Introduction to Economics Practice Exam
Course Introduction
Introduction to Economics provides students with a foundational understanding of the principles governing individual, firm, and societal decision-making within the context of limited resources. The course examines fundamental concepts such as supply and demand, market equilibrium, opportunity cost, and the role of government in the economy. Through real-world examples and basic economic models, students will learn to analyze how markets function, how prices are determined, and how economic issues impact their daily lives and society at large. This course serves as a basis for further study in economics and related disciplines.
Recommended Textbook
Economics The Basics 2nd Edition by Michael Mandel
Available Study Resources on Quizplus
19 Chapters
1210 Verified Questions
1210 Flashcards
Source URL: https://quizplus.com/study-set/3247
Page 2
Chapter 1: Introduction
Available Study Resources on Quizplus for this Chatper
66 Verified Questions
66 Flashcards
Source URL: https://quizplus.com/quiz/64509
Sample Questions
Q1) The financial markets do NOT include which of the following?
A) Banks.
B) Stock markets.
C) Government regulatory agencies.
D) Nonprofit organizations.
Answer: D
Q2) Deregulation includes reducing governmental control over some aspects of private industry,while increasing control of others.
A)True
B)False
Answer: False
Q3) Globalization is the exchange of ________________ among countries.
A) e-mail
B) telephone calls
C) goods, services, ideas, and people
D) money
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Demand and Supply: The Basics of the Market Economy
Available Study Resources on Quizplus for this Chatper
65 Verified Questions
65 Flashcards
Source URL: https://quizplus.com/quiz/64508
Sample Questions
Q1) Households are generally buyers in the markets for products and sellers in ________ markets.
A) goods
B) service
C) natural resource
D) labor
Answer: D
Q2) A supply schedule illustrates the quantity supplied at A) various demand levels.
B) a single selling price.
C) different selling prices.
D) market equilibrium.
Answer: C
Q3) In contrast to the law of supply,sometimes ______ can reduce the quantity supplied.
A) an increased price
B) a market supply curve
C) a market demand curve
D) price negotiations
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Market Equilibrium and Shifts
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/64507
Sample Questions
Q1) To determine whether a particular good is a normal good,a luxury good,or an inferior good,you would want to observe what happens to demand for the good when __________ changes.
A) supply
B) price
C) the price of raw materials
D) income
Answer: D
Q2) Left to themselves,most markets will eventually reach market equilibrium.
A)True
B)False
Answer: True
Q3) A demand shift to the right generally leads to
A) higher prices and lower quantities.
B) lower prices and higher quantities.
C) higher prices and higher output.
D) lower prices and higher output.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: How Businesses Work
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/64506
Sample Questions
Q1) An example of variable costs is
A) rent on the building a business occupies.
B) loans on equipment purchased.
C) hourly labor.
D) insurance premiums to protect assets.
Q2) _____________ is the added revenue from producing and selling one more unit of output.
A) Added revenue
B) Marginal profit
C) Marginal cost
D) Marginal revenue
Q3) What word describes the money that a business pays for its inputs?
A) Cost.
B) Output.
C) Revenue.
D) Production.
Q4) Cost is what a business receives after subtracting expenses from revenue.
A)True
B)False
Q5) Explain how marginal product can be negative.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Competition and Market Power
Available Study Resources on Quizplus for this Chatper
65 Verified Questions
65 Flashcards
Source URL: https://quizplus.com/quiz/64505
Sample Questions
Q1) In a market where businesses are earning high profits,new entrants will cause the supply curve to shift to the _________ and the market price to _________.
A) left; rise
B) left; fall
C) right; rise
D) right; fall
Q2) Which of the following is NOT an example of a barrier to entry?
A) lower costs.
B) scarce land.
C) rare natural minerals.
D) heavy government regulations.
Q3) If music was perfectly competitive,then all performers would
A) charge the same price for concerts, but not necessarily play the same music.
B) play the same music, but not necessarily charge the same price for concerts.
C) play the same music and charge the same price for concerts.
D) produce a nonstandardized product.
Q4) Why does the government sometimes support a monopoly?
Q5) In perfect competition,all buyers and sellers are price takers.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Government and the Economy
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/64504
Sample Questions
Q1) What percentage of college students attends a publicly funded college or university?
A) 20%.
B) 75%.
C) 40%.
D) 30%.
Q2) In 1997 the FTC blocked the merger between Staples and Office Depot.Why was this merger blocked?
Q3) The Uniform Commercial Code governs
A) what can be broadcast on public airways.
B) commercial transactions between companies and consumers.
C) commercial transactions between the United States and foreign countries.
D) international commerce transactions.
Q4) The New Deal was a government outgrowth of World War I.
A)True
B)False
Q5) The private sector includes privately owned businesses and for-profit divisions of various governments.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: The First Step Into Macroeconomics
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/64503
Sample Questions
Q1) Gross domestic product (GDP)is the __________ of the total output of the economy in a given year.
A) quantity
B) physical volume
C) dollar value
D) physical weight
Q2) If gross domestic purchases are _________,then net exports are __________.
A) greater than gross domestic product; greater than net imports
B) equal to zero; also equal to zero
C) greater than gross domestic product; positive
D) less than gross domestic product; positive
Q3) What is included in government consumption and investment when calculating the GDP?
Q4) Which of the following describes an intermediate input?
A) A business-to-business sale where the product is used in the production process.
B) A business-to-consumer sale included in the GDP.
C) A wholesale transaction.
D) The production of a good that has not yet been sold or delivered.
Q5) What is macroeconomics?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Inflation
Available Study Resources on Quizplus for this Chatper
68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/64502
Sample Questions
Q1) Expected inflation is
A) the inflation rate that governments require from year to year.
B) the inflation rate that consumers and businesses expect will hold for some time in the future.
C) the inflation rate that is based on GDP growth.
D) the inflation rate minus the actual growth rate.
Q2) What is one way to avoid money illusion?
Q3) In the United States,inflation peaked around
A) 1980.
B) 1982-1984.
C) 1929.
D)1973.
Q4) As an example of hyperinflation,one U.S.dollar was equal to _________ German marks in 1923,compared to 8.9 marks in 1919.
A) 0.001
B) 1
C) 1,000
D) 1 trillion
Q5) What is a pure price change?
Q6) Explain how globalization has caused some goods to be cheaper.
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Growth
Available Study Resources on Quizplus for this Chatper
70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/64501
Sample Questions
Q1) If there is moderate growth,we have a zero-sum economy.
A)True
B)False
Q2) One essential force in the growth of human capital over the past several decades has been
A) The growth of Social Security.
B) The community college system.
C) The growth of Medicare.
D) The growth of Medicaid.
Q3) In a growing economy,__________ enjoy a rising standard of living.
A) both rich and poor
B) only the poor
C) only the rich
D) neither the rich nor the poor
Q4) The inputs used in the aggregate production function do not include which of the following?
A) Education and skill levels.
B) Knowledge.
C) Average price levels.
D) The number of workers in a country.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Business Cycles, unemployment and Inflation
Available Study Resources on Quizplus for this Chatper
66 Verified Questions
66 Flashcards
Source URL: https://quizplus.com/quiz/64500
Sample Questions
Q1) As the economy slows in a recession,the __________ schedules of most businesses shift to the __________.
A) supply; left
B) supply; right
C) demand; left
D) demand; right
Q2) If GDP is too high relative to potential GDP,which of the following happens?
A) Inflation rises.
B) A recession begins.
C) Deflation occurs.
D) Unemployment rises.
Q3) _________ are organized groups of workers that bargain collectively with employers.
A) Unions
B) Student councils
C) Aggregated labor groups
D) Amalgamations
Q4) How is it possible for output to be greater than potential GDP?
Q5) What is the definition of the output gap?
Q6) What are the definition and purpose of potential GDP?
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
65 Verified Questions
65 Flashcards
Source URL: https://quizplus.com/quiz/64499
Sample Questions
Q1) When higher taxes discourage whatever activity is being taxed,that is called
A) tax discouragement.
B) tax abatement.
C) the multiplier effect.
D) the negative incentive effect.
Q2) The overall increase in GDP that results from a $1 cut in taxes is called
A) The government spending effect.
B) The tax multiplier.
C) The fiscal multiplier.
D) The base multiplier.
Q3) As overseas leakage becomes greater,the multiplier effect
A) grows.
B) shrinks.
C) becomes more moderate.
D) is replaced with the incentive effect.
Q4) An increase in government spending can raise wages and prices in the short term.
A)True
B)False
Q5) What is the largest tax in the United States?
Q6) What is the multiplier effect?
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Monetary Policy
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/64498
Sample Questions
Q1) Why is it important that the central bank be independent,or insulated from changes in political power?
Q2) Generally,if the inflation rate is too high,the Federal Reserve will want to raise the federal funds rate.
A)True
B)False
Q3) If the Federal Reserve increases the federal funds rate dramatically,which of the following would we expect to happen?
A) The price of houses would increase.
B) The amount of credit card borrowing would increase.
C) The price of cars would decrease.
D) People with adjustable-rate mortgages would be better off.
Q4) One potential problem with having private currencies-such as "Bank of Sam" dollars and "Bank of Fred" dollars-is that it will be difficult for individuals to
A) compare Sam dollars to Fred dollars.
B) trade Sam dollars for Fred dollars.
C) discourage both Sam and Fred from inflating their currencies.
D) keep both Sam dollars and Fred dollars in their wallets.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: The Financial Markets
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/64497
Sample Questions
Q1) The supply curve for loans to high-risk borrowers is _________ the supply curve for loans to low-risk borrowers.
A) below
B) more elastic than C) to the right of D) to the left of
Q2) Splitting money across different investments (diversification)reduces risk but also reduces the rate of return,according to the risk-return principle.
A)True
B)False
Q3) Banks generally do NOT provide
A) Mortgages to individuals.
B) Consumer loans.
C) Venture capital funding.
D) Loans to well-established businesses.
Q4) Suppose the ABC Corporation had a stock price of $56.80 on December 31,2006.On December 30,2007,it has a stock price of $60.15.Over the year,it paid $2.00 in dividends per share.Calculate the total return of a share of ABC Corporation stock in 2007,showing your work.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: International Trade
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/64496
Sample Questions
Q1) The "infant industry" argument for protectionism says that new or small industries in a country are vulnerable and therefore should be protected with trade barriers until they have had an opportunity to grow large enough to compete effectively with their foreign rivals.
A)True
B)False
Q2) Which of the following statements is TRUE?
A) Imports from Britain become more expensive for U.S. customers when the dollar appreciates.
B) American exports become cheaper for the British when the dollar appreciates.
C) Imports from Britain become less expensive for U.S. customers when the dollar depreciates.
D) American exports become more expensive for the British when the dollar appreciates.
Q3) Who loses from expanding international trade? Does this mean that globalization is a bad idea overall?
Q4) What is the difference between absolute advantage and comparative advantage? Which one is most important for determining what a country will specialize in producing?
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: Technological Change
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/64495
Sample Questions
Q1) Suppose scientists figure out how to prevent strokes and heart attacks by using microscopic robots that enter the bloodstream and fix problems before they become serious.This could fit into two categories of innovation.They are
A) a quality-of-life innovation and a productivity-enhancing innovation.
B) the creation of new goods and services and a productivity-enhancing innovation.
C) the creation of new goods and services and a quality-of-life innovation.
D) a productivity-enhancing innovation and basic research.
Q2) Scientific investigations that have no immediately obvious commercial applications are called
A) basic research.
B) sterile research.
C) applied research.
D) diffused research.
Q3) Currently the main sources for basic research are
A) large corporations.
B) government and universities.
C) charitable organizations.
D) small businesses.
To view all questions and flashcards with answers, click on the resource link above.
17
Chapter 16: Economics of the Labor Market
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/64494
Sample Questions
Q1) If the labor force increases in size,which of the following would NOT occur?
A) The labor supply curve would shift to the right.
B) The equilibrium wage would fall.
C) The number of workers employed would rise.
D) The labor demand curve would shift to the right.
Q2) Why do college-educated workers get paid more than those without a college education? Provide at least two reasons,using economic reasoning.
Q3) If an extra worker allows a child care center to care for an extra nine children a week,the weekly price of child care per child is $200,and the other workers are all paid wages and benefits totaling $500 per week,then the marginal revenue of that additional worker is
A) $4,500 per week.
B) $2,700 per week.
C) $1,800 per week.
D) The answer cannot be determined from the information provided.
Q4) Suppose the government changes the tax code so that it is much simpler-there are fewer rules,fewer deductions,and fewer calculations to perform.Describe,using a supply and demand diagram,what would happen in the market for tax accountants.
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: The Distribution of Income
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/64493
Sample Questions
Q1) Increasing foreign trade has reduced income inequality because the market expansion effect increases the work opportunities and wages of low-skilled workers.
A)True
B)False
Q2) In the last two decades,women have completely closed the gender earnings gap.
A)True
B)False
Q3) What is the lowest value the 80/20 ratio can take?
A) -1.
B) 0.
C) 1.
D)100.
Q4) Under the current federal income tax laws,a person who has a high income is likely to
A) pay a larger percentage of income in taxes than the average taxpayer.
B) pay a smaller percentage of income in taxes than the average taxpayer.
C) receive a substantial benefit from the earned income tax credit.
D) spend a larger fraction of total income than a low-income taxpayer.
Q5) How has global trade affected income inequality? Explain briefly.
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Economics of Retirement and Healthcare
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/64492
Sample Questions
Q1) Which of the following statements about Social Security is true?
A) The Social Security program offers retirees retirement benefits for up to 20 years after retirement.
B) Social Security is funded with income tax revenues.
C) Social Security requires workers to contribute to an account that is held in their name at the Treasury and invested in government and highly rated private sector bonds.
D) Social Security transfers income from current workers to current retirees.
Q2) Describe the basic financial life cycle.How does the life cycle change with Social Security in the picture?
Q3) Economists talk about a four-legged stool of retirement income,which includes all of the following sources of income EXCEPT
A) individual savings.
B) funding provided by charitable organizations.
C) employer retirement plans.
D) Social Security benefits.
Q4) What problems with healthcare did President Obama attempt to address with the health insurance reform bill he signed in 2010,and how were those problems addressed?
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Economics of Energy, the Environment, and Global Climate Change Glossary
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/64491
Sample Questions
Q1) The "cap" in cap-and-trade refers to the
A) cap on pollution implied by the limited number of permits issued.
B) captain who oversees the reduction of pollution by businesses.
C) maximum number of pollution permits that any one business may use.
D) name of a specific piece of equipment that is used to reduce air pollution.
Q2) When electricity buyers and electric utility companies trade with one another,the electric utilities may generate electricity with a coal-burning power plant.This produces sulfur dioxide,nitrogen dioxide,particulates,and other air pollutants,which affect people who may not be among the buyers or sellers.This phenomenon is known as
A) a negative externality.
B) excess supply.
C) resource overuse.
D) mitigation.
Q3) Greenhouse gases arise from
A) the combustion of carbon-based fossil fuels.
B) the chemicals that are used in agriculture.
C) the use of toxic household cleansers.
D) rising global temperatures.
Q4) Describe the two main categories of responses to global climate change.
Page 21
To view all questions and flashcards with answers, click on the resource link above.