Foundations of Economics Question Bank
Course Introduction
Foundations of Economics introduces students to the fundamental principles underlying the field of economics, exploring both microeconomic and macroeconomic concepts. The course covers topics such as scarcity, opportunity cost, the role of markets, supply and demand, price determination, and the impact of government intervention. Students will examine how individuals and societies make choices regarding the allocation of limited resources, analyze the behavior of consumers and firms, and gain insight into broader economic issues like inflation, unemployment, and economic growth. Through theoretical frameworks and real-world examples, the course provides a solid basis for further study in economics and related disciplines.
Recommended Textbook
Essentials of Economics 9th Edition by Bradley R Schiller
Available Study Resources on Quizplus
17 Chapters
2470 Verified Questions
2470 Flashcards
Source URL: https://quizplus.com/study-set/3313 Page 2
Chapter 1: The Challenge of Economics
Available Study Resources on Quizplus for this Chatper
135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/65760
Sample Questions
Q1) Assuming the level of resources and technology are constant,if France decreases the size of its military,then:
A) Its' production possibilities curve will shift outward.
B) Its' production possibilities curve will shift inward.
C) Its' production of consumer goods can increase.
D) Its' production of consumer goods must decrease.
Answer: C
Q2) Assuming all parcels of land are the same,when all land is in use,one more unit of timber produced will require
A) Two more units of food produced
B) Five fewer units of food produced
C) One-half fewer units of food produced
D) Two fewer units of food produced
Answer: C
Q3) Which of the following explains why economic choices must be made?
A) The factors of production are scarce.
B) The factors of production are expensive.
C) The factors of production are used inefficiently.
D) The factors of production are of inferior quality.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: The US Economy
Available Study Resources on Quizplus for this Chatper
131 Verified Questions
131 Flashcards
Source URL: https://quizplus.com/quiz/65759
Sample Questions
Q1) A country's total output includes all of the following except:
A) Household consumption.
B) Business investment.
C) Imports.
D) Government services.
Answer: C
Q2) By definition,a progressive tax:
A) Generates greater tax revenues from the poor.
B) Imposes a higher tax rate as income increases.
C) Imposes a lower tax rate as income increases.
D) Implies that the same tax rate is paid at all income levels.
Answer: B
Q3) According to your textbook,which of the following spending categories ranks the contribution to GDP in correct order (from largest to smallest for the United States)?
A) Consumer goods,total government purchases,investment goods,exports.
B) Consumer goods,investment goods,total government purchases,exports.
C) Investment goods,consumer goods,total government purchases,exports.
D) Total government purchases,consumer goods,investment goods,exports.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Supply and Demand
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/65758
Sample Questions
Q1) If the market price is set at $25 per unit in Figure 3.3,there will be a:
A) Surplus of 4 units.
B) Surplus of 2 units.
C) Shortage of 4 units.
D) Shortage of 2 units.
Answer: A
Q2) Refer to Figure 3.1.Consider the market for new houses.The level of income increases for all consumers.
A) A
B) B
C) C
D) D
Answer: D
Q3) In a market economy,the _______ determines who gets the goods and services produced.
A) Magical hand
B) Market mechanism
C) Government
D) Stock market
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Consumer Demand
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/65757
Sample Questions
Q1) Market demand is the:
A) Sum of all individual demands for a product in a given time period.
B) Sum of all individual supply preferences.
C) Same thing as an individual's demand.
D) Satisfaction from consuming an additional unit of a gooD.
Q2) Which of the following is the best reason why we typically pay a relatively low price for water?
A) Additional units of water are normally not worth much to us.
B) Because water is abundant,the total utility we receive from water is relatively low.
C) Because water is abundant,the marginal utility we receive from water is relatively high.
D) Although additional units of water are normally worth a lot to us,the supply of water is so great we refuse to pay a high price for these additional units.
Q3) The law of demand states that:
A) The greater the number of buyers in a marker,the lower the price.
B) Price and quantity demanded are directly related.
C) The lower the cost the lower the price.
D) Price and quantity demanded are inversely relateD.
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Supply Decisions
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/65756
Sample Questions
Q1) In Table 5.5,the marginal cost of the first unit of output is:
A) $19.
B) $10.
C) $9.
D) $3.
Q2) If the first,second,third and forth worker employed by the firm add 15,21,12 and 8 units of total product respectively,we can conclude that:
A) The marginal product of all four workers is 14.
B) The total product of two workers is 42.
C) That after the second worker marginal product declines.
D) That adding a forth worker will cause total product to decline.
Q3) Which of the following is most likely a variable cost in the short run?
A) Labor
B) Property taxes
C) Rent
D) A business license
Q4) Profit is equal to total revenue minus total cost.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Competition
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/65755
Sample Questions
Q1) The goal of most business firms is to:
A) Maximize total revenue.
B) Maximize total profit.
C) Maximize both total revenue and total profit at the same time.
D) Produce as much output as possible.
Q2) Which of the following is a determinant of market supply but will not influence the marginal cost curve of an individual firm?
A) The price of factor inputs.
B) The number of firms in the market.
C) Improvements in technology.
D) The person's desires.
Q3) The price of a good multiplied by the quantity sold equals:
A) Total profit.
B) Total revenue.
C) Marginal revenue.
D) Marginal cost.
Q4) Competitive firms can earn an economic profit in the long run.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Monopoly
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/65754
Sample Questions
Q1) In Figure 7.2,the profit-maximizing level of output for a monopolist is:
A) 3 units.
B) 4 units.
C) Between 3 and 4 units.
D) Between 4 and 5 units.
Q2) Suppose a market is dominated by three firms.This type of market is called:
A) Perfect competition.
B) A monopoly.
C) Monopolistic competition.
D) An oligopoly.
Q3) Why does a monopolist demand curve lie above the marginal revenue curve whereas in a competitive market the demand curve and marginal revenue curve are equal? Would it be possible that the marginal revenue curve and demand curve could ever be the same for a monopolist?
Q4) A monopolist:
A) Maximizes profit at the output where price equals marginal cost.
B) Charges a higher price than a competitive firm,ceteris paribus.
C) Is a price taker since it has market power.
D) Cannot earn an economic profit in the long run.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: The Labor Market
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/65753
Sample Questions
Q1) In order to maintain an above-equilibrium wage for its members,a union must exclude some workers.
A)True
B)False
Q2) The supply curve for labor is upward sloping to the right because as wages _____,the quantity of _____ rises.
A) Rise;goods purchased
B) Fall;work required
C) Rise;labor supplied
D) Fall;labor demanded
Q3) If labor productivity rises,then wages:
A) Will decrease and the number of jobs will decrease.
B) Will decrease,but the number of jobs will not change.
C) Can increase without a decrease in the number of jobs.
D) Can increase,but only if the number of jobs decrease.
Q4) If it difficult to measure the MRP of a CEO,this means that the CEO should not be paid very much because he or she brings little value to the company.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Government Intervention
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/65752
Sample Questions
Q1) Which of the following is most likely to have social demand greater than market demand?
A) Health services
B) Cars
C) Housing
D) Cigarettes
Q2) The most desirable combination of output attainable with available resources,technology and social values is known as the:
A) Economic choice of output.
B) Efficient choice of production.
C) Preferred output choice.
D) Optimal mix of output.
Q3) Which of the following is not considered to be a source of market power for a firm?
A) A copyright.
B) Control of resources.
C) Efficiencies of large-scale production.
D) Antitrust laws.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: The Business Cycle
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/65751
Sample Questions
Q1) Alternating periods of growth and contraction in real GDP define:
A) The business cycle.
B) Capitalism.
C) Inflation.
D) Macro equilibrium.
Q2) If all prices and wages in the economy rise by the same percentage during the same time period,inflation does not cause a redistribution of income.
A)True
B)False
Q3) Business cycles in the United States:
A) Are similar in length but vary greatly in magnitude.
B) Vary greatly in length,frequency,and magnitude.
C) Are similar in frequency and magnitude.
D) Are similar in length and magnitude.
Q4) Nominal income:
A) Reflects the purchasing power of money.
B) Is income adjusted for inflation.
C) Is the amount of money income,measured in current dollars.
D) Is the amount of money income,measured in constant dollars.
Q5) Define a recession and the effects of recession on rate of growth.
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Aggregate Supply and Demand
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/65750
Sample Questions
Q1) Ceteris paribus,if the average price level falls,then the _____ effect will result in _____ in the purchases of goods and services.
A) Real balances;an increase
B) Foreign trade;a decrease
C) Interest rate;a decrease
D) Cost;an increase
Q2) In Figure 11.2,at what price level does equilibrium occur?
A) P<sub>1</sub>
B) P<sub>2</sub>
C) P<sub>3</sub>
D) P<sub>4</sub>
Q3) Keynesian theory became important when classical economic theory did not adequately explain a prolonged period of:
A) Inflation with low unemployment.
B) Inflation with high unemployment.
C) Deflation with low unemployment.
D) Deflation with high unemployment.
Q4) Explain Say's Law.What is meant by "supply creates its own demand?"
Q5) Discuss the various changing policy levers from 1960 through 2000.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/65749
Sample Questions
Q1) Government spending on goods and services plus income transfers are counted as part of aggregate demand.
A)True
B)False
Q2) Expenditure by households on final goods and services is referred to as:
A) Investment.
B) Disposable income.
C) Consumption.
D) Aggregate demand.
Q3) One News Wire article in the text says,"After years of living happily beyond their means,Americans are finally facing financial reality." Ceteris paribus,a decrease in consumer confidence will result in:
A) An increase in consumer spending.
B) A rightward shift of the aggregate demand curve.
C) An increase in the equilibrium price level.
D) A decrease in the equilibrium level of output.
Q4) Aggregate demand is a constant level and does not change as the price level changes.
A)True
B)False
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Money and Banks
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/65748
Sample Questions
Q1) If businesses and individuals decide to stop borrowing money,this can reduce money creation.
A)True
B)False
Q2) If total reserves for a bank are $10,000,excess reserves are zero,and demand deposits are $100,000,then the money multiplier must be:
A) 5.
B) 10.
C) 15.
D) 20.
Q3) If there is only one bank in an economy:
A) Reserves never leave the bank.
B) Transactions accounts equal bank reserves.
C) Loans equal bank reserves.
D) Loans equal transaction accounts.
Q4) The assets held by a bank to fulfill its deposit obligations are known as:
A) Excess reserves.
B) Bank reserves.
C) The reserve ratio.
D) The deposit ratio.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Monetary Policy
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/65747
Sample Questions
Q1) Discretionary policy calls for continual adjustments to the money supply and is associated with the monetarist perspective.
A)True
B)False
Q2) One News Wire article in the text has the title "Fed Cuts Key Interest Rate Half-Point to 1 Percent." The Fed has most likely reduced the:
A) Discount rate.
B) Rate for purchasing bonds in the open market.
C) Prime lending rate.
D) Rate for foreign exchange.
Q3) When the Fed makes bonds more or less attractive,it influences the:
A) Open market decision.
B) Money multiplier.
C) Portfolio decision.
D) Reserve decision.
Q4) If the Fed wants to increase the money supply,it should increase the discount rate. A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Economic Growth
Available Study Resources on Quizplus for this Chatper
131 Verified Questions
131 Flashcards
Source URL: https://quizplus.com/quiz/65746
Sample Questions
Q1) Additional capital contributes to economic growth by:
A) Replacing labor and increasing unemployment.
B) Enhancing labor productivity.
C) Replacing manufacturing industries with service industries.
D) Giving savers more money to put into investment.
Q2) GDP per capita is used to measure the standard of living.
A)True
B)False
Q3) Crowding out is most likely to occur when the federal government:
A) Runs a surplus and pays off part of the debt.
B) Balances the budget.
C) Runs a deficit and raises taxes to generate more revenue.
D) Runs a deficit and borrows money to finance its spending.
Q4) GDP per capita is:
A) Total GDP multiplied by total population.
B) Total GDP divided by total population.
C) Total output divided by total labor force.
D) The percentage change in real GDP from one period to another.
Q5) Compare the conflict between short-term profits and long-term productivity gains.
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Theory and Reality
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/65745
Sample Questions
Q1) Which of the following is the appropriate order of policy responses?
A) Design,recognition,impact,implementation.
B) Recognition,design,implementation,impact.
C) Design,implementation,recognition,impact.
D) Recognition,design,impact,implementation.
Q2) A cartoon in the text shows a man reading a newspaper.He says to another man "Which economist should we listen to today?" The cartoon depicts the concept that:
A) Economists are not necessary because they don't know what they are talking about.
B) Newspapers cannot accurately predict future economic situations.
C) Most economists approach macro failures with the same policy options.
D) Different macro theories provide different explanations and policy choices to address macro failures.
Q3) Which of the following is true about the U.S.economy during the 1970s?
A) It experienced low levels of inflation.
B) It experienced high employment levels.
C) It met the goal for economic growth each year.
D) It experienced two recessions.
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: International Trade
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/65744
Sample Questions
Q1) Specialization and trade:
A) Reduce consumption possibilities.
B) Increase the prices of goods.
C) Make workers lazy.
D) Increase the standard of living.
Q2) World output of goods and services increases with specialization because:
A) The world's resources are used more efficiently.
B) The production possibilities curve shifts outward for each country.
C) The workers in each country work fewer hours per week.
D) The infant industries in each country are protected.
Q3) The General Agreement on Tariffs and Trade (GATT):
A) Encouraged trade restrictions.
B) Committed GATT members to pursue free-trade policies.
C) Has not been effective in eliminating trade barriers.
D) Has eliminated all nontariff barriers to trade.
Q4) Exports account for approximately ___ percent of U.S.GDP.
A) 5
B) 9
C) 11
D) 25
To view all questions and flashcards with answers, click on the resource link above. Page 19