Economics Mid Term Exam

Which one of the following statements can be put under positive economics?

• The government should reduce un employment rate in Ethiopia to 10%

• This year's inflation rate in Ethiopia is higher in comparing with last year

• We recommend the government to raise interest rate as a measure to control inflation

• All

One of the following can't be convenient definition of economics

• Economics is the social science concerned with the efficient use of limited or scarce resources to achieve the maximum satisfaction of human material wants

• Economics is a study concerned with doing the best with what we have.

• Economics is the study of how best to use limited means in the pursuit of unlimited ends.

• Economics is an accounting system limited to recording income and expenditure stream of a nation

• None

Red-Tapism and bureaucracy is the main problems of which type of economic system?

• Mixed economic system

• Command economic system

• Free market economic system

• All

The two fundamental economic facts which set a base for the foundation of principle economics are

• Unlimited resources but limited wants

• Limited wants and limited resources

• Unlimited wants but limited resources

• Unlimited wants and unlimited resources

One of the following is not true about the production possibility curve (PPF)

• It is a curve which shows different combinations of two goods that a society can produce using current resources

• As moving down the curve resources are better adapted to the production of one good

• The law of increasing opportunity cost is better shown by slope of the PPF

• For the points inside the PPF, resources are idle

What is the opportunity cost of increasing the production A from 3 to 4?

• 7 units of B

• 11 units of B

• 1 unit of A

• 5 units of B

A combination of 2 units of A and 12 units of B implies that the economy is _________

• Operating efficiently

• Operating inefficiently

• On its production possibility curve

• Operating outside the production possibility curve

The law of demand says other things being constant there is

• A positive relationship between price and quantity supplied

• An inverse relationship between price and quantity supplied

• An inverse relationship between price and quantity demanded

• A positive relationship between price and quantity demanded

One of the following factors positively affect the supply a given commodity

• Expectation of lower future price

• Price of inputs

• Price of substitutable goods

• Expectation of higher future price by the buyer

• Taxes imposed on the producer

If demand is elastic and price decreased by 5%, then quantity demand will

• decrease by less than 5%

• increase by 5%

• increase by more than 5%

• decrease by 5%