APECO Midterm Review Quiz

A country heavily relies on importing raw materials for its manufacturing sector. Due to a sudden increase in tariffs imposed by its trading partners, the cost of importing these materials rises significantly. What is the likely impact on the country's balance of trade?

• It will likely experience a trade deficit.
• It will likely experience a trade surplus.
• The impact on the balance of trade will be negligible.
• It will cause the balance of trade to fluctuate.

A high school student, Sarah, is debating whether to work part-time during the school year or focus solely on her studies and extracurricular activities. How does the concept of opportunity cost influence Sarah's decision-making process?

• By weighing the immediate benefits of earning money against the long-term benefits of academic and personal development.
• By prioritizing leisure activities over financial gain.
• By disregarding the financial implications and focusing solely on personal enjoyment.
• By assuming that she can pursue both options simultaneously without any trade-offs.

A small bakery owner, Miguel, is contemplating expanding his business by opening a new location in a neighboring town. Considering the current economic downturn, how might Miguel apply Keynesian economic principles to evaluate the potential impact of expansion?

• By considering government intervention measures, such as fiscal stimulus, to stimulate demand for bakery products during the downturn.
• By assuming that market forces will naturally correct any downturn, negating the need for expansion.
• By focusing solely on maximizing profits without considering the broader economic context.
• By analyzing consumer spending patterns to predict the demand for bakery products in the new location.

Maria, a recent college graduate, is torn between investing her savings in pursuing a master's degree or starting her own business. How does Maria's understanding of scarcity affect her decision-making process?

• By recognizing that resources are limited and she must choose between the potential long-term benefits of further education or the immediate rewards of entrepreneurship.
• By assuming that she can indefinitely postpone her decision until more resources become available.
• By ignoring the financial implications of her choices and focusing solely on short-term desires.
• By assuming that she can pursue both options simultaneously without any trade-offs.

A young adult, Carlos, is debating whether to allocate his savings to invest in the stock market or purchase real estate properties. How might Carlos evaluate the potential risks and rewards of each option using Keynesian economic principles?

• By analyzing the potential impact of government fiscal policies on both the stock market and real estate sectors.
• By assuming that market forces alone will determine the success or failure of his investments, regardless of government intervention.
• By focusing solely on short-term gains without considering the broader economic context or long-term stability.
• By assuming that Keynesian economics would discourage investment altogether due to its emphasis on government intervention.

In a rural area of India, a family of skilled farmers struggles to make ends meet despite their expertise in agriculture. What is the most likely reason for their economic challenges?

• Limited access to markets and transportation infrastructure.
• Lack of necessary farming techniques and knowledge.
• Government policies prioritizing urban development over rural investment.
• Insufficient land for farming to meet their needs.

In a developing country, income inequality is pervasive, with significant disparities between the wealthy and the poor. How might this income inequality affect young adults' decisions regarding pursuing higher education?

• By limiting their access to quality education due to financial constraints.
• Because government scholarships ensure equal opportunities for all.
• As job opportunities are abundant regardless of educational attainment.
• Since income inequality encourages a competitive spirit among students.

Despite having a stable job as a skilled worker in a metropolitan area, Maria struggles to make ends meet. What could be a primary reason for Maria's experience of poverty?

• High living costs such as housing and transportation expenses.
• Government policies prioritizing rural development over urban infrastructure.
• Scarce job opportunities in urban areas compared to rural regions.
• Income inequality is not a significant factor in urban environments.

In a remote village in Africa, residents lack access to basic infrastructure such as clean water and electricity. How does this lack of infrastructure perpetuate poverty in the community?

• By hindering agricultural productivity and food security.
• Because government subsidies ensure affordability of essential services.
• As rural communities rely on traditional methods of sustenance.
• Since infrastructure does not significantly impact poverty levels.

A small island nation heavily relies on tourism for its economic stability. Due to a global economic downturn, tourism numbers have plummeted, leading to widespread unemployment and reduced income for businesses. How might the government apply Keynesian economic principles to mitigate the impact of the recession?

• By implementing fiscal stimulus measures to boost consumer spending and support struggling businesses.
• By assuming that market forces alone will eventually restore tourism levels without government intervention.
• By prioritizing austerity measures to reduce government spending and stabilize the economy.
• By relying solely on monetary policy to control interest rates and stabilize the currency.