Survey of Economics Test
Bank
Course Introduction
Survey of Economics provides students with a comprehensive overview of fundamental economic principles and concepts, including both microeconomics and macroeconomics. The course explores topics such as supply and demand, market structures, the role of government in the economy, fiscal and monetary policies, and the global economic environment. Through real-world examples and basic analytical tools, students will develop an understanding of how economic decisions are made by individuals, businesses, and governments, as well as the impact of these decisions on society. This course is designed for students seeking a broad introduction to economics, regardless of their major.
Recommended Textbook
ECON MACRO 5th Edition by William A. McEachern
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19 Chapters
2883 Verified Questions
2883 Flashcards
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Chapter 1: The Art and Science of Economic Analysis
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) When economic choice involves an adjustment to an existing situation,marginal analysis:
A)has no practical applications or real-world uses.
B)eliminates incorrect decisions and bad choices.
C)involves comparing the additional costs and additional benefits of an activity before deciding.
D)involves examining only the total costs and total benefits of an activity before deciding.
E)guarantees an incorrect decision.
Answer: C
Q2) Which of the following is true about the resource market?
A)It facilitates the exchange of goods and services between buyers and sellers.
B)It facilitates the exchange of resources between buyers and sellers.
C)Firms are sellers in the resource market.
D)Households are buyers in the resource markets.
E)There is no flow of money in the resource market.
Answer: B
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Chapter 2: Economic Tools and Economic Systems
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) If Helen can paint one room in the time it takes her to bake 40 cakes and Josh can paint one room in the time it takes him to bake 60 cakes,Josh's opportunity cost of baking one cake is:
A)painting one room.
B)painting 1/40 of a room.
C)painting 1/60 of a room.
D)painting 2/3 of a room.
E)painting 3/2 of a room.
Answer: C
Q2) Any movement along a bowed-out production possibilities frontier involves the production of:
A)more of both goods.
B)more of one good and less of the other.
C)less of both goods.
D)more resources.
E)better technology.
Answer: B
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Page 4
Chapter 3: Economic Decision Makers
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) Household production increases when there is a stronger desire to avoid taxation.
A)True
B)False
Answer: True
Q2) Mark and Charles are roommates at college.Each has written a 25-page term paper for the same English class.They are equally poor typists.Charles types his own paper and gets paid by Mark to type his,too.On the basis of the information given,which one of the following must be true?
A)Mark is wealthier than Charles.
B)Mark needs more time to study than Charles.
C)Charles hates typing.
D)Mark and Charles have different utilities for typing but place the same value on time.
E)Mark's opportunity cost of typing is higher than Charles's.
Answer: E
Q3) Gasoline taxes illustrate the benefits-received principle of taxation.
A)True
B)False
Answer: True
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5
Chapter 4: Demand, supply, and Markets
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152 Flashcards
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Sample Questions
Q1) Consider the market for a good that is initially in equilibrium.For a given upward-sloping supply curve,an increase in demand will typically:
A)increase price but quantity could change in either direction.
B)increase quantity but price could change in either direction.
C)increase price but leave quantity unchanged.
D)decrease both quantity and price.
E)increase both quantity and price.
Q2) Which of the following statements about gold jewelry and round-trip bus tickets to Bismarck,North Dakota,is most likely to be correct?
A)They are both inferior goods.
B)Their demand curves have equal slope.
C)They are complements.
D)They are substitutes.
E)They are unrelated.
Q3) Classified ads and job web sites reduce the transaction costs of finding a new job.
A)True
B)False
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6
Chapter 5: Introduction to Macroeconomics
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151 Flashcards
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Sample Questions
Q1) Which of these is a likely consequence of an increase in the price level in the economy,other things constant?
A)Firms demanding less imported raw materials
B)Government demanding less military hardware
C)Foreigners demanding greater amount of U.S.goods
D)Households demanding more housing and furniture
E)Firms demanding more capital resources
Q2) An increase in government spending,other things constant,will cause a:
A)leftward shift of the aggregate supply curve.
B)rightward shift of the aggregate supply curve.
C)leftward shift of the aggregate demand curve.
D)rightward shift of the aggregate demand curve.
E)downward movement along the aggregate supply curve.
Q3) Which of the following economic measures is most useful in comparing different economies across the world?
A)Aggregate supply
B)Total unemployment
C)Gross domestic product
D)Net national product
E)Aggregate expenditure
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Chapter 6: Tracking the Useconomy
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150 Flashcards
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Sample Questions
Q1) Which of the following would be included in the gross domestic product (GDP)?
A)The monthly telephone bill paid by Mr.Jones
B)The corporate stock purchased by Steven
C)The used limousine purchased by Harold
D)The bricks purchased by a construction company to build a house
E)The $300 George saved because he painted his own garage
Q2) Which of the following expenditures is included in the consumption component of the gross domestic product (GDP)?
A)The money spent on the purchase of stocks
B)The money spent on the purchase of used furnitures
C)The money spent on the purchase of a used car
D)The money spent on the purchase of kitchen appliances
E)The money spent on the purchase of bonds issued by the government
Q3) Which of the following is not true about gross domestic product (GDP)?
A)It includes only final goods and services.
B)It reflects production in a particular year.
C)Intermediate goods and services are excluded to prevent double counting.
D)It excludes purchases of financial assets.
E)It includes transfer payments.
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Page 8
Chapter 7: Unemployment and Inflation
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150 Flashcards
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Sample Questions
Q1) The nominal interest rate is determined in the market for loanable funds.
A)True
B)False
Q2) Which of the following is true of the labor force participation rate?
A)When workers become unemployed,the labor force participation rate declines.
B)When the unemployed become discouraged workers,the labor force participation rate declines.
C)When workers do not fully use their skills,the labor force participation rate decreases.
D)Since the 1950s,the labor force participation rate of women has decreased in the United States.
E)The trend toward earlier retirement has increased the labor force participation rate in the United States.
Q3) The problems of inflation are caused primarily by:
A)greed on the part of sellers.
B)uncertainty about inflation.
C)too much incentive to lend money.
D)greed on the part of union leaders.
E)governments' actions to reduce the effects of inflation.
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9
Chapter 8: Productivity and Growth
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Sample Questions
Q1) Since 1870,U.S.labor productivity growth has averaged roughly 2.1 percent annually.
A)True
B)False
Q2) The cumulative power of productivity growth:
A)emphasizes the importance of short-term growth.
B)emphasizes the importance of long-term growth.
C)emphasizes the importance of capital-labor ratio.
D)increases poverty in an economy.
E)leads to capital deepening
Q3) According to Simon Kuznets,_____.
A)the main force behind economic growth is increases in the quantity of labor
B)the main force behind economic growth is increases in the quantity of capital
C)the main force behind economic growth is increases in the quality of inputs
D)government regulations increase labor productivity
E)government regulations decrease labor productivity
Q4) If the ratio of labor to capital increases,we can expect that labor productivity will increase.
A)True
B)False
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Chapter 9: Aggregate Demand
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Sample Questions
Q1) The aggregate expenditure line shows total planned spending at each _____.
A)consumption level
B)investment level
C)income level,holding the price level constant
D)price level,holding the level of income constant
E)interest rate,holding the price level constant
Q2) An economy's investment demand curve shows the inverse relationship between the quantity of investment demanded and the market interest rate,other things held constant.
A)True
B)False
Q3) An increase in autonomous investment in an economy will _____.
A)shift the aggregate expenditure line upward
B)shift the aggregate expenditure line downward
C)result in an upward movement along the aggregate expenditure line
D)result in a downward movement along the aggregate expenditure line
E)increase aggregate expenditures only at high levels of income
Q4) The slope of the consumption function equals the marginal propensity to consume.
A)True
B)False
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Chapter 10: Aggregate Supply
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150 Flashcards
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Sample Questions
Q1) Which of the following is true of a beneficial supply shock?
A)It can lead to a temporary lower price level.
B)It can create a recessionary gap.
C)It can permanently decrease the economy's price level.
D)It can shift the aggregate demand curve rightward.
E)It can shift the aggregate demand curve leftward.
Q2) When actual output increases the potential output,_____.
A)more resources become unemployed.
B)prices remain constant.
C)prices tend to increase.
D)nominal GDP decreases.
E)resource prices decrease.
Q3) Which of the following is generally true of nominal wages?
A)In the long run,nominal wages tend to equal real wages.
B)Nominal wages are more flexible downward than upward.
C)Nominal wages are more flexible than prices.
D)Nominal wages tend to adjust slowly in the downward direction.
E)Nominal wages do not rise during labor shortages.
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Chapter 11: Fiscal Policy
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149 Flashcards
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Sample Questions
Q1) Economists and policy makers questioned the effectiveness of discretionary fiscal policy during the 1970s for all the following reasons except:
A)the difficulty of estimating the natural rate of unemployment.
B)the time lags involved in implementing fiscal policy.
C)the existence of possible feedback effects of fiscal policy on aggregate supply.
D)the distinction between current and permanent income.
E)the possible feedback effects of fiscal policy on aggregate demand.
Q2) One lesson of the Great Depression was that potential GDP could _____.
A)be too low to ensure full employment if the population was growing
B)be too low to ensure full employment in a capitalist economy
C)be too low to ensure full employment in a market economy
D)fall short of full-employment GDP
E)exceed equilibrium GDP
Q3) Unemployment insurance is an example of a discretionary fiscal policy.
A)True
B)False
Q4) Government transfer payments are a good example of an automatic stabilizer.
A)True
B)False
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Chapter 12: Federal Budgets and Public Policy
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153 Flashcards
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Sample Questions
Q1) The federal budget deficit becomes _____ during recessions because _____.
A)smaller; transfer payments increase and tax revenues decline
B)larger; transfer payments increase and tax revenues decline
C)larger; both transfer payments and tax revenues increase
D)smaller; both transfer payments and tax revenues increase
E)smaller; both transfer payments and tax revenues decrease
Q2) Which of the following countries hold the most U.S.Treasury securities?
A)Japan and China
B)Taiwan and Brazil
C)United Kingdom
D)Belgium
E)Switzerland
Q3) Some economists argue that federal government capital projects,which offer benefits over a number of years,should be financed through deficit financing.
A)True
B)False
Q4) Biennial budgets have replaced the annual budget process for the federal government.
A)True
B)False
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Chapter 13: Money and the Financial System
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150 Flashcards
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Sample Questions
Q1) The more specialized labor becomes,the:
A)less likely it is that a double coincidence of wants will exist,and the less likely it is that monetary exchange will develop.
B)less likely it is that a double coincidence of wants will exist,and the more likely it is that monetary exchange will develop.
C)more likely it is that a double coincidence of wants will exist,and the less likely it is that monetary exchange will develop.
D)more likely it is that a double coincidence of wants will exist,and the more likely it is that monetary exchange will develop.
E)more likely it is that the individual is producing only what he or she wants to consume.
Q2) Barter may be the only alternative:
A)if the supply of money dries up.
B)if the price system is not allowed to function properly.
C)if disinflation sets in.
D)if hyperinflation sets in.
E)if fiat money is discontinued.
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15
Chapter 14: Banking and the Money Supply
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Sample Questions
Q1) Lowering the discount rate:
A)encourages banks to borrow from the Fed,and they can more easily accommodate their customers' needs for loans.
B)encourages business customers to borrow directly from the Fed.
C)reduces the amount of reserves banks are required to keep.
D)automatically reduces excess reserves.
E)encourages banks to sell U.S.government securities and increase their cash reserves.
Q2) Suppose a bank has $8,000 in checkable deposits and the required reserve ratio is 0.2.If actual reserves equal $3,000,then excess reserves equal:
A)$1,600.
B)$1,400.
C)$2,400.
D)$5,000.
E)zero.
Q3) A fall in the discount rate will usually encourage banks to borrow from the Fed and therefore reduce the money supply.
A)True
B)False
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Page 16
Chapter 15: Monetary Theory and Policy
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Sample Questions
Q1) All other things constant,when the interest rate increases:
A)the demand for investment curve shifts to the right
B)the demand for investment curve shifts to the left.
C)there is a movement downward along the demand for investment curve.
D)there is a movement upward along the demand for investment curve.
E)GDP increases.
Q2) Which of the following changes will shift the money demand curve leftward?
A)An increase in the price level
B)An increase in real GDP
C)A decrease in the nominal interest rate
D)An increase in the nominal interest rate
E)A decrease in real GDP
Q3) If the money supply is $600,the price level is $2,and real GDP is $300,the velocity of money is _____.
A)1
B)150
C)300
D)600
E)1,200
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Page 17
Chapter 16: Macro Policy Debate: Active or Passive
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Sample Questions
Q1) If rational expectations cause people's price expectations to be generally correct,active policy will influence the price level but not output.
A)True
B)False
Q2) Which of the following central banks does not have an explicit inflation target?
A)The Bank of England
B)The Federal Reserve
C)Swiss National Bank
D)European Central Bank
E)The Reserve Bank of India
Q3) In general,the Fed has not embraced a fixed-growth-rate monetary policy because:
A)its adoption would lead to a decrease in the employment rate in the U.S.economy .
B)no influential economists have come out in favor of it.
C)the Fed has to report to Congress,and Congress is not in favor of it.
D)the Fed prefers active fiscal policy.
E)they believe the economy is too complex to make such a policy work consistently.
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18
Chapter 17: International Trade
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Sample Questions
Q1) Countries export products they can produce cheaply in return for products that are unavailable domestically or are cheaper elsewhere.
A)True
B)False
Q2) For each pound of blueberry cheesecake Abura produces,it gives up the opportunity to make 150 screwdrivers.Mayo can produce one pound of blueberry cheesecake for every 300 screwdrivers it produces.If specialization and trade were to occur between these two countries,which of the following is true with regard to opportunity costs in the two countries?
A)The opportunity cost of producing cheesecakes is lower in Abura than Mayo.
B)The opportunity cost of producing screwdrivers is lower in Abura than Mayo.
C)The opportunity cost of producing cheesecakes is identical in both countries.
D)The opportunity cost of producing screwdrivers is higher in Abura than Mayo.
E)In Mayo,the opportunity cost of producing one unit of screwdriver is one pound of cheesecake.
Q3) Japan is generally considered a closed economy.
A)True
B)False
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Chapter 18: International Finance
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Sample Questions
Q1) For the U.S.,a drop in the price of foreign exchange means that:
A)fewer U.S.dollars are needed to purchase foreign currency.
B)more U.S.dollars are needed to purchase foreign currency.
C)imports will become more expensive worldwide.
D)exports will become cheaper worldwide.
E)transaction costs in international markets will decrease.
Q2) A floating exchange rate:
A)is determined by the national governments involved.
B)remains extremely stable over long periods of time.
C)is determined by the actions of central banks.
D)is allowed to vary only within a narrow range.
E)adjusts in response to market forces.
Q3) If the U.S.dollar depreciates,it becomes cheaper for U.S.residents to travel in foreign countries.
A)True
B)False
Q4) Speculators profit by taking risks,while the actions of arbitrageurs involve no risk.
A)True
B)False
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Chapter 19: Economic Development
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Sample Questions
Q1) Because of disappointment with the results of government aid,the trend is to _____.
A)stop accepting outside aid altogether
B)channel funds through profit-making organizations
C)channel funds through private investors
D)become the donor country from being the recipient country
E)channel funds through private non-profit agencies
Q2) The World Bank estimates GNI per capita and then adjusts figures across countries based on _____.
A)the population rate in each country
B)the unemployment rate in each country
C)the purchasing power of the income in each country
D)the inflation rate in each country
E)the consumer price index in each country
Q3) Which of the following is likely to be a characteristic of a developing economy?
A)A high rate of illiteracy
B)A low rate of growth of population
C)A high rate of economic growth
D)The export of manufactured goods
E)The efficient use of labor
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