Economics Trivia Questions for Students — page 11

According to Keynesian theory

• Athe FED should allow the money supply to grow at a constant rate.
• Bfiscal policy is the preferred way of shifting the aggregate demand curve.
• Cthe FED should not conduct monetary policy.
• Dchanges in the money supply have significant effects.

Jason cleans swimming pools in a perfectly competitive local market. A profit maximizer, he can charge $10 per pool to clean 9 pools per day, incurring total variable costs of $80 and total fixed costs of $20. Which of the following is true?

• AJason should clean 9 pools per day, with economic losses of $10.
• BJason should shut down in the short run, with economic losses of $10.
• CJason should shut down in the short run, with economic losses of $20.
• DJason should clean 9 pools per day, with economic losses of $20.

In the long run aggregate supply is

• Avertical below full employment.
• Bupward sloping at full employment.
• Chorizontal below full employment.
• Dvertical at full employment.

Suppose the reserve ratio is 0.1. If a bank gets $200 in deposits what is the maximum amount it can lend?

• AGreater than $200 but less than $500
• B$180
• C$20
• D$2,000

A tax imposed on a supplier will more likely be passed on to the consumer in the form of price increase if

• Aprice elasticity of demand is highly inelastic.
• Bwage elasticity of demand is highly elastic.
• Cprice elasticity of demand is unit elastic.
• Dprice elasticity of demand is highly elastic.

If Nation A can produce a good at lower opportunity cost than Nation B can produce the same good it is said that

• ANation A has absolute advantage in the production of that good.
• BNation B has absolute advantage in the production of that good.
• CNation B has comparative advantage in the production of that good.
• DNation A has comparative advantage in the production of that good.

If interest rates rise relatively more in country A than in country B then the value of country A's currency will

• Adepreciate.
• Bremain unchanged.
• Cchange indeterminately.
• Dappreciate.

Deadweight loss occurs in

• Aoligopoly markets because P > MC.
• Bmonopolistic competition as P > MC.
• Cmonopoly markets because P > MC.
• DAll of the above.

If the short-run aggregate supply curve is horizontal it is because

• Afalling interest rates increase the demand for goods and services putting upward pressure on prices.
• Bincreases in output cause prices to increase but wages adjust much less quickly.
• Cthere exist many unemployed resources so that output can be increased without increasing wages and prices.
• Dany increase in output requires a corresponding increase in wages and prices.

If the price of a product decreases with the price of a substitute product remaining constant such that the consumer buys more of this product, this is called the

• Asupply effect.
• Bmarginal effect.
• Csubstitution effect.
• Dincome effect.

Which of the following is true for a firm operating under perfect competition in the long run?

• AThe firm will incur economic losses.
• BThe firm will realize zero economic profits.
• CThe firm will realize economic profits.
• DThe firm will engage in non-price competition.

GDP measures

• A(A) and (C)
• Bproduction by a nation's citizens wherever they may be.
• Cincome earned by the factors of production plus depreciation and indirect business taxes.
• Dproduction within a nation's borders.

If the demand for grapes increases simultaneously with an increase in the supply of grapes, we can say that

• Aequilibrium quantity falls, and the price falls.
• Bequilibrium quantity rises, and the price rises.
• Cequilibrium quantity falls, but the price change is ambiguous.
• Dequilibrium quantity rises, but the price change is ambiguous.

There is relatively more crowding out as the result of expansionary fiscal policy when

• Agovernment spending improves profit expectations among businesses
• Bthe investment demand curve is elastic
• Cexpansionary monetary policy accompanies the fiscal policy
• Dthe investment demand curve is inelastic

A monopoly with a straight, downward-sloping demand curve has a marginal revenue curve that is

• Aparallel to the demand curve
• Binitially downward sloping and then upward sloping
• Cupward sloping
• Dhalfway between the demand curve and the vertical axis

Which of the following causes the supply curve of paper to shift to the left?

• AThe price of pencils, a complement to paper, increases.
• BImprovements in the technology used to produce paper.
• CPaper producers expect lower paper prices in the months ahead.
• DEnvironmental concerns reduce the yearly amount of timber that can be harvested.

Fisher's Hypothesis states that

• Athe nominal interest rate equals the real interest rate minus the inflation rate.
• Bthe nominal interest rate equals the unemployment rate plus the real interest rate.
• Cthe real interest equals the nominal interest rate plus the inflation rate.
• Dthe nominal interest rate equals the real interest rate plus the inflation rate.

Depreciation of the dollar is most likely to

• Adecrease a trade surplus
• Bincrease imports
• Cincrease travel abroad
• Dincrease exports

Assume a firm hires labor for $15 each and sells its products for $3 each. If the MP of the 3rd worker is 10, which of the following statements would be the most true?

• AThe firm should hire less labor so that the MRPL will decrease.
• BThe firm should hire more labor so that the MRPL will decrease.
• CThe firm should hire more labor so that the MRPL will increase.
• DThe firm should hire less labor so that the MRPL will increase.

The real interest rate is

• Awhat one sees when looking at bank literature
• Bthe nominal interest rate plus the anticipated inflation rate
• Cthe nominal interest rate divided by the inflation rate
• Dthe nominal interest rate minus anticipated inflation

The individual firm, operating under perfect competition, is characterized as:

• Aa price-taker.
• Ba price-maker.
• Ca price strategist.
• Done of a few sellers.

Which of the following would shift the aggregate demand curve to the left?

• AForeigners develop a preference for our products.
• BBusiness firms expect lower sales in the future.
• CAn increase in consumer confidence.
• DGovernment increases its level of spending.

Your aunt runs a small firm from her home making apple pies. She hires some friends to help her. Which of the following situations would most likely increase her demand for labor?

• AThe price of apple peelers/corers rises.
• BA new study reveals that apples increase your risk of cancer.
• CThere is a sale on ovens.
• DYour aunt's friends gossip all day, slowing their dough-making process.

The standard of living is measured by

• AGDP.
• BGDP per capita.
• CReal GDP per capita.
• DActual GI)P per capita.

Which of the following could cause the aggregate demand curve to shift to the left?

• AExpansionary demand management policies.
• BAn increase in the money supply.
• CContractionary demand management policies.
• DAn increase in government spending.

Which component of a nation's balance of payments recognizes the purchase and sale of real and financial assets between nations?

• AThe capital account
• BThe trade deficit account
• CThe current account
• DThe official reserves account

If the government wishes to regulate a natural monopoly so that it produces an allocatively efficient level of output, it would be at an output

• Awhere normal profits are made.
• Bwhere price is equal to marginal cost.
• Cwhere price is equal to average total cost.
• Dwhere marginal revenue equals marginal cost.

The long-run average cost curve

• Ais always below the short-run average cost curve
• Bis always above the short-run average cost curve
• Calways intersects the short-run average cost curve at the minimum of short-run average cost
• Dis below the short-run average cost except at one point

What is the main difference between the short-run and long-run Phillips curve?

• AThe short-run Phillips curve is downward sloping and the long-run Phillips curve is upward sloping.
• BThe short-run Phillips curve is upward sloping and the long-run Phillips curve is vertical.
• CThe short-run Phillips curve is downward sloping and the long-run Phillips curve is vertical.
• DThe short-run Phillips curve is horizontal and the long-run Phillips curve is upward sloping.

A recessionary gap exists when the short-run equilibrium level of real GDP

• Ais below the full-employment level of real GDP
• Bis above the full-employment level of real GDP
• Cequals the full-employment level of real GDP
• Ddecreases over time

In the short run, the shut down price is equal to

• Amaximum point on average total cost.
• Bmaximum point on average variable cost.
• Cminimum point on average variable cost.
• Dminimum point on average total cost.

Marginal cost (MC) is equal to average variable cost (AVC) and average total cost (ATC) when:

• AMC intersects AVC and ATC at their minimum points.
• BAVC and ATC intersect MC at its minimum point.
• Cmarginal cost (MC) intersects AVC and ATC at their maximum points.
• DAVC and ATC intersect MC at its maximum point.

When the value of the U.S. dollar appreciates relative to other currencies which of the following is the most likely to occur?

• AMore foreign visitors will travel to the United States.
• BImports into the United States will decrease.
• CExports from the United States will increase.
• DU.S. residents will take more vacations in foreign countries.

Which of the following is true about the pure public good?

• AConsumers can be excluded from its benefits by not paying for it.
• BOne more unit of a public good for some consumers means one less unit for other consumers.
• CThe marginal cost of providing an additional unit of the good to additional citizens is greater than zero.
• DThe good cannot be divided into discrete units.

Which of the following conditions is characteristic of oligopoly?

• AA rival firm matches price decreases of rivals, but fails to match any price increases of rivals.
• B(I)) Rival firms act independently of each other.
• CA rival firm fails to match both price increases or price decreases of rivals.
• DA rival firm matches price increases of rivals, but fails to match any price decrease of rivals.

Which of the following statements is most consistent with a capitalist market economy?

• AMost wages and prices are legally controlled.
• BPrivate property is fundamental to innovation, growth, and trade.
• CA central government plans the production and distribution of goods.
• DEconomic resources are allocated according to the decisions of the central bank.

If the money supply increases what happens in the money market (assuming money demand is downward sloping)?

• AThe nominal interest rates rises.
• BThe nominal interest rate does not change.
• CThe nominal interest rates falls.
• DTransaction demand for money falls.

Using the model of AD and AS what happens in the short run to real GDP the price level and unemployment with more consumption spending (C)? REAL GDP PRICE LEVEL UNEMPLOYMENT

• ADecreases Increases Increases
• BDecreases Decreases Decreases
• CIncreases Increases Decreases
• DIncreases Decreases Decreases

Opportunity costs or implicit costs of a "Mom & Pop"-owned business are:

• Aequal to earnings or profits that occurred for Mom & Pop's business.
• Bequal to accounting costs.
• Cequal to accounting profits.
• Dequal to earnings or profits that could have occurred using resources elsewhere.

If the economy experienced a decrease in real GDP and price level this could best be explained by

• Aa decline in labor productivity.
• Ba technological advance.
• Can uptick in net exports.
• Da decline in investment.

Which of the following is most likely an example of production inputs that can be adjusted in the long run, but not in the short run?

• AThe size of a McDonald's kitchen.
• BNumber of teacher's assistants in local high schools.
• CAmount of wood used to make a desk.
• DNumber of pickles put on a sandwich.

Which of the following is a likely effect of a higher tariff imposed by the United States on imported automobiles?

• ANet exports will rise and the dollar will appreciate in value.
• BThe price of automobiles in the United States will fall.
• CNet exports will fall and the dollar will appreciate in value.
• DNet exports will fall and the dollar will depreciate in value.

Suppose real GDP increases. We can conclude without a doubt that

• Aproduction is higher.
• Bemployment is higher.
• Cprices are higher.
• Dprices and/or output is higher.

Suppose yesterday the euro was trading on the foreign exchange market at $1.36 U.S. and today it is trading at $1.40 U.S. Which of the following is true?

• AThe U.S. dollar has appreciated.
• BInterest rates in the United States have decreased.
• CThe euro has depreciated.
• DThe euro has appreciated.

An increase in the consumer price index is commonly referred to as

• Aunemployment.
• Binflation.
• Cdiscouraged workers.
• Deconomic growth.

Which of the following is the best example of a public good?

• APrivate violin lessons
• BThe volunteer fire department in your community
• CA $1 ticket for admission to a museum
• DA bag of potato chips

Which of the following is true about the relationship of the average total cost (ATC) curve and the marginal cost (MC) curve?

• AATC and MC are always equal.
• BATC and MC are never equal.
• CThe ATC curve intersects the MC curve at the minimum point of the MC curve.
• DThe MC curve intersects the ATC curve at the minimum point of the ATC curve.

The international value of the dollar will appreciate if

• AAmerican prices rise.
• BAmerican income falls relative to the rest of the world.
• CAmerican interest rates fall relative to interest rates in other countries.
• Dforeigners boycott American products.

Which of the following is a predictable consequence of import quotas?

• AIncreased government tax revenue from imported goods
• BRising net exports and a rightward shift in aggregate supply
• CIncreased competition and lower consumer prices
• DHigher consumer prices and a misallocation of resources away from efficient producers

If Matt's total utility from consuming bratwurst increased at a constant rate, no matter how many bratwurst Matt consumed, what would Matt's demand curve for bratwurst look like?

• ADownward sloping
• BVertical
• CHorizontal
• DUpward sloping