Course Introduction
Survey of Economics
Study Guide Questions
Survey of Economics offers a broad overview of fundamental economic principles, including both microeconomics and macroeconomics. The course covers topics such as supply and demand, market structures, the role of government, economic indicators, fiscal and monetary policy, and international trade. Emphasis is placed on understanding how economic decision-making impacts individuals, businesses, and society as a whole. Real-world applications and current events are incorporated to help students develop critical thinking skills and an appreciation for the relevance of economics in everyday life.
Recommended Textbook
Economics for Today 4th Asia Pacific Edition by Allan Layton
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19 Chapters
2245 Verified Questions
2245 Flashcards
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Page 2
Chapter 1: Thinking like an economist
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89 Flashcards
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Sample Questions
Q1) Microeconomics only looks at the behaviour of one consumer or one firm in a market,while macroeconomics looks at the behaviour of an entire industry or group of consumers.
A)True
B)False Answer: False
Q2) Economists most often disagree over positive rather than normative economic issues.
A)True
B)False Answer: False
Q3) Scarcity is a problem:
A)that only poor people face.
B)because human wants are limited while resources are unlimited.
C)because human wants are unlimited while resources are limited.
D)only in third world countries. Answer: C
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Chapter 2: Production possibilities and opportunity cost
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Sample Questions
Q1) Suppose an economy is faced with the production possibilities table shown in Exhibit 2-8.The second unit of capital goods production will cost _____ units of consumption goods and the third unit of capital goods production will cost _____ units of consumption goods.
A)4; 6
B)25; 23
C)23; 19
D)1; 23
E)2; 19
Answer: A
Q2) A nation's current location on its production possibilities curve cannot determine the future location of that nation's production possibilities curve.
A)True
B)False
Answer: False
Q3) Increase in current consumption is necessary for economic growth.
A)True
B)False
Answer: False
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Page 4
Chapter 3: Market demand and supply
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Sample Questions
Q1) There is news that the price of Tucker's Cider Explosion will increase significantly next week.If the demand for Tucker's Cider Explosion reacts only to this factor and shifts to the right,the position of this demand curve has reacted to a change in:
A)tastes.
B)income levels.
C)the price of other goods.
D)the number of buyers.
E)expectations.
Answer: E
Q2) The relationship between changes in the non-price determinants of supply and the supply curve:
A)is positive and significant.
B)depends on the nature of the non-price determinant of supply.
C)always results in an increase in supply.
D)indicates a rightward shift of the supply curve for all goods and services.
Answer: B
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Chapter 4: Markets in action
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Sample Questions
Q1) Public goods differ from private goods in that:
A)they produce negative externalities.
B)they are not scarce.
C)there is no way to prevent people from consuming them even if they did not pay for the goods.
D)their consumption must be regulated by the government.
E)their benefits are very narrow.
Q2) If the equilibrium price of aspirins is $5.50 for 250 tablets and the government imposes a price ceiling at $5.00 for 250 tablets,the eventual result will be:
A)a shift in the demand curve to the right.
B)a shift in the supply curve to the right.
C)an accumulation of inventories of unsold aspirins.
D)a shortage of aspirin.
Q3) A price floor is:
A)the lowest price a producer will accept.
B)the lowest price a consumer will pay.
C)a minimum price set by the government above equilibrium price.
D)a maximum price set by the government above equilibrium price
E)usually set equal to equilibrium price.
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Page 6
Chapter 5: Elasticity of demand and supply
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Sample Questions
Q1) The most important determinant of price elasticity of demand is:
A)the availability of substitutes.
B)the higher the price of the good.
C)the more of the budget is spent on the good.
D)the longer the time the consumer has to adjust to price changes.
Q2) Within different price ranges along a linear demand curve,elasticities are:
A)constant.
B)different.
C)equal.
D)the same as slope.
E)negative 1.
Q3) The number of satellite dishes increased by 50 per cent when the average monthly price of cable television increased by 10 per cent.Assuming that other factors are held constant,satellite dishes and cable television are classified as:
A)complements.
B)unrelated goods.
C)substitutes.
D)social goods.
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Chapter 6: Production costs
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Sample Questions
Q1) ATC can be calculated as follows:
A)AFC*AVC or TC*Q
B)AFC-AVC or TC/Q
C)AFC+AVC or TC*Q
D)AFC+AVC or TC/Q
Q2) As shown in Exhibit 6-3,what was the marginal product of labour when only one worker was hired?
A)50.
B)100.
C)150.
D)175.
Q3) The long-run average cost curve traces the lowest points of the AVC and ATC for all firms.
A)True
B)False
Q4) Which of the following statements is true?
A)TC = TFC - TVC.
B)AVC = TC/Q.
C)TFC = TC - TVC.
D)MC equals the change in ATC divided by the change in Q.
Page 8
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Chapter 7: Perfect competition
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Sample Questions
Q1) Under long-run perfect competition,which of the following are the same (equal)at all levels of output?
A)Market price and marginal cost.
B)Market price and marginal revenue.
C)Marginal cost and marginal revenue.
D)Market cost and marginal cost.
Q2) Suppose the market demand for second-hand books has decreased to the level less than the average total cost.The firm will:
A)reduce its losses to zero.
B)produce at the output level where ATC = MC.
C)produce at the level of output that keeps its losses to a minimum.
D)increase its output to make up for losses.
Q3) Under perfect competition,a firm is a price taker because:
A)setting a price higher than the going price results in profits.
B)each firm's product is perceived as different.
C)each firm has a significant market share.
D)setting a price higher than the going price results in zero sales.
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Chapter 8: Monopoly
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Sample Questions
Q1) When Nobel Laureate Sir John Hicks made the statement that: 'The best of all monopoly profit is a quiet life',he meant:
A)that monopolists often have a very low profile.
B)that earning monopoly profits allow people to retire early.
C)that monopolists are free from competition and so are not forced to innovate to survive.
D)that monopolists always earn economic profits.
Q2) According to Exhibit 8-7,if a firm buys all the other firms in this market and becomes a monopolist,we would expect:
A)a more efficient allocation of resources, as P = MC now.
B)the price to fall and output to rise to (P<sub>1</sub>, Q<sub>2</sub>).
C)the price to fall and output to decline to (P<sub>0</sub>, Q<sub>2</sub>).
D)the price to rise and output to fall to (P<sub>0</sub>, Q<sub>1</sub>).
Q3) Another way to say that marginal revenue is less than the price at a given level of output is that:
A)the marginal output curve lies below the demand curve.
B)the marginal revenue curve lies above the demand curve.
C)the marginal revenue curve is the same as the demand curve.
D)the marginal revenue curve lies below the demand curve.
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Page 10
Chapter 9: Monopolistic competition and oligopoly
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Sample Questions
Q1) In the short run the monopolistic firm's profit maximising decision:
A)is hard to determine.
B)is like that of the perfectly competitive firm.
C)is based on the horizontal market price.
D)is like that of the monopoly.
Q2) The monopolistically competitive firm:
A)(like a firm in a competitive market) will earn an economic profit in the long run.
B)(unlike a monopolist) will not earn an economic profit in the long run.
C)(like a monopolist) will not earn an economic profit in the long run.
D)(unlike a firm in a competitive market) will not earn an economic profit in the long run.
Q3) Monopolistic competition has the following characteristics:
A)one large buyer.
B)many small sellers.
C)a homogeneous product.
D)difficult entry and exit.
Q4) Firms in monopolistic competition are price takers.
A)True
B)False
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Chapter 10: Policy issues: resource taxes and climate change
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124 Flashcards
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Sample Questions
Q1) Which of the following is not supported by economists to combat the problem of climate change?
A)Carbon tax to reduce emissions.
B)Emissions trading scheme.
C)'Cap and trade' scheme.
D)Heavy subsidies for green energy technologies like wind and solar.
Q2) The ad valorem royalties are preferred to the flat rate royalties because:
A)they are estimated at an accelerated rate.
B)they are easier to calculate.
C)they create more revenue to the government.
D)they reflect the change in the value of the mineral.
Q3) Regulation is the best solution to climate change issues.
A)True
B)False
Q4) Suppose government imposed a carbon tax to reduce carbon emissions.How is it illustrated in Exhibit 10-2?
A)A shift from 'Supply 2' to 'Supply 1'.
B)A movement along the 'Supply 1' curve.
C)A shift in demand.
D)A shift from 'Supply 1' to 'Supply 2'.
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Chapter 11: Measuring the size of the economy
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Sample Questions
Q1) If I bought 1000 shares in Newish Corp.for $5 per share and sold them two months later for $6 per share,then:
A)GDP will rise by $6000.
B)GDP will fall by $6000.
C)GDP will rise by $1000.
D)GDP will rise by the amount I have to pay my broker to arrange the transaction.
E)GDP will not change.
Q2) In an open economy,domestic savings must always equal investment. A)True
B)False
Q3) Nominal GDP is based on:
A)the existing prices during the period of production.
B)prices of final goods and services adjusted for inflation.
C)prices at which intermediate goods are sold.
D)the existing price during a given time period based on the price existing in a selected base year.
Q4) Capital goods,like factories and machinery,are classified as intermediate goods.
A)True B)False
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Chapter 12: Business cycles and economic growth
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Sample Questions
Q1) One of the long-term potential problems in getting an economy to increase its living standards in the Solow growth model is that:
A)current generations may not want to sacrifice investment for the benefit of future generations.
B)current generations may not want to sacrifice consumption for the benefit of future generations.
C)current generations may not want to sacrifice savings for the benefit of future generations.
D)future generations may not want to have to sacrifice consumption for the benefit of current generations.
E)future generations may not want to have to to sacrifice investment for the benefit of current generations.
Q2) Which of the following is true?
A)The business cycle is a maximum period of economic growth.
B)The rise and fall in nominal GDP is a significant indicator of the business cycle.
C)Employment growth indicates a downturn in the business cycle.
D)Increase in employment indicates a phase of economic growth.
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14
Chapter 13: Inflation and unemployment
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Sample Questions
Q1) The phrase 'too much money chasing too few goods' describes which type of inflation?
A)Demand-supply inflation.
B)Demand-push inflation.
C)Demand-pull inflation.
D)Demand-excess inflation.
Q2) Frictional unemployment is:
A)long-term unemployment.
B)a rare type of unemployment.
C)the largest type of unemployment.
D)short-term unemployment.
Q3) Find the size of the civilian labour force from the following data: frictional unemployment = 150,structural unemployment = 200,cyclical unemployment = 225,discouraged workers = 25,underemployed workers = 75,fully employed workers = 850,total population = 2000.
A)1425.
B)1450.
C)1500.
D)1525.
E)2000.
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Chapter 14: A simple model of the macro economy
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Sample Questions
Q1) In Exhibit 14-2,if aggregate demand shifts from AD to AD ,real GDP will:
A)not change and the price level will fall from 170 to 100.
B)not change and the price level will fall from 140 to 100.
C)fall from $8 to $6 and the price level will not change.
D)fall from $8 to $6 and the price level will fall from 140 to 120.
E)not change and the price level will fall from 170 to 140.
Q2) In Exhibit 14-2,if aggregate demand shifts from AD to AD ,real GDP will:
A)not change and the price level will not change.
B)fall from $7 to $4 and the price level will not change.
C)fall from $4 to $3 and the price level will not change.
D)fall from $4 to $3 and the price level will fall from 120 to 100.
E)fall from $4 to $3 and the price level will fall from 170 to 100.
Q3) In Exhibit 14-2,if aggregate demand shifts from AD to AD ,real GDP will:
A)increase from $3 to $4 and the price level will increase from 100 to 140.
B)increase from $3 to $7 and the price level will increase from 100 to 140.
C)increase from $3 to $4 and the price level does not change.
D)increase from $3 to $7 and the price level will increase from 100 to 120.
E)not change and the price level will increase from 100 to 140.
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Chapter 15: The monetary and financial system
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Sample Questions
Q1) The Australian Securities and Investment Commission's role is to:
A)ensure competition among financial companies.
B)control interest rates.
C)control inflation.
D)oversee financial market integrity.
Q2) Precious metals and cigarettes are the example of:
A)gold-exempt money.
B)non-backed money.
C)paper money.
D)commodity money.
Q3) Comparing how many dollars it takes to run your car each year to annual earnings on a job instead of recording costs in terms of litres of petrol and oil represents the use of money as:
A)a means of payment.
B)a unit of account.
C)a store of purchasing power.
D)a form of plastic money.
Q4) Credit cards are money because they serve the three functions of money.
A)True
B)False
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Chapter 16: Macroeconomic policy I: monetary policy
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Sample Questions
Q1) If the RBA is 'testing' the foreign exchange market,it is trying to:
A)reduce excessive fluctuations in the $A.
B)maintain the $A at its agreed fixed rate.
C)see whether movement in the value of the currency is real or speculative.
D)smooth the market.
Q2) Australia has experimented with policy based on the monetarist policy prescription of monetary targeting.
A)True
B)False
Q3) The V in the equation of exchange represents the:
A)variation in the GDP.
B)variation in the CPI.
C)variation in real GDP.
D)average number of times per year a dollar is spent on final goods and services.
Q4) Australia:
A)did not implement monetarist policy during 1976-85.
B)has only used the classical economics approach in designing monetary policy.
C)rejected a monetarist policy during 1976-85.
D)implemented a monetarist policy during 1976-85.
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Chapter 17: Macroeconomic policy II: fiscal policy
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Sample Questions
Q1) If the treasurer announces a large,expected budget deficit for the forthcoming year,this is a sign that the government's fiscal stance will be:
A)expansionary.
B)contractionary.
C)neutral.
D)negative.
E)indeterminate.
Q2) According to Exhibit 17-3,if we assume the MPC is 0.8,then a shift in the AD curve from AD to AD would require an increase in government spending of:
A)$5 billion.
B)$10 billion.
C)$50 billion.
D)greater than $50 billion to allow for inflation.
E)less than $10 billion to allow for inflation.
Q3) To finance a budget deficit,the government must:
A)reduce taxes.
B)buy securities.
C)sell securities.
D)increase unemployment rate.
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Page 19
Chapter 18: International trade and finance
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Sample Questions
Q1) If country A lowers its tariffs even if country B doesn't,then:
A)only country A will be at a disadvantage.
B)both countries will be worse off.
C)both countries will be better off.
D)country A will be better off than if it kept tariffs high.
E)country B is better off if it keeps tariffs high.
Q2) Assume that the opportunity cost of producing wheat is lower in Australia compared with Malaysia.Further assume that the opportunity cost of producing cars is higher in Australia compared with Malaysia.Which country has a comparative advantage in producing wheat?
A)Australia and Malaysia.
B)Australia.
C)Malaysia.
D)Both countries have to specialise in producing cars.
Q3) An increase in Indonesia's income relative to Malaysia's should result in:
A)an appreciation of the Indonesian rupiah relative to the Malaysian ringgit.
B)a depreciation of the Indonesian rupiah relative to the Malaysian ringgit.
C)an increase in the supply of ringgits in exchange for rupiahs.
D)an increase in the demand for rupiah in exchange for ringgits.
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Page 20
Chapter 19: Applying graphs to economics
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Sample Questions
Q1) A direct relationship is a relationship between two variables in which they move in different directions (if one increases,the other decreases).
A)True
B)False
Q2) Basic economic analysis typically concerns:
A)the relationship between two variables, one of which has negative values.
B)the relationship between two variables, both of which have negative values.
C)the relationship between two variables, both of which have positive values.
D)the relationship between two variables, one variable always increases and the other variable always decreases.
Q3) Adding a third variable to a two dimensional graph:
A)makes it impossible to interpret the graph.
B)helps to show the effect of factors that are not on the graph.
C)creates unnecessary complexity and should be avoided.
D)provides a point of intersection.
Q4) Direct relationships are illustrated using upward-sloping lines and curves.
A)True
B)False
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