Multiple choice questions

Economics

1. In economics the central problem is:

	money.
	consumption.
	allocation.
	production.
	scarcity.

2. Macroeconomics deals with:

	economic aggregates.
	the behaviour of firms.
	the behaviour of the electronics industry.
	the activities of individual units.

3. The study of inflation is part of:

	microeconomics.
	normative economics.
	descriptive economics.
	macroeconomics.

4. Aggregate supply is the total amount:

	of goods and services produced in an economy.
	of products produced by a given industry.
	of labour supplied by all households.
	produced by the government.

5. A recession is:

	a period of declining prices.
	a period during which aggregate output declines.
	a period of declining unemployment.
	a period of very rapidly declining prices.

6. Opportunity cost is

	the additional benefit of buying an additional unit of a product.
	that which we forgo, or give up, when we make a choice or a decision.
	the cost incurred in the past before we make a decision about what to do in the future.
	a cost that cannot be avoided, regardless of what is done in the future.

7. What is the difference between inflation and deflation?

Inflation affects interest rates, deflation does not

Inflation is always bad and deflation is always good

Inflation is an increase in the price level, while deflation is a decrease in the price level

Inflation is an increase in output and deflation is a decrease in price level

8. What tools are available to a government if it wants to try to move an economy to equilibrium?

Fiscal and monetary policy

Just increasing or decreasing the money supply

Just government spending

Just government taxation

9. Which of the following is not a subject matter of study in macroeconomics?

All of the choices are subject matters of macroeconomics

Fiscal policy

Unemployment

Inflation

Business cycle

10. Which of the following is the best explanation of microeconomics?

The study of how businesses and consumers make economic decisions

The study of economic activities of cities and counties

The study of consumer behavior

The study of businesses

11. Which of the following is the best explanation of economics?

It's the study of the allocation of resources in a society

It's the study of businesses

None of the answers are correct

It's the study of consumers

It's the study of buying and selling

12. What law states that supply will increase when price increase?

There is no such law

Law of quantity

The law of supply

Law of price

13. What is the law of demand?

All things being equal, prices do not change because of demand

All things being equal, price will increase if demand increases, but will decrease if demand decreases

Paying your taxes when the government demands it

All things being equal, prices will increase when demand goes up, but remain unchanged if demand decreases

14. Which is the best explanation of substitute goods?

There is no such thing, all goods are unique

A good that a company sends to a customer when it is out of stock of the product ordered

A product that replaces a defective one

A good that is similar to another and will be purchased if the other good rises in price

15. What's the best explanation of price elasticity of demand?

The ability of a price to remain stable regardless of demand

The flexibility of demand as it relates to changes in the price of a product

The tendency for demand to go up if prices go down

The tendency of demand to go down if prices go up

16. When is a market at equilibrium?

When there is no consumer surplus or producer surplus

There is no such thing

When supply equals demand

When the price is at the maximum that the market can support

17. For most goods, the elasticity of demand is always _

less than -1

negative (This is because there is an inverse relationship between price and quantity demanded. As price goes up, quantity demanded decreases. As price decreases, quantity demanded increases. This is due to the law of demand.) The Price Elasticity of Demand (commonly known as just price elasticity) measures the rate of response of quantity demanded due to a price change.

greater than 1

positive

18. If the current market price is below the equilibrium price, what happens?

Nothing

Price goes down and supply goes down

Price goes up and supply goes up (A market price below the equilibrium price signals a supply shortage. Buyers will bid up (набавлять цену) the price in order to secure the purchase and suppliers will increase production to take advantage of the price increase until the market reaches equilibrium.)

Price goes up and supply goes down

19. If market price is above the equilibrium price, what happens?

Supply goes down

The price goes up

Price goes down and supply goes down (A price above the equilibrium price indicates a market supply surplus. Suppliers will lower prices and slow production until the equilibrium price is reached.)

Nothing

20. If injections are greater than withdrawals:

a) National income will increase

b) National income will decrease

c) National income will stay in equilibrium

d) Prices will fall

With higher levels of planned injections than withdrawals this means aggregate demand is high which will increase national income.

21. Which of the following is an injection into the economy?

a) Investment

b) Savings

c) Taxation

d) Import spending

Injections into the economy include investment, government spending and export spending.

Withdrawals/leakages include savings, taxes and import spending.

Savings leaks out to borrowers as it goes through the banking system, and borrowers use the money to buy goods and services, which then injects the money back into the circular flow. Government taxes leak out of the circular flow model, and then government spending injects them back into the economy. Imports leak out of the economy because the money in our country that's used to buy imports from other countries goes out of our economy and into their hands. Exports, on the other hand, are an injection because we earn income from the goods and services we export to other countries.

22. In perfect competition:

a) The products firms offer are very similar

b) Products are heavily differentiated

c) A few firms dominate the market

d) Consumers have limited information

23. Effective branding will tend to make:

a) Demand more price inelastic

b) Supply more price inelastic

c) Demand more income elastic

d) Supply more income elastic

Effective branding should make demand less sensitive to price.

Дата добавления: 2015-10-29