Survey of Economics Practice Questions
Course Introduction
Survey of Economics introduces students to the fundamental principles and concepts of both microeconomics and macroeconomics. Students will explore topics such as supply and demand, market structures, the role of government in the economy, monetary and fiscal policy, economic growth, inflation, and unemployment. The course emphasizes real-world applications and current economic issues, providing a broad understanding of how economic systems function and their impact on individuals and society.
Designed for both majors and non-majors, this survey course equips students with critical thinking skills and a foundational economic literacy necessary for informed citizenship and decision-making.
Recommended Textbook
Macroeconomics A Contemporary Introduction 9th Edition by William A. McEachern
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26 Chapters
3954 Verified Questions
3954 Flashcards
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Chapter 1: The Art and Science of Economic Analysis
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147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/49101
Sample Questions
Q1) If a business produces and sells only one unit of a good, its profit would be the
A)price received for the good
B)price of the product minus the cost of the resources used to produce the product
C)return paid to the firm's bank on its outstanding loans
D)price of the product minus the wages paid for the labor used to produce it
E)wages paid for the labor used to produce the product minus the price
Answer: B
Q2) Which of the following statements about economic methodology is correct?
A)An economic law is a cause-and-effect relationship that has been verified by a controlled experiment.
B)The test of a theory's validity is its usefulness in explaining reality.
C)An economic law is a statement about group behavior that is based on the observed behavior of a single individual.
D)An economic law, because it is based on probabilities, can only be expected to be true about half the time.
E)Assumptions are ignored in the development of hypotheses.
Answer: B
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Page 3
Chapter 2: Economic Tools and Economics Systems
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or 15 pens in one hour. Which of the following statements is correct?
A)Don has an absolute advantage over Bob in the production of pencils and Bob in the production of pens
B)Bob has an absolute advantage over Don in the production of pencils
C)Bob has a comparative advantage over Don in the production of pens
D)Don has a comparative advantage over Bob in the production of pens
E)Don does not have a comparative advantage in the production of either good
Answer: C
Q2) Opportunity cost exists because
A)technology is fixed at any point in time
B)the law of comparative advantage is working
C)resources are scarce but wants are unlimited
D)the value of lost opportunities varies from person to person
E)efficiency is measured by the monetary cost of an activity
Answer: C
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4
Chapter 3: Economic Decision Makers
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200 Verified Questions
200 Flashcards
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Sample Questions
Q1) Of the three levels of government in the United States,
A)only the federal government provides public goods
B)only the federal government has the power to tax
C)local governments are primarily responsible for primary and secondary education
D)the federal government is primarily responsible for higher education
E)state governments are primarily responsible for economic stability
Answer: C
Q2) You are more likely to hire a plumber to repair a leaky drain pipe
A)as the tax rate on your earned income rises
B)if you already own the specialized tools required to complete the plumbing repair work
C)following an increase in the opportunity cost of your time
D)the more knowledge and experience in plumbing repair work that you possess
E)as the transaction cost of entering into a plumbing contract increases due to government regulations
Answer: C
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Chapter 4: Demand Supply and Markets
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232 Verified Questions
232 Flashcards
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Sample Questions
Q1) For a renter, the income effect of an increase in apartment rents will
A)have a greater effect than the income effect of an increase in the price of chewing gum
B)have no impact on the demand curve for apartments, because everything except price is assumed constant
C)have less of an effect than the income effect of an increase in the price of chewing gum
D)be almost negligible, because housing is a necessity
E)occur only when income increases
Q2) The law of demand says that the lower the price of a good, other things constant,
A)the smaller the demand for that good
B)the larger the demand for that good
C)the smaller the quantity demanded of that good
D)the larger the quantity demanded of that good
E)the smaller the real income of consumers and the lower the quantity demanded of that good
Q3) If income rises and a good is inferior, then demand for that good will decrease.
A)True
B)False
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Page 6
Chapter 5: Introduction to Macroeconomics
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165 Flashcards
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Sample Questions
Q1) When economists refer to the economy's price level, they mean
A)the rate of inflation
B)the price of goods and services relative to consumers' incomes
C)a general measure of prices of all goods and services
D)a period of level, or steady, prices
E)the prices of a specific consumer good
Q2) In the history of the U.S. economy, which economic era saw both high unemployment and high inflation at the same time?
A)after the Great Depression to the early 1970s
B)since the early 1980s
C)the colonial period
D)before and during the Great Depression
E)from the early 1970s to the early 1980s
Q3) Who wrote The General Theory of Employment, Interest, and Money?
A)Adam Smith
B)Jean Baptiste Say
C)François Quesnay
D)John Maynard Keynes
E)Alfred Marshall
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Chapter 6: Tracking the Us Economy
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213 Verified Questions
213 Flashcards
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Sample Questions
Q1) GDP is a poor measure of social well-being because
A)the value of leisure time is not counted in GDP
B)revenue earned on U.S. exports is ignored
C)each dollar of government spending is valued at less than one-half of private spending
D)consumer spending is more important than business spending and should be considered more valuable
E)it values products at their market prices but ignores services produced
Q2) Whenever there is inflation, the increase in nominal GDP will overstate growth in the economy.
A)True
B)False
Q3) Which of the following is not a component of aggregate expenditure?
A)consumption expenditures
B)investment
C)imports
D)rent
E)government purchases
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8
Chapter 7: Unemployment and Inflation
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) Since World War II, labor force participation rates have
A)increased for males and females
B)remained nearly constant for males and increased for females
C)decreased for males and decreased for females
D)increased for males and decreased for females
E)decreased for males and increased for females
Q2) Unemployment arising from mismatch of skills is called
A)frictional unemployment
B)structural unemployment
C)seasonal unemployment
D)cyclical unemployment
E)underemployment
Q3) Discouraged workers are included in the labor force figures but not in unemployment figures.
A)True
B)False
Q4) Inflation is defined as a sustained increase in the price level.
A)True
B)False
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Chapter 8: Productivity and Growth
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) Since 1996,
A)U.S. productivity growth skyrocketed as more computers were installed
B)the computer sector has grown faster than the U.S. economy as a whole
C)spending on computers has been approximately constant as a fraction of total U.S. investment spending
D)the contribution of computers to U.S. productivity growth has been negative
E)computing technology did not improve enough to have a measurable impact on U.S. productivity
Q2) A decrease in the capital-labor ratio means
A)higher labor productivity because labor does more work
B)lower labor productivity because labor is working with relatively less capital
C)higher labor productivity because labor is producing less capital and more of other goods
D)lower labor productivity because more capital is available
E)higher labor productivity because more capital is available
Q3) The diminishing slope of the per-worker production function reflects the law of diminishing marginal returns.
A)True
B)False
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Page 10
Chapter 9: Aggregate Expenditure
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187 Verified Questions
187 Flashcards
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Sample Questions
Q1) Suppose that when disposable income rises from $3 trillion to $3.2 trillion, consumption rises from $2.5 trillion to $2.6 trillion. What is the marginal propensity to save?
A)0.1
B)0.2
C)0.5
D)0.8
E)0.9
Q2) A change in which of the following is least likely to cause a shift of the consumption function?
A)the saving rate
B)consumer expectations about future prices
C)household wealth
D)investment spending
E)the interest rate
Q3) The opportunity cost of investing in capital is the interest rate.
A)True
B)False
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11
Chapter 10: Aggregate Expenditure and Aggregate
Demand
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) If the marginal propensity to save is 1/8, the value of the simple multiplier is A)8
B)1/8
C)2
D)1/2
E)4
Q2) If people spend 2/3 of any extra income they receive, new autonomous spending of $10 causes equilibrium to increase by
A)$6.67
B)$16.67
C)$15.00
D)$30.00
E)$45.00
Q3) The smaller the marginal propensity to save, other things constant,
A)the smaller the marginal propensity to consume
B)the smaller the multiplier
C)the flatter the consumption function
D)the flatter the saving function
E)the steeper the saving function
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Chapter 11: Aggregate Supply
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213 Verified Questions
213 Flashcards
Source URL: https://quizplus.com/quiz/49111
Sample Questions
Q1) A rising price level in the short run may create an incentive for firms to increase production because
A)costs of production will increase
B)total sales revenue will decrease
C)profits will increase
D)costs of production will increase faster than total revenue
E)output prices are generally not fixed by contract whereas resource prices are
Q2) Exhibit 11-4 shows that the
A)expansionary gap has been closed
B)contractionary gap has been closed
C)potential level of real GDP has risen
D)potential level of real GDP has fallen
E)economy will experience deflation
Q3) Given the aggregate demand curve, an adverse supply shock would
A)increase output and the price level
B)decrease output and the price level
C)increase output and decrease the price level
D)decrease output and increase the price level
E)cause no change in output or the price level
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Chapter 12: Fiscal Policy
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242 Verified Questions
242 Flashcards
Source URL: https://quizplus.com/quiz/49112
Sample Questions
Q1) Assume autonomous net taxes fall by $300; the MPC = 2/3. Net exports, planned investment, taxes, and government purchases are autonomous and remain fixed. As a result, equilibrium real GDP demanded will
A)rise by $300
B)rise by $900
C)fall by $300
D)fall by $600
E)rise by $600
Q2) In a study by Edmunds.com, the Cash for Clunkers program was shown to cost the government _____ per additional car sale.
A)$6,000
B)$10,000
C)$16,000
D)$20,000
E)$24,000
Q3) The combined effect of changes in government purchases and net taxes can be determined by adding their individual effects.
A)True
B)False
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Page 14
Chapter 13: Federal Budgets and Public Policy
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158 Verified Questions
158 Flashcards
Source URL: https://quizplus.com/quiz/49113
Sample Questions
Q1) The crowding out of private investment is associated with
A)a reduction in profitable investment opportunities due to a recession
B)increased competition from foreign investors in U.S. markets
C)higher interest rates resulting from a declining rate of saving
D)higher interest rates resulting from increased borrowing by the federal government
E)higher interest rates resulting from restrictive monetary policy
Q2) U.S. debt has never exceeded 100 percent of GDP because if it did so, the federal government would be bankrupt.
A)True
B)False
Q3) Large budget __________ have come from a combination of tax __________ and spending __________.
A)surpluses, cuts, increases
B)surpluses, increases, increases
C)deficits, increases, increases
D)deficits, cuts, cuts
E)deficits, cuts, increases
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Chapter 14: Money and the Financial System
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209 Verified Questions
209 Flashcards
Source URL: https://quizplus.com/quiz/49114
Sample Questions
Q1) The distinction between depository institutions and other financial institutions is that
A)only depository institutions seek to maximize profit
B)only depository institutions don't seek to maximize profit
C)depository institutions do not make loans
D)only depository institutions make loans
E)only depository institutions receive funds through customer deposits
Q2) U.S. banks have grown primarily through
A)America's longstanding preference for big banks
B)surviving banks buying up bankrupt banks
C)excellent customer service
D)mergers and acquisitions
E)All of the answers are correct
Q3) According to Gresham's Law, when two kinds of money are in circulation (such as $1 gold coins and $1 silver coins), the preferred--or more highly valued--form of money will tend to predominate, driving the "bad" money out of circulation.
A)True
B)False
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Chapter 15: Banking and the Money Supply
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229 Verified Questions
229 Flashcards
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Sample Questions
Q1) The higher the required reserve ratio,
A)the larger the money multiplier
B)the smaller the money multiplier
C)the more excess reserves there are after each round of the money-creation process
D)the more money that can be lent in each round of the money-creation process
E)the fewer required reserves after each round of the money-creation process
Q2) Bank reserves can be held in the form of
A)loans and cash in the bank's vault
B)loans and deposits with the Fed
C)loans and checking accounts
D)deposits with the Fed and cash in the bank's vault
E)deposits with the Fed and checking accounts
Q3) To maximize its profit, a bank will
A)minimize actual reserves
B)maximize actual reserves
C)minimize excess reserves
D)maximize excess reserves
E)minimize required reserves
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Chapter 25: The Algebra of Income and Expenditure
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17 Verified Questions
17 Flashcards
Source URL: https://quizplus.com/quiz/49099
Sample Questions
Q1) If Y = C + I + G + (X - M) (where C = $100, I = $50, G = $50, and X - M = -$10) the equilibrium level of Y equals
A)$150
B)$180
C)$190
D)$200
E)$210
Q2) The nation of Omega has an MPC of 0.70 and a multiplier of 2.22. Therefore, Omega's MPM is
A)0.9
B)0.7
C)0.5
D)0.15
E)This question cannot be answered without knowing the MPS
Q3) Equilibrium output equals autonomous spending multiplied by the spending multiplier.
A)True
B)False
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18
Chapter 16: Monetary Theory and Policy
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185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/49116
Sample Questions
Q1) What is the opportunity cost of holding money rather than some other financial asset?
A)the forgone interest income
B)the forgone utility
C)time
D)the forgone leisure
E)the forgone profit
Q2) If the money supply increases when there is much idle capacity in the economy,
A)most of the resulting rise in nominal GDP will be a result of price increases
B)most of the resulting rise in nominal GDP will be a result of increases in real output
C)most of the resulting rise in real GDP will be a result of increases in the price level
D)most of the resulting rise in real GDP will be a result of increases in the interest rate
E)only nominal GDP will change; real GDP will be unaffected
Q3) When the money supply increases, people get rid of their excess money by buying real assets, such as durable goods.
A)True
B)False
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19
Chapter 17: Macro Policy Debate: Active or Passive
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Sample Questions
Q1) The rational expectations school advocates the passive rule of a fixed-growth-rate monetary policy because
A)we don't have enough information to pursue an active policy
B)the economy is not in bad enough shape to require active intervention
C)then the Federal Reserve Board would be superfluous and we could eliminate a large bureaucracy
D)people render active policy ineffective by figuring out what it's going to be and taking actions to offset it
E)they prefer to put their major emphasis on an active fiscal policy
Q2) When self-correction works to eliminate an expansionary gap,
A)both money wages and real wages increase
B)money wages increase while real wages decrease
C)both money wages and real wages decrease
D)money wages decrease while real wages increase
E)money wages remain unchanged
Q3) Contrary to what the Phillips curve would have predicted, the U.S. economy in the 1970s experienced simultaneous increases in inflation and unemployment.
A)True
B)False
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Page 20
Chapter 26: The Algebra of Demand-Side Equilibrium
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22 Flashcards
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Sample Questions
Q1) Suppose that government purchases increase by $200 and at the same time autonomous net taxes are increased by $200. If there are neither income taxes nor net exports, the change in equilibrium real GDP demanded will A)depend on the value of the MPC
B)be a $200 decrease
C)be a $200 increase
D)be equal to zero, since higher taxes exactly offset higher government spending
E)be an increase by some amount greater than $200
Q2) The balanced budget multiplier is equal to A)1
B)1 ÷ (1 - MPC)
C)1 ÷ (1 - MPS)
D)zero
E)Y - Y<sup>*</sup>
Q3) A $100 increase in autonomous government purchases has the same effect on the equilibrium level of real GDP as a $100 increase in autonomous investment spending would.
A)True
B)False
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21
Chapter 18: International Trade
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) The basis for international trade is
A)established trade patterns
B)the size of gold holdings of two countries
C)shipping and transportation costs
D)absolute advantage
E)comparative advantage
Q2) One reason for international specialization in production is
A)differing national tastes
B)diseconomies of scale in production
C)a high world price for a good
D)resources are plentiful in all nations
E)people have limited wants for domestically produced goods and services
Q3) At a world price of $1.00 in Exhibit 18-4,
A)20 units will be exported
B)20 units will be imported
C)50 units will be exported
D)50 units will be imported
E)10 units will be exported
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22
Chapter 19: International Finance
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231 Verified Questions
231 Flashcards
Source URL: https://quizplus.com/quiz/49119
Sample Questions
Q1) The theory that changes in the exchange rate reflect only changes in the price levels of two countries is called
A)the floating exchange rate theory
B)the fixed exchange rate theory
C)the flexible exchange rate theory
D)purchasing power parity
E)the managed exchange rate theory
Q2) Imagine that there are only two nations in the world, the United States and Mexico. If Americans buy more goods made in Mexico, other things constant, the
A)U.S. demand curve for Mexican pesos will shift rightward
B)U.S. demand curve for Mexican pesos will shift leftward
C)U.S. supply curve of Mexican pesos will shift leftward
D)U.S. supply curve of Mexican pesos will shift rightward
E)U.S. supply curve of Mexican pesos will shift upward
Q3) In 2009, the United States balance of trade deficit with China was about 4 times as large as the balance of trade deficit with Canada
A)True
B)False
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Chapter 20: Economic Development
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) In centrally planned economies, most prices are not
A)established by central planners
B)inflexible
C)set below the market-clearing level
D)based on consumer demand
E)the cause of shortages of supply
Q2) Export promotion has been more successful than import substitution.
A)True
B)False
Q3) Laws, customs, conventions, and other institutional elements that sustain an economy fall under the category of
A)rules of the game
B)human capital
C)natural resources
D)financial institutions
E)capital infrastructure
Q4) Developing countries must confront industrial countries' trade restrictions, such as tariffs and quotas.
A)True
B)False
Page 24
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Chapter 21: National Income Accounts
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Sample Questions
Q1) Personal income is
A)NDP minus indirect business taxes
B)NDP minus depreciation minus taxes
C)national income minus taxes
D)national income plus income received but not earned minus income earned but not received
E)national income minus income received but not earned plus income earned but not received
Q2) The income approach to GDP reveals that compensation of employees (i.e., wages and salaries) is larger than profits.
A)True
B)False
Q3) Disposable income is commonly referred to as take home pay.
A)True
B)False
Q4) Disposable Income is Personal Income minus personal taxes.
A)True
B)False
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Page 25
Chapter 22:Understanding Graphs
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Sample Questions
Q1) The slope of the line in Exhibit 1-6 is
A)0.1
B)1
C)10
D)-0.1
E)-10
Q2) Refer to exhibit 1-16. Which of the graphs illustrates an inverse or negative relationship between variable X and variable Y?
A)a
B)b
C)c
D)d
E)e
Q3) The slope of a vertical straight line is infinity.
A)True
B)False
Q4) The slope of an inverted U-shaped curve is infinity at the top of the curve.
A)True
B)False
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Chapter 23:Variable Net Exports
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Sample Questions
Q1) A decrease in the value of the U.S. dollar relative to foreign currencies would lead to a(n)
A)increase in U.S. exports
B)decrease in U.S. imports
C)increase in both U.S. imports and U.S. exports
D)increase in U.S. exports and a decrease in U.S. imports
E)decrease in U.S. exports and an increase in U.S. imports
Q2) Which of the following factors is not assumed constant along the U.S. net export function?
A)U.S. price levels and foreign price levels
B)interest rates in the U.S. and abroad
C)exchange rates between the U.S. and other currencies
D)foreign income levels
E)income levels in the U.S.
Q3) U.S. net exports will increase if
A)U.S. income increases
B)the value of the U.S. dollar decreases relative to foreign currency
C)the value of the U.S. dollar increases relative to foreign currency
D)U.S. exports decrease
E)U.S. imports increase
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Chapter 24: Variable Net Exports Revisited
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Sample Questions
Q1) If the marginal propensity to import (MPM) equals 0.10 and the multiplier equals 5.0, the marginal propensity to consume must equal
A)0.99
B)0.95
C)0.90
D)0.85
E)0.50
Q2) A more realistic approach has net exports varying __________ with income.
A)positively
B)independently
C)directly
D)inversely
E)None of the answers is correct
Q3) The marginal propensity to import
A)is negative
B)is positive
C)is likely to be larger than the MPC
D)depends on the value of domestic income
E)depends on the value of exports
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