Introduction to Economics
Exam Materials
Course Introduction
Introduction to Economics offers a comprehensive overview of the fundamental principles governing economic behavior and decision-making. Students will explore the concepts of scarcity, opportunity cost, supply and demand, market structures, and the roles of government intervention in the economy. The course examines both microeconomic and macroeconomic perspectives, providing insights into how individuals, firms, and governments allocate limited resources, and how these decisions impact the broader economy. Through case studies and real-world examples, students will gain foundational analytical skills essential for understanding everyday economic phenomena and policy debates.
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) "Late registration will result in an additional $30 fee." This is an example of:
A)price gauging.
B)a disincentive.
C)marginal cost.
D)limited time pricing.
Answer: B
Q2) Households are vital to the circular flow model in what two ways?
A)They supply factors of production and purchase goods and services.
B)They export goods and services and import goods and services.
C)They vote for political officers and pay taxes.
D)They facilitate exchange between consumers and firms.
Answer: A
Q3) In the past,there was a strong correlation between ice cream consumption by children and polio cases for children.There was not a causal relationship due to:
A)an omitted variable.
B)reverse causality.
C)accounting fraud practiced by Baskin Robbins.
D)an infection present in cherries.
Answer: A
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Page 3
Chapter 2: Specialization and Exchange
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104 Flashcards
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Sample Questions
Q1) Suppose that,given the same number of workers,the United States can produce five times as many computers or 10 times as many airplanes as Mexico.Which of the following statements is true?
A)The United States has an absolute advantage in the production of computers,and Mexico has an absolute advantage in the production of airplanes.
B)The United States has an absolute advantage in the production of airplanes,and Mexico has an absolute advantage in the production of computers.
C)The United States has an absolute advantage in the production of both airplanes and computers.
D)Mexico has an absolute advantage in the production of both airplanes and computers.
Answer: C
Q2) The slope of a production possibilities frontier measures:
A)the opportunity cost of producing one good in terms of the other.
B)the trade-off inherent in the production of one good versus the other.
C)how much of one good that must be given up in order to produce the other.
D)All of these statements are true.
Answer: D
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Chapter 3: Markets
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Sample Questions
Q1) The latest news report stated that the housing market is making a comeback and that house prices are on the rise.This information is likely to:
A)increase demand for houses now due to a change in expectations of future prices.
B)decrease demand for houses now due to a change in expectations of future prices.
C)have no effect on the current housing market,but will increase demand in the future.
D)have no effect on the current demand for housing,but will decrease current supply.
Answer: A
Q2) A nonprice determinant of demand refers to:
A)something that affects the price other than demand.
B)something that affects demand other than the price.
C)something that determines how large a role prices play in the demand decision.
D)something that determines how prices are affected by income.
Answer: B
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Chapter 4: Elasticity
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Sample Questions
Q1) A price increase will cause an increase in revenue:
A)when the price effect outweighs the quantity effect.
B)when the quantity effect outweighs the price effect.
C)when demand is perfectly elastic.
D)when demand is unit elastic.
Q2) A decrease in price:
A)causes a decrease in revenue due to the quantity effect.
B)causes an increase in revenue due to the price effect.
C)does not necessarily have to experience a quantity effect when the demand curve is downward sloping.
D)None of these is true.
Q3) A subway ride is ___________________ than a car because ___________________.
A)less price elastic;it is a smaller portion of one's income
B)more price elastic;it is a smaller portion of one's income
C)less price elastic;people will have a longer time to adjust to the change in its price
D)more price elastic;people will have a longer time to adjust to the change in its 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 $11:
A)total producer surplus would fall by $4.
B)producer surplus for each producer falls by $4.
C)House Depot's producer surplus falls by $4.
D)total producer surplus falls by $8.
Q2) What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?
A)$0
B)$35
C)($35 x P*)
D)None of these is correct.
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Page 7
Chapter 6: Government Intervention
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Sample Questions
Q1) An unintended consequence of price ceilings is:
A)non-price rationing must occur,and can lead to bribes.
B)the loss of surplus always outweighs the benefits of the policy.
C)the transfer of surplus from producer to consumer rarely is recognized.
D)None of these is correct.
Q2) A tax wedge:
A)refers to the difference in the price the buyer pays and the price the sellers keep.
B)only occurs in markets when the tax is placed on sellers.
C)only occurs in markets when the tax is placed on buyers.
D)only occurs in markets when taxes are placed on large corporations.
Q3) In general,price controls have a:
A)larger effect in the long run because demand and supply become more elastic over time.
B)larger effect in the short run since demand and supply become more elastic over time.
C)smaller effect in the long run since demand and supply become less elastic over time.
D)smaller effect in the short run because demand and supply become less elastic over time.
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Page 8
Chapter 7: Consumer Behavior
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Sample Questions
Q1) Ethan enjoys buying books and going to the movies.He has income of $150 to spend on these two goods each month.The price of a book is $15 and the price of going to the movies is also $15.He currently consumes four books and six movies a month.If the price of a book increases to $20,then:
A)the substitution and income effects would both predict Ethan would consume more of both goods.
B)the substitution and income effects would both predict Ethan would consume less of both goods.
C)the substitution effect would predict Ethan would consume more books and less movies,and the income effect would predict he would consume less of both.
D)the substitution effect would predict Ethan would consume less books and more movies and the income effect would predict he would consume less of both.
Q2) Utility is:
A)at the heart of all microeconomic thinking.
B)a way of describing the value that a person places on something.
C)what drives decision making in individuals.
D)All of these are true.
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Page 9
Chapter 8: Behavioral Economics: A Closer Look at Decision Making
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Sample Questions
Q1) Buddy has $2000 in a checking account and wants to buy a new Macbook for $1100.Buddy decides he needs the money in his account to pay his bills next month and so puts the $1100 on his credit card and pays it off gradually over the next several months.Buddy choosing to "save" his cash on hand for everyday expenses is:
A)irrational,since money is fungible.
B)rational,since Buddy can now pay all his bills with a small credit card payment each month.
C)going to make Buddy wealthier in the long run.
D)rational,since he has his new computer and has money in the bank.
Q2) A consumer is likely to _____________ his opportunity costs when
A)undervalue;they are not right in front of him
B)undervalue;they are obvious
C)overvalue;they are not obvious
D)overvalue;they are right in front of him
Q3) Which of the following is an example of a fungible commodity?
A)Picasso paintings
B)Houses
C)Live concerts
D)None of these is a fungible commodity.
Page 10
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Chapter 9: Game Theory and Strategic Thinking
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101 Flashcards
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Sample Questions
Q1) Economists call a game that is played more than once:
A)a repeated game.
B)collusion.
C)a commitment strategy.
D)cooperative price play.
Q2) Which of the following is a subtle way for a company to reassure their competitors that they are committed to a tit-for-tat strategy?
A)Price matching guarantees
B)Setting prices below cost
C)Collusion
D)Offering a commitment strategy
Q3) In real life,people's behavior is constrained by:
A)laws of nature.
B)legislated rules of society.
C)laws that define industry structure.
D)All of these are rules that constrain people's behavior.
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Chapter 10: Information
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Taking action to reveal one's own private information is called:
A)screening.
B)signaling.
C)statistical discrimination.
D)proofing.
Q2) The presence of adverse selection:
A)reduces the efficiency of markets.
B)increases the efficiency of markets.
C)does not affect the efficiency of markets.
D)makes the buyer less efficient and the seller more efficient.
Q3) An example of a market subject to adverse selection would be:
A)the used car market.
B)the auto repair market.
C)the appliance market.
D)All of these are markets subject to adverse selection.
Q4) An employer asking potential employees to interview with them is an example of:
A)signaling.
B)screening.
C)statistical discrimination.
D)building a reputation.
Page 12
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Chapter 11: Time and Uncertainty
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120 Flashcards
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Sample Questions
Q1) The interest rate:
A)is expressed as a percentage per dollar borrowed and per unit of time.
B)tells us how much less money is worth today than in the future.
C)exists only because lending is risky.
D)All of these statements are true.
Q2) A risk-seeker is likely to:
A)buy a government bond instead of a stock.
B)put money in a savings account instead of investing in a start-up company.
C)invest in a start-up company instead of putting his money under his mattress.
D)put his money under his mattress instead of buying company stock.
Q3) Risk aversion:
A)is the same for everyone.
B)is an unusual type of preference.
C)is an aspect of an individual's preferences.
D)All of these statements are true.
Q4) Risk pooling:
A)doesn't reduce the risk of catastrophes happening to individuals.
B)assures the individuals that they are less likely to have a catastrophe occur.
C)reduces the risk of catastrophes happening collectively to groups.
D)None of these statements is true.
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Chapter 12: The Costs of Production
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Sample Questions
Q1) Average total cost:
A)decreases when output levels are low,then increases as output increases.
B)increases when output levels are low,then decreases as output decreases.
C)is minimized when it equals average variable cost.
D)is maximized when it equals marginal cost.
Q2) Profit is the:
A)total revenue minus total cost.
B)sum of total revenue and total cost.
C)total cost minus total revenue.
D)None of these is true.
Q3) The marginal product of any input into the production process:
A)is the increase in output that is generated by an additional unit of input.
B)is the decrease in input that is generated by an additional unit of output.
C)is the constant ratio of inputs to outputs.
D)None of these is true.
Q4) The long run:
A)depends on the type of firm and type of production being considered.
B)is defined as however long it would take a firm to vary all of its costs.
C)is longer in industries that take longer to make adjustments in input levels.
D)All of these are true.
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Chapter 13: Perfect Competition
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Sample Questions
Q1) Perfectly competitive markets:
A)are more an idealized model economists use than a real-life occurrence.
B)are the most common type of market in the United States.
C)tend to have relatively few buyers.
D)tend to have relatively few sellers.
Q2) In the long run,firms will enter a perfectly competitive market if the existing firms are making:
A)a profit.
B)negative profits.
C)zero profits.
D)Any of these could be true.
Q3) Each point of a firm's supply curve represents a price-quantity pair where:
A)MC = MR.
B)P = min ATC.
C)P = min AVC.
D)MC = ATC.
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15
Chapter 14: Monopoly
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Sample Questions
Q1) One of the reasons why monopolies exist is:
A)there are barriers to entry into the market.
B)there is easy entry and exit into and out of the market.
C)the goods sold are highly inaccessible to buyers.
D)geographical differences.
Q2) At any quantity of output above the intersection of the marginal revenue and marginal cost curves:
A)MR is higher than MC.
B)ATC is lower than AVC.
C)MC is higher than ATC.
D)None of these statements is true.
Q3) The profit-maximizing decision for the monopoly is:
A)to choose the quantity where marginal cost equals marginal revenue.
B)the same as that of the perfectly competitive firm.
C)to choose price according to demand.
D)All of these statements are true.
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Chapter 15: Monopolistic Competition and Oligopoly
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Sample Questions
Q1) A large difference between a monopolistically competitive firm and a monopoly is:
A)the ability for competition to enter the market in the long run.
B)the ability for competition to enter the market in the short run.
C)only the monopolistically competitive firm is a price taker.
D)only the monopolist can set his price equal to demand.
Q2) If a firm in a monopolistically competitive market has a demand curve shifting to the right,it is likely that:
A)positive economic profits are being earned.
B)firms are entering the market.
C)the selling price is less than the average total cost of the firm.
D)All of these statements are true.
Q3) If a monopolistically competitive firm is suffering losses in the short run:
A)the exit of competing firms will shift the firm's demand to the right.
B)the exit of competing firms will shift the firm's demand to the left.
C)the exit of competing firms will cause price to drop,but not affect the firm's demand curve.
D)the exit of competing firms will cause price to rise,but not affect the firm's demand curve.
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17
Chapter 16: The Factors of Production
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Sample Questions
Q1) A profit-seeking firm will choose the combination of inputs that maximizes profit,based on the:
A)local price of each factor of production.
B)ratio of each factor of production.
C)substitutability of each factor of production.
D)All of these statements are true.
Q2) If the U.S.experiences an enormous surge of immigration,we could predict it would make the labor:
A)supply increase and shift to the right.
B)supply decrease and shift to the right.
C)supply increase and shift to the left.
D)supply decrease and shift to the left.
Q3) In general,the larger the membership of a union:
A)the more power it has to keep wages above equilibrium.
B)the less power it has to keep wages above equilibrium.
C)the more likely the distribution of power within the organization will make it less effective.
D)None of these statements is true.
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18
Chapter 17: International Trade
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Sample Questions
Q1) If Japan has an absolute advantage over the United States in making TVs,it means:
A)Japan probably sells TVs to the United States.
B)Japan is more productive at making TVs than the United States,when both countries use the same quantity of resources in TV production.
C)Japan has the ability to produce TVs at a lower opportunity cost than the United States.
D)None of these is true.
Q2) A common tool for restricting trade is:
A)a quota.
B)a tariff.
C)lengthening the import paperwork process.
D)All of these would restrict trade.
Q3) Laws limiting trade are often referred to as:
A)trade protection.
B)trade liberalization.
C)trade enhancement.
D)international policy.
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Page 19
Chapter 18: Externalities
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Sample Questions
Q1) When we add private benefits and external benefits together,the result is called:
A)production benefits.
B)social benefits.
C)public costs.
D)network benefits.
Q2) If a Pigovian tax is levied on consumers,the demand curve will shift:
A)straight down,decreasing quantity.
B)straight up,decreasing quantity.
C)straight down,increasing quantity.
D)straight up,increasing quantity.
Q3) All externalities:
A)are harmful to society and create costs external to the decision maker.
B)are beneficial to society and create benefits external to the decision maker.
C)create either a cost or benefit to a person other than the person who caused it.
D)are addressed by the government through taxation.
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Chapter 19: Public Goods and Common Resources
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Sample Questions
Q1) An example of a public good that is difficult to make excludable is:
A)toll roads.
B)city buses.
C)state universities.
D)None of these is a nonexcludable public good.
Q2) The free rider problem is triggered when a good is ______________,and the tragedy of the commons arises when a good is ________________
A)nonexcludable;both rivalrous and nonexcludable.
B)rivalrous;both rivalrous and nonexcludable.
C)both rivalrous and nonexcludable;rivalrous.
D)both rivalrous and nonexcludable;excludable.
Q3) One way the government decides how to pay for a public good is:
A)if they can make the good excludable and charge its users.
B)the ease of collecting payout.
C)the transfer of surplus.
D)All of these are ways the government allocates payment of public goods.
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21
Chapter 20: Taxation and the Public Budget
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Sample Questions
Q1) The market for cigarettes likely has a:
A)highly inelastic demand.
B)highly elastic demand.
C)slightly elastic demand.
D)slightly inelastic demand.
Q2) The administrative burden of taxes is:
A)smallest with a lump-sum tax.
B)the same if the revenue generated is the same for any kind of tax.
C)smaller the larger the amount of the tax.
D)None of these statements is true.
Q3) The taxes used to pay for Social Security and Medicare are:
A)payroll taxes.
B)income taxes.
C)sales taxes.
D)corporate income taxes.
Q4) A tax in an efficient market:
A)increases efficiency.
B)decreases total surplus.
C)maximizes total surplus.
D)often fails to generate revenue.
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Chapter 21: Poverty, Inequality, and Discrimination
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Sample Questions
Q1) Some say in-kind transfers are inefficient because:
A)cash transfers allows utility-maximizing individuals to make the best decision about items they need.
B)some of them get traded in a secondary market,implying inefficient distribution.
C)it's not what most people want.
D)everyone always prefers cash to goods and services.
Q2) Income mobility is:
A)the ability to improve one's economic circumstances over time.
B)how much income is stored in offshore banks.
C)how likely the income associated with each job in the country will change in relative terms.
D)how likely the income associated with each job in the country will increase over time.
Q3) Today the greatest number of poor is _________ Americans,but the poverty rate for __________ is higher.
A)white;black and Hispanic
B)black;white
C)black;Hispanic
D)white;Hispanic
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Chapter 22: Political Choices
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Sample Questions
Q1) The Condorcet paradox is a situation in which the preferences of each individual member of a group are ___________,and the collective preferences of the group are
A)transitive;not transitive
B)not transitive;not transitive
C)transitive;transitive
D)not transitive;transitive
Q2) When a group of people stand to gain from an action that is not rational for any of the members to undertake individually,it is referred to as a:
A)collective-action problem.
B)free-rider problem.
C)moral hazard problem.
D)societal-wellbeing problem.
Q3) Compared to two-party systems,proportional-representation systems are thought to:
A)lead to more centrist policies.
B)offer a wider variety of platforms among which voters can choose.
C)create unwieldy combinations of policies within one platform.
D)All of these are true.
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Page 24
Chapter 23: Public Policy and Choice Architecture
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Sample Questions
Q1) The success of the SMarT program has proven that changing the way we present options can:
A)affect people's behavior.
B)help them overcome mental biases.
C)avoid regret.
D)All of these statements are true.
Q2) The Save More Tomorrow (SMarT)program found that:
A)people want to save more than they typically do.
B)participants quadrupled their savings in just a couple of years.
C)if the default choice is to save a portion of income,people will save more.
D)All of these statements are true.
Q3) Behavioral economists accept that people ___________ their well-being but sometimes ________________.
A)try to maximize;make mistakes
B)try to minimize;maximize it
C)try to maximize;maximize their bad choices
D)None of these statements is true.
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25
Chapter 24: Measuring the Wealth of Nations
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Sample Questions
Q1) A recession is characterized by:
A)a period of significant decline in economic activity.
B)falling GDP.
C)increasing unemployment.
D)All of these statements are true.
Q2) When maximizing economic growth is a country's goal:
A)it may work in opposition to the country's happiness in terms of satisfaction gained from leisure.
B)it increases the correlation to the country's happiness,because more money makes people happier.
C)it creates a perfect correlation to happiness,if the money is allocated fairly.
D)None of these statements is true.
Q3) The many goods and services that are sold below the radar,outside of official records take place in the:
A)underground economy.
B)soft market.
C)illegal economy.
D)None of these statements is true.
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26
Chapter 25: The Cost of Living
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Sample Questions
Q1) Just as indexing allows us to compare the cost of living across different periods of time,the ____________ is used to allow us to compare the cost of living across different locations.
A)consumer purchasing index
B)purchasing power index
C)producer purchasing index
D)retail power parity
Q2) The real value of any variable is:
A)its nominal value adjusted for inflation.
B)its nominal value holding the base constant.
C)its nominal value holding the quantity constant.
D)its nominal value hold the basket constant.
Q3) The price index that measures the prices of goods and services purchased by firms is called the:
A)PPI.
B)CPI.
C)RPI.
D)PRI.
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Chapter 26: Economic Growth
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Sample Questions
Q1) If a country has a high level of income,it likely has:
A)a highly productive work force.
B)widespread access to technology.
C)high levels of physical capital.
D)All of these are true.
Q2) Which of the following is not an example of human capital investment?
A)A leadership training course
B)A bachelor's degree
C)Software with spell-check included
D)All of these are examples of human capital investment.
Q3) Domestic savings:
A)is equal to domestic income minus consumption spending.
B)comes from private households spending less than they earn.
C)occurs when government revenues exceed noncapital expenditures.
D)All of these are true.
Q4) Which of the following is considered a nonrenewable resource?
A)Natural gas
B)Sunlight
C)Rivers
D)Wind
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Chapter 27: Unemployment and the Demand for Labor
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Sample Questions
Q1) We would expect that policies to protect workers would:
A)lead to greater unemployment.
B)lead to less unemployment.
C)have no impact on unemployment.
D)affect those seasonally unemployed more profoundly than other unemployed workers.
Q2) When growth goes down,unemployment tends to go:
A)up shortly after,and vice versa.
B)down shortly after,and vice versa.
C)up at the same time,and vice versa.
D)up at the same time,but remains sticky on the way down and lags behind.
Q3) Cyclical unemployment:
A)is unemployment caused by short-term economic fluctuations reflected in GDP growth.
B)is unemployment that results from a mismatch between the skills workers can offer and the skills that are in demand.
C)is unemployment caused by workers who are changing their location,job,or career.
D)is the effect of wages remaining persistently above the market-clearing level.
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Chapter 28: Aggregate Demand and Aggregate Supply
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Sample Questions
Q1) The aggregate demand curve slopes:
A)downward,like individual supply curves.
B)downward,like individual demand curves.
C)upward,like individual supply curves.
D)upward,like individual demand curves.
Q2) Which of the following is a component of aggregate demand?
A)Net exports
B)Income
C)Government revenues
D)All of these are components of aggregate demand.
Q3) The long-run aggregate supply curve represents:
A)potential output in the economy.
B)the level of output possible if the economy is operating at full capacity.
C)a production function for the entire economy.
D)All of these are true.
Q4) When the U.S.price level decreases,we would expect:
A)a movement down along the aggregate demand curve.
B)a shift straight up of the aggregate demand curve.
C)a shift to the right of the aggregate demand curve.
D)None of these is true.
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Chapter 29: Fiscal Policy
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Sample Questions
Q1) A budget surplus is:
A)the amount of money a government spends beyond the net revenue it brings in.
B)the amount of net revenue a government brings in beyond what it spends.
C)the total amount of money that a government owes.
D)the total amount of money that a government is owed.
Q2) If the marginal propensity to consume was 0.75,it would mean that:
A)$0.75 of an additional $1 of individuals' after-tax income is spent on consumption.
B)$0.75 of an additional $1 of individuals' after-tax income is saved.
C)$0.25 of an additional $1 of individuals' after-tax income is spent on consumption.
D)None of these is true.
Q3) If the government increases the income tax rate,consumers:
A)have less to spend and will reduce their consumption.
B)have more to spend and will reduce their consumption.
C)have less to spend and will increase their consumption.
D)have more to spend and will increase their consumption.
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Chapter 30: The Basics of Finance
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Sample Questions
Q1) Institutions that channel funds from people who have them to people who want them are called:
A)financial intermediaries.
B)banks.
C)the Federal Reserve.
D)All of these are true.
Q2) A determinant of the supply of loanable funds is:
A)current economic conditions.
B)wealth.
C)culture.
D)All of these are determinants of the supply of loanable funds.
Q3) If Jen takes out a $2,000 loan for one year at 10 percent interest annually,the price she will pay for borrowing is:
A)$2,000.
B)$2,200.
C)$200.
D)$2,400.
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Chapter 31: Money and the Monetary System
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Sample Questions
Q1) When goods that have intrinsic value are used as money,if their value as money falls,the good:
A)is still useful to people for other reasons.
B)loses its intrinsic value.
C)is no longer useful to people for other reasons.
D)tends to gain in intrinsic value.
Q2) Modern banks in the United States can keep reserves as:
A)commodity money only.
B)a deposit at the Federal Reserve.
C)gold.
D)All of these are ways banks hold reserves.
Q3) The definition of M2 includes:
A)cash and checking account balances.
B)hard money and savings account balances.
C)cash,checking account,and savings account balances.
D)cash,checking accounts,savings accounts,and other financial instruments where money is locked away for a specified period of time.
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33
Chapter 32: Inflation
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Sample Questions
Q1) When an economy experiences deflation,consumption:
A)will decrease,because people will want to wait for prices to drop before spending.
B)will increase,because people will want to wait for prices to drop before spending.
C)will decrease,because people will lose value in their savings.
D)will increase,because people will lose value in their savings.
Q2) If the nominal interest rate is higher than the inflation rate,the value of your savings:
A)will increase.
B)will decrease.
C)should remain about the same.
D)Cannot say without knowing the beginning balance of savings.
Q3) In order to calculate the real interest rate,simply:
A)add the rate of inflation to the nominal interest rate.
B)subtract the rate of inflation from the nominal interest rate.
C)subtract the nominal interest rate from the rate of inflation.
D)divide the nominal interest earned by the rate of inflation.
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Chapter 33: Financial Crisis
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Sample Questions
Q1) From 1922 to 1929,the total value of the stock market:
A)more than tripled.
B)decreased by nearly 50 percent.
C)decreased by nearly 90 percent.
D)more than quadrupled.
Q2) When the Fed injected newly made money into the economy by buying bonds,it:
A)was practicing quantitative easing.
B)was trying to avoid a deflationary period similar to Japan.
C)inserted over $1 trillion of new money into the economy.
D)All of these statements are true.
Q3) The decrease in consumer spending that occurred after the collapse of the housing bubble caused:
A)aggregate demand to increase.
B)aggregate demand to decrease.
C)aggregate supply to increase.
D)aggregate supply to decrease.
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Chapter 34: Open-Market Macroeconomics
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Q1) When interest rates in the U.S.increase,we can expect:
A)NCO to decrease,because capital inflow is increasing.
B)NCO to increase,because capital inflow is increasing.
C)NCO to decrease,because capital outflow is increasing.
D)NCO to increase,because capital outflow is increasing.
Q2) When the Fed decides to enact expansionary monetary policy,the supply of loanable funds:
A)increases,while the demand for loanable funds decreases.
B)decreases,while the demand for loanable funds increases.
C)and the demand for loanable funds both decrease.
D)and the demand for loanable funds both increase.
Q3) The value of exports minus the value of imports is called the:
A)trade value.
B)net trade balance.
C)balance of trade.
D)net trade value.
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Chapter 35: Development Economics
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Sample Questions
Q1) Economic development is:
A)about the quality of life for all sectors of society.
B)an indicator of individual poverty.
C)a measurement of available resources.
D)about increases in real GDP.
Q2) Recently,many Asian countries have:
A)supported export-led growth instead of import substitution policies.
B)supported import substitution policies instead of export-led growth.
C)been extremely successful in their attempts at industrial clustering.
D)failed in their attempts at industrial clustering.
Q3) An example of a tool a government might use to pursue industrial policy would be:
A)incentives for foreign direct investment.
B)tax breaks.
C)investment in research.
D)All of these statements are true.
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