Survey of Economics Final
Exam
Course Introduction
Survey of Economics provides students with a broad overview of fundamental economic principles and concepts, encompassing both microeconomics and macroeconomics. The course covers topics such as supply and demand, market structures, consumer behavior, the role of government in the economy, fiscal and monetary policy, national income, inflation, and unemployment. Emphasis is placed on understanding how economic theories apply to real-world issues and decision-making processes faced by individuals, businesses, and governments. This course offers a foundational perspective, preparing students for more advanced study in economics or related disciplines.
Recommended Textbook
Macroeconomics 5th Edition by R.
Glenn Hubbard
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19 Chapters
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Page 2
Chapter 1: Economics: Foundations and Models
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) Which of the following is part of an economic model?
A)assumptions
B)norms
C)opinions
D)preferences of economic agents
Answer: A
Q2) Policies based on normative economic ideas tend to increase economic efficiency and improve equity.
A)True
B)False
Answer: False
Q3) According to census figures and the Congressional Budget Office,the number of people ________ is projected to increase and the number of people ________ is projected to decrease by the year 2020.
A)who are uninsured; who are insured
B)who are uninsured; age 65 and older
C)age 65 and older; who are uninsured
D)who are insured; age 65 and older
Answer: C
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Page 3
Chapter 2: Trade-Offs,comparative Advantage,and the Market System
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Sample Questions
Q1) All of the following are examples of spending on goods and services in the circular flow model except
A)Amanda purchases a new electric guitar to pursue her hobby seriously.
B)Chaitanya buys a new spa pedicure chair for her expanding nail salon business.
C)Hernan buys a pizza at Papa C's.
D)Lenny buys a new digital camera to take pictures at his son's graduation.
Answer: B
Q2) Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures.If she now performs 35 manicures and 70 pedicures,what is the opportunity cost of performing an additional 15 manicures?
A)5 pedicures
B)20 pedicures
C)25 pedicures
D)45 pedicures
Answer: C
Q3) The payment received by suppliers of entrepreneurial skills is called profit.
A)True
B)False
Answer: True
Page 4
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Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
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Sample Questions
Q1) Prices of smartphones (assume that this is a normal good)have fallen in recent years.Over this same period,the price of the components used to produce smartphones has also fallen and consumer incomes have risen.Which of the following best explains the falling prices of smartphones?
A)The supply curve for smartphones has shifted to the right while the demand curve for smartphones has shifted to the left.
B)The demand curve for smartphones has shifted to the right more than the supply curve has shifted to the right.
C)The demand curve and the supply curve for smartphones have both shifted to the left. D)The supply curve for smartphones has shifted to the right more than the demand curve has shifted to the right.
Answer: D
Q2) A positive technological change will cause the quantity supplied of a good to increase.
A)True
B)False
Answer: False
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5
Chapter 4: Economic Efficiency, government Price Setting, and Taxes
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Sample Questions
Q1) The difference between the lowest price a firm would have been willing to accept and the price it actually receives from the sale of a product is called
A)producer surplus.
B)profit.
C)marginal revenue.
D)price differential.
Q2) Refer to Figure 4-1.If the market price is $2.50,what is the consumer surplus on the second ice cream cone?
A)$0.50
B)$1.50
C)$3.00
D)$10.50
Q3) Rent control is an example of a price floor.
A)True
B)False
Q4) Government intervention in agriculture began in the United States in the 1890s. A)True
B)False
Page 6
Q5) What area on a supply and demand graph represents producer surplus?
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Chapter 5: The Economics of Health Care
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Sample Questions
Q1) Of the following high-income countries,which has the highest life expectancy at birth?
A)Canada
B)Japan
C)the United Kingdom
D)the United States
Q2) Over time,people in the United States and other high-income countries have,on average,become taller,which is an indication that their nutritional status has improved.
A)True
B)False
Q3) On average,people in low-income countries ________ than people in high-income countries.
A)have a longer life expectancy
B)are subject to a lower infant mortality rate
C)are shorter
D)are exposed to fewer severe diseases
Q4) Briefly describe changes in life expectancy,average height,and infant mortality in the United States since 1850.
Q5) How can increases in a country's total income improve health?
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Chapter 6: Firms,the Stock Market,and Corporate Governance
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Sample Questions
Q1) Firms disclose financial statements in ________ and in ________.
A)periodic filings to the federal government; annual reports to shareholders
B)daily filings to the federal government; daily reports to shareholders
C)monthly reports to shareholders; 5-year balance statements to the board of directors
D)weekly filings with the SEC; monthly reports to the Fed
Q2) What is a primary market?
A)a market where primary inputs like steel are sold
B)a market where you can sell any bonds you own as a private investor
C)a market where a newly issued claims are sold to initial buyers by the borrowing firm
D)a market where you can sell any stocks you own as a private investor
Q3) When Potbelly sold stock to the public in its IPO,it did so through the NASDAQ market.This was an example of Potbelly raising funds through
A)reinvesting retained earnings.
B)a financial intermediary.
C)dividend reinvestment.
D)a financial market.
Q4) How can a sole proprietorship raise funds needed for firm expansion?
Q5) What is the difference between explicit and implicit costs?
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Chapter 7: Comparative Advantage and the Gains From International Trade
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Sample Questions
Q1) Today,the United States charges an average tariff rate of less than 1.5 percent.
A)True
B)False
Q2) In the real world we don't observe countries completely specializing in the production of goods for which they have a comparative advantage.All of the following are reasons for this except
A)not all goods and services are traded internationally.
B)some countries have more resources than other countries.
C)tastes for many traded goods are different in many countries because of globalization.
D)production of most goods involves increasing opportunity costs.
Q3) A voluntary export restraint is an agreement negotiated by two countries that places ________ that can be imported by one country from another country.
A)a tax on goods
B)a minimum quantity of a good C)quality standards on goods
D)a numerical limit on the quantity of a good
Q4) What was the GATT,why was it established,and why and with what was it replaced?
Q5) What are terms of trade?
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Chapter 8: GDP: Measuring Total Production and Income
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Sample Questions
Q1) The best measure of the income households actually have available to spend is
A)personal income.
B)disposable personal income.
C)national income.
D)net national income.
Q2) Increases in real GDP would overstate the increase in the well-being of a country over time if,over that time period,the
A)average hours worked per week increased.
B)amount of pollution decreased.
C)price level increased.
D)crime rate decreased.
Q3) Which of the following is not an example of a transfer payment?
A)unemployment insurance payments
B)health insurance payments to an army private
C)social security payments to retirees
D)social security payments to disabled persons
Q4) Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so,how?
Q5) Give two reasons why GDP does not reflect total production in an economy.
Page 10
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Chapter 9: Unemployment and Inflation
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Sample Questions
Q1) Discuss the likely impact of each of the following on the unemployment rate:
a.The length of time workers are eligible to receive unemployment insurance payments is cut in half.
b.The government passes a law making labor unions illegal.
c.The minimum wage is raised by 50 percent.
d.The government funds an Internet site where companies can post job openings at no charge.
Q2) Which of the following cause the unemployment rate as measured by the Bureau of Labor Statistics to overstate the true extent of joblessness?
A)inflation
B)discouraged workers
C)counting people as employed who are working part time,although they would prefer to be working full time
D)unemployed persons falsely report themselves to be actively looking for a job
Q3) Which of the following would decrease the unemployment rate?
A)an increase in the minimum wage
B)an increase in the efficiency wage
C)an increase in labor union membership
D)government aid to retrain unemployed workers
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Page 11
Chapter 10: Economic Growth, the Financial System, and Business Cycles
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Sample Questions
Q1) If,in an economy experiencing inflation,the government decided to tax real interest income rather than nominal interest income,this change would cause the real interest rate to ________ and the equilibrium quantity of loanable funds to ________.
A)fall; rise
B)fall; fall
C)rise; fall
D)rise; rise
Q2) Accumulating a greater number of inputs will ensure that an economy will experience economic growth.
A)True
B)False
Q3) Explain why a centrally-planned economy might not grow as rapidly as a market economy.
Q4) When potential GDP increases,is it necessarily the case that real GDP increases as well? Explain.
Q5) If net taxes rise by $150 billion,would you expect household saving to fall by $150 billion,by more than $150 billion,or by less than $150 billion?
Page 12
Q6) Outline the various actions the government sector could take to promote growth.
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Chapter 11: Long-Run Economic Growth: Sources and Policies
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Sample Questions
Q1) The Industrial Revolution began in
A)England around 1750.
B)the United States around 1820.
C)France around 1680.
D)Germany around 1780.
Q2) The developing countries have been catching up to the lower-income industrial countries in terms of economic growth.
A)True
B)False
Q3) In 1973,the Club of Rome published a book titled The Limits to Growth,which predicted that economic growth would likely end in high-income countries because of A)declining populations.
B)rapid increases in government debt.
C)increases in outsourcing of the production of goods and services to low-income countries.
D)increasing pollution and the depletion of natural resources.
Q4) How does government support of health and education programs foster economic growth?
Q5) Is knowledge capital subject to the law of diminishing returns? Explain.
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Chapter 12: Aggregate Expenditure and Output in the Short Run
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Sample Questions
Q1) Equations for C,I,G,and NX are given below.If the equilibrium level of GDP is $32,000,what will the new equilibrium level of GDP be if government spending increases to 2,500? C = 5,000 + (MPC)Y
I = 1,500
G = 2,000
NX = -500
A)$32,500
B)$34,000
C)$38,000
D)$42,000
Q2) If the economy is currently in equilibrium at a level of GDP that is above potential GDP,which of the following would move the economy back to potential GDP?
A)a decrease in wealth
B)a decrease in interest rates
C)an increase in business confidence
D)a decrease in the value of the dollar relative to other currencies
Q3) Discuss the leading causes of the Great Depression.Use the 45-degree line diagram to show how they caused a decline in GDP.
Q4) What are the four categories of aggregate expenditure?
Page 14
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Chapter 13: Aggregate Demand and Aggregate Supply Analysis
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Sample Questions
Q1) Monetarism is a school of thought put forth by ________,who argued that the economy would most likely be at potential GDP.
A)Karl Marx
B)Milton Friedman
C)Finn Kydland and Edward Prescott
D)Robert Lucas and Thomas Sargent
Q2) The level of real GDP in the long run is
A)potential GDP.
B)affected by changes in the price level.
C)determined solely by aggregate demand.
D)the same as the level of nominal GDP in the long run.
Q3) The level of real GDP in the long run is called
A)potential GDP.
B)short-run GDP.
C)frictional GDP.
D)low-capacity GDP.
Q4) Using an aggregate demand graph,illustrate the impact of an increase in the interest rate.
Page 15
Q5) Briefly describe monetarism and the monetary growth rule.
Q6) Why does the short-run aggregate supply curve slope upward?
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Page 16
Chapter 14: Money, banks, and the Federal Reserve System
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280 Verified Questions
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Sample Questions
Q1) Fiat money is generally issued by
A)private banks.
B)central banks.
C)brokerage firms.
D)major multinational corporations.
Q2) According to the quantity theory of money,the inflation rate equals
A)the money supply minus real output.
B)the growth rate of the money supply minus the growth rate of real output.
C)real output minus the money supply.
D)the growth rate of real output minus the growth rate of the money supply.
Q3) The Fed has complete control over the money supply.
A)True
B)False
Q4) A bank's assets are
A)things owned by or owed to the bank.
B)things the bank owes to someone else.
C)a measure of the bank's net worth.
D)always greater than the bank's liabilities.
Q5) Suppose you withdraw $1,000 in cash from your checking account.Draw a T-account to show the effect of this transaction on your bank's balance sheet.
Page 17
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Chapter 15: Monetary Policy
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Sample Questions
Q1) Which of the following situations is one in which the Fed will potentially pursue expansionary monetary policy?
A)Potential GDP is forecasted to be higher than equilibrium GDP.
B)Potential GDP is forecasted to be lower than equilibrium GDP.
C)Aggregate demand is growing too fast to keep the economy at full employment.
D)Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment.
Q2) Expansionary monetary policy enacted during a recession will cause the inflation rate to increase.
A)True
B)False
Q3) If the Federal Reserve raises or lowers interest rates too late,it could result in a ________ policy that destabilizes the economy.
A)fiscal
B)budgetary
C)procyclical
D)countercyclical
Q4) What is a mortgage? What were the important developments in the mortgage market during the years after 1970?
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Chapter 16: Fiscal Policy
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Sample Questions
Q1) The problem causing most recessions is too little
A)money (currency plus checking accounts).
B)spending.
C)unemployment.
D)taxes.
Q2) Suppose real GDP is $12.6 trillion and potential GDP is $12.4 trillion.To move the economy back to potential GDP,Congress should
A)lower government purchases by an amount less than $200 billion.
B)lower government purchases by $200 billion.
C)raise taxes by $200 billion.
D)lower taxes by $200 billion.
E)raise taxes by an amount more than $200 billion.
Q3) If the economy is growing beyond potential real GDP,which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in
A)the money supply and a decrease in interest rates.
B)government purchases.
C)oil prices.
D)taxes.
Q4) What is fiscal policy,and who is responsible for fiscal policy?
Page 19
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Chapter 17: Inflation, unemployment, and Federal Reserve Policy
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Sample Questions
Q1) In order to change inflationary expectations in 1979,the Fed's monetary policy under Paul Volcker's leadership resulted in ________ and ________.
A)disinflation; high unemployment
B)steep inflation; low unemployment
C)disinflation; low unemployment
D)steep inflation; high unemployment
E)deflation; high unemployment
Q2) If firms and workers have rational expectations,including knowledge of the policy being used by the Federal Reserve,the short-run Phillips curve will be
A)negatively sloped.
B)positively sloped.
C)vertical.
D)flatter in the long run than it is in the short run.
Q3) The actual real wage is lower than the expected real wage if
A)actual inflation is less than expected inflation.
B)expected inflation is less than actual inflation.
C)actual unemployment is less than expected unemployment.
D)actual unemployment is less than actual inflation.
Q4) Why is the credibility of the Fed's policy announcements particularly important?
Page 20
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Chapter 18: Macroeconomics in an Open Economy
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Sample Questions
Q1) Which of the following would decrease the balance on the current account?
A)a decrease in foreign direct investment
B)a decrease in the amount of aid money the government sends abroad
C)a decrease in imports
D)None of the above will increase the balance on the current account.
Q2) Expansionary fiscal policy crowds out both domestic investment and net exports.
A)True
B)False
Q3) Refer to Figure 18-3.Consider the market for U.S.dollars against the Japanese yen shown above.An event which could have caused the changes shown in the graph would be
A)an increase in U.S.real income.
B)speculators expect the dollar to depreciate in value in the near future.
C)an economic expansion in the United States.
D)a decrease in Japanese interest rates.
Q4) In recent decades the United States has incurred overall balance of payments deficits.
A)True
B)False
Q5) Explain the relationship between net exports and net foreign investment.
Page 21
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Chapter 19: The International Financial System
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Sample Questions
Q1) If the rate of inflation in the United States exceeds the rate of inflation in Great Britain we would expect the U.S.dollar to depreciate in value against the British pound.
A)True
B)False
Q2) If the U.S.government places tariffs on imports from countries that have been accused of deliberately undervaluing their currencies,the price of these imports will ________ and the demand for the undervalued currency will ________.
A)rise; rise
B)rise; fall
C)fall; rise
D)fall; fall
Q3) Refer to Figure 19-5.Suppose the pegged exchange rate is $0.11/yuan.Because of safety concerns and numerous product recalls,U.S.consumers lower their demand for Chinese products.Using the figure above,this would
A)increase the surplus of Chinese yuan.
B)decrease the surplus of Chinese yuan.
C)decrease the shortage of Chinese yuan.
D)increase the shortage of Chinese yuan.
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