Deck 12: Economics

Question 1

What is the correct term used to describe a group of firms that act in unison in order to set price and output for goods in the market?

A)Oligopoly
B)Cartel
C)Monopoly
D)Barrier to entry

Answer 1

Cartel

Question 2

Why is it likely that when Mike goes to a sushi restaurant, he eats 15 pieces of sushi instead of 25?

A)Mike probably cannot afford to eat more than 15 pieces of sushi
B)The marginal utility of the sushi eventually weakens
C)The marginal utility of the sushi rises
D)The satisfaction that Mike derives from the sushi remains constant

Answer 2

The marginal utility of the sushi eventually weakens

Question 3

Imagine that the number of people who are graduating from medical school increases by 10% each year. If this is the case, which of the following statements about doctors' salaries is true?

A)Doctors' salaries will increase
B)Doctors' salaries will decrease
C)Doctors' salaries will decrease if the demand is less than the supply
D)Doctors' salaries will decrease if the demand is greater than the supply

Answer 3

Doctors' salaries will decrease if the demand is less than the supply

Question 4

Which kind of government features a goal of fair distribution of wealth and wages that are negotiated between managers and trade unions?

A)Communism
B)Capitalism
C)Socialism
D)Monarchy

Question 5

Rogers Communication has over a dozen products in various stages of development at any given time. For these products, nearly half will have patents before the testing stage. These patents are considered:

A)Intangible debts
B)Tangible debts
C)Intangible assets
D)Tangible assets

Question 6

What is the difference between a level of production that would be optimal for society and the actual market level?

A)Spillover costs
B)Coase theorem
C)Market failure
D)Negative internality

Question 7

Which of the following is the correct term for the simple act of giving one thing up for another?

A)Opportunity cost
B)Profit motive
C)Trade-off
D)Command

Question 8

In recent years, Microsoft has been accused of unfair competitive practices and an unequal access to consumers. Another negative consequence of the free-market economy is:

A)Reduced pricing due to increased consumer choice
B)Global competition
C)Lack of adherence to social and environmental goals
D)Supplies' shortages

Question 9

Which of the following is one of the reasons that the labor curve might shift?

A)Immigration
B)Change in tastes or cultural norms
C)There are opportunities available in other labor markets
D)All of the above

Question 10

What are goods that are used together called?

A)Substitutes
B)Complements
C)Pairs
D)Supplies

Question 11

Middle class families, on average, earn $60K per annum before taxes are deducted. When state and federal taxes are directly removed from personal income, the remaining is referred to as:

A)Gross income
B)Disposable income
C)Labor income
D)Domestic income

Question 12

Price Elasticity of Demand (PED) illustrates how well quantities of goods and services demanded by consumers respond to changes in prices. The following are determinants of PED except:

A)Income percentage spent on goods
B)Availability of substitute goods and services
C)Decreased choice
D)Time period

Question 13

In the quantity theory of money, what does the (P) stand for as seen in the equation MV = PY?

A)Period
B)Peak
C)Product
D)Price

Question 14

In order to effectively maximize its profit, a business should mire labor until MRP = W.

Question 15

If the demand for something is perfectly inelastic, then what is the price elasticity of demand?

A)-1
B)0
C)1
D)100

Question 16

Which principle maintains that the government should tax individuals in accordance with the benefits they receive-no matter what their income level?

A)Ability-to-pay principle
B)Benefits-received principle
C)Regressive tax principle
D)Progressive tax principle

Question 17

In a free-market economy, the price of rice following a surplus is likely to:

A)Increase
B)Decrease
C)Remain unchanged
D)Require intervention

Question 18

What is the correct term for the ability to produce something with a lower opportunity cost?

A)Comparative advantage
B)Absolute advantage
C)Opportunity cost advantage
D)Efficiency

Question 19

When looking at the determinants of demand, a(n) ________ in demand causes the curve to shift to the left, while a(n) _________ in demand causes the curve to shift to the right.

A)Decrease; increase
B)Increase; decrease
C)Consumer shift; supplier shift
D)None of the above

Question 20

Which of the following measures the benefit of a buyer in participating in a particular market for goods?

A)Tax incidence
B)Price elasticity of demand
C)Producer surplus
D)Consumer surplus

Question 21

Economists state that government purchases have a multiplier effect on aggregate demand. In other words, every dollar spent by the government leads to an increase in aggregate demand for goods and services by a dollar or more. According to the multiplier equation below, what does MPC stand for? Multiplier = 1/(1-MPC)

A)Marginal propensity to consume
B)Medium proportion to consumption
C)Marginal proportion to consumption
D)Medium propensity to consume

Question 22

Prices for goods and services depend largely on the product's lifecycle. Which is the correct stage progression in a product's lifecycle?

A)Launch - maturity - decline
B)Growth - proliferation - maturity - decline
C)Growth - maturity - decline
D)Launch - growth - maturity - decline

Question 23

Which of the following is not an example of the government's attempt to reduce national poverty?

A)Welfare
B)Social Security
C)Income taxes
D)Minimum wage laws

Question 24

If the tax multiplier is ?4 and net taxes are reduced by $200 billion, what will the output be?

A)$600 billion
B)$100 billion
C)$800 billion
D)$50,000

Question 25

Which of the following economic questions must any society answer, regardless of its location, size, or political form?

A)Who will consume the services and goods produced?
B)What goods will be produced?
C)What methods of producing goods are appropriate for our society?
D)All of the above

Question 26

What is the first determinant of supply?

A)Technology
B)Expectations of suppliers
C)Input prices
D)Elasticity

Question 27

If buyers and/or sellers do not have all of the available information about a product's prices, customers, suppliers, inputs, available markets, etc., what is this called?

A)Imperfect information
B)Market failure
C)Bilateral monopoly
D)In-truth advertising

Question 28

Which of the following refers to the graphical method of illustrating the complicated economic relationship between consumption and spending?

A)The scarcity and demand curve
B)The supply and demand paradigm
C)The market equilibrium balance
D)The production possibilities curve

Question 29

The marginal social benefit (MSB) is obtained by adding the marginal private benefit to what?

A)The marginal private cost
B)The marginal external cost
C)The marginal external benefit
D)The marginal social cost

Question 30

What is the correct equation for determining the elasticity of supply?

A)Percentage change in quantity demanded/percentage change in price
B)Percentage change in quantity demanded/percentage change in income
C)Percentage change in quantity supplied/percentage change in price
D)Percentage change in quantity supplied/percentage change in quantity demanded

Question 31

Which group within the government helps the Department of Justice to enforce antitrust laws?

A)Congress
B)The Federal Trade Commission
C)The FDIC
D)The Social Security Administration

Question 32

Suppose that Mike is bidding on a superhero figure at a comic book convention. Mike tells the seller that he is looking for a particular figure and he is willing to pay a maximum of $150 for it. The seller says that he has the exact figure that Mike is looking for and he will sell it for $150. Which of the following statements is true about this situation?

A)The seller will not be able to sell the figure to Mike
B)Mike gains a $150 consumer surplus
C)The seller gets a $150 consumer surplus
D)Mike does not get a consumer surplus

Question 33

What term refers to the contribution that using one more unit of a particular factor makes to a business's bottom line?

A)Marginal utility
B)Marginal derived demand
C)Marginal revenue product
D)Resource quantity

Question 34

The luxury clothing market is known to be especially vulnerable to economic recessions as people curtail spending on expensive non-essentials. Some luxury clothing retailers resort to selling these same goods at outlet markets in an effort to lure customers who are unwilling or unable to pay. This is an example of:

A)First degree price discrimination
B)Price stickiness
C)Second degree price discrimination
D)Demand-pull inflation

Question 35

Which of the following might be a reason that a monopoly could exist?

A)A business owns a patent on a good, service, or idea
B)Economies of scale exist
C)A single business owns one of the most important resources used to make a good
D)All of the above

Question 36

Which of the following is the study of how groups and people tend to behave in strategic situations?

A)Monopolistic competition
B)Game theory
C)Collusion
D)Perfect competition

Question 37

In a legislative meeting designed to investigate new standard of living changes, a number of politicians contemplating whether there should be an increase in minimum wages or a provision of small business tax cuts. This is an example of:

A)Trickle down economics
B)Positive economics
C)Normative economics
D)Negative economics

Question 38

In the case of a recession, which of the following might the Fed do to counter the financial situation?

A)Increase taxes
B)Decrease taxes
C)Increase government spending
D)Purchase bonds

Question 39

Sweden is considered to be a country with a low inflation rate, while the Congo has a high inflation rate. According to the quantity theory of money, describe the nature of the positive relationship between inflation and money supply growth for Sweden and the Congo, respectively.

A)Strong; strong
B)Strong; weak
C)Weak; strong
D)Weak; weak

Question 40

The mayor of Hiramville is looking at some startling statistics about his city. The labor force in Hiramville is 400,000 and there are currently 100,000 people who are unemployed. What is the unemployment rate, expressed as a percentage, in Hiramville?

A).25%
B)2.5%
C)25%
D)10%

Question 41

What states that as the price of a product rises, people purchase less of that good, leading to a decrease in demand?

A)Law of supply
B)Command economy
C)Law of demand
D)Law of increasing opportunity costs

Question 42

From an economist's standpoint, which of the following would be a resource?

A)Labor
B)Entrepreneurship
C)Land
D)All of the above

Question 43

When calculating unemployment figures in a given population, economists count those:

A)Looking for paid work
B)Early retirees seeking extra income
C)Discouraged after long searches
D)Incarcerated in prisons

Question 44

Which type of unemployment occurs as a result of a mismatch between the skills of the unemployed population and the type of jobs that are available?

A)Frictional unemployment
B)Structural unemployment
C)Skills unemployment
D)Cyclical unemployment

Question 45

Over the past 25 years, the manufacturing base in the United States has begun to erode due to outsourcing to countries with cheaper production. Skilled workers in automobile and textile manufacturing have found it difficult to find other work. What type of unemployment is this?

A)Manufacturing
B)Outsourcing
C)Structural
D)Dynamic

Question 46

The following are examples of commodity money except:

A)Bonds
B)Gold
C)Silver
D)Cigarettes

Question 47

If the foreign exchange value of a nation's currency rises, what will happen to the aggregate supply and aggregate demand?

A)AS will increase, AD will decrease
B)AS will decrease, AD will increase
C)Both AS and AD will increase
D)Both AS and AD will decrease

Question 48

When discussing the aggregate expenditure approach, economists generally include four distinct types of spending: investment, government spending, net exports, and ____________.

A)Peak
B)Double counting
C)Consumption
D)Medicare

Question 49

Think about making deposits at a commercial bank. If that bank has no excess reserves and the requirement is 20 percent, how much money would be created in new loans from all banks after this bank gets a deposit of $15,000?

A)$60,000
B)$10,000
C)$20,000
D)$30,000

Question 50

A country's national economy has shown an 8% growth over the past 4 years. Before that, the economy moved from recession to stagnation over a period of 10 years. What is this economic fluctuation referred to?

A)Business cycle
B)Economic forecast
C)Growth cycle
D)Stagnation cycle

Question 51

When government spending (G) goes up, does the aggregate demand curve (AD) shift? If so, which way?

A)No
B)Yes. The curve shifts to the left.
C)Yes. The curve shifts to the right.
D)It is impossible to tell given the information.

Question 52

What is the correct term for the ease with which an asset-typically money-can be converted into spending?

A)Monetary policy
B)Marginal propensity to consume
C)Broad money
D)Liquidity

Question 53

Human capital consists of workers' skills and education.

Question 54

Which of the following reduces imports by restricting the quantity of one particular good that can be imported from another country?

A)Import quota
B)Embargo
C)Tariff
D)Export quota

Question 55

Although demand changes with a change in price, there are also five general changes that will also lead to a change in demand for people-regardless of whether or not the price changes. Which of the following is one of these changes?

A)Change in the price of other products
B)Change in level of income
C)Change in individual tastes
D)All of the above

Question 56

In 2007, the nominal Gross Domestic Product (GDP) of a small Asian country was 5% and the real GDP growth was 2%. What was the rate of inflation for this country?

A)-3%
B)10%
C)3%
D)7%

Question 57

The medium run aggregate supply (MRAS) is affected by labor, capital availability, technological capability, and wage rate.

Question 58

What happens if the demand for oranges increases, but the supply of oranges decreases?

A)The price and quantity will both increase
B)The price and quantity will both decrease
C)The price will increase, but the quantity will decrease
D)The price will increase, but it cannot be determined what will happen to the quantity

Question 59

During the 1990s and due to a civil war, Nigeria experienced capital flight, especially by foreign investors. Capital flight is a significant and sudden reduction in the _______ within a country.

A)Insurance against fraud
B)Loanable funds
C)Supply assets
D)Demand for assets

Question 60

With the introduction of government-funded health programs for the elderly and the poor, private health insurers have lost a substantial portion of their insured clients to these programs. The introduction of government-sponsored spending that curbs private investment is referred to as:

A)Squeezing-out
B)Crowding-in
C)Crowding-out
D)Squeezing-in

Question 61

What was passed by Congress in 1890 to strictly limit monopoly power, prohibiting things like separation markets and fixing prices with intent to gain?

A)The Clayton Act
B)The Federal Trade Commission Act
C)The Sherman Antitrust Act
D)None of the above

Question 62

Which of the following is not one of the factors that determine whether or not the demand for a particular good is elastic or inelastic in respect to the price?

A)How much of a consumer's budget is spent on the good
B)How much the good costs
C)Whether the good being bought is a luxury item or a necessity
D)If close substitutes for the good are available

Question 63

Costs are minimized when all of the marginal products of all the inputs are _________.

A)Increasing
B)Decreasing
C)Equal
D)Zero

Question 64

Which classical economist argued that investment demand does not depend so much upon interest rates, but rather about the expectations about the prosperity of the economy?

A)Say
B)Keynes
C)Fisher
D)Phillips

Question 65

The figure shown depicts a shift in investment (Q0 to Q1) demand by consumers in response to a decrease in interest rates (r0 to r1). What does this shift indicate about consumers' business confidence?

A)Insufficient information available
B)No change in business confidence
C)Decrease in business confidence
D)Increase in business confidence

Question 66

Why does the PPC slope downward?

A)Increasing opportunity costs
B)Scarcity
C)A rising unemployment rate
D)The PPC does not slope downward

Question 67

What is the correct term for a sustained decrease in the general price level within an economy?

A)Money illusion
B)Depreciation
C)Inflation
D)Deflation

Question 68

What does MPC stand for?

A)Multiplier of personal consumption
B)Mean of personal contributions
C)Monies due to private contractors
D)Marginal propensity to consume

Question 69

How do economists compare how rich or poor different nations are?

A)By measuring per capita GDP
B)By measuring GNP
C)By looking at the total GDP
D)By dividing GDP by the nation's area in square miles

Question 70

Look at the following data set:Total population = 60 millionPersons of proper working age (16-65) = 30 millionPersons employed = 20 millionPersons actively looking for work = 2 millionWhat is the size of the labor force for this economy?

A)60 million
B)52 million
C)22 million
D)50 million

Question 71

Imagine that the consumer price index rises from 125 to 250. What can be concluded from this information?

A)Consumer incomes are all doubled
B)Consumer incomes are cut in half
C)All prices in the average consumer's market basket are doubled
D)All prices in the given economy are doubled

Question 72

Economics is the study of how people:

A)Allocate societal resources by purchasing goods and services
B)Gain access to local and foreign markets
C)Produce goods and services at the lowest production costs
D)Make profits and reduce unemployment

Question 73

Which of the following is the term for the economic indicator that measures change in price over time, using a fixed market basket of average services and goods?

A)Phillip's Curve
B)CPI
C)MPC
D)GDP

Question 74

What is the system in the United States in which only a portion of total deposits is reserved and the rest is lent out?

A)Liquidity
B)Fractional reserve banking system
C)Central bank policy
D)Open market operations