WorksheetsEcon 1.9 Test
Total questions: 40
Worksheet time: 1hrs 20mins
Name
Class
Date
1.
A decrease in the price of a good will most likely be reflected in a:
a)
A. change in the intercept of the demand curve.
b)
B. change in the slope of the demand curve.
c)
C. downward movement along the demand curve.
2.
a)
A. One that uses a current consumption basket
b)
B. One that uses a constant consumption basket
c)
C. One reflecting substitutions made by consumers over time
3.
Q. Which of the following is least likely to be caused by a shift in aggregate demand?
a)
A. Stagflation
b)
B. A recessionary gap
c)
C. An inflationary gap
4.
Which of the following is least likely to be a valid function/characteristic of money? Money:
a)
A. provides a store of wealth.
b)
B. requires a double coincidence of wants.
c)
C. acts as a unit of account.
5.
Q. Deep River Manufacturing is one of many companies in an industry that make a food product. Deep River units are identical up to the point they are labeled. Deep River produces its labeled brand, which sells for $2.20 per unit, and “house brands” for seven different grocery chains which sell for $2.00 per unit. Each grocery chain sells both the Deep River brand and its house brand. The best characterization of Deep River’s market is:
a)
A. oligopoly.
b)
B. perfect competition.
c)
C. monopolistic competition.
6.
Q. The inflation rate most likely relied on to determine public economic policy is:
a)
A. core inflation.
b)
B. headline inflation.
c)
C. index of food and energy prices.
7.
Q. A firm is operating beyond minimum efficient scale in a perfectly competitive industry. To maintain long-term viability the most likely course of action for the firm is to:
a)
A. operate at the current level of production.
b)
B. increase its level of production to gain economies of scale.
c)
C. decrease its level of production to the minimum point on the long-run average total cost curve.
8.
Q. The discouraged worker category is defined to include people who:
a)
A. are overqualified for their job.
b)
B. could look for a job but choose not to.
c)
C. currently look for work without finding it.
9.
a)
A. inferior goods.
b)
B. substitutes.
c)
C. complements.
10.
Q. The unemployment rate is considered a lagging indicator because:
a)
A. new job types must be defined to count their workers.
b)
B. multi-worker households change jobs at a slower pace.
c)
C. businesses are slow to hire and fire due to related costs.
11.
Q. In a recession, companies are most likely to adjust their stock of physical capital by:
a)
A. selling it at fire sale prices.
b)
B. not maintaining equipment.
c)
C. quickly canceling orders for new construction equipment.
12.
a)
A. 3 .
b)
B. 4 .
c)
C. 5 .
13.
Q. A country that maintains a target exchange rate is most likely to have which outcome when its inflation rate rises above the level of the inflation rate in the target country?
a)
A. An increase in short-term interest rates.
b)
B. An increase in the domestic money supply.
c)
C. An increase in its foreign currency reserves.
14.
Q. Which of the following statements best describes the benefits of international trade?
a)
A. Countries gain from exchange and specialization.
b)
B. Countries receive lower prices for their exports and pay higher prices for imports.
c)
C. Absolute advantage is required for a country to benefit from trade in the long term.
15.
Q. Following a sharp increase in the price of energy, the overall price level is most likely to rise in the short run:
a)
A. and remain elevated indefinitely unless the central bank tightens.
b)
B. but remain unchanged in the long run unless the money supply is increased.
c)
C. and continue to rise until all prices have increased by the same proportion.
16.
Q. Which of the following is not a condition of an ideal currency regime?
a)
A. Fully convertible currencies.
b)
B. Fully independent monetary policy.
c)
C. Independently floating exchange rates.
17.
a)
A. 3 .
b)
B. 4 .
c)
C. 5 .
18.
The consumer price index (CPI) this year is 252. The CPI last year was 246. The inflation rate this year is closest to:
a)
A. 6.00%.
b)
B. 2.38%.
c)
C. 2.44%.
19.
Q. Which action is a central bank least likely to take if it wants to encourage businesses and households to borrow for investment and consumption purposes?
a)
A. Sell long-dated government securities.
b)
B. Purchase long-dated government treasuries.
c)
C. Purchase mortgage bonds or other securities.
20.
a)
A. 50 .
b)
B. 60 .
c)
C. 110 .
21.
Q. 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.
22.
Q. Over the past month, the Swiss Franc (CHF) has depreciated 12 percent against pound sterling (GBP). How much has the pound sterling appreciated against the Swiss Franc?
a)
A. 12%.
b)
B. Less than 12%
c)
C. More than 12%
23.
Cost–push inflation is least likely to be affected by an increase in:
a)
A. employee wages.
b)
B. finished goods prices.
c)
C. commodity prices.
24.
a)
A. 8 .
b)
B. 66 .
c)
C. 81 .
25.
Q. A decrease in the real exchange rate (quoted in terms of domestic currency per unit of foreign currency) is most likely to be associated with an increase in which of the following?
a)
A. Foreign price level.
b)
B. Domestic price level.
c)
C. Nominal exchange rate.
26.
Q. Convergence of incomes over time between emerging market countries and developed countries is most likely the result of:
a)
A. total factor productivity.
b)
B. diminishing marginal productivity of capital.
c)
C. the exhaustion of non-renewable resources.
27.
Q. Equality between aggregate expenditure and aggregate output implies that the government’s fiscal deficit must equal:
a)
A. Private saving – Investment – Net exports.
b)
B. Private saving – Investment + Net exports.
c)
C. Investment – Private saving + Net exports.
28.
According to the Solow neoclassical growth model, sustained long-term growth in potential GDP is best explained by:
a)
A. capital deepening investments.
b)
B. technological change.
c)
C. growth in labor supply.
29.
Q. The most likely argument against high national debt levels is that:
a)
A. the debt is owed internally to fellow citizens.
b)
B. they create disincentives for economic activity.
c)
C. they may finance investment in physical and human capital.
30.
If the quantity demanded of pears falls by 4% when the price of apples decreases by 3%, then apples and pears are best described as:
a)
A. complements.
b)
B. substitutes.
c)
C. inferior goods.
31.
Q. 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.
32.
Q. What is the most important effect of labor productivity in a cost-push inflation scenario?
a)
A. Rising productivity indicates a strong economy and a bias towards inflation.
b)
B. The productivity level determines the economy’s status relative to its “natural rate of unemployment.”
c)
C. As productivity growth proportionately exceeds wage increases, product price increases are less likely.
33.
A liquidity trap is most closely associated with:
a)
A. deflation.
b)
B. an inelastic demand for money.
c)
C. a positive nominal central bank policy rate.
34.
Q. The characteristic of national consumer price indexes that is most likely shared across major economies worldwide is:
a)
A. the geographic areas covered in their surveys.
b)
B. the weights they place on covered goods and services.
c)
C. their use in the determination of macroeconomic policy.
35.
Q. Based on typical labor utilization patterns across the business cycle, productivity (output per hours worked) is most likely to be highest:
a)
A. at the peak of a boom.
b)
B. into a maturing expansion
c)
C. at the bottom of a recession.
36.
a)
A. 2 .
b)
B. 3 .
c)
C. 4 .
37.
If the scale of a single producer is small relative to the demand for an undifferentiated good, the market structure of the producer is best described as being:
a)
A. an oligopoly.
b)
B. monopolistic competition.
c)
C. perfect competition.
38.
A country with which of the following characteristics is least likely to face long-term GDP growth challenges?
a)
A. A country with innovations in production processes
b)
B. A country with high labor quality
c)
C. A country with large natural resources
39.
Which of the following is the least likely outcome when a monopolist adopts first-degree price discrimination because of customers’ differing demand elasticities?
a)
A. The output increases to the point at which price equals the marginal cost.
b)
B. The monopolist shares the total surplus with consumers.
c)
C. The price for a marginal unit decreases to less than the price for other units.
40.
a)
A. 3 .
b)
B. 4 .
c)
C. 5 .
100 %
