Survey of Economics
Mock Exam
Course Introduction
Survey of Economics offers a broad overview of the fundamental principles and concepts of both microeconomics and macroeconomics. The course introduces students to topics such as supply and demand, market structures, consumer behavior, production costs, and the role of government in the economy. Additionally, it covers essential macroeconomic indicators, economic growth, unemployment, inflation, and monetary and fiscal policy. This course is designed to provide students with a foundational understanding of economic theory and its real-world applications, preparing them for further study in economics and helping them make informed decisions as consumers and citizens.
Recommended Textbook
Macroeconomics Principles and Applications 6th Edition by Robert E. Hall
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17 Chapters
2744 Verified Questions
2744 Flashcards
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Chapter 1: What is Economics?
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) If two economists completely agree about the magnitude of employment effects of a proposed change in government policy,but disagree about whether the change is a good idea.The difference in opinion
A) must be normative in nature
B) is both positive and normative in nature
C) is more likely to be normative than positive
D) is more likely to be positive than normative
E) would be neither positive nor normative in nature
Answer: A
Q2) Using economic analysis to help understand world issues
A) assumes that all decision makers use detailed economic analysis
B) highlights the role of choice when resources are scarce
C) has unlimited application
D) is not appropriate because reality is too complex for economic modeling
E) typically enables one nation to gain only when another nation loses
Answer: B
Q3) Macroeconomics focuses on the economy as a whole.
A)True
B)False
Answer: True
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Chapter 2: Scarcity, Choice, and Economic Systems
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141 Flashcards
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Sample Questions
Q1) An economy with a government planning commission that provides explicit instructions for resource allocation is an example of
A) a command economy
B) a communal economy
C) a traditional economy
D) a market economy
E) market socialism
Answer: A
Q2) A person has a comparative advantage if
A) she can produce everything more cheaply than her co-worker can
B) she can produce everything at a faster rate than her co-worker can
C) she can produce a good with a smaller opportunity cost than her co-worker can
D) she sees through corporate and government manipulation
E) she gets rich through inheritance
Answer: C
Q3) Every economic system requires a means for determining resource allocation. A)True
B)False
Answer: True
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Page 4
Chapter 3: Supply and Demand
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178 Verified Questions
178 Flashcards
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Sample Questions
Q1) If automobiles are like most goods and the price of automobiles rises,then holding all else constant,the
A) demand for automobiles will rise
B) quantity demanded of automobiles will fall
C) demand for automobiles will fall
D) quantity demanded of automobiles will rise
E) supply of automobiles will fall
Answer: B
Q2) Which of the following would increase the amount of an inferior good that buyers would like to purchase?
A) an increase in buyers' incomes
B) an increase in the price of a complement
C) a decrease in the price of a substitute
D) a decrease in buyers' incomes
E) a decrease in its expected future price
Answer: D
Q3) Both the supply and demand curves can shift due to changes in income.
A)True
B)False
Answer: False
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Chapter 4: Working With Supply and Demand
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53 Verified Questions
53 Flashcards
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Sample Questions
Q1) If an excise tax is imposed on automobiles,
A) the demand curve will shift upward and the market price will increase
B) the supply curve will shift downward and the market price will increase
C) the supply curve will shift upward and the market price will increase
D) the equilibrium quantity supplied will increase
E) the equilibrium quantity demanded will increase
Q2) If the government thinks the price that a consumer has to pay for a good is too high,then which of the following would solve this problem?
A) a price ceiling or an excise tax
B) a price floor or an excise tax
C) a price ceiling or a subsidy
D) a price floor or a subsidy
E) none of the above will lower the price a consumer has to pay for a good
Q3) A price floor on corn would have the effect of
A) creating a surplus regardless of the level at which the price floor is set
B) creating a surplus supply when the floor is above the equilibrium price
C) creating a shortage when the price floor is set below the equilibrium price
D) creating a shortage regardless of where the price floor is set
E) ensuring a more equitable distribution of the good among consumers
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Page 6
Chapter 5: What Macroeconomics Tries to Explain
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) Why do policymakers have the goal of stable prices?
A) Stables prices always keep the economy in expansion
B) Firms make too much money when prices are rising
C) Inflation is always associated with wars
D) Inflation imposes costs on society
E) Inflation is always associated with trade deficits
Q2) The difference between microeconomics and macroeconomics is that
A) microeconomics deals with only small numbers while macroeconomics is always dealing with numbers in the billions and trillions
B) microeconomics deals with the economy as a whole while macroeconomics deals with individual firms
C) microeconomics is concerned with the behavior of individual decision-makers while macroeconomics is concerned with behavior of entire economies
D) microeconomics is only useful for small countries while macroeconomics is useful for large countries
E) microeconomics is only useful for large economies like the United States while macroeconomics is only useful for small economies
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Chapter 6: Production, Income, and Employment
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227 Verified Questions
227 Flashcards
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Sample Questions
Q1) Cyclical unemployment
A) is short-term joblessness experienced by those who are between jobs
B) is joblessness created by a mismatch between available jobs and workers' skills
C) is joblessness related to regular seasonal events such as holidays or weather changes
D) is joblessness caused entirely by microeconomic forces
E) does not exist when the economy is at full employment
Q2) Which of the following would be classified as consumption spending?
A) A family's purchase of a new home
B) A family's purchase of a used car
C) A family's payment for a child's hospitalization
D) A family's purchase of Microsoft stock
E) A family's purchase of a swing set for their home day-care business
Q3) The U.S.system of national income accounts was started in the
A) late 1800s to measure the effects of rapid industrialization
B) mid-1910s to measure the effects of World War I on the economy
C) early 1930s to keep track of national income and output
D) early 1940s to keep track of output during World War II
E) early 1950s to measure changes in post-World War II output and income
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Page 8
Chapter 7: The Price Level and Inflation
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164 Verified Questions
164 Flashcards
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Sample Questions
Q1) Suppose that the government reports the following information on violent crime in a certain area: there were 1100 incidents in the base year (2007)and 1155 incidents in 2008.The person collecting these data wants to present them in the form of an index.What is the index for 2008?
A) 100.0
Q2) If the CPI overstates the true rate of inflation,then
A) the economy will grow more slowly than if inflation was measured accurately B) the economy will grow more rapidly than if inflation was measured accurately
C) social security payments will increase in real terms
D) social security payments will decrease in real terms
E) so will other means of measuring the inflation rate
Q3) Inflation imposes a cost on society by directly decreasing average real income in the economy.
A)True
B)False
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Chapter 8:The Classical Long run Model
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) How do people in a market economy obtain income that is used to buy goods and services?
A) Supplying labor and other resources to firms
B) Trading goods and services in a barter system
C) Selling goods and services to each other
D) None of the above
E) b and c
Q2) In an economy without international trade,we can expect total output to equal
A) consumption spending plus investment spending plus government purchases
B) consumption spending minus leakages
C) the sum of leakages and injections
D) consumption spending plus investment spending
E) total spending minus leakages and injections
Q3) When represented graphically,the government's demand for funds curve is A) downward sloping
B) upward sloping
C) vertical
D) initially downward sloping,then upward sloping
E) initially rightward sloping,then downward sloping
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Page 10
Chapter 9: Economic Growth and Rising Living Standards
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185 Verified Questions
185 Flashcards
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Sample Questions
Q1) Refer to Figure 9-13.An increased labor supply on the graph would A) decrease total output
B) increase total output at a constant rate
C) increase total output at an increasing rate
D) increase total output at a decreasing rate
E) not change total output
Q2) If labor demand increases,the market wage rate will A) increase
B) decrease
C) remain stable
D) decrease initially and then rise by a larger amount
E) decrease initially and then rise by a small amount
Q3) If output grows faster than the population,the average standard of living will A) rise
B) fall
C) remain the same
D) stagnate
E) rise and then fall
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11
Chapter 10: Economic Fluctuations
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85 Verified Questions
85 Flashcards
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Sample Questions
Q1) During a recession,a rising unemployment rate is
A) rare
B) stimulating higher levels of inflation
C) predicted by the classical model
D) the basis for a new economics expansion
E) almost inevitable
Q2) The recession of 1982 was largely caused
A) on purpose by the Federal Reserve's decision to raise interest rates to combat inflation.
B) on purpose by the Federal Reserve's decision to cut interest rates to combat inflation.
C) by accident as a result of the Reagan era tax cuts.
D) by dramatically rising oil prices.
E) on purpose by the Reagan Administration's decision to raise interest rates to combat inflation.
Q3) Half of American recessions since the early 1950s have been caused at least in part by rapid increases in oil prices.
A)True
B)False
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Page 12
Chapter 11: The Short-run Macro Model
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210 Verified Questions
210 Flashcards
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Sample Questions
Q1) Refer to Figure 11-6.Which point represents the value of equilibrium GDP?
A) A
B) B
C) C
D) D
E) E or F
Q2) Which of the following is not an automatic stabilizer?
A) Forward-looking behavior
B) Interest rates
C) Imports
D) Transfer payments
E) Consumption spending.
Q3) Aggregate expenditure is the sum of
A) all types of spending by households and firms
B) spending and savings by households
C) spending by households and governments on final goods and services
D) spending by households,government,firms,and foreigners on final goods and services
E) all spending and saving by households,firms,and governments
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13
Chapter 12: Fiscal Policy
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) In mid-2009,publicly held debt was approaching ______ and total debt was approaching ______ .
A) $1 trillion;$12 trillion.
B) $3 trillion;$6 trillion.
C) $12 trillion;$7 trillion.
D) $7 trillion;$12 trillion.
E) $12 trillion;$12 trillion.
Q2) The national debt
A) exists because of past government budget deficits
B) is the difference between the government's spending and revenue in a given year
C) is the amount households owe on credit cards,mortgages and other loans
D) is a flow variable
E) is the same as the government's budget deficit
Q3) Government debt and interest payments on that debt
A) are problems if they grow faster than GDP
B) are unrelated in the short run
C) are unrelated in the long run,but not in the short run
D) generally grow faster than government spending
E) contributed to the crisis experienced by the U.S.economy in the late 1990s
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Page 14
Chapter 13: Money, Banks, and the Federal Reserve
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255 Verified Questions
255 Flashcards
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Sample Questions
Q1) A bank wants to get rid of excess reserves by making loans because
A) it will be penalized if it does not get rid of the reserves
B) the reserves do not earn interest
C) it is afraid it will lose the excess reserves
D) firms will not borrow from a bank with excess reserves
E) the bank has too many liabilities
Q2) Suppose a bank has total assets of $300 million and a net worth of $15 million.Its demand deposit liabilities must be equal to
A) $20 million
B) $315 million
C) $0.05 million
D) $285 million
E) $585 million.
Q3) Commercial banks can increase the money supply by
A) accepting demand deposits
B) loaning out required reserves
C) loaning out excess reserves
D) selling bonds to the public
E) buying bonds from the Fed
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Page 15
Chapter 14: The Money Market and Monetary Policy
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) Refer to Figure 14-1.If the economy is currently at point X,an increase in the interest rate will
A) increase the quantity of money demanded (moving the economy toward point A)
B) decrease the quantity of money demanded (moving the economy toward point B)
C) increase money demand (shifting the curve toward curve C)
D) decrease money demand (shifting the curve toward curve D)
E) leave the economy at point X
Q2) Many economists thought the Fed should have lowered the federal funds rate less aggressively in late 2007 and throughout 2008.
A)True
B)False
Q3) When economists speak of the demand for money,they refer to the amount of money people would like to hold
A) given that it can only be printed slowly
B) in the best of all possible worlds
C) in their bank accounts rather than their wallets
D) at each interest rate
E) rather than spend.
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16
Chapter 15: Aggregate Demand and Aggregate Supply
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185 Verified Questions
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Sample Questions
Q1) Which of the following would not cause a movement along the AD curve?
A) An increase in the price level.
B) A decrease in the price level.
C) A change in the interest rate caused by a change in the price level.
D) A change in autonomous consumption
E) Both a change in the interest rate caused by a change in the price level,and a change in autonomous consumption.
Q2) In the short run,an increase in real GDP will
A) increase unit costs and increase the price level
B) increase unit costs and decrease the price level
C) decrease unit costs and decrease the price level
D) decrease unit costs and increase the price level
E) have no effect on unit costs or the price level
Q3) Equilibrium real GDP is
A) independent of the price level
B) determined solely in the loanable funds market
C) controlled by the Fed
D) directly related to the interest rate
E) the level of output at which total spending equals total output for a given price level
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Page 17
Chapter 16: Inflation and Monetary Policy
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) If the inflation rate is 3 percent and the nominal wage is frozen for one year,by how much will the real wage change?
A) It will decrease by about 3 percent.
B) It will not change.
C) It will increase by 3 percent.
D) It will triple.
E) We do not have enough information to determine this answer.
Q2) If cyclical unemployment is eliminated
A) GDP is at its full-employment level
B) GDP is at its equilibrium level
C) the loanable funds market is in equilibrium
D) the aggregate supply curve shifts upward
E) potential output has increased
Q3) When the Federal Reserve System was first established,which of the following was its chief responsibility?
A) Keeping the inflation rate low and stable
B) Ensuring the stability of the banking system
C) Achieving full employment of the labor force
D) Keeping the interest rate low and stable
E) Keeping output growth high and stable.
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Chapter 17: Exchange Rates and Macroeconomic Policy
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) Which of the following is equivalent to the trade deficit?
A) Imports÷ exports
B) Net capital inflow
C) Exports + imports
D) Net exports - imports
E) Exports× imports.
Q2) If the exchange rate (dollars per unit of foreign currency)has increased,we say there has been a(n)
A) appreciation of the foreign currency
B) depreciation of the foreign currency
C) revaluation of the foreign currency
D) devaluation of the foreign currency
E) fixing of the foreign currency
Q3) You see on the news that a recession has started in Saudi Arabia.Which of the following would happen in the market for Saudi riyals?
A) A decrease in the supply of riyals and an appreciation of the riyal.
B) An increase in the supply of riyals and a depreciation of the riyal.
C) A decrease in the supply of riyals and a depreciation of the riyal.
D) An increase in the supply of riyals and an appreciation of the riyal.
E) Cannot be determined without additional information.
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