Survey of Economics Exam
Solutions
Course Introduction
Survey of Economics provides an overview of fundamental economic concepts, including both microeconomics and macroeconomics. Students will explore topics such as supply and demand, market structures, consumer behavior, production costs, fiscal and monetary policy, unemployment, inflation, and international trade. The course emphasizes the application of economic reasoning to real-world issues and introduces basic economic terminology and analysis, enabling students to better understand how economic forces shape personal decisions, business strategies, and public policies.
Recommended Textbook
ECON MACRO4 4th Edition by William A. McEachern
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21 Chapters
3789 Verified Questions
3789 Flashcards
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Page 2
Chapter 1: The Art and Science of Economic Analysis
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) An economic model will produce poor predictions if it includes unrealistic assumptions.
A)True
B)False
Answer: False
Q2) Which of the following decisions lends itself to marginal analysis
A)Whether Addison should attend class on any given day
B)Whether Patrick should drive or walk to the local convenience store
C)Whether Jacob should spend his birthday money on a basketball backboard
D)Whether Colin should move to a new apartment
E)all of the above woullend themselves to the application of marginal analysis
Answer: E
Q3) Considering both product markets and resource markets, most economic decision makers participate in the economy as both buyers and sellers.
A)True
B)False
Answer: True
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Chapter 2: Understanding Graphs-Appendix
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64 Flashcards
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Sample Questions
Q1) In Exhibit 1-2, at x = 8, the
A)value of y is larger on curve A than on curve B
B)value of y is smaller on curve A than on curve B
C)value of y is the same on curve A as on curve B
D)slope of line A is negative
E)slope of line B is positive
Answer: B
Q2) If a given value of x is associated with a particular value of y,
A)then x causes y
B)then y causes x
C)then x and y must be logically connected
D)there are no other variables that affect the value of y
E)there may be no causal relationship between x and y
Answer: E
Q3) The slope of a U-shaped curve is infinity at the bottom of the U.
A)True
B)False
Answer: False
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Chapter 3: Economic Tools and Economics Systems
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) Fast food is faster and cheaper than a similar meal you could prepare for yourself. Which of the following does not explain that fact?
A)meal preparation has been divided into many separate tasks
B)larger-scale production allows the introduction of more efficient machines
C)workers gain productivity at a task over time
D)there is less time lost moving from one task to another E)workers are more productive when they are being paid
Answer: E
Q2) In Exhibit 2-5, the opportunity cost of moving from point b to d is
A)30 mufflers
B)50 mufflers
C)100 socks
D)150 socks
E)250 socks
Answer: C
Q3) Absolute advantage is based on opportunity cost.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Economic Decision Makers
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Sample Questions
Q1) The term "fiscal policy" refers to
A)the amount of physical output produced by firms
B)the means by which government policy makes firms more productive
C)the avenue by which government influences credit markets
D)spending and taxing by governments
E)a tool of government that works in the opposite direction of monetary policy
Q2) The excise tax on gasoline is based on the ability-to-pay principle of taxation.
A)True
B)False
Q3) If the value of the euro increases relative to the U.S. dollar, then French goods will be less expensive in the U.S.
A)True
B)False
Q4) Which category includes the largest number of firms?
A)sole proprietorship
B)partnership
C)corporation
D)S-corporation
E)limited partnerships
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Chapter 5: Demand, Supply, and Markets
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232 Flashcards
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Sample Questions
Q1) The effect of an increase in consumer income on equilibrium price and quantity of Florida orange juice (a normal good) is
A)to increase equilibrium price and quantity
B)to decrease equilibrium price and quantity
C)to increase equilibrium price and decrease equilibrium quantity
D)to increase equilibrium quantity and decrease equilibrium price
E)that equilibrium price and quantity remain constant
Q2) There are three consumers in the market for playing cards: Don, John, and Ron. At a price of $2 per pack, the quantities demanded by each are 3, 2, and 1, respectively. At a price of $1.50 per pack, the quantities demanded by each are 4, 5, and 3, respectively. Which of the following is true?
A)The market demand curve for playing cards does not obey the law of demand.
B)The price decrease causes the quantity demanded in this market to increase by 6.
C)The price decrease causes John's demand curve to shift the most.
D)At a price of $1 per pack, the quantity demanded in this market must be 20.
E)Don's behavior does not obey the law of demand.
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Chapter 6: Introduction to Macroeconomics
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Sample Questions
Q1) The aggregate supply curve has
A)a negative slope
B)a positive slope
C)a zero slope (a horizontal line)
D)an infinite slope (a vertical line)
E)a negative slope like the aggregate demand curve, only steeper
Q2) On an aggregate demand and aggregate supply graph, the Great Depression can be pictured as
A)a leftward shift of the aggregate supply curve
B)a rightward shift of the aggregate supply curve
C)a leftward shift of the aggregate demand curve
D)an increase in the price level caused by a movement along the aggregate demand curve
E)a decrease in the price level caused by a movement along the aggregate supply curve
Q3) An increase in wage rates, other things constant, would shift the aggregate supply curve upward.
A)True
B)False
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Page 8
Chapter 7: Tracking the Us Economy
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Sample Questions
Q1) To determine the CPI, you would need to know the
A)current market basket at current- and base-year prices
B)base-year market basket at current- and base-year prices
C)current market basket at current prices and base-year market basket at base-year prices
D)current market basket at base-year prices only
E)current market basket at current prices only
Q2) If the CPI is 160 one year and 175 the next, the annual rate of inflation as measured by the CPI is approximately
A)4.5 percent
B)8.6 percent
C)9.4 percent
D)15 percent
E)175 percent
Q3) Which of the following is an injection into the circular flow?
A)taxes
B)saving
C)transfer payments
D)government borrowing
E)disposable income
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Chapter 8: Unemployment and Inflation
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Sample Questions
Q1) A decrease in the interest rate, other things constant, will
A)shift the supply of loanable funds curve to the left
B)shift the supply of loanable funds curve to the right
C)decrease the quantity of loanable funds demanded
D)decrease the quantity of loanable funds supplied
E)shift the demand for loanable funds curve to the right
Q2) Demand-pull inflation is caused by an
A)inward shift of the aggregate demand curve
B)inward shift of the aggregate supply curve
C)outward shift of the aggregate supply and demand curves
D)outward shift of the aggregate demand curve
E)outward shift of the aggregate supply curve
Q3) Consider an economy with an adult population of 100, 50 of whom hold jobs, 10 of whom are looking for work, and 15 of whom are retired. The labor force participation rate is
A)100 percent
B)60 percent
C)50 percent
D)40 percent
E)10 percent
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Chapter 9: Productivity and Growth
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Sample Questions
Q1) In the long run, changing technology on average has led to
A)lower employment and lower wage rates
B)higher employment and lower wage rates
C)lower employment with wage rates unchanged
D)higher employment with wage rates unchanged
E)higher incomes and more leisure time
Q2) The productivity growth slowdown of the late 1970s and early 1980s may have been due, in part, to the environmental and workplace safety legislation.
A)True
B)False
Q3) Declining growth in productivity means that the standard of living has been falling over time.
A)True
B)False
Q4) Labor productivity the United States has never fallen has never fallen from one year to the next.
A)True
B)False
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Chapter 10: Aaggregate Expenditure and Agregate Demand
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179 Flashcards
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Sample Questions
Q1) In Exhibit 9-3, the slope of the consumption function is equal to A).33
B).5
C).67
D).7
E).9
Q2) Which of the following would not increase the Gallego family's real net wealth?
A)an increase in the value of their home
B)an increase in the value of Mrs. Gallego's pension fund
C)an increase in the amount that the Gallegos have saved in the bank
D)a rise in the price level
E)a decrease in the size of the mortgage payments on the Gallego's home
Q3) Which is true of disposable income?
A)it excludes transfer payments
B)the portion of income is used solely for consumption
C)it is that part of aggregate income that is taken in taxes by government
D)all of disposable income contributes directly to aggregate expenditure
E)disposable income equals consumption expenditures plus saving
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Chapter 11: Aggregate Expenditure and Aggregate Demand
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148 Flashcards
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Sample Questions
Q1) The larger the marginal propensity to save, other things constant,
A)the larger the marginal propensity to consume
B)the larger the multiplier
C)the steeper the consumption function
D)the steeper the saving function
E)the flatter the saving function
Q2) Which of the following is not true?
A)When planned aggregate expenditure is greater than output, real GDP demanded will rise.
B)When planned aggregate expenditure is greater than output, real GDP demanded will fall.
C)When planned aggregate expenditure is increasing, disposable income and consumption are increasing.
D)When planned aggregate expenditure is increasing, consumption and saving are both increasing.
E)As long as planned aggregate expenditure is increasing, real GDP demanded does also.
Q3) The larger the MPC, the greater the multiplier effect.
A)True
B)False
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Chapter 12: Aggregate Supply
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Sample Questions
Q1) Beneficial supply shocks include all of the following except one. Which is the exception?
A)an abundant harvest that increases food supplies
B)discoveries of natural resources
C)changes in legislation favorable to production
D)technological advances
E)establishment of the Occupational Safety and Health Administration (OSHA)
Q2) One explanation for the persistently high unemployment rates in Europe during the 1990s is that
A)unemployment rates have always been high in Europe
B)the United States has "exported" unemployment through its economic policies
C)the labor supply in Europe increased faster than labor demand increased
D)the labor supply in Europe increased while labor demand decreased
E)European labor demand decreased because of legislation that makes hiring a worker an almost irreversible decision
Q3) An adverse supply shock could increase both the price level and nominal GDP.
A)True
B)False
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14
Chapter 13: Fiscal Policy
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240 Flashcards
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Sample Questions
Q1) If net taxes exceed government purchases,
A)the price level will rise
B)the money supply must fall
C)the aggregate demand curve will shift rightward
D)the short-run aggregate supply curve will leftward
E)there will be a federal budget surplus
Q2) Suppose both autonomous taxes and transfer payments increase by $50 billion. If the MPC = 0.75, by how much does equilibrium real GDP demanded change?
A)$0
B)$50 billion
C)-$50 billion
D)$200 billion
E)-$200 billion
Q3) If the economy is already producing at its potential,
A)the spending multiplier equals 1/(1 - MPC) in the long run
B)the spending multiplier is less than 1/(1 - MPC) in the long run
C)the spending multiplier is more than 1/(1 - MPC) in the long run
D)the spending multiplier equals zero in the long run
E)the aggregate demand curve is horizontal
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Page 15
Chapter 14: Federal Budgets and Public Policy
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158 Flashcards
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Sample Questions
Q1) Which of the following is not true about the U.S. twin deficits?
A)The U.S. is now the world's leading creditor
B)The U.S. borrows huge sums from abroad
C)Some critics blame U.S. fiscal policy for the switch from a creditor to a debtor nation
D)Japan and China are big buyers of U.S. Treasury securities
E)A debtor country becomes more beholden to those countries that supply credit
Q2) Only about one-fourth of the federal budget involves expenditure categories determined by existing obligations and laws (e.g., interest on the national debt, Social Security, and Medicare).
A)True
B)False
Q3) Federal spending (including transfer payments), as a percent of GDP,
A)has remained largely unchanged over the last 50 years
B)has exceeded 10 percent only in wartime periods
C)is less than half of state and local government spending
D)has increased since 1921
E)has greatly diminished in recent years
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Page 16
Chapter 15: Money and the Financial System
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Sample Questions
Q1) Compared to many other countries, the United States has
A)fewer banks, with assets distributed more evenly
B)fewer commercial banks, with assets concentrated in a few large banks
C)more banks, with assets concentrated in a few large banks
D)more commercial banks, with assets more widely distributed among banks
E)more commercial banks, with assets concentrated in a few large banks
Q2) The Miwok Indians of Yosemite Valley used seashells as money. The advantages of seashells as money for these people included all of the following except one. Which is the exception?
A)It was difficult for anyone to get shells except by trading.
B)The shells were easily identifiable.
C)The shells were easy to carry.
D)The shells provided a money supply that was easily divisible.
E)The shells were intrinsically valuable as commodities.
Q3) The emergence of the subprime mortgage market following the recession of 2001 made it increasingly difficult for low income individuals to obtain a mortgage.
A)True
B)False
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Chapter 16: Banking and the Money Supply
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Sample Questions
Q1) Banks in need of reserves can borrow from the Fed or in the federal funds market.
A)True
B)False
Q2) Which of the following is not a liability to a bank?
A)checkable deposits
B)NOW accounts
C)net worth
D)borrowings from the Fed
E)deposits with the Fed
Q3) In commercial banking operations, there is a tradeoff between liquidity and profitability.
A)True
B)False
Q4) All of the following are part of M2 except one. Which is the exception?
A)money market deposit accounts
B)coins
C)travelers checks
D)large denomination time deposits
E)savings deposits
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Chapter 17: Monetary Theory and Policy
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Sample Questions
Q1) If there is a decrease in the supply of money, which one of the following is most likely to happen?
A)the demand for money will increase
B)planned investment spending will increase
C)interest rates will rise
D)aggregate expenditure will increase
E)the demand for money will decrease
Q2) The quantity theory of money
A)states that fiscal policy plays an important role in determining economic activity
B)states that the quantity of money in circulation determines aggregate spending
C)argues that velocity is unpredictable
D)states that the quantity of money in circulation determines only the price level in the long run
E)states that the quantity of money in circulation determines only real spending in the short run
Q3) An increase in the money supply will cause a decrease in planned investment spending.
A)True
B)False
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Page 19
Chapter 18: Macro Policy Debate: Active or Passive
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Sample Questions
Q1) The long-run Phillips curve
A)represents the fact that inflation is consistent with many unemployment rates
B)represents the fact that inflation will not influence unemployment in the long run
C)has a negative slope because the short-run Phillips curve shifts up and to the left
D)shows that expected inflation can never equal actual inflation
E)shows that unemployment is a short run, but not a long run, phenomenon
Q2) If the price level increases more rapidly than expected, A)output will fall B)output will increase
C)output will not change D)real wages will increase E)none of the above
Q3) The active approach to monetary policy involves predetermined rules that are followed virtually without exception.
A)True
B)False
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Chapter 19: International Trade
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Sample Questions
Q1) In Exhibit 19-1, the opportunity cost of 1 t-shirt in Costa Rica is
A)0
B)1/40 ton of rice
C)3/4 ton of rice
D)1 ton of rice
E)2 tons of rice
Q2) The primary difference between an import tariff and an import quota is that
A)tariffs cause prices to rise, but quotas do not
B)quotas cause prices to rise, but tariffs do not
C)tariffs result in a net welfare loss, but quotas do not
D)quotas result in a net welfare loss, but tariffs do not
E)tariff revenues go to government, but quotas benefit those with the right to sell foreign goods domestically
Q3) The General Agreement on Tariffs and Trade forms the legal and institutional foundation for the current multilateral trading system.
A)True
B)False
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Chapter 20: International Finance
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231 Flashcards
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Sample Questions
Q1) Which of the following is not considered as a unilateral transfer?
A)income earned from foreign investments
B)foreign aid
C)personal gifts to friends or family abroad
D)institutional charitable donations
E)government transfers to foreign residents
Q2) Which of the following best describes circumstances surrounding the breakdown of the Bretton Woods system?
A)The United States was enjoying a persistent trade surplus.
B)There was too much dependence on the dollar because no other country had a stable currency.
C)Germany, with its strong currency, refused to defend the dollar.
D)Speculators were betting on the fall of the dollar.
E)All the other nations basically wished their currencies to appreciate, which was impossible under the system.
Q3) A country's balance of payments summarizes all economic transactions during a given period between residents of that country and residents of other countries.
A)True
B)False
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Page 22
Chapter 21: Economic Development
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Sample Questions
Q1) Successful management of resource wealth is a poverty trap
A)True
B)False
Q2) The first step in gradualism is
A)the privatization of larger industrial sectors
B)the phasing out of money-losing enterprises
C)large industrial enterprises quickly finding market-clearing prices
D)the thriving of small-scale capitalism
E)state-owned enterprises running more like businesses to maximize profit
Q3) The average value added per U.S. farm worker is about __________ times that of farm workers in low- and middle-income countries.
A)one half
B)one
C)ten
D)seventy-five
E)five hundred
Q4) Export promotion has been more successful than import substitution.
A)True
B)False
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