Introduction to Economics Question Bank
Course Introduction
Introduction to Economics provides a foundational understanding of the principles that govern economic activity at both individual and societal levels. The course explores basic concepts such as supply and demand, market structures, consumer behavior, and the roles of governmental policy in influencing economic outcomes. Students will learn how economies address issues of scarcity, resource allocation, and production, and how economic agents make decisions. Emphasis is placed on both microeconomic and macroeconomic perspectives to equip students with the analytical tools necessary for interpreting real-world economic events and trends.
Recommended Textbook
Fundamentals of Economics 6th Edition by William Boyes
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18 Chapters
2262 Verified Questions
2262 Flashcards
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Page 2
Chapter 1: Economics and the World Around You
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110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/28532
Sample Questions
Q1) Which of the following is an example of capital?
A) Education
B) Natural resources
C) Machinery
D) Training
E) Money
Answer: C
Q2) The opportunity cost of going to the movies is always the same for everyone.
A)True
B)False
Answer: False
Q3) According to the data in Table 1.1, the opportunity cost of a cookie in Iowa is
A) 8 chilies.
B) 96 chilies.
C) 1/8 chili.
D) less than in Ohio.
E) the same as in Ohio.
Answer: A
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Chapter 2: Markets and the Market Process
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) According to the law of supply, if the price of calculators decreased, the supply of calculators would decrease, everything else held constant.
A)True
B)False
Answer: False
Q2) According to the data in Table 2.2, the market supply of bread is given by what quantities corresponding to $5, $4, $3, $2, $1?
A) 102, 84, 66, 48, 30
B) 60, 50, 40, 30, 20
C) 42, 34, 26, 18, 10
D) 90, 75, 60, 45, 30
E) 30, 25, 20, 15, 10
Answer: A
Q3) The development of a low-cost synthetic fuel is expected to affect the market for crude oil and cause a decrease in the price of oil.
A)True
B)False
Answer: True
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4
Chapter 3: Applications of Demand and Supply
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) A price floor is a situation where the
A) price is not allowed to rise above a certain level.
B) price is not allowed to fall below a certain level.
C) price is not allowed to change.
D) quantity is not allowed to fall below a certain level.
E) quantity is not allowed to rise above a certain level.
Answer: B
Q2) The more restrictive the quota, the lower the impact on price in the market.
A)True
B)False
Answer: False
Q3) In Figure 3.4, if the wage rate in market A and market B were set at $15, then
A) there would be a shortage of workers in both markets.
B) there would be a surplus of workers in both markets.
C) there would be a shortage of workers in market A and a surplus of workers in market B.
D) there would be a shortage of workers in market B and a surplus of workers in market A.
E) the market as a whole would be in equilibrium.
Answer: C
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Chapter 4: The Firm and the Consumer
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Airlines now charge passengers for checking luggage, and for food and blankets in flight. Airlines must have determined that demand for these items is
A) elastic.
B) inelastic.
C) unit elastic.
D) perfectly elastic.
E) perfectly inelastic.
Q2) Teddy's Burgers decreased the price of their hamburgers by 25 cents, and sold 100 more hamburgers each day. It can be concluded that Teddy's Burgers has a(n) ____ demand for its burgers.
A) inelastic
B) elastic
C) unit elastic
D) perfectly elastic
E) Nothing can be concluded about elasticity for Teddy's Burgers.
Q3) The price elasticity of demand depends on how readily and easily consumers can switch their purchases from one product to another.
A)True
B)False
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Page 6
Chapter 5: Costs and Profit Maximization
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) The existence of economic profits in a competitive market
A) will attract competitors.
B) is usually against the law.
C) allows firms to create monopolies.
D) results in normality.
E) increases negative economic net worth.
Q2) In Figure 5.1 the firm is maximizing profit at a quantity of A) 10.
B) 35.
C) 50.
D) 75.
E) 90.
Q3) When Ford Motor Company reports that it earned a loss of $100 million for the fourth quarter of 2007, the firm is A) reporting economic profit.
B) reporting normal profit.
C) earning a negative economic profit of more than $100 million.
D) earning positive economic profit.
E) earning normal accounting profit.
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Page 7
Chapter 6: Competition
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) If a firm can limit competition, it will likely be able to charge higher prices.
A)True
B)False
Q2) When increasing size leads to lower per unit costs, we say there are diseconomies of scale.
A)True
B)False
Q3) Businesses would rather produce commodities than differentiated products.
A)True
B)False
Q4) A price taker is
A) an individual seller in a commodity market
B) a monopoly firm
C) the electric company as their rates are set by the Public Utilities Commission
D) a firm that has a brand name
E) a firm that enjoys positive economic profits
Q5) Significant barriers to entry exist in monopolistically competitive markets.
A)True
B)False
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Chapter 7: Business, Society, and the Government
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) Several politicians have proposed a "guzzler" tax that would be added to the cost of few-miles-per-gallon vehicles. If enacted, this tax would most likely
A) reduce the equilibrium price.
B) increase the equilibrium output.
C) increase U.S. dependency on foreign oil supplies.
D) shift the supply curve (for automobiles) inward.
E) do all of these.
Q2) Selling products below cost to drive competitors out of a market is called predatory lending.
A)True
B)False
Q3) The goal of a business is not to benefit society.
A)True
B)False
Q4) The private costs of a good that create a negative externality are equal to the social costs plus the externality.
A)True
B)False
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Chapter 8: Government Intervention Versus Free Markets
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) In the market for a nonrenewable natural resources,
A) supply will decrease with decreases in the accessibility of the resource.
B) the supply curve is negatively sloped, reflecting the fact that there is a limited quantity available.
C) the equilibrium price is likely to decrease with reductions in the accessibility of the resource.
D) demand is a relationship identifying the willingness of resource owners to extract the resource from its natural state.
E) technological advances that lower the cost of extracting the resource have a tendency to increase the equilibrium price.
Q2) What is the main reason many economists do not believe in or trust the free market?
A) the speed with which a free market adjusts to changes
B) market failures
C) special interest groups influence politicians
D) natural resources are over-used
E) statistical discrimination is costly
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Chapter 9: An Overview of the National and International Economies
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) A trade deficit arises because
A) inflows of goods and services from foreign countries are less than outflows of goods and services from the domestic country.
B) net exports are positive.
C) exports exceed imports.
D) imports exceed exports.
E) net imports are negative.
Q2) Which of the following does not constitute a consumption item?
A) A Toyota Prius
B) A calculator
C) An iPad
D) A tractor
E) All of these are consumption items
Q3) An import constitutes a
A) purchase of goods and services from another country.
B) business transaction between domestic firms.
C) sale of goods and services to another country.
D) tariff on foreign merchandise.
E) trade agreement between two industrial countries.
Page 11
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Chapter 10: Macroeconomic Measures
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) If the U.S. dollar appreciates against the Japanese yen, then
A) it takes fewer Japanese yen to buy one dollar.
B) Japanese products are less expensive to U.S. residents.
C) the Japanese yen has also appreciated against the U.S. dollar.
D) the prices of U.S. imports from Japan are more expensive.
E) it takes more U.S. dollars to buy a given amount of Japanese yen.
Q2) If the prices of all goods and services never changed, nominal and real GDP would always be the same.
A)True
B)False
Q3) Which of the following will count in this year's GDP?
A) The value of a house built last year
B) The real estate broker's fee on the sale of the house this year
C) The value of a new Toshiba built-in home theatre system installed to help sell the house
D) All of these would be counted in this year's GDP.
E) All of these would not be counted in this year's GDP.
Q4) The GDP underestimates the value of the nation's output.
A)True
B)False
Page 12
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Chapter 11: Unemployment, Inflation, and Business Cycles
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) When there is a rise in the volume of economic activity, the economy has reached a trough.
A)True
B)False
Q2) The natural rate of unemployment describes the labor market when the economy is producing what it realistically can produce in the absence of ____ unemployment.
A) seasonal
B) frictional
C) static
D) structural
E) cyclical
Q3) During the Great Depression in the 1930s, all of the following were characteristic of the economy except
A) about one in four workers was out of work.
B) a large number of firms had laid off workers or gone out of business.
C) consumer prices rose.
D) national output fell 25%.
E) none - all of these were characteristic of the economy during the Great Depression.
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Chapter 12: Macroeconomic Equilibrium: Aggregate
Demand and Supply
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) In the mid-2000s, the price of oil was being driven higher by rising demand by A) Germany
B) the United States
C) China
D) the United States and China
E) Germany, the United States, and China
Q2) Which of the following will not cause net exports to decline?
A) An appreciation of the domestic currency
B) A fall in foreign income
C) Higher foreign tariffs on domestic goods
D) Lower foreign prices
E) None - all of these will cause net exports to decline.
Q3) The upward-sloping aggregate supply curve represents
A) increases in national output that are accompanied by decreases in the average price level.
B) increases in national output but a fixed price level.
C) increases in the average price level but fixed national output.
D) increases in national output that are accompanied by increases in the average price level.
E) fixed national output and a fixed price level.
Page 14
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Chapter 13: Fiscal Policy
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) A major source of tax revenue for developing countries is
A) personal income taxes.
B) social security taxes.
C) property taxes.
D) international trade taxes.
E) excise taxes.
Q2) When increases in national debt cause the domestic currency to appreciate, then debt-financed fiscal spending may be less effective than is implied by the simple government spending multiplier.
A)True
B)False
Q3) Which of the following statements is false?
A) Increased government borrowing raises interest rates.
B) Higher interest rates can depress investment.
C) Lower investment means fewer capital goods in the future.
D) Government deficits can have no effect on international trade.
E) Government deficits can lower the level of output in the economy.
Q4) Most industrialized countries now have a value-added tax.
A)True B)False
Page 15
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Chapter 14: Money and Banking
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) Travelers' checks issued by bank are included in demand deposits.
A)True
B)False
Q2) Which of the following is a transactions account?
A) Currency
B) Travelers' checks
C) A savings account
D) A credit card balance
E) A demand deposit
Q3) A person from San Francisco can easily withdraw cash from an automated teller machine (ATM) while on vacation in Beijing.
A)True
B)False
Q4) Scarcity and durability characterize the medium-of-exchange property of money.
A)True
B)False
Q5) If you use your credit card to buy a shirt, you are buying the shirt with money.
A)True
B)False
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Chapter 15: Monetary Policy
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) Suppose that M increases by 5 percent while the velocity of money is constant. The quantity theory of money predicts that
A) nominal GDP will rise by 5 percent.
B) the price level will fall by 5 percent.
C) the quantity of output will fall by 5 percent.
D) nominal GDP will remain unchanged.
E) nominal GDP will fall by 5 percent.
Q2) Refer to Figure 15.1. The market is initially reflected by S and D<sub>1</sub>, but a change in demand moves D<sub>1 </sub>to D<sub>2</sub>. If the Fed wants the exchange rate to return to where it was initially, it could
A) buy $7 million.
B) increase the money supply by $4 million and buy the surplus..
C) use its pesos to buy $4 million.
D) use its pesos to buy $3 million.
E) selling U.S. dollars equal to $4 million.
Q3) The Fed influences the nation's output by manipulating the money supply.
A)True
B)False
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17
Chapter 16: Macroeconomic Policy, Business Cycles, and Growth
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) If the inflation rate has been 6 percent over the past four years and the Federal Reserve announces an increase in the growth of the money supply, then adaptive expectations theory would predict an inflation rate of 6 percent.
A)True
B)False
Q2) The lack of capital formation in developing countries is due in part to A) excessive foreign aid.
B) the fact that it is harder to forgo current consumption to be able to save.
C) high interest rates.
D) high tax rates on private investment.
E) government prohibitions on private ownership.
Q3) Other things being equal, if the labor input grows faster than total output, total factor productivity falls.
A)True
B)False
Q4) If the growth rate of resources is zero and real output is growing at 4 percent, then total factor productivity has risen by 4 percent.
A)True
B)False
18
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Chapter 17: Issues in International Trade and Finance
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) With regard to those goods that can be produced most efficiently with modern technology, the countries with a comparative advantage will be those with the
A) largest stock of natural resources.
B) most favorable trade policies.
C) largest labor force.
D) most advanced technology.
E) strictest adherence to "tried and true" manufacturing processes.
Q2) International trade on the basis of comparative advantage maximizes
A) domestic output and allows consumers access to better-quality products at lower prices than would be available in the domestic market alone.
B) foreign output and allows consumers access to better-quality products at lower prices than would be available in the domestic market alone.
C) world output and allows consumers access to better-quality products at lower prices than would be available in the domestic market alone.
D) world output, but gives consumers access to lower-quality products at higher prices than would be available in the domestic market alone.
E) foreign output and product quality in all markets.
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Page 19
Chapter 18: Globalization
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) The greater the amount of short-term money invested in a country, the greater the potential for a financial crisis.
A)True
B)False
Q2) Critics of globalization claim it has primarily
A) enriched corporate elites.
B) helped only the agrarian poor.
C) allowed countries to compete too fairly.
D) stimulated too much discussion about the environment.
E) done all of these.
Q3) The pace of globalization is affected by technological change and A) population control.
B) environmental movements.
C) declining transportation costs.
D) education levels.
E) political stability.
Q4) Some studies have shown that globalization narrows the income gap between rich and poor countries.
A)True
B)False
Page 20
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