Econ PAT.pptx

1. Econ 1b – BASIC MICROECONOMICS Assessment Test

2. What is the fundamental economic problem? Overpopulation Inflation Scarcity Unemployment

3. 2. Economics is primarily concerned with which of the following? Allocation of unlimited resources Distribution of wealth among the poor Allocation of scarce resources to satisfy wants Ensuring equal distribution of income

4. 3. Opportunity cost refers to: The money cost of an activity The benefits of an alternative that are forgone The accounting profit from an investment The cost of producing one more unit of a good

5. 4. Which of the following is a normative economic statement? The unemployment rate is 5%. Inflation is rising. The government should increase minimum wage. GDP grew by 2% last year.

6. 5. In a market economy, who decides what goods and services will be produced? The government Producers Consumers Both consumers and producers

7. 6. The law of demand states that: As price increases, demand decreases As price decreases, demand decreases As income increases, demand decreases As income decreases, demand increases

8. 7. If two goods are substitutes, an increase in the price of one will: Increase the demand for the other Decrease the demand for the other Increase the supply of the other Have no effect on the demand for the other

9. 8. A perfectly inelastic demand curve is: Horizontal Vertical Upward sloping Downward sloping

10. 9. The cross elasticity of demand between two goods is positive if the goods are: Complements Substitutes Independent Normal

11. 10. Which of the following is a characteristic of a monopoly? Many sellers Easy entry and exit Price taker Single seller

12. 11. Gross Domestic Product (GDP) measures: The total market value of all final goods and services produced within a country in a given period The total income of a country's residents The value of a nation's exports minus imports The distribution of income in a country

13. 12. Inflation is best defined as: An increase in the overall level of prices A decrease in the overall level of prices An increase in the level of production A decrease in the level of production

14. 13. The Phillips curve shows the relationship between: Inflation and unemployment Inflation and GDP Unemployment and GDP Interest rates and GDP

15. 14. Fiscal policy refers to: Changes in the money supply Changes in government spending and taxes Changes in interest rates Regulation of the stock market

16. 15. An increase in aggregate demand will most likely cause: An increase in unemployment A decrease in GDP An increase in inflation A decrease in inflation

17. 16. Comparative advantage is the principle that: A country should specialize in producing and exporting goods in which it has a lower opportunity cost A country should produce goods that are in high demand globally A country should produce all goods more efficiently than others A country should import goods that it can produce at a lower cost

18. 17. A tariff is: A tax on exports A tax on imports A limit on the quantity of goods that can be imported A subsidy to domestic producers

19. 18. An exchange rate is: The price of one country's currency in terms of another’s The price of goods and services in an economy The rate at which banks lend to each other The rate at which consumers purchase goods

20. 19. Which of the following would likely depreciate a country's currency? Higher interest rates Lower inflation rates A trade deficit A trade surplus

21. 20. Which organization is primarily responsible for regulating international trade? International Monetary Fund (IMF) World Bank World Trade Organization (WTO) United Nations (UN)

22. 21. A public good is characterized by: Excludability and rivalry Excludability and non-rivalry Non-excludability and rivalry Non-excludability and non-rivalry

23. 22. An externality is: A side effect of an economic activity that affects other parties without being reflected in market prices The cost of producing an additional unit of a good The opportunity cost of an economic decision A government intervention in the economy

24. 23. A progressive tax system is one in which: Everyone pays the same percentage of their income in taxes Higher-income individuals pay a higher percentage of their income in taxes Higher-income individuals pay a lower percentage of their income in taxes Taxes are based on consumption rather than income

25. 24. The concept of "tax incidence" refers to: The legal responsibility for paying a tax The actual distribution of the tax burden between buyers and sellers The process of calculating taxes The time at which a tax must be paid

26. 25. A subsidy is: A payment by the government to decrease the price of a good A tax on imported goods A tax on exported goods A payment by consumers to producers

27. 26. Economic development refers to: The process by which a country improves the economic, political, and social well-being of its people The increase in a country's GDP The decrease in unemployment rates The rise in the stock market index

28. 27. Human capital refers to: The physical tools and equipment used in production The financial resources available for investment The skills, knowledge, and experience possessed by individuals The natural resources of a country

29. 28. Microfinance is: Large loans provided to large businesses Small loans provided to individuals and small businesses, typically in developing countries Financial services provided by large commercial banks The regulation of financial markets

30. 29. The Human Development Index (HDI) measures: Economic growth alone A combination of income, education, and life expectancy The wealth of the richest individuals in a country The number of people employed in the labor force

31. 30. Which of the following is a characteristic of underdeveloped economies? High literacy rates High levels of industrialization High birth rates Low levels of poverty

32. 31. In a centralized economy, the allocation of resources is determined by: Market forces Government planning Consumer choices Private businesses

33. 32. Market economies are characterized by: Centralized decision-making Government ownership of resources Private ownership of resources Equal distribution of wealth

34. 33. Which economic system features a combination of private and government ownership of resources? Capitalism Socialism Mixed economy Command

35. 34. The business cycle refers to: The long-term trend of economic growth The short-term fluctuations in economic activity The pattern of trade between nations The rate of technological innovation

36. 35. Which of the following is a tool of monetary policy? Government spending Taxation Interest rates Import quotas

37. 36. A bond represents: Ownership in a company A loan from the bondholder to the issuer A share of a company's profits A form of money

38. 37. The stock market is primarily a place where: Bonds are issued and traded Foreign exchange rates are determined Corporate stocks are bought and sold Government policies are discussed

39. 38. Liquidity refers to: The ease with which an asset can be converted into cash The risk of an investment The return on an investment The length of time an investment is held

40. 39. Which of the following is an example of a derivative? Stocks Bonds Options Real estate

41. 40. The primary goal of a central bank is to: Maximize employment Maintain price stability Control the stock market Regulate international trade

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