Economics

100

Economics is the study of:

A: Changes in technology
B: The best way to run a society
C: How society decides what, for whom, and how much to produce
D: Household spending decisions
E: How people react to the world around them

C: How society decides what, for whom, and how much to produce

100

Knowing the amount of a good or service buyers would purchase at any given price tells you:

A: Supply
B: Demand
C: Excess supply
D: Excess demand
E: Equilibrium

B: Demand

100

The rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling, is called:

A: Inflation
B: Deflation
C: Equilibrium
D: Symmetry
E: Disequilibrium

A: Inflation

100

The Latin phrase "ceteris paribus" is a common assumption in economic models, and roughly means:

A: "Holding all other things equal or constant"
B: "At a given time"
C: "Assuming normal conditions"
D: "In light of this change"
E: "Ignoring outside factors"

A: "Holding all other things equal or constant"

100

The basic economic problems are common to _____

(A) Mixed economy

(B) Socialism

(D) All the above

200

When demand and supply are equal, economists most commonly call this:

A: Inflation
B: Deflation
C: Equilibrium
D: Symmetry
E: Disequilibrium

C: Equilibrium

200

If a price increase in Product A increases the quantity demanded of Product B, then we know that Product B is a(n) ____ to Product A.

A: Complementary good
B: Substitute good
C: Normal good
D: Inferior good
E: Luxury good

B: Substitute good

200

The study of the economic behavior of individual units of an economy (such as a person, household, firm, or industry).

A: Economics
B: Macroeconomics
C: Microeconomics
D: Demography
E: Sociology

C: Microeconomics

200

If country A can produce more of good X than good Y in a day, even if they produce less of both goods than country B, then country A has a(n) ____ in good X.

A: Surplus
B: Shortage
C: Comparative advantage
D: Absolute advantage
E: Marginal advantage

C: Comparative advantage

200

The pricing of factors of production is called

(A) Distribution

(B) Exchange

(D) Consumption

(A) Distribution

300

The opportunity cost of a good is:

A: The time lost in finding it
B: The units of other goods given up in order to get another unit of that good
C: Money spent to buy a good
D: The effort it takes to access a good
E: The skill level needed to use a good

B: The units of other goods given up in order to get another unit of that good

300

When consumers' income increases, their spending on _____ will increase, while their spending on _____ will decrease.

A: Goods; services
B: Substitute goods; complementary goods
C: Inferior goods; normal goods
D: Normal goods; inferior goods
E: Luxury goods; services

D: Normal goods; inferior goods

300

In economics, "scarcity" occurs when:

A: There is too much competition in the market
B: The price of a good is so low that producers stop producing it
C: The price of a good is so high that consumers stop buying it
D: There is a shortage of resources to meet demand at price zero
E: Debt reaches an unsustainable level

D: There is a shortage of resources to meet demand at price zero

300

Please study this model carefully before answering the question. In the model above, to what does P1 refer?

A: The price level at GDP level Y.
B: The price level at GDP level Y1.
C: The price of a good at supply Y1.
D: The quantity supplied of a good at price Y1.
E: The quantity demanded of good A at price Y1.

B: The price level at GDP level Y1.

300

The consumer will buy _____ at lower prices.

(A) Equal

(B) Less

(D) Neither less or more

400

In economics, a market is best described as:

A: A place to buy things
B: A place to sell things
C: The movement of prices in the absence of government intervention
D: A place, physical or virtual, where buyers and sellers interact
E: A local store

D: A place, physical or virtual, where buyers and sellers interact

400

What does the blue line labeled "S" represent in a basic economic model?
A: Demand
B: Scarcity
C: Supply
D: Services
E: Standard price

C: Supply

400

The most common way of measuring a national economy is GDP. This acronym stands for:

A: Growth in Domestic Productivity
B: Gross Domestic Product
C: Gain in Domestic Production
D: Greater Domestic Product
E: Gross Dollar Productivity

B: Gross Domestic Product

400

Please study this model carefully before answering the question. In the model above, to what does AD refer?

A: Original demand.
B: Demand after a downward shift in prices.
C: Original supply.
D: Supply after a downward shift in prices.
E: The price level at GDP level Y1.

A: Original demand.

400

The demand for labour is _____

(A) Derived demand

(B) Direct demand

(D) Elastic demand

(A) Derived demand

500

In a "free market" economy:

A: The government determines the price of goods and services
B: Private businesses work with the government to solve economic problems
C: Goods and services are provided for free
D: Private citizens are taxed, but corporations are not
E: Prices adjust naturally to reach equilibrium in the face of scarcity and demand

E: Prices adjust naturally to reach equilibrium in the face of scarcity and demand

500

What is the term for the situation in which a single supplier controls the market in a particular sector?

A: Monopoly
B: Oligopoly
C: Mixed economy
D: Planned economy
E: Competitiveness

A: Monopoly

500

An economic actor who is risk averse, when given a choice between two investments with similar predicted return, would be expected to choose:

A: Both investments
B: Neither investment
C: It is impossible to predict
D: The higher-risk investment
E: The lower-risk investment

E: The lower-risk investment

500

Please study this model carefully before answering the question. The movement in this model illustrates what phenomenon?

A: Growth in production
B: Marginal productivity
C: Deadweight loss
D: Inflation
E: Deflation

E: Deflation

500

To explain rent, _____ economists make use of the term transfer earning.

(A) New Classical

(B) Today

(D) Modern