WorksheetsEcons 1.5 Test
Total questions: 40
Worksheet time: 1hrs 20mins
Name
Class
Date
1.
Which of the following is most likely to cause a shift to the right in the aggregate demand curve?
a)
A. Boom in the stock market
b)
B. Increase in taxes
c)
C. Decrease in real estate values
2.
Which of the following best describes a fundamental assumption when monetary policy is used to influence the economy?
a)
A. Financial markets are efficient.
b)
B. Money is not neutral in the short run.
c)
C. Official rates do not affect exchange rates.
3.
According to the theory of money neutrality, money supply growth does not affect variables such as real output and employment in:
a)
A. the long run.
b)
B. the short run.
c)
C. the long and short run.
4.
In theory, setting the policy rate equal to the neutral interest rate should promote:
a)
A. stable inflation.
b)
B. balanced budgets.
c)
C. greater employment.
5.
An advantage of indirect taxes as a fiscal policy tool is that such taxes:
a)
A. have a greater impact on aggregate spending and output than direct government spending.
b)
B. can be adjusted almost immediately.
c)
C. minimize interference with consumer choices.
6.
If the GDP deflator values for year 1 and year 2 were 190 and 212.8, respectively, which of the following best describes the annual growth rate of the overall price level?
a)
A. 5.8%.
b)
B. 6%.
c)
C. 12%.
7.
Monetarists favor a limited role for the government because they argue:
a)
A. government policy responses may lag.
b)
B. firms take time to adjust to systemic shocks to the economy.
c)
C. resource use is efficient with marginal revenue and cost equal.
8.
Which of the following best represents a contractionary fiscal policy?
a)
A. Public spending on a high-speed railway.
b)
B. A temporary suspension of payroll taxes.
c)
C. A freeze in discretionary government spending.
9.
Which of the following equations is a consequence of the Fisher effect?
a)
A. Nominal interest rate = Real interest rate + Expected rate of inflation.
b)
B. Real interest rate = Nominal interest rate + Expected rate of inflation.
c)
C. Nominal interest rate = Real interest rate + Market risk premium.
10.
Suppose a painting is produced and sold in 2018 for £5,000. The expenses involved in producing the painting amounted to £2,000. According to the sum-of-value-added method of calculating GDP, the value added by the final step of creating the painting was:
a)
A. £2,000.
b)
B. £3,000.
c)
C. £5,000.
11.
a)
A. Py.
b)
B. Qx.d
c)
C. Px.
12.
a)
A. –3.1.
b)
B. –1.9.
c)
C. 0.6.
13.
The characteristic business cycle patterns of trough, expansion, peak, and contraction are:
a)
A. periodic.
b)
B. recurrent.
c)
C. of similar duration.
14.
Companies most likely have a well-defined supply function when the market structure is:
a)
A. oligopoly.
b)
B. perfect competition.
c)
C. monopolistic competition
15.
All else remaining equal, a decline in the average duration of unemployment most likely indicates that an economic:
a)
A. upturn is beginning.
b)
B. upturn has already occurred.
c)
C. downturn is forthcoming.
16.
A decrease in a country’s total imports is most likely caused by:
a)
A. an increase in the pace of domestic GDP growth.
b)
B. a cyclical downturn in the economies of primary trading partners.
c)
C. persistent currency depreciation relative to primary trading partners.
17.
Price elasticity of demand for a good will most likely be greater if:
a)
A. there are no substitutes for the good
b)
B. consumers consider the good as discretionary.
c)
C. consumers spend a small portion of their budget on the good.
18.
Upsilon Natural Gas, Inc. is a monopoly enjoying very high barriers to entry. Its marginal cost is $40 and its average cost is $70. A recent market study has determined the price elasticity of demand is 1.5. The company will most likely set its price at:
a)
A. $40.
b)
B. $70.
c)
C. $120.
19.
The sale of mineral rights would be captured in which of the following balance of payments components?
a)
A. Capital account.
b)
B. Current account.
c)
C. Financial account.
20.
a)
A. -0,778.
b)
B. -0,5.
c)
C. -0,438.
21.
Convergence of incomes over time between emerging market countries and developed countries is most likely due to:
a)
A. total factor productivity.
b)
B. diminishing marginal productivity of capital.
c)
C. the exhaustion of non-renewable resources.
22.
a)
A. proprietary for SigmaSoft and proprietary for ThetaTech.
b)
B. open architecture for SigmaSoft and proprietary for ThetaTech.
c)
C. proprietary for SigmaSoft and open architecture for ThetaTech.
23.
a)
A. 13.0.
b)
B. 3.5.
c)
C. 9.3.
24.
A BRL/MXN spot rate is listed by a dealer at 0.1378. The 6-month forward rate is 0.14193. The 6-month forward points are closest to:
a)
A. –41.3.
b)
B. +41.3.
c)
C. +299.7.
25.
Increased household wealth will most likely cause an increase in:
a)
A. household saving.
b)
B. investment expenditures.
c)
C. consumption expenditures.
26.
Which of the following is most likely to cause the long-run aggregate supply curve to shift to the left?
a)
A. Higher nominal wages.
b)
B. A decline in productivity.
c)
C. An increase in corporate taxes.
27.
The sustainable growth rate is best estimated as:
a)
A. the weighted average of capital and labor growth rates.
b)
B. growth in the labor force plus growth of labor productivity.
c)
C. growth in total factor productivity plus growth in the capital-to-labor ratio.
28.
Which of the following is most likely to lead to a recessionary gap?
a)
A. Rising stock prices
b)
B. Declining consumer confidence
c)
C. Easing monetary policy
29.
Over a given period, the price of a commodity falls by 5.0%, and the quantity demanded rises by 7.5%. The price elasticity of demand for the commodity is best described as:
a)
A. perfectly elastic.
b)
B. elastic.
c)
C. inelastic.
30.
An electricity producer charges lower rates to its high-volume customers and higher rates to its low-volume customers. The degree of price discrimination is best described as:
a)
A. second.
b)
B. first.
c)
C. third.
31.
a)
A. 3.
b)
B. 4.
c)
C. 5.
32.
Which of the following factors is most likely to lead to economies of scale?
a)
A. Supply constraints
b)
B. Duplication of product lines
c)
C. Specialization by workers
33.
Which of the following statements is most accurate concerning the sum-of-value-added method used to determine GDP based on expenditures?
a)
A. The method involves summing the income created at each stage of the production and distribution process.
b)
B. The method shows a larger GDP value compared with the value-of-final-output method.
c)
C. The method is based on the prices consumers pay for the products and services.
34.
Which of the following economic developments is most likely to cause cost-push inflation?
a)
A. Industrial capacity utilization rises to a very high level.
b)
B. Labor productivity increases faster than hourly labor costs.
c)
C. A shortage of trained workers emerges throughout the economy.
35.
A market structure characterized by many sellers with each having some pricing power and product differentiation is best described as:
a)
A. oligopoly.
b)
B. perfect competition.
c)
C. monopolistic competition
36.
If the domestic currency is trading at a forward premium, then relative to the interest rate of the domestic country, the interest rate in the foreign country is most likely:
a)
A. lower.
b)
B. higher.
c)
C. the same.
37.
Which of the following statements is the best description of the characteristics of economic indicators?
a)
A. Leading indicators are important because they track the entire economy.
b)
B. Lagging indicators in measuring past conditions do not require revisions.
c)
C. A combination of leading and coincident indicators can offer effective forecasts.
38.
a)
A. 3.
b)
B. 4.
c)
C. 5.
39.
A wireless phone manufacturer introduced a next-generation phone that received a high level of positive publicity. Despite running several high-speed production assembly lines, the manufacturer is still falling short in meeting demand for the phone nine months after introduction. Which of the following statements is the most plausible explanation for the demand/supply imbalance?
a)
A. The phone price is low relative to the equilibrium price.
b)
B. Competitors introduced next-generation phones at a similar price.
c)
C. Consumer incomes grew faster than the manufacturer anticipated.
40.
a)
A. 71%.
b)
B. 86%.
c)
C. 95%.
100 %
