Economic Principles
Mock Exam
Course Introduction
Economic Principles introduces students to the fundamental concepts and analytical tools essential for understanding the workings of an economy. Covering both microeconomics and macroeconomics, the course explores how individuals, businesses, and governments make choices regarding the allocation of scarce resources. Key topics include supply and demand, market equilibrium, elasticity, production and cost theories, and the role of government intervention. Students will also examine broader economic issues such as inflation, unemployment, international trade, and economic growth, developing a solid foundation for further study in economics and related fields.
Recommended Textbook
Principles of Microeconomics 1st Edition by Dirk Mateer
Available Study Resources on Quizplus
20 Chapters
2784 Verified Questions
2784 Flashcards
Source URL: https://quizplus.com/study-set/1955
Page 2
Chapter 1: The Five Foundations of Economics
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/38929
Sample Questions
Q1) The basic goal of economics is:
A) controlling the effects of government actions.
B) determining how to distribute all that is produced in an economy.
C) addressing the scarcity problem created because the population's desire for goods exceeds the ability to produce them.
D) matching limited resources to people's limited wants and needs.
E) controlling tastes and wishes so that there will be enough resources to produce all the goods and services that people want.
Answer: C
Q2) A camera takes a picture of drivers who do not stop at a red light,and this practice is used to issue a traffic ticket.These red light cameras can be understood as serving a(n):
A) positive incentive to encourage individuals to stop at a red light.
B) negative incentive to discourage individuals from driving through a red light.
C) indirect incentive to encourage individuals to stop at a red light.
D) direct incentive to encourage individuals to stop at a red light.
E) negative incentive to encourage individuals to drive through a red light.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Model Building and Gains From Trade
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/38930
Sample Questions
Q1) Specialization and trade allow individuals to:
A) consume outside their own production possibilities frontier (PPF).
B) shift their PPF outward.
C) produce more goods with less technology.
D) eliminate scarcity.
E) produce fewer goods with less technology.
Answer: A
Q2) What is Angelo's opportunity cost of a painting?
A) 1/3 painting
B) 1/3 sculpture
C) 2/5 sculpture
D) 3 paintings
E) 3 sculptures
Answer: E
Q3) Draw a production possibilities frontier (PPF) that shows a pizza shop's production trade-offs between producing pizzas and stromboli.Suppose the pizza shop upgrades to a larger,more-automated oven.On the same graph,show how the PPF changes.(The oven is used to bake both pizzas and stromboli.)
Answer: 11ea592e_1c23_6299_af5c_394911296349_TB4869_00
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: The Market at Work: Supply and Demand
Available Study Resources on Quizplus for this Chatper
142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/38931
Sample Questions
Q1) Using a supply and demand model,show what happens to the equilibrium price and equilibrium quantity in the market for bananas if,holding all else constant,a study comes out that says eating bananas causes cardiac problems.
Answer: 11ea592e_1c2a_679d_af5c_113ead8d78e7_TB4869_00
Q2) If a new french fry-cutting machine works twice as fast as the old machine,McDonald's would:
A) be willing to produce and sell fewer french fries at every price.
B) be making less profit.
C) be willing to produce and sell more french fries at every price.
D) lose customers.
E) pay its employees more.
Answer: C
Q3) Two goods that are used together are called:
A) complements.
B) inferior.
C) Giffin.
D) substitutes.
E) normal.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Price Controls
Available Study Resources on Quizplus for this Chatper
135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/38932
Sample Questions
Q1) What would be the quantity supplied if a price floor is set at $20?
A) 90
B) 45
C) 265
D) 165
E) 305
Q2) If a good is subject to a binding price ceiling and you purchase it on the black market,what do you expect to happen to the price over time?
A) The black market price will rise over time as the supply curve becomes more elastic and the demand curve becomes more inelastic.
B) The black market price will fall over time as both the supply and demand curves become more inelastic.
C) The black market price will rise over time as the demand curve becomes more elastic and the supply curve becomes more inelastic.
D) The black market price will fall over time as both the supply and demand curves become more elastic.
E) The black market price will not change over time.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: The Efficiency of Markets and the Costs of Taxation
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/38933
Sample Questions
Q1) Which party is responsible for paying this tax out of pocket?
A) consumers
B) producers
C) both consumers and producers
D) some consumers and some producers, but not all consumers and producers
E) some consumers and no producers
Q2) When a tax is imposed on some good,what usually happens to consumer and producer surplus?
A) They both increase.
B) They both fall to zero.
C) They both decrease.
D) Consumer surplus increases and producer surplus decreases.
E) Consumer surplus decreases and producer surplus increases.
Q3) When looking at a supply and demand graph,you would find consumer surplus:
A) above the demand curve and below the supply curve.
B) below the demand curve and above market price.
C) to the right of equilibrium quantity and above market price.
D) above the demand curve and above the supply curve.
E) below market price and above the supply curve.
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Introduction to Macroeconomics and Gross
Domestic Product
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/38934
Sample Questions
Q1) What was the rate of inflation between the two years?
A) 19.44%
B) 8.57%
C) 6.67%
D) 2.38%
E) 16.67%
Q2) Nominal GDP is GDP measured in:
A) current prices.
B) base prices.
C) average prices.
D) fixed prices.
E) marginal prices.
Q3) When GDP increases,national income ________ and national output __________.
A) is unaffected; is unaffected
B) increases; increases
C) decreases; decreases
D) increases; is unaffected
E) is unaffected; decreases
Q4) Explain why intermediate goods and used goods do not count in GDP.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Unemployment
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/38935
Sample Questions
Q1) Typically during a recession,the percentage of the total unemployed that are classified under short-term unemployment ____________ and the percentage classified as long-term unemployment ____________.
A) increases; increases B) increases; decreases C) decreases; decreases D) decreases; increases E) stays the same; increases
Q2) Which of the following people would be officially considered unemployed?
A) Mitchell, who is a full-time student working part-time at the bookstore
B) Janice, who is actively seeking a full-time job while currently working at a part-time job
C) Jade, who has stopped looking for a job because she feels there are no jobs available for her
D) Jenna, who just graduated college and is searching for a job that fits her graphic-design skills
E) Ralph, who is a stay-at-home father and is not currently looking for a job
Q3) What happened to the labor force participation rate for females between 1950 and 2012? What are some reasons for this trend?
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: The Price Level and Inflation
Available Study Resources on Quizplus for this Chatper
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/38936
Sample Questions
Q1) Which of the following reflects a practical example of the price confusion problem?
A) Lines are short at the coffee shop you own because your resource prices are rising and your retail prices must be raised at the same rate; your customers are confused as to whether they should buy from your shop or not.
B) Long lines at the coffee shop you own prompt you to open a new coffee shop, but the second shop is unsuccessful because the first shop's success was just due to your prices being set too low (below market prices) because of inflation.
C) It is difficult for you to determine whether the long lines at your coffee shop are due to increased demand or because inflation has created "too many dollars chasing too few goods."
D) It is difficult for you to determine the right signal to send to your consumers through prices because the signal sent to you by the Bureau of Labor Statistics is easily misinterpreted.
E) Signals sent from consumers to producers are clear, but those from producers to consumers are confused.
Q2) Explain the notion of money illusion in specific detail.
Q3) Describe menu costs.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Savings, interest Rates, and the Market for Loanable Funds
Available Study Resources on Quizplus for this Chatper
139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/38937
Sample Questions
Q1) If interest rates rise:
A) firms are willing to borrow more money because their rates of return have increased. B) households are willing to borrow more money because their rates of return have increased.
C) firms are willing to borrow less money because their cost of borrowing has increased. D) foreign entities are willing to borrow more money because their rates of return have increased.
E) it must mean that inflation has decreased because nominal rates have increased.
Q2) List the factors of supply for loanable funds,and explain what would cause each of them to shift the supply curve rightward.
Q3) Explain the difference in the real and nominal interest rates.Under what conditions would the real exceed the nominal and vice versa? Why does the textbook refer only to the nominal rate rather than the real rate?
Q4) What would happen if foreigners no longer felt the United States was a safe place to lend their money?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Financial Markets and Securities
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/38938
Sample Questions
Q1) As of January 2013,Microsoft had an S&P bond rating of:
A) A.
B) AA.
C) AAA.
D) A++.
E) BBB.
Q2) In financial markets,firms and governments in search of funds to undertake their daily operations would be the:
A) banks.
B) buyers and sellers.
C) financial intermediaries.
D) buyers.
E) sellers.
Q3) Most people who purchase stocks and bonds use brokers,who buy the stocks and bonds in:
A) minor markets.
B) inferior markets.
C) alternate markets.
D) secondary markets.
E) primary markets.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Economic Growth and the Wealth of Nations
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/38939
Sample Questions
Q1) In 1950,Brazil's economy was roughly the same size as Nicaragua's.Today,Brazil's economy is almost five times as large as Nicaragua's.Which of the following best explains this difference?
A) Nicaragua was too reliant on foreign aid, whereas Brazil was far more economically independent.
B) Brazil greatly limited international trade, whereas Nicaragua opened its borders to imports and exports.
C) Brazil supported institutions like property rights, which tend to foster growth, whereas Nicaragua did not.
D) Brazil's economy was largely agricultural, whereas Nicaragua's was industrial.
E) Nicaragua had excessively high tax rates, but Brazil kept its taxes low and competitive.
Q2) Define economic growth,and explain what it means in terms of standards of living.
Q3) How would an increase in capital goods,holding the size of the labor force constant,help to make workers more productive and increase economic growth?
Q4) List,define,and give an example of each of three types of resources.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Growth Theory
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/38940
Sample Questions
Q1) What policy prescriptions follow from the Solow growth model?
Q2) When _________ units of capital are purchased,the marginal product will _________.
A) more; increase
B) more; not change
C) more; decrease
D) fewer; decrease
E) fewer; not change
Q3) A key assumption of the Solow model is:
A) increasing returns to labor and diminishing returns to capital.
B) diminishing returns to capital only.
C) diminishing marginal product of capital and labor.
D) diminishing marginal product of capital and increasing marginal product of labor.
E) constant marginal product of capital only.
Q4) Why does the Solow growth model predict that per capita gross domestic product (GDP) levels across nations will equalize as nations approach the steady state?
Q5) Explain the difference between investment and net investment.
Q6) Why are institutions so important for economic growth?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: The Aggregate Demandaggregate Supply
Model
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/38941
Sample Questions
Q1) Based on the figure,starting at point A,if there is an increase in the price of oil,then in the short run we move to point __________ and in the long run to point
A) F; E
B) F; A
C) D; C
D) D; A
E) B; E
Q2) New computer technologies can be expected to:
A) increase long-run aggregate supply.
B) increase the price level.
C) increase the unemployment rate.
D) decrease aggregate demand.
E) decrease aggregate supply.
Q3) How does the international trade effect explain the slope of the aggregate demand curve?
Q4) Explain and illustrate how the short-run and long-run equilibrium levels of output and the price level are affected by legislation that increases the employer's cost of providing health care to workers.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Q5) How does the wealth effect explain the slope of the aggregate demand curve?
Chapter 14: The Great Recession, the Great Depression, and Great Macroeconomic Debates
Available Study Resources on Quizplus for this Chatper
142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/38942
Sample Questions
Q1) During the Great Recession,the U.S.aggregate demand curve shifted to the left,in part,because:
A) unemployment in the United States decreased.
B) there was excessively high inflation during this time.
C) there was a stock market boom.
D) U.S.housing prices fell.
E) the government dramatically increased taxes.
Q2) During the Great Depression,the U.S.aggregate demand curve shifted to the left,in part,because:
A) housing prices increased dramatically.
B) the U.S.government decreased taxes.
C) there was a severe decline in stock prices.
D) the U.S.government increased the supply of money.
E) there was an increase in the U.S.population.
Q3) One of the reasons why the Great Depression was so severe is that:
A) the U.S.government lowered taxes.
B) stock prices increased during the Great Depression.
C) expected income increased.
D) the U.S.government allowed the money supply to decline.
Page 16
E) the U.S.government allowed the money supply to increase.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Federal Budgets: the Tools of Fiscal Policy
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/38943
Sample Questions
Q1) Why do the reported federal debt figures typically omit intragovernmental debt (debt that is owned by agencies of the government itself)?
Q2) The most recent federal budget surplus occurred:
A) never; the government has always run a budget deficit.
B) in 1959.
C) in 2012.
D) in 2006.
E) in 2001.
Q3) A progressive income tax system is one in which:
A) income tax rates decrease as earned income increases.
B) everyone pays the same tax rate, so that wealthier people pay a larger sum of taxes.
C) everyone pays the same tax rate, so that people with low incomes pay a smaller sum of taxes.
D) income tax rates increase as earned income increases.
E) incomes taxes are based on occupation.
Q4) Why may foreign ownership of U.S.debt be good for the United States? Why may foreign ownership of U.S.debt be bad for the United States?
Q5) Why has "entitlement reform" become such a major national issue?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/38944
Sample Questions
Q1) It takes time for the complete effects of monetary and fiscal policy to materialize.This is because there is ___________ between setting fiscal policy and seeing its effects.
A) a recognition lag
B) an implementation lag
C) an impact lag
D) a countercyclical lag
E) an automatic lag
Q2) If the economy starting at full-employment output begins to enter into an expansion,one would expect Congress and the president to conduct:
A) expansionary fiscal policy.
B) expansionary monetary policy.
C) contractionary fiscal policy
D) contractionary monetary policy.
E) countercyclical monetary policy.
Q3) Give two examples of automatic stabilizers,and explain why they are an important component of fiscal policy.
Q4) Explain the differences and similarities between monetary and fiscal policy.
Q5) Tie fiscal policy initiatives to budget deficits and surpluses.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Money and the Federal Reserve
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/38945
Sample Questions
Q1) What are the consequences of an economy relying on a fiat money?
Q2) Using the table,what is the value of M2 that is not part of M1?
A) $404,000,000
B) $740,000,000
C) $906,000,000
D) $744,000,000
E) $1,650,000,000
Q3) My sister has been given a loan for $10,000,and she deposited the full loan amount into her checking account.How would this be reflected on her bank's balance sheet?
A) Loans would increase by $10,000, but deposits would decrease by less than $10,000.
B) Loans would be unaffected, but deposits would increase by $10,000.
C) Loans and deposits would be unaffected.
D) Loans would decrease and deposits would increase by the same amount as the deposit.
E) Loans and deposits would increase by the same amount as the deposit.
Q4) What limits the moral hazard problem in the fractional reserve banking system in England as compared to the moral hazard problem that exists in the United States?
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Monetary Policy
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/38946
Sample Questions
Q1) Before the development of expectations theory:
A) monetary policy prescriptions were strictly passive.
B) monetary policy had no real effects in the short run.
C) monetary policy prescriptions were strictly activist.
D) monetary policy only had real effects in the long run.
E) economists did not understand the idea of sticky prices.
Q2) Studying alternative theories of how people form expectations is particularly relevant to monetary policy because:
A) if people fully expect inflation to occur, the effects of monetary policy are more widespread.
B) monetary policy can only have real effects on the economy if people fully expect inflation.
C) unexpected inflation cause prices to be flexible.
D) the effects of expected inflation are completely different from the effects of unexpected inflation.
E) expected inflation cause prices to become sticky.
Q3) Explain why workers have an incentive to expect a certain level of inflation.
Q4) Explain the theory behind the traditional short-run Phillips curve and draw the traditional short-run Phillips curve.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: International Trade
Available Study Resources on Quizplus for this Chatper
142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/38947
Sample Questions
Q1) Trade deficit is:
A) the sum of a nation's total exports and total imports.
B) the difference between a nation's total exports and total imports.
C) when a nation exports more than it imports.
D) when a nation imports more than it exports.
E) when a nation no longer feels it has the need for trade partners.
Q2) Which of the following trade agreements is a binding agreement to reduce trade barriers between 18 Asian nations?
A) World Trade Organization
B) Asia Pacific Economic Cooperation
C) North American Free Trade Agreement
D) European Union
E) Central America Free Trade Agreement
Q3) Spencer and Trevor produce cars and trucks.Spencer can produce 10 cars per hour and 5 trucks per hour.Trevor can produce 12 cars per hour and 4 trucks per hour.Who has the absolute advantage and comparative advantage in the production of cars and trucks?
Q4) List three trade-restrictive policies.
Q5) Would consumers benefit more from a tariff or a quota on imports?
Q6) What are some of the gains from trade?
Page 21
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: International Finance
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/38948
Sample Questions
Q1) Explain what is meant by derived demand,and discuss the importance of this concept to international trade.Describe another market with derived demand.
Q2) Between April 12,2008,and April 12,2013,the U.S.dollar appreciated against the:
A) Australian dollar.
B) Canadian dollar.
C) Swiss franc.
D) Japanese yen.
E) British pound.
Q3) An increase in imports,ceteris paribus,indicates:
A) economic weakness.
B) an increase in net exports.
C) an increase in unemployment.
D) a decrease in gross domestic product (GDP).
E) a decrease in the trade deficit.
Q4) Assuming a country is satisfied with its level of exports,why would a country still decide to peg its exchange rate to another currency,such as the U.S.dollar?
Q5) Why might a large capital account surplus be considered bad for an economy?
Q6) Why should a large trade deficit not necessarily be a cause for concern for an economy?
Page 22
To view all questions and flashcards with answers, click on the resource link above.