Econ TE10 Test

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.

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.

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.

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.

None

• A. 50 .
• B. 60 .
• C. 110 .

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.

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.

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

• A. Financial markets are efficient.
• B. Money is not neutral in the short run.
• 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?

• A. Minimal displacement costs.
• B. Trade diversions benefit members.
• C. Quicker and easier policy coordination.

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

• A. remain unchanged.
• B. decrease.
• C. increase.