0% Economics Full BookAdvertisements 1 / 50 1. Which of the following is most likely to lead to a decrease in aggregate supply? a) Increased consumption expenditure b) Rise in wage costs per unit of output c) Decline in unemployment benefit rates d) Improved labor productivity 2 / 50 2. Given C=30+0.7Y and an equilibrium income of 300, what is the investment level? a) 60 b) 100 c) 210 d) 270 3 / 50 3. During a year, if national income rises by 8%, prices by 4%, and population by 2%, how does real income per head change? a) Decrease of 2% b) No change c) Increase of 2% d) Increase of 4% 4 / 50 4. When the nominal value of national income increases by 10% and the average price level by 20%, what is implied? a) Increase in money supply b) Increased income velocity of circulation c) Decrease in demand for money d) Reduction in output volume 5 / 50 5. In a closed economy with no government, C=30+0.8YC and I=50. What is the equilibrium level of income? a) 64 b) 80 c) 256 d) 400 6 / 50 6. Suppose a monopolist sets its price where demand is unit elastic. What is true of its marginal revenue? a) Positive b) Negative c) Zero d) Maximized 7 / 50 7. Which of the following types of unemployment is not directly affected by economic policies? a) Frictional b) Structural c) Cyclical d) Demand-deficient 8 / 50 8. A rightward shift in the demand curve for a product could result from: a) Fall in the price of a substitute b) Increase in consumer income c) Fall in product's own price d) Reduction in complementary 9 / 50 9. In which scenario does a contractionary fiscal policy occur? a) Increase in government spending b) Increase in taxation c) Reduction in interest rates d) Increase in budget deficit 10 / 50 10. The multiplier measures the rate of change in: a) Output from a spending change b) Consumption from output change c) Investment from output change d) Savings from consumption change 11 / 50 11. A fall in national income resulting from an increase in imports is associated with: a) Demand-pull inflation b) Deflationary gap c) Supply-push inflation d) Cost-push inflation 12 / 50 12. Which of the following best defines "opportunity cost"? a) Monetary value spent on resources b) Lost benefits of the next best alternative c) Cost of buying a product d) Total expenditure on a product 13 / 50 13. When a monopolist’s marginal revenue is zero, what can be said about the elasticity of demand? a) Perfectly elastic b) Perfectly inelastic c) Unitary elastic d) Inelastic 14 / 50 14. The Laffer Curve shows the relationship between: a) Tax rates and tax revenue b) Inflation and unemployment c) National income and investment d) Exchange rates and exports 15 / 50 15. If the price elasticity of demand is greater than 1, a rise in price will: a) Increase total revenue b) Decrease total revenue c) Have no effect on revenue d) Increase both price and quantity 16 / 50 16. When an economy operates on its production possibility frontier, it implies: a) Economic growth b) Full employment and efficiency c) Inflation control d) Surplus production 17 / 50 17. A firm experiences economies of scale if: a) Its long-run average cost rises as output rises b) Its long-run average cost falls as output rises c) Output decreases with increased input d) Short-run costs equal long-run costs 18 / 50 18. A profit-maximizing firm in perfect competition will set its output where: a) Price equals marginal revenue b) Marginal cost equals average cost c) Price equals marginal cost d) Marginal revenue is maximized 19 / 50 19. What does the Phillips Curve illustrate? a) Relation between inflation and unemployment b) Link between money supply and GDP c) Association between interest rates and inflation d) Relationship between exchange rate and exports 20 / 50 20. Which one of the following factors is most likely to cause an increase in aggregate demand? a) Increase in tax rates b) Increase in export demand c) Fall in government expenditure d) Decline in consumer confidence 21 / 50 21. A perfectly competitive firm’s demand curve is: a) Upward sloping b) Vertical c) Perfectly elastic d) Downward sloping 22 / 50 22. If demand is price inelastic, a firm can: a) Increase total revenue by lowering price b) Increase total revenue by raising price c) Keep total revenue unchanged d) Increase total revenue without price change 23 / 50 23. In the circular flow model, injections include: a) Imports b) Savings c) Taxes d) Investment 24 / 50 24. A rise in interest rates is likely to: a) Increase investment b) Reduce aggregate demand c) Increase aggregate demand d) Increase consumer spending 25 / 50 25. Price discrimination is possible when: a) There are two distinct markets b) No substitute products exist c) Government regulates prices d) Supply is perfectly inelastic 26 / 50 26. Which concept measures the responsiveness of supply to price changes? a) Price elasticity of demand b) Income elasticity of demand c) Cross elasticity of demand d) Price elasticity of supply 27 / 50 27. The principle of comparative advantage suggests: a) Specializing in goods with highest opportunity cost b) Trading goods only with absolute advantage c) Specializing in goods with lower opportunity cost d) Equalizing production across all sectors 28 / 50 28. If a good has a cross elasticity of demand of +2 with respect to another good, the two goods are: a) Substitutes b) Complements c) Unrelated d) Inferior 29 / 50 29. Which of the following is not a merit of fiscal policy? a) Reduces cyclical fluctuations b) Creates budget deficit c) Promotes economic stability d) Can achieve social justice 30 / 50 30. Marginal propensity to consume (MPC) is defined as the: a) Change in total consumption due to income changes b) Percentage of total income spent c) Fraction of additional income spent on consumption d) Ratio of consumption to savings 31 / 50 31. A minimum price above equilibrium results in: a) Shortage b) Surplus c) Equilibrium d) No effect 32 / 50 32. The unemployment rate includes all except: a) Discouraged workers b) Unemployed actively seeking work c) Temporarily laid-off workers d) Underemployed workers 33 / 50 33. In a competitive market, firms are price: a) Setters b) Makers c) Takers d) Influencers 34 / 50 34. The Keynesian consumption function suggests that: a) Consumption varies inversely with income b) Consumption is always constant c) Consumption is positively related to disposable income d) Marginal propensity to consume is negative 35 / 50 35. The discount rate used in net present value (NPV) calculations reflects: a) Return on equity b) Rate of inflation c) Cost of capital d) Depreciation rate 36 / 50 36. Suppose the income elasticity of demand for a good is +1.5. If consumers’ income rises by 10%, what happens to the demand for the good? a) Increases by 1.5% b) Increases by 15% c) Decreases by 1.5% d) Decreases by 15% 37 / 50 37. When the central bank conducts open market operations and buys government bonds, which of the following is expected? a) Increase in interest rates b) Decrease in money supply c) Increase in bank reserves d) Decrease in aggregate demand 38 / 50 38. If an economy is experiencing both rising unemployment and high inflation, it is likely facing: a) Hyperinflation b) Stagflation c) Deflation d) Recession 39 / 50 39. When a government imposes a tariff on imported goods, which of the following outcomes is least likely? a) Increase in government revenue b) Increase in the domestic market price c) Increase in the quantity of imports d) Decrease in foreign producers’ revenue 40 / 50 40. In an open economy with government intervention, where C=50+0.8(Y−T), I=100I, G=200G , and T=0.25YT , what is the equilibrium level of income? a) 400 b) 800 c) 1000 d) 1600 41 / 50 41. If the price elasticity of supply for a good is greater than 1, then the supply of the good is: a) Perfectly inelastic b) Inelastic c) Elastic d) Perfectly elastic 42 / 50 42. Which of the following best describes a liquidity trap? a) High inflation with stagnant economic growth b) Low interest rates failing to stimulate borrowing c) Government budget deficits increasing demand d) An excess of imports over exports 43 / 50 43. In the context of the foreign exchange market, what effect does an appreciation of the domestic currency have on the balance of trade? a) Increases exports, decreases imports b) Decreases exports, increases imports c) No effect on exports or imports d) Decreases both exports and imports 44 / 50 44. Which of the following is the best example of a regressive tax? a) Income tax b) Corporate tax c) Sales tax on essential goods d) Capital gains tax 45 / 50 45. A decrease in aggregate demand would most likely have what effect in the short run if the economy is already at full employment? a) Increase in output and decrease in prices b) Decrease in output and decrease in prices c) Increase in prices only d) Increase in output only 46 / 50 46. An economy’s production possibility frontier (PPF) would shift outward in response to: a) Technological advancements b) Increased unemployment c) Decrease in resources d) Lower demand for exports 47 / 50 47. Under which of the following conditions would a firm produce at the shutdown point? a) Price exceeds average variable cost b) Price is equal to average variable cost c) Price is equal to marginal revenue d) Marginal cost exceeds average cost 48 / 50 48. Which of the following is true if the cross-price elasticity of demand between two goods is positive? a) The goods are complements b) The goods are substitutes c) The goods are inferior d) The goods have unitary elasticity 49 / 50 49. In the event of a positive externality, which policy would most likely achieve an efficient allocation of resources? a) Imposing a tax on consumers b) Providing subsidies to producers c) Setting price ceilings d) Increasing taxes on income 50 / 50 50. According to the Ricardian Equivalence Theorem, a government deficit will not affect total demand if: a) It is financed by borrowing from the central bank b) People perceive future taxes as an offset c) It is financed by increasing money supply d) Government reduces its expenditure Your score isThe average score is 49% 0% Restart quiz Advertisements
