income
Available Study Resources on Quizplus for this Chatper
266 Verified Questions
266 Flashcards
Source URL: https://quizplus.com/quiz/71272
Sample Questions
Q1) The underground economy - the informal sector - can be a significant drag on the economies of developing countries.Why are firms in the informal sector often less efficient than firms in the formal sector?
Q2) Residential investment includes spending by firms on office buildings.
A)True
B)False
Q3) If the GDP deflator is equal to 100,then for that year nominal GDP is equal to real GDP.
A)True
B)False
Q4) Refer to the Article Summary.In China,________ is (are)the main driver of economic growth,while in the United States,________ is the main driver of economic growth.
A)consumption; investment
B)net exports; government purchases
C)investment; consumption
D)consumption; net exports
Q5) Refer to Table 8-25.Given the following information,calculate the rate of increase in the price level from 2012 to 2013.Use the percent change in the GDP deflator.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Unemployment and Inflation
Available Study Resources on Quizplus for this Chatper
292 Verified Questions
292 Flashcards
Source URL: https://quizplus.com/quiz/71271
Sample Questions
Q1) The unemployment rate in the United States is typically lower than in Western Europe because the United States has tougher requirements for the unemployed to receive government payments.
A)True
B)False
Q2) The cost to firms of changing prices
A)is small even when there is rapid inflation.
B)is called a menu cost.
C)does not exist if inflation is perfectly anticipated.
D)all of the above
Q3) Refer to Figure 9-1.Based on the graph of the labor market above,if a minimum wage is set at $5 per hour,which of the following will occur?
A)The unemployment rate will rise.
B)The unemployment rate will fall.
C)The level of unemployment will rise,but the percentage of the labor force unemployed will not change.
D)None of the above will occur.
Q4) Explain how the CPI is constructed.
Q5) Describe how inflation can be costly even if it is anticipated.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Economic Growth, the Financial System, and Business Cycles
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/71288
Sample Questions
Q1) Explain why the demand curve for loanable funds has a negative slope.
Q2) Which of the following would you expect to increase the equilibrium interest rate?
A)an increase in the percentage of income after net taxes that households save
B)an increase in the budget deficit
C)a decrease in the profitability of investment projects firms are considering
D)a change from an income tax to a consumption tax
Q3) Which of the following is an example of human capital?
A)a computer
B)a factory building
C)a college education
D)a software program
Q4) A good measure of the standard of living is
A)real GDP per capita.
B)nominal GDP per capita.
C)total real GDP.
D)total nominal GDP.
Q5) Explain and show graphically how a decrease in government spending affects the equilibrium interest rate and equilibrium quantity of loanable funds in the market for loanable funds.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Long-Run Economic Growth: Sources and Policies
Available Study Resources on Quizplus for this Chatper
268 Verified Questions
268 Flashcards
Source URL: https://quizplus.com/quiz/71287
Sample Questions
Q1) The Industrial Revolution
A)marked the beginning of significant economic growth in the world.
B)started in France around the year 1750.
C)produced goods exclusively using human or animal power.
D)had no impact on standards of living in the world.
Q2) When an economy faces diminishing returns,
A)the slope of the per-worker production function becomes steeper as capital per hour worked increases.
B)the slope of the per-worker production function becomes flatter as capital per hour worked increases.
C)the per-worker production function shifts to the left.
D)the per-worker production function shifts to the right.
Q3) The lower-income industrial countries are catching up to the higher-income industrial countries in terms of economic growth.
A)True
B)False
Q4) Political stability is not a prerequisite to economic growth.
A)True
B)False
13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Aggregate Expenditure and Output in the Short Run
Available Study Resources on Quizplus for this Chatper
306 Verified Questions
306 Flashcards
Source URL: https://quizplus.com/quiz/71286
Sample Questions
Q1) If the consumption function is defined as C = 7,250 + 0.8Y,what is the autonomous level of consumption expenditure?
A)$5,800
B)$7,250
C)$9,062.50
D)$9,700
Q2) Given the equations for C,I,G,and NX below,what is the marginal propensity to save?
C = 1,000 + 0.8Y
I = 1,500
G=1,250
NX = 100
A)0.2
B)0.8
C)1.8
D)10
Q3) What is the macroeconomic consequence if firms accumulate large amounts of unplanned inventory at the beginning of a recession?
Q4) What is the difference between aggregate expenditure and aggregate demand?
Q5) Why do economists care about aggregate expenditures?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Aggregate Demand and Aggregate Supply Analysis
Available Study Resources on Quizplus for this Chatper
284 Verified Questions
284 Flashcards
Source URL: https://quizplus.com/quiz/71285
Sample Questions
Q1) If,due to a recession,foreign workers begin to leave the United States to search for temporary work in their home countries until the recession has ended,this will
A)shift the short-run aggregate supply curve of the home country to the left.
B)shift the short-run aggregate supply curve of the home country to the right.
C)move the home country's economy up along a stationary short-run aggregate supply curve.
D)move the home country's economy down along a stationary short-run aggregate supply curve.
Q2) President Bush lowered income taxes for individuals in 2001.Explain how lower income taxes affect the aggregate demand curve.
Q3) Lower personal income taxes
A)increase aggregate demand.
B)decrease disposable income.
C)decrease aggregate demand.
D)increase transfer payments.
Q4) Using an aggregate demand graph,illustrate the impact of an increase in the price level on aggregate demand.
Q5) What does the phrase "Keynesian revolution" refer to?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Money, banks, and the Federal Reserve System
Available Study Resources on Quizplus for this Chatper
280 Verified Questions
280 Flashcards
Source URL: https://quizplus.com/quiz/71284
Sample Questions
Q1) If households choose to take some fraction of each check they deposit and hold it as currency,then the simple deposit multiplier ________ the real-world multiplier. A)is greater than B)is less than C)is equal to D)bears no relationship to
Q2) For the purchasing power of money to increase,the price level has to fall.
A)True
B)False
Q3) The amount of national income in an economy equals the money supply in an economy.
A)True
B)False
Q4) Economies cannot function without money.
A)True
B)False
Q5) Although gold is highly valued by most people,it is difficult to use as a medium of exchange.Explain.
Q6) What is the principle monetary policy tool used by the Fed.Why?
Page 16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Monetary Policy
Available Study Resources on Quizplus for this Chatper
277 Verified Questions
277 Flashcards
Source URL: https://quizplus.com/quiz/71283
Sample Questions
Q1) Contractionary monetary policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________.
A)higher; higher
B)higher; lower
C)lower; higher
D)lower; lower
Q2) Refer to Figure 15-12.In the dynamic AD-AS model,if the economy is at point A in year 1 and is expected to go to point B in year 2,and the Federal Reserve pursues no policy,then at point B
A)firms are producing above capacity.
B)there is pressure on wages and prices to fall.
C)the unemployment rate is greater than the natural rate of unemployment.
D)incomes and profits are falling.
Q3) In the countries that have adopted inflation targeting,the inflation rate has typically A)increased.
B)decreased.
C)decreased to zero.
D)not changed.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
303 Verified Questions
303 Flashcards
Source URL: https://quizplus.com/quiz/71282
Sample Questions
Q1) Contractionary fiscal policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________.
A)higher; higher
B)higher; lower
C)lower; higher
D)lower; lower
Q2) The federal budget was in deficit from 1931 to 1939,except in the year 1937.Given this fact,how do you explain E.Cary Brown's statement,"Fiscal policy,then,seems to have been an unsuccessful recovery device in the 'thirties-not because it did not work,but because it was not tried."
Q3) Refer to Table 16-2.Consider the hypothetical information in the table above for potential real GDP,real GDP and the price level in 2013 and in 2014 if the Congress and the president do not use fiscal policy.If the Congress and the president want to keep real GDP at its potential level in 2014,they should
A)buy Treasury securities.
B)conduct expansionary fiscal policy.
C)decrease government purchases.
D)decrease the discount rate.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Inflation, unemployment, and Federal Reserve Policy
Available Study Resources on Quizplus for this Chatper
257 Verified Questions
257 Flashcards
Source URL: https://quizplus.com/quiz/71281
Sample Questions
Q1) What can the Federal Reserve do to reduce the natural rate of unemployment?
A)nothing
B)follow expansionary monetary policy that will increase inflation
C)follow expansionary monetary policy that will reduce inflation
D)follow contractionary monetary policy that will increase inflation
Q2) Which of the following could increase unemployment and inflation simultaneously?
A)an increase in oil prices
B)expansionary monetary policy
C)contractionary monetary policy
D)a decrease in the real wage
Q3) Last year,the unemployment rate was 4 percent and the inflation rate was 3 percent.If the natural rate of unemployment is 3 percent,how do you expect inflation to change?
Q4) How would you expect the Fed to respond to a negative supply shock in the economy?
Q5) When unemployment is below its natural rate,the inflation rate will eventually A)increase.
B)decrease.
C)move to its natural rate.
Page 19
D)become equal to the natural rate of unemployment.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Macroeconomics in an Open Economy
Available Study Resources on Quizplus for this Chatper
278 Verified Questions
278 Flashcards
Source URL: https://quizplus.com/quiz/71280
Sample Questions
Q1) You're traveling in Japan and are thinking about buying a new kimono.You've decided you'd be willing to pay $175 for a new kimono,but kimonos in Japan are all priced in yen.If the kimono you're looking at costs 14,000 yen,under which of the following exchange rates would you be willing to purchase the kimono? (Assume no taxes or duties are associated with the purchase.)
A)24.5 yen per dollar
B)65 yen per dollar
C)80 yen per dollar
D)You would purchase the new kimono at any of the above exchange rates.
Q2) Which of the following transactions would be included in Germany's current account?
A)A German citizen purchases 100 shares of Texas Instruments stock.
B)An American citizen purchases 100 shares of BMW stock.
C)A German citizen purchases a new Volkswagen made in Germany.
D)An American citizen purchases a new Volkswagen made in Germany.
Q3) Explain and show graphically the effect of a decrease in U.S.budget deficits that decrease U.S.interest rates on the demand and supply of U.S.dollars for euros.
Q4) How is the impact of expansionary monetary policy different in an open economy than in a closed economy?
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: The International Financial System
Available Study Resources on Quizplus for this Chatper
262 Verified Questions
262 Flashcards
Source URL: https://quizplus.com/quiz/71279
Sample Questions
Q1) Foreign purchases of stocks and bonds issued by U.S.corporations ________ between 1995 and 2007 and ________ in 2012.
A)increased at a slow but steady pace; increased dramatically
B)remained stagnant; declined sharply
C)increased dramatically; declined sharply
D)decreased slightly; increased slightly
Q2) In order to reduce or eliminate a chronic shortage in the market for a currency under a fixed exchange rate system,we must devalue the currency.
A)True
B)False
Q3) Refer to Figure 19-8.The equilibrium exchange rate is at A,$1.25/euro.Suppose the European Central Bank pegs its currency at $1.00/euro.Speculators expect that the value of the euro will rise and this shifts the demand curve for euro to D<sub>2</sub>.After the shift,
A)there is a shortage of euro equal to 1,000 million.
B)there is a surplus of euro equal to 400 million.
C)there is a shortage of euro equal to 800 million.
D)there is a surplus of euro equal to 500 million.
Q4) What is the difference between a devaluation and a revaluation of a currency?
To view all questions and flashcards with answers, click on the resource link above. Page 21