Which of the following correctly describes how price adjustments eliminate a shortage?

As the price rises, the quantity demanded will decrease while the quantity supplied will increase.

As the price rises, the quantity demanded will increase while the quantity supplied will decrease.

As the price falls, the quantity demanded will decrease while the quantity supplied will increase.

As the price falls, the quantity demanded will increase and the quantity supplied will also increase.

The government wants to reduce the consumption of electricity by 5%. The price elasticity of demand for electricity is -0.4. The government should

raise the price of electricity by 12.5%.

raise the price of electricity by 2%.

raise the price of electricity by .08%.

lower the price of electricity by 0.4%.

The ABC Computer Company spends a lot of money on advertising designed to convince you that its personal computers are superior to all other personal computers. If the ABC Company is successful

the demand for ABC personal computers will become less price elastic but the demand for other firms' personal computers will become more price elastic.

the demand for ABC personal computers will become more price elastic but the demand for other firms' personal computers will become less price elastic.

the demand for ABC personal computers will become more price elastic and the demand for other firms' personal computers will also become more price elastic.

the demand for ABC personal computers will become less price elastic and the demand for other firms' personal computers will also become less price elastic.

Assume that the income elasticity of demand for bread is 0.2. A 5% increase in income will cause

a 1% increase in the demand for bread.

a 25% decrease in the demand for bread.

a 10% increase in the demand for bread.

a 25% increase in the demand for bread.

There are two goods A and B. In which of the following cases will good A have the more price elastic supply?

If it is less costly to shift from producing A to another product than it is to shift from producing B to another product.

A higher proportion of national income is spent on A than on B.

The cost of producing extra units increases more rapidly in the case of A than in the case of B.

Consumers find it easier to find alternatives to A than to B.

Which of the following defines the price elasticity of supply?

The responsiveness of quantity supplied to a change in price

The responsiveness of supply to a change in demand

The responsiveness of quantity demanded to a change in supply

The responsiveness of quantity supplied to a change in income

Kathy eats five slices of pizza on a Saturday night but admits each slice of pizza doesn't taste as good as the previous one. This suggests that for Kathy

the marginal utility of a slice of pizza is positive but decreasing.

the marginal utility of a slice of pizza is negative.

the total utility of slices of pizza is increasing by larger and larger increments.

the total utility of slices of pizza is declining

Insurance companies can lower their risks by

using the law of large numbers to make the number of claims more predictable.

diversifying across insurance products.

Which of the following is not an example of either moral hazard or adverse selection?

A business owner/manager doing fewer hours work than his employees.

An individual not pointing out their worst characteristics on a job application form.

A student not being as careful with their spending levels when the students' parents are paying his/her credit card bill.

A shop worker doing less work on the days when the boss is not in the shop.

Which of the following explains why too much choice can be a bad thing?

Too much choice can hinder decision making and reduce utility.

Consumers are irrational and so will make inefficient choices.

Firms must produce too many products, and this reduces the quality of them.

Consumers are encouraged to buy too much which can lead to growing levels of debt.

Which of the following is a correct statement about the relationship between average cost (AC) and marginal cost (MC)?

If AC exceeds MC, then AC is falling.

If AC = MC, then total cost is at a maximum.

If TC is declining then AC is negative.

If AC is at a minimum, then MC is also.

Assume that the wool industry is a perfectly competitive industry. Why is it difficult for a wool producer to make excess profits?

The fact that wool producers are 'price takers'.

The assumption of free entry into the wool industry.

The fact that the demand curve facing each wool producer is perfectly elastic.

The assumption that wool producers in the industry do not 'differentiate' their products.

If a country has negative outward FDI, this means that

inward FDI exceeds outward FDI.

outward investment as a percentage of inward investment is falling.

sales of existing investments abroad exceed new investments abroad.

sales of foreign assets in the country exceed sales of the country's assets abroad.

A horizontally integrated multinational is one that

produces the same product in more than one country.

produces various stages of production in different countries.

one which exports more than 50% of output.

produces different products in different countries.

Multinational corporations (MNCs) engaging in technological transfer may lead to gains elsewhere in the economy as

other companies in the host county may try to copy the methods.

the MNC takes market share from local companies.

workers trained by the MNC move to other parts of the economy.

If a country has negative outward FDI, this means that

inward FDI exceeds outward FDI.

sales of foreign assets in the country exceed sales of the country's assets abroad.

outward investment as a percentage of inward investment is falling.

sales of existing investments abroad exceed new investments abroad.

If the total expenditure of the UK public sector is £650bn and revenues to the UK public sector are £325bn each year, then

the UK government will have a budget deficit of £325bn.

the UK will have a PSNB of -£325bn.

the UK will have a PSNB of £325bn.

the UK general government debt will rise by £325bn

Fiscal stance refers to

whether a government is pursuing an expansionary or contractionary fiscal policy.

a government that is running a budget deficit.

a government that takes a tough stance when it comes to running the country's finances.

a government that prefers the use of fiscal to monetary policy for demand management.

If the economy were booming, we would expect

government expenditure to be low and tax revenues to be high so that the public sector might be running a surplus.

government expenditure to be low and tax revenues to be low so that the government could pay off the central government debt.

government expenditure to be high and tax revenues to be low causing a large budget deficit.

A central bank wishing to operate a tighter monetary policy might

raise interest rates and use open-market operations to reduce the money supply.

reduce interest rates but use open-market operations to reduce the money supply.

lower interest rates to encourage spending and discourage saving.

promote investment in other countries by domestic firms.

Which of the following is NOT an undesirable side-effect of discretionary fiscal policy?

Tax changes may change expectations.

Tax changes could have disincentive effects.

Cuts in spending may harm the poor.

Which of the following is an example of an easy/relaxed monetary policy?

An increase in the liquidity ratio

The central bank selling government securities in the open market

The economy's unemployment rate is 3% and the inflation rate is 15%. The most likely policy for the central bank to pursue would be to

increase interest rates to try to reduce the inflation rate.

do nothing because the unemployment rate is so low.

reduce interest rates to try to reduce the unemployment rate.

increase interest rates so long as unemployment remained below a level considered politically acceptable.

What is meant by 'quantitative easing'?

An increase in money supply brought about by the purchase of assets by the central bank

An increase in the quantity of government bonds being sold by the central bank

An easing of restrictions on government borrowing

If Argentina has an absolute advantage in the production of wheat and Chile has an absolute advantage in the production of copper, then

it is reasonable to expect that specialisation and trade will benefit both countries.

neither country has anything to gain from specialisation and trade.

it is reasonable to expect that trade will benefit both countries, but specialisation will not.

it is reasonable to expect that specialisation will benefit both countries, but trade will not

The main advantage of trade between two countries is that

both countries can consume beyond their previous resource and productivity constraints.

trade makes both countries more self-sufficient.

employment in both countries will increase.

both countries can produce beyond their previous resource and productivity constraints.

The trade effect of Brexit for the UK is likely to be

a reduction in trade with the EU.

either a reduction or an increase in trade between the UK and non-EU countries.

a reduction in both inward and outward capital flows between the UK and the EU.

Which one of the following would appear as a credit item in the UK balance of payments?

The expenditure by Japanese tourists on holidays in the UK

Money sent by UK residents to relatives living in Australia.

Investment by UK companies in new factories in the USA.

The purchase of German cars by consumers in the UK.

Expenditure by the British government in maintaining its embassy in Russia.

When a country hosts the World Cup, this can be expected to

lead to a depreciation of the host country's currency.

reduce the supply of the country's currency on the foreign exchange markets.

increase the country's exports.

A depreciation of sterling would be caused by _______ and/or _______.

an increase in the supply of sterling; a reduction in the demand for sterling

Which of the following would cause exports to rise?

A. A depreciation of the exchange rate

C. An appreciation of the exchange rate

Economics Quiz

Authored by Anthony Owusu

Specialty

12th Grade

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51 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

When an increase in the price of good A causes an increase in demand for good B, the goods are

normal

complements

inferior

substitutes

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is NOT part of the opportunity cost of attending university?

The tuition fees that you or your government pays.

The alternative uses of the time you spend studying.

The income that you could have earned if you did not attend university.

The cost of the food that you consume while you are attending university.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Inferior goods are best defined as

goods whose supply falls as people's income rises.

goods that only those who are relatively poor purchase.

goods whose demand falls as people's income rises.

goods that have higher-quality alternatives.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Expectations about price changes will affect

both the demand and supply curves.

the demand curve only.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following might shift the demand curve for butter to the right?

A decrease in the price of margarine, a substitute

A decrease in the price of butter

An increase in income

An increase in the price of bread, a complement

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A movement upward along the demand curve to the left could be caused by

A rise in inflation.

A fall in the price of substitutes.

A rise in income.

A decrease in supply.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following will cause a shift in a supply curve?

An increase in the ability/productivity of the firm’s workforce.

A change in hourly wage costs.

A change in the profitability of alternative products.

All of the above

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Economics Quiz

When an increase in the price of good A causes an increase in demand for good B, the goods are

Which of the following is NOT part of the opportunity cost of attending university?

Inferior goods are best defined as

Expectations about price changes will affect

Which of the following might shift the demand curve for butter to the right?

A movement upward along the demand curve to the left could be caused by

Which of the following will cause a shift in a supply curve?

Which of the following correctly describes how price adjustments eliminate a shortage?

The following table shows the demand and supply schedules for good X. Assume that supply increases by 40 units at all prices. What will be the effect on equilibrium price?

Suppose that it is observed that the price of wheat falls, and that the quantity sold also falls. From this we can deduce

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