Survey of Economics
Mock Exam
Course Introduction
Survey of Economics provides students with a comprehensive introduction to the fundamental principles of microeconomics and macroeconomics. The course covers topics such as supply and demand, market structures, consumer behavior, production and costs, national income, economic growth, unemployment, inflation, and the role of government in the economy. Real-world examples and current events are integrated to help students understand economic decision-making at both the individual and societal levels. By the end of the course, students will be equipped with a solid foundation to analyze economic issues and understand the impact of economic policies in a global context.
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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Chapter 1: Economics and the World Around You
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) Which economic concept is the closest parallel to the saying, "There's no such thing as a free lunch"?
A) Specialization
B) Unlimited wants
C) Underutilization of resources
D) Opportunity costs
E) Overutilization of resources
Answer: D
Q2) The total cost of attending college
A) includes only college-related expenses.
B) is the sum of the costs of tuition, books, and meals.
C) would not include other options that were sacrificed due to the decision to attend college.
D) would not include the lost opportunity to travel.
E) is the sum of college-related expenses and opportunity cost.
Answer: E
Q3) Economists are concerned with ways global production could increase.
A)True
B)False
Answer: True
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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) In Figure 2.2, a price of
A) M would cause a surplus of BE quantity.
B) M would cause a shortage of BE quantity.
C) N would cause a shortage of BE quantity.
D) 0 would bring about an equilibrium solution.
E) L would cause a shortage of BC quantity.
Answer: A
Q2) Consider the market represented by the schedule in Table 2.4. At equilibrium,
A) the market price is $5 per unit.
B) there is a surplus of 900 units.
C) there is a shortage of 900 units.
D) 900 units are traded at a price of $3 per unit.
E) the market price is $1 per unit and the quantity traded is 500 units.
Answer: D
Q3) Economists use the term supply to refer to the quantity of a good that is supplied at various price levels, that is, a set of price and quantity-supplied combinations, everything else held constant.
A)True
B)False
Answer: True
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Chapter 3: Applications of Demand and Supply
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) In Table 3.3, the equilibrium quantity is
A) 10.
B) 15.
C) 20.
D) 25.
E) 30.
Answer: C
Q2) In Figure 3.4, the reason for the wage differential could be the fact that
A) market A is the market for a risky occupation.
B) market B consists of unskilled labor.
C) market A consists of workers with more human capital.
D) market B consists of workers with less human capital.
E) all of these are true.
Answer: E
Q3) A quota is a tax on an imported good.
A)True
B)False
Answer: False
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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) If a university charges a set tuition for 12 credit hours or more, its marginal revenue from students taking an overload is zero.
A)True B)False
Q2) Assume that the price elasticity of demand is 0.20. Given a 10 percent increase in price, we will see a
A) 20 percent increase in the quantity demanded.
B) 2 percent decrease in the quantity demanded.
C) 20 percent decrease in the quantity demanded.
D) 0.2 percent decrease in the quantity demanded.
E) 2 percent increase in the quantity demanded.
Q3) If demand is perfectly inelastic, then the
A) elasticity of demand is 1.
B) elasticity of demand is -1.
C) demand curve will be nonexistent.
D) demand curve will be a horizontal line.
E) demand curve will be a vertical line.
Q4) Price elasticity of demand is also known as the slope of the demand curve.
A)True B)False
Page 6
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Chapter 5: Costs and Profit Maximization
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) Which of the following is not a variable cost at the sandwich shop?
A) Cost of tomatoes
B) Cost of labor
C) Cost of rent
D) Cost of electricity
E) Cost of bread
Q2) Refer to Table 5.1. Marginal cost (MC) of the third unit of output is
A) 3,500.
B) 1,400.
C) 1,167.
D) 700.
E) 500.
Q3) The demand curve is also the average-revenue curve.
A)True
B)False
Q4) Marginal revenue ultimately depends on the firms as they have the ability to set the price for their products.
A)True
B)False
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Chapter 6: Competition
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Which of the following is the closest to being a perfectly competitive market in the United States?
A) Freshly brewed coffee
B) Airline travel
C) Computer hardware
D) Fast-food restaurants
E) Cell phone service
Q2) When officers of firms in an industry get together to discuss how they can improve their mutual well-being, the result is
A) product differentiation.
B) collusion.
C) price leadership.
D) rule-of-thumb pricing.
E) game theory.
Q3) A monopolistically competitive firm will maximize profits where
A) MR = MC.
B) P = MR.
C) MR + MC = 0.
D) TR- TC = MC.
E) MC - MR = P.
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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) Every activity has associated positive and/or negative externalities.
A)True
B)False
Q2) The World Trade Organization is often asked to address charges of dumping by international companies.
A)True
B)False
Q3) Consumers who benefit from a public good or service without paying for it are called
A) free loafers.
B) thieves.
C) amoral hazards.
D) free riders.
E) externals.
Q4) The market system is not relied on to make all allocations because sometimes people don't like the results of competition.
A)True
B)False
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9
Chapter 8: Government Intervention Versus Free Markets
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) If the interest rate decreased, we would expect the supply of renewable resources to ____ and the supply of nonrenewable resources to ____.
A) decrease; decrease
B) decrease; increase
C) increase; decrease
D) increase; increase
E) decrease; remain unchanged
Q2) The largest publicly sponsored health care program is
A) Medicare.
B) Medicaid.
C) Head Start.
D) social security.
E) Health maintenance organization (HMO).
Q3) What proportion of the United States' current GDP do health care expenditures represent?
A) More than 16 percent
B) Between 5 and 10 percent
C) Less than 5 percent
D) Between 10 and 15 percent
E) More than 25 percent
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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) The main trading partners of the United States are
A) developing countries.
B) industrial countries.
C) Saudi Arabia and Venezuela.
D) Communist countries.
E) Latin American countries.
Q2) In Figure 9.1, what is the total amount of consumption expenditures?
A) $7,500
B) $10,000
C) $25,000
D) $35,000
E) $42,500
Q3) A household is defined as
A) families of two or more people.
B) employed people and their dependents.
C) one or more persons who occupy a unit of housing.
D) individuals who live in single-family homes.
E) families that include single people.
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Chapter 10: Macroeconomic Measures
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) According to Table 10.1, the value added by the grocer is
A) $.10.
B) $.15.
C) $.30.
D) $.65.
E) $.75.
Q2) The balance of payments is
A) the difference between the dollar value of exports and the dollar value of imports.
B) the same as the sum of the merchandise and services accounts.
C) a record of a country's trade in goods, services, and financial assets with the rest of the world.
D) a summary statement of the merchandise, services, and unilateral transfers accounts.
E) a record of the amount of U.S. dollars held abroad.
Q3) If the prices of all goods and services never changed, nominal and real GDP would always be the same.
A)True
B)False
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12
Chapter 11: Unemployment, Inflation, and Business Cycles
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) When inflation is much higher than expected, which of the following is true?
A) Nominal incomes are lower than expected.
B) Real interest rates are higher than expected.
C) Income is redistributed from those whose expenditures are fixed toward those who receive a fixed income.
D) Nominal interest rates are lower than expected.
E) Real interest rates are lower than expected.
Q2) Rapid increases in military spending by the federal government without accompanying increases in real output could be a cause of cost-push inflation.
A)True
B)False
Q3) The effect of the underground economy is an unemployment rate that understates actual unemployment.
A)True
B)False
Q4) Business cycles are fluctuations in economic output that occur approximately every four years.
A)True
B)False
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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) Which of the graphs in Figure 12.3 describes the impact of domestic real wage increases on U.S. equilibrium income and the U.S. equilibrium price level?
A) A
B) B
C) C
D) D
E) E
Q2) Investment spending is negatively related to changes in interest rates.
A)True
B)False
Q3) Aggregate supply could increase due to all of the following except:
A) an improvement in technology
B) decrease in the price of resources
C) optimistic producers' expectations
D) increase in government spending
E) none - all of these would cause aggregate supply to increase
Q4) U.S. economic growth in the twenty-first century has been steady.
A)True
B)False
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) Under a progressive tax system,
A) the average tax rate increases with increases in real GDP.
B) the average tax rate remains constant with changes in real GDP.
C) the average tax rate falls with increases in real GDP.
D) government tax receipts increase when the economy is in a recession.
E) government tax receipts decrease when the economy is expanding.
Q2) The higher the level of inflation, the stronger the impact on real GDP of reductions in the personal income tax.
A)True
B)False
Q3) An automatic stabilizer is a(n)
A) change in government spending aimed at achieving a policy goal.
B) element of fiscal policy that automatically changes in value as real GDP changes.
C) element of monetary policy that automatically changes in value as real GDP changes.
D) deliberate change in taxation aimed at increasing real GDP.
E) decrease in tax rates as the economy moves into a recession.
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15
Chapter 14: Money and Banking
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) An important change that has taken place in the U.S. bank market is the growth of interstate banking.
A)True
B)False
Q2) The U.S. dollar will always be the world's most important reserve currency.
A)True
B)False
Q3) Gold is the most liquid asset.
A)True
B)False
Q4) Which of the following is considered a liability by a depository institution?
A) Reserves
B) Bank loans
C) Government securities
D) Buildings and equipment
E) Time deposits
Q5) The value of the U.S. dollar depends on the price of gold.
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) One of the functions of the Fed is to make loans to commercial banks.
A)True
B)False
Q2) An increase in the discount rate
A) increases reserve holdings.
B) reduces the amount of lending by commercial banks.
C) lowers the cost of borrowing from the Fed.
D) causes a decrease in the federal funds rate.
E) increases the money supply.
Q3) The quantity theory of money asserts that changes in
A) nominal GDP are inversely related to changes in the velocity of money.
B) the quantity of money are positively related to changes in the velocity of money.
C) the quantity of money are unrelated to changes in the price level.
D) the output level are unrelated to changes in the price level.
E) the quantity of money are directly related to changes in nominal GDP.
Q4) When velocity is not constant, there can be problems with using money growth rates as an intermediate target.
A)True
B)False
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Chapter 16: Macroeconomic Policy, Business Cycles, and Growth
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Unexpected inflation can affect the unemployment rate in all of the following ways except:
A) wage expectations.
B) inventory fluctuations.
C) wage contracts.
D) federal funds rate changes.
E) none - all of these affect the unemployment rate.
Q2) According to the long-run Phillips curve, which of the following would not be the end result of expansionary monetary policy when unemployment is at its natural rate?
A) Higher inflation
B) Rising production costs
C) No change in potential real GDP
D) A decrease in unemployment
E) An increase in prices
Q3) If workers realize that an increase in nominal wage rates also constitutes a rise in real wages, then we would expect an increase in employment and an upward movement along the short-run Phillips curve.
A)True
B)False
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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) Countries export goods in which they have
A) a tremendous surplus.
B) a comparative advantage.
C) an absolute advantage.
D) national pride.
E) a comparative disadvantage.
Q2) Comparative advantage is found by comparing the relative costs of production in each country.
A)True
B)False
Q3) "Fair trade, not free trade" is a slogan that is inconsistent with the doctrine of comparative advantage.
A)True
B)False
Q4) A very productive country can have a comparative advantage in producing all goods over a less productive country.
A)True
B)False
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Chapter 18: Globalization
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) Stories about sweat shops in developing countries producing goods for consumers in industrialized countries contribute to the criticism that globalization encourages harmful labor practices.
A)True
B)False
Q2) If industrialized countries impose environmental constraints, manufacturers may seek opportunities in poor countries that do not have or do not enforce environmental constraints. This practice is known as the
A) production sharing system.
B) race to the bottom.
C) cost-profit equation.
D) speculative spread.
E) shark attack.
Q3) Supporters of globalization believe it has raised living standards.
A)True
B)False
Q4) International organizations are funded by corporations, not governments.
A)True
B)False
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