Q. Which of the following best describes a fundamental assumption when monetary policy is used to influence the economy?

B. Money is not neutral in the short run.

A. Financial markets are efficient.

C. Official rates do not affect exchange rates.

Q. Which of the following factors best explains why regional trading agreements are more popular than larger multilateral trade agreements?

C. Quicker and easier policy coordination.

B. Trade diversions benefit members.

If the central bank buys securities from banks in its open-market operations when the economy is already in long-run equilibrium, which of the following is most likely to occur?

B. The long-run supply curve will be unaffected, but the price level will rise.

A. The aggregate demand curve will shift to the left.

C. Both the long- and the short-run aggregate supply curves will shift to the right.

Q. Which of the following best describes the aggregate supply curve in the short run (one to two years)? The short-run aggregate supply curve is:

C. upward sloping, because input prices do not fully adjust to the price level in the short run.

A. flat, because output is more flexible than prices in the short run.

B. vertical, because wages and other input prices fully adjust to the price level.

Q. Which of the following international trade bodies was the only multilateral body governing international trade from 1948 to 1995?

C. General Agreement on Tariffs and Trade (GATT).

A. World Trade Organization (WTO).

B. International Trade Organization (ITO).

Q. Which of the following statements is the most appropriate description of gross domestic product (GDP)?

B. The total amount spent on all final goods and services produced within the economy during a given period

A. The total income earned by all households, firms, and the government whose value can be verified

C. The total market value of resalable and final goods and services produced within the economy during a given period

Q. Which of the following would be included in Canadian GDP for a given year? The market value of:

A. wine grown in Canada by US citizens.

B. electronics made in Japan and sold in Canada.

C. movies produced outside Canada by Canadian filmmakers.

Q. Collusion is less likely in a market when:

B. companies have similar market shares.

C. the cost structures of companies are similar.

Q. Diseconomies of scale most likely result from:

B. overlap of business functions and product lines.

A. specialization in the labor force.

C. discounted prices on resources when buying in larger quantities.

Q. In the Ricardian trade model, a country captures more of the gains from trade if:

C. the terms of trade are closer to its partner’s autarkic prices than to its autarkic prices.

A. it produces all products while its trade partner specializes in one good.

B. the terms of trade are closer to its autarkic prices than to its partner’s autarkic prices.

Q. The least likely goal of a government’s fiscal policy is to:

C. ensure the stability of the purchasing power of its currency.

A. redistribute income and wealth.

B. influence aggregate national output.

Q. The least likely explanation for why fiscal policy cannot stabilize aggregate demand completely is that:

B. policy changes are implemented very quickly.

A. private sector behavior changes over time.

C. fiscal policy focuses more on inflation than on unemployment.

Q. Which of the following counterparties is most likely to be considered a sell-side foreign-exchange market participant?

C. A multinational bank that trades foreign exchange with its diverse client base.

A. A large corporation that borrows in foreign currencies.

B. A sovereign wealth fund that influences cross-border capital flows.

C. ZAR 4200 per million SEK traded.

A. ZAR 3671 per million SEK traded.

B. SEK 4200 per million ZAR traded.

Both monetary and fiscal policies can most likely be used by a government to:

C. influence the level of economic activity.

A. redistribute income and wealth.

B. affect the level of interest rates.

Q. The category of persons who would be most likely to be harmed by an increase in the rate of inflation is:

B. retirees relying on a fixed annuity payment.

A. homeowners with fixed 30-year mortgages.

C. workers employed under contracts with escalator clauses.

Higher than expected inflation will most likely lead to an increase in:

A. the real wealth of borrowers.

C. the information content of market prices for economic agents.

The central bank of a developing country wants to effectively import the inflation experience of the United States. The developing country’s economy is most likely to experience:

C. more volatile domestic money supply.

A. interest rates similar to those in the United States.

B. economic growth similar to that of the United States.

The structural deficit is equal to the budget deficit:

B. that would exist at full employment.

C. excluding the impact of automatic stabilizers.

The primary monetary policy goal of most major central banks is best characterized as:

A. maintaining price stability.

B. stimulating economic growth.

C. maintaining low interest rates.

Q. A forward premium indicates:

C. the interest rate is higher in the price currency than in the base currency.

A. an expected increase in demand for the base currency.

B. the interest rate is higher in the base currency than in the price currency.

Which of the following statements with respect to Giffen and Veblen goods is least accurate?

B. The highly negative income effect overpowers the substitution effect for both types of goods.

A. Giffen goods are “inferior,” whereas Veblen goods are “high-status” goods.

C. Both types of goods demonstrate the possibility of a positively sloping demand curve.

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Practice Problem

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Hard

Education Trustville

Used 1+ times

FREE Resource

40 questions

Show all answers

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Q. Over time, the market share of the dominant company in an oligopolistic market will most likely:

A. increase.

B. decrease.

C. remain the same.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Q. Which is the most accurate statement regarding central banks and monetary policy?

A. Central bank activities are typically intended to maintain price stability.

B. Monetary policies work through the economy via four independent channels.

C. Commercial and interbank interest rates move inversely to official interest rates.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Q. Which statement regarding fiscal policy is most accurate?

A. To raise business capital spending, personal income taxes should be reduced.

B. Cyclically adjusted budget deficits are appropriate indicators of fiscal policy.

C. An increase in the budget surplus is associated with expansionary fiscal policy.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Q. A profit maximum is least likely to occur when:

A. average total cost is minimized.

B. marginal revenue equals marginal cost.

C. the difference between total revenue and total cost is maximized.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

None

A. 50 .

B. 60 .

C. 110 .

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Quantitative easing addresses the monetary policy challenges most likely caused by:

A. expected periods of deflation.

B. actions of bond market vigilantes.

C. inflationary demand shocks or supply shocks.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Q. The characteristic of national consumer price indexes that is most likely shared across major economies worldwide is:

A. the geographic areas covered in their surveys.

B. the weights they place on covered goods and services.

C. their use in the determination of macroeconomic policy.

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Econ TE10 Test

40 questions

Q. Over time, the market share of the dominant company in an oligopolistic market will most likely:

Q. Which is the most accurate statement regarding central banks and monetary policy?

Q. Which statement regarding fiscal policy is most accurate?

Q. A profit maximum is least likely to occur when:

None

Quantitative easing addresses the monetary policy challenges most likely caused by:

Q. The characteristic of national consumer price indexes that is most likely shared across major economies worldwide is:

Q. Which of the following best describes a fundamental assumption when monetary policy is used to influence the economy?

Q. Which of the following factors best explains why regional trading agreements are more popular than larger multilateral trade agreements?

If the prices of substitute resources decrease, the demand for a given resource will most likely:

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