Course Introduction
Survey of Economics
Textbook Exam Questions
Survey of Economics introduces students to the fundamental principles and concepts of both microeconomics and macroeconomics. This course covers how individuals, businesses, and governments make choices about the allocation of scarce resources, the functioning of markets, determinants of supply and demand, price mechanisms, and the roles of competition and government intervention in the economy. It also examines national income determination, economic growth, unemployment, inflation, monetary and fiscal policy, and the global economic environment. Designed for non-majors and those seeking a broad overview, this course lays a strong foundation for understanding key economic issues that shape societies and influence everyday 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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Page 2
Chapter 1: The Art and Science of Economic Analysis
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) Which of the following would an economist classify as capital?
A)100 shares of Microsoft stock
B)a $50 bill
C)a credit card
D)a lawyer's personal computer
E)a bauxite mine in Jamaica
Answer: D
Q2) Which of the following is the best definition of economics?
A)An investigation of the quantities and prices of the various goods produced by the nations of the world.
B)A study of why inflation and unemployment periodically plague the U.S. economy.
C)An analysis of how individuals and societies deal with the problem of scarcity.
D)An examination of the role that money plays in the economy.
E)A study of how goods and services are distributed throughout the world.
Answer: C
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3
Chapter 2: Economic Tools and Economics Systems
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) Which economic question does the decision to produce butter instead of guns answer?
A)What to produce?
B)How to produce?
C)For whom to produce?
D)Who has a comparative advantage in gun production?
E)Who has an absolute advantage in butter production?
Answer: A
Q2) Society's production possibilities frontier
A)helps explain the immense complexity of the real economy
B)demonstrates that, although resources are scarce for individuals, there is no problem of scarcity for society as a whole
C)is based on unrealistic assumptions and therefore has no value as an economic tool
D)is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth
E)is based on the assumption that technology is constantly changing
Answer: D
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Chapter 3: Economic Decision Makers
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200 Verified Questions
200 Flashcards
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Sample Questions
Q1) Which of the following is the category to which the largest portion of households' personal income is allocated?
A)taxes collected by government
B)savings
C)purchases of services
D)purchases of durable goods
E)purchases of nondurable goods
Answer: C
Q2) The main source of revenue for the U.S. federal government is
A)personal income taxes
B)corporate income taxes
C)sales taxes
D)borrowing on financial markets
E)revenue from the sale of government goods and services
Answer: A
Q3) Two important roles of government in the economy are to safeguard private property and enforce contracts.
A)True
B)False Answer: True
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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) If demand increases and supply decreases,
A)equilibrium price will fall and equilibrium quantity will rise
B)equilibrium price and quantity will both rise
C)equilibrium quantity will rise; equilibrium price will either rise or fall
D)equilibrium price will fall; equilibrium quantity will either rise or fall
E)equilibrium price will rise; equilibrium quantity will either rise, fall, or remain unchanged
Q2) Which of the following is true of the relationship between price and quantity supplied?
A)There is always an inverse relationship.
B)More is supplied at lower prices.
C)Producers work harder and sell more when the price decreases.
D)There is a direct relationship between price and quantity supplied.
E)It is always true that a higher price leads to a decrease in quantity supplied.
Q3) A decrease in the price of peanut butter will cause a leftward shift of the supply curve of peanut butter.
A)True
B)False
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Chapter 5: Introduction to Macroeconomics
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) A depression can be defined as
A)a mild reduction in total production coupled with a rising unemployment rate that lasts for several years
B)a decline in total production that lasts less than six months
C)a severe fall in stock prices that causes financial panic and lasts several years
D)a severe reduction in total production coupled with high unemployment that lasts several years
E)a decline in government spending and taxes that lasts for several months
Q2) Adam Smith's "invisible hand" explains
A)why people act in their own best interests
B)why the government intervenes to overcome failures in private markets.
C)how people, acting out of self-interest, unintentionally promote the general good
D)how comparative advantage and specialization promote international trade
E)how the creation of goods and services (supply) generates its own demand by creating employment and income
Q3) In U.S. history, recessions have usually lasted longer than expansion periods.
A)True
B)False
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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) If drug enforcement policies result in price increases for illegal drugs and the quantity sold decreases, GDP will decrease.
A)True
B)False
Q2) Suppose a loaf of bread sold for $3.00 in 2008. The price of bread then increases to $3.60 in 2009. The price index for bread is
A)($3.60/$3.00) = 1.20
B)($3.00/$3.60) *100 = 83.33
C)($3.60/$3.00) *100 = 120
D)($3.00/$3.00) * 100 = 100
E)($0.60/$3.00) * 100 = 20
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) As a result of the hyperflation in Zimbabwe, GDP fell by 50%.
A)True
B)False
Q2) A decrease in a person's real wage necessarily means
A)lower purchasing power
B)a lower nominal wage
C)a lower nominal wage after payment of taxes
D)a higher nominal wage
E)a higher nominal wage after payment of taxes
Q3) The supply of loanable funds curve slopes downward to the right.
A)True
B)False
Q4) In the United States,
A)the average inflation rate was higher before 1950 than after
B)the average inflation rate was higher after 1950 than before
C)inflation caused no serious problems before World War II
D)inflation caused no serious problems after World War II
E)the implicit price deflator was used to measure inflation before World War II, and the consumer price index has been used since then.
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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) Research and development contributes most to productivity growth through its impact on the
A)quantity of labor available
B)quantity of capital goods available
C)quality of labor available
D)quality of capital goods available
E)use of energy
Q2) Which of the following would not slow down productivity growth?
A)The composition of the work force changes so that more young people and fewer middle-aged people are working.
B)The composition of the work force changes so that more women, who enter and leave the work force more frequently than men, are included.
C)The quality of education decreases.
D)Investment declines.
E)Firms switch from providing services to producing goods.
Q3) Basic research seeks to answer specific questions or to apply scientific discoveries to the development of specific products.
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) New investment will be undertaken up to the point where the expected rate of return equals
A)zero
B)10 percent
C)5 percent
D)the market interest rate
E)the inflation rate
Q2) Suppose that when disposable income rises from $5.2 trillion to $6.0 trillion, consumption rises from $5.0 trillion to $5.6 trillion. What is the marginal propensity to consume?
A)0.25
B)0.33
C)0.75
D)0.67
E)0.07
Q3) The primary determinant of saving is income.
A)True
B)False
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Chapter 10: Aggregate Expenditure and Aggregate Demand
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) At the equilibrium level of GDP in Exhibit 10-2, injections equal
A)$1.0 trillion
B)$1.5 trillion
C)$1.4 trillion
D)$1.2 trillion
E)$1.3 trillion
Q2) If planned spending exceeds planned output, the result is
A)unintended inventory increases
B)a reduction in GDP
C)a decrease in imports
D)an increase in government purchases
E)unintended inventory reductions
Q3) The larger the marginal propensity to save, other things constant,
A)the smaller the marginal propensity to consume
B)the larger the marginal propensity to consume
C)the larger the multiplier
D)the steeper the consumption function
E)the flatter the saving function
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Chapter 11: Aggregate Supply
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213 Verified Questions
213 Flashcards
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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) A contractionary gap may be closed in the long run by a(n)
A)rightward shift of the short-run aggregate supply curve
B)leftward shift of the short-run aggregate supply curve
C)rightward movement along a fixed short-run aggregate supply curve
D)decrease in aggregate demand
E)increase in aggregate demand
Q3) In the long run, an increase in aggregate demand will cause
A)a decrease in price and output levels
B)an increase in price and output levels
C)an increase in the price level and a decrease in output
D)a decrease in the price level and an increase in output
E)an increase in the price level and no change in output
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Page 13
Chapter 12: Fiscal Policy
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242 Verified Questions
242 Flashcards
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Sample Questions
Q1) Lags in the approval and implementation of fiscal policy
A)weaken fiscal policy as a tool of economic stabilization
B)increase the effectiveness of fiscal policy as a tool of economic stabilization
C)help legislators to better assess what policies are most appropriate to adopt
D)make fiscal policy more responsive to the current economic environment
E)cause fiscal policy to be more effective in changing the level of real GDP than changing the price level
Q2) Fiscal policy focuses on manipulating
A)aggregate demand to smooth out business fluctuations
B)aggregate supply to smooth out business fluctuations
C)both aggregate supply and aggregate demand to smooth out business fluctuations
D)aggregate demand to stimulate the economy and aggregate supply to contract it
E)short-run aggregate supply to stimulate the economy and aggregate demand to contract it
Q3) A $100 billion increase in government purchases will have the same effect on real GDP as a $100 billion decrease in taxes.
A)True
B)False
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14
Chapter 13: Federal Budgets and Public Policy
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158 Verified Questions
158 Flashcards
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Sample Questions
Q1) If a federal budget deficit causes crowding out,
A)real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because bondholders' saving declines
B)real GDP does not increase by as much as the government purchases of goods and services multiplier would predict because investment declines
C)interest rates fall, reducing the burden of the debt
D)interest rates fall, bringing the current deficit back down
E)interest rates fall, so that decreases in investment and government purchases of goods and services exactly offset the expansionary effect of the deficit
Q2) If the deficit is increasing because of the effects of the automatic stabilizers,
A)all of the following
B)the economy is contracting
C)the annual deficit will approach zero
D)the budget is cyclically balanced
E)the economy is growing
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15
Chapter 14: Money and the Financial System
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209 Verified Questions
209 Flashcards
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Sample Questions
Q1) To say that money serves as a store of value is to say that money is a useful way to store wealth for future use.
A)True
B)False
Q2) In general, the more money in existence, the better it functions as a store of value.
A)True
B)False
Q3) The U.S. dollar is backed by gold.
A)True
B)False
Q4) During the 1980s,
A)better bank management resulted in the most stable U.S. banking system since the Great Depression
B)more U.S. banks failed than in any period since the Great Depression
C)U.S. banks became more conservative in the type of assets they held
D)economic conditions contributed to the stability of U.S. banks
E)there were no U.S. bank failures for the first time in U.S. history
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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 money expansion process continues until there are no more
A)required reserves in the system
B)demand deposits in the system
C)excess reserves in the system that banks are willing to lend
D)liabilities in the system
E)assets in the system
Q2) If the Fed wishes to reduce the money supply, it can sell U.S. government securities to member banks.
A)True
B)False
Q3) Banks create money when they make loans.
A)True
B)False
Q4) In order to meet a deficiency of excess reserves, a bank could
A)buy securities
B)deposit vault cash with the Fed
C)turn some of its deposit at the Fed into cash
D)close some checking accounts
E)borrow from another bank in the federal funds market
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Chapter 25: The Algebra of Income and Expenditure
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17 Verified Questions
17 Flashcards
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Sample Questions
Q1) If the net export function is 500 - 0.15Y, then an increase in income of $1,000 will decrease net exports by $150.
A)True
B)False
Q2) If C = $3,000 + 0.9Y and income is $20,000,
A)consumption is $20,000
B)consumption is $18,000
C)saving is $0
D)saving is -$1,000
E)income will increase to $200,000
Q3) 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
Q4) Investment is the only autonomous spending component in aggregate expenditure. A)True B)False
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Chapter 16: Monetary Theory and Policy
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185 Verified Questions
185 Flashcards
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Sample Questions
Q1) Over the past 40 years, the most frequent target for the Fed's monetary policy has been
A)the prime interest rate
B)the federal funds rate
C)the M1 money supply
D)the M2 money supply
E)the M3 money supply
Q2) 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
Q3) Which of the following is the last step in the sequence?
A)A strong dollar relative to foreign currencies hurts U.S. exporters
B)As the money supply increases, interest rates fall in the short run
C)The value of the dollar declines
D)Low U.S. interest rates makes the dollar less attractive to foreign investors
E)The Fed chooses an expansionary monetary policy
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Chapter 17: Macro Policy Debate: Active or Passive
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190 Verified Questions
190 Flashcards
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Sample Questions
Q1) An implementation lag is the time it takes
A)policy makers to decide what to do
B)for the chosen policy to have its full impact on the economy
C)to identify trouble in the economy and to assess its severity
D)to put a selected policy into action
E)before a policy's effects on the economy are noticed by ordinary people
Q2) Which of the following lags reduces the effectiveness of active policy?
A)both d and e
B)all of the following
C)self-correction lag
D)recognition lag
E)decision-making lag
Q3) As people come to expect higher inflation, the long-run Phillips curve shifts leftward. A)True
B)False
Q4) If self-correction causes prices to fall less than nominal wages, both output and real wages will decrease.
A)True
B)False
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Chapter 26: The Algebra of Demand-Side Equilibrium
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22 Verified Questions
22 Flashcards
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Sample Questions
Q1) With a proportional income tax,
A)the tax multiplier equals (MPC)/(1 - MPC)
B)the tax multiplier equals -MPC/(1 - MPC)
C)the spending multiplier equals (MPC)/(1 - MPC)
D)the spending multiplier equals 1/[1 - MPC(1 - t)]
E)the spending multiplier equals 1/[1 - (MPC)t]
Q2) With a proportional income tax,
A)each individual pays whatever he/she is able to pay
B)each individual pays the same amount of money to the government
C)each individual pays the same percent of income in the form of taxes
D)the spending multiplier is unaffected by the tax rate
E)the spending multiplier increases as the tax rate increases
Q3) If the MPC is equal to .75 and net taxes, government spending, investment and net exports are all autonomous, then a $1 billion dollar decrease in net taxes will
A)have no effect on real GDP
B)increase real GDP by $1 billion
C)increase real GDP by $2 billion
D)increase real GDP by $3 billion
E)increase real GDP by $4 billion
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Chapter 18: International Trade
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) International trade between countries typically produces a winner and a loser. Generally, it is the economically more advanced country that gains at the expense of the less developed nation.
A)True
B)False
Q2) Absolute advantage
A)is the same as comparative advantage
B)implies autarky
C)means that countries of the same size have the same opportunity cost of producing both goods
D)means that a country can produce more of two goods than another country can
E)means that a country can produce less of two goods than another country can
Q3) A tax on imports equal to a percentage of the cost of those imports is known as A)a specific tariff
B)an ad valorem tariff
C)a tax on luxury goods only
D)an effective quota
E)an ad valorem quota
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22
Chapter 19: International Finance
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231 Verified Questions
231 Flashcards
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Sample Questions
Q1) The International Monetary Fund was founded
A)in Paris in 1938
B)in New York in 1961
C)in Washington in 1971
D)in New York in 1991
E)in Bretton Woods in 1944
Q2) The demand for foreign currency in the United States
A)increases as the level of imports increases
B)increases as the level of exports increases
C)decreases with the lowering of the inflation rate abroad
D)decreases as foreign interest rates rise
E)is unaffected by U.S. demand for goods and services abroad
Q3) Between 1917 and 1982, the US ran a financial account deficit.
A)True
B)False
Q4) If the U.S. dollar depreciates, it becomes cheaper for U.S. residents to travel in foreign countries.
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 recent years in Russia, the most popular tax system has been
A)graduated rates topping at 13 percent
B)a flat rate of 60 percent
C)graduated rates topping at 40 percent
D)graduated rates topping at 30 percent
E)a flat rate of 13 percent
Q2) A reliable system of property rights and enforceable contracts are prerequisites for creating incentives that support a healthy market economy.
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
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Page 24
Chapter 21: National Income Accounts
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34 Flashcards
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Sample Questions
Q1) Disposable income is
A)personal income minus personal taxes
B)national income plus transfer payments
C)NDP minus personal income tax
D)personal income minus transfer payments
E)national income minus transfer payments plus taxes
Q2) Given the following data: GDP = $5,200; NI = $4,700; PI = $4,300; indirect business taxes net of subsidies = $300; depreciation equals
A)-$600
B)-$200
C)$200
D)$600
E)$1,200
Q3) In Exhibit 6-4, Disposable Income equals
A)$365 billion
B)$375 billion
C)$385 billion
D)$390 billion
E)$420 billion
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Page 25
Chapter 22:Understanding Graphs
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Sample Questions
Q1) A functional relationship exists between two variables if the value of one variable depends on the value of the other variable.
A)True
B)False
Q2) On a graph, the origin represents
A)the dependent variable
B)the variable that is the primary source of causation
C)a caption or explanatory description of the symbols, colors, and measurements used on the graph
D)the point at which the values of both variables are zero
E)ancestry
Q3) In Exhibit 1-2, curve B has a __________ slope that is __________ at every point.
A)positive; constant
B)positive; changing
C)negative; constant
D)negative; changing
E)changing; constant
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26
Chapter 23:Variable Net Exports
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Sample Questions
Q1) A decrease in the value of the U.S. dollar relative to other currencies will increase U.S. exports.
A)True
B)False
Q2) Which of the following statements regarding imports and exports is true?
A)Both imports and exports vary directly with the level of domestic income.
B)Both imports and exports vary inversely with the level of domestic income.
C)Imports vary directly with the level of domestic income; exports are independent of the level of domestic income.
D)Exports vary directly with the level of domestic income; imports are independent of the level of domestic income.
E)Both imports and exports are independent of the level of domestic income.
Q3) 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
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Page 27
Chapter 24: Variable Net Exports Revisited
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Sample Questions
Q1) The marginal propensity to import is defined as
A)the fraction of each additional dollar of income that is spent on imported products
B)the fraction of each additional dollar of income that is spent on exports minus imports
C)the amount spent on imports at each level of income
D)the change in income divided by the change in imports
E)the level of imports divided by the level of income
Q2) If the MPS = 0.25 and the MPM = 0.25, the spending multiplier with net exports equals
A)5
B)4
C)3
D)2
E)1
Q3) Imports increase as domestic income increases.
A)True
B)False
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