Economics MCQs

Option A: Labour costs are a high percentage of total costs

Option B: Demand for the final product is price inelastic

Option C: It is relatively easy to substitute capital for labour

Option D: There are many substitutes for the final product

Correct Answer: There are many substitutes for the final product ✔

Option A: Frictional Unemployment would fall

Option B: The official unemployment rate would probably understate true unemployment

Option C: The official unemployment rate would probably overstate true unemployment

Option D: There would be no impact on the official unemployment rate

Correct Answer: The official unemployment rate would probably overstate true unemployment ✔

Option A: Unemployment due to unions

Option B: Unemployment due to efficiency wages

Option C: Frictional Unemployment

Option D: Unemployment due to minimum-wage laws

Correct Answer: Frictional Unemployment ✔

Option A: Paying above the competitive equilibrium wage tends to cause workers to shirk their responsibilities

Option B: Firms do not have a choice about whether they pay efficiency wages or not because these wages are determined by law

Option C: Paying the lowest possible wage is always the most efficient (Profitable)

Option D: Paying above the competitive equilibrium wage may improve worker health lower worker turnover improve worker quality and increase worker effort

Correct Answer: Paying above the competitive equilibrium wage may improve worker health lower worker turnover improve worker quality and increase worker effort ✔

Option A: of minimum wage laws

Option B: There are changes in the demand for labour among different firms.

Option C: Of unions

Option D: All of these answers

Correct Answer: There are changes in the demand for labour among different firms. ✔

Option A: Structural Unemployment

Option B: Unemployment due to efficiency wages

Option C: Unemployment due to unions

Option D: Frictional Unemployment

Correct Answer: Frictional Unemployment ✔

Option A: Maximum wage the firm is willing to pay

Option B: tip necessary to get a waiter to reserve a table

Option C: minimum wage the worker is willing to accept

Option D: competitive equilibrium wage.

Correct Answer: minimum wage the worker is willing to accept ✔

Option A: Structural unemployment

Option B: Cyclical Unemployment

Option C: Frictional Unemployment

Option D: None of these answers

Correct Answer: Structural unemployment ✔

Option A: Not in the labour force

Option B: Not in the adult population

Option C: Unemployed

Option D: Employed

Correct Answer: Not in the labour force ✔

Option A: 47.1 Percent

Option B: 65.9 Percent

Option C: 50.2 Percent

Option D: 70.2 Percent

Correct Answer: 70.2 Percent ✔

Option A: 134.0 million

Option B: None of theses answers

Option C: 92.3 million

Option D: 98.0 million

Correct Answer: 98.0 million ✔

Option A: The natural rate of unemployment

Option B: cyclical unemployment

Option C: efficiency wage unemployment

Option D: frictional unemployment

Correct Answer: The natural rate of unemployment ✔

Option A: The upward accelerator

Option B: The downward multiplier

Option C: The upward PPF

Option D: The downward mpc

Correct Answer: The downward multiplier ✔

Option A: Increased training

Option B: Providing more information

Option C: Helping individuals to move location to find work

Option D: Increasing spending on existing industries

Correct Answer: Helping individuals to move location to find work ✔

Option A: Increase interest rates

Option B: Encourage savings

Option C: Cut taxes

Option D: Reduce government spending

Correct Answer: Encourage savings ✔

Option A: unemployment benefits increase

Option B: Income tax increases

Option C: More training is available for the unemployed

Option D: Geographical immobility increases

Correct Answer: unemployment benefits increase ✔

Option A: Frictional unemployment

Option B: Seasonal unemployment

Option C: Cyclical unemployment

Option D: Structural unemployment

Correct Answer: Seasonal unemployment ✔

Option A: Occupational immobility

Option B: Cyclical unemployment

Option C: Structural immobility

Option D: Geographical immobility

Correct Answer: Cyclical unemployment ✔

Option A: Marginal revenue = marginal product

Option B: Marginal cost = marginal product

Option C: Marginal revenue product = average cost of labour

Option D: Marginal revenue product = marginal cost of labour

Correct Answer: Marginal cost = marginal product ✔

Option A: Upward sloping due to the law of demand

Option B: Upward sloping due to the law of marginal utility

Option C: Downward sloping due to the law of diminishing returns

Option D: Downward sloping due to the law of supply

Correct Answer: Upward sloping due to the law of demand ✔

Option A: A lower equilibrium wage and lower quantity of labour

Option B: A lower equilibrium wage and higher quantity of labour

Option C: A higher equilibrium wage and higher quantity of labour

Option D: A higher equilibrium wage and lower quantity of labour

Correct Answer: A lower equilibrium wage and higher quantity of labour ✔

Option A: Will usually lead to more people employed

Option B: Will decrease total earning if the demand for labour is wage elastic

Option C: is illegal in a free market

Option D: will cause a shift in the demand for labour

Correct Answer: will cause a shift in the demand for labour ✔

Option A: There is a role for fiscal policy

Option B: There is a role for monetary policy

Option C: There is a role for supply-side policy

Option D: There is a role for stabilizing output ever the business cycle

Correct Answer: There is a role for stabilizing output ever the business cycle ✔

Option A: ceiling, stock building

Option B: ceiling, capital prices

Option C: floor, output

Option D: floor, the capital-output ratio

Correct Answer: floor, output ✔

Option A: consumption expected future profits

Option B: investment, interest rates

Option C: investment expected future profits

Option D: stock building interest rates

Correct Answer: investment expected future profits ✔

Option A: boom

Option B: slump

Option C: recovery

Option D: acceleration

Correct Answer: acceleration ✔

Option A: trend path of output

Option B: boom

Option C: recession

Option D: short-run fluctuations in output

Correct Answer: trend path of output ✔

Option A: saving, investment

Option B: capital per person, productivity

Option C: labor growth, output

Option D: investment capital per person

Correct Answer: investment capital per person ✔

Option A: the value of leisure

Option B: Externalities

Option C: Untraded goods

Option D: Change in the distribution of income

Correct Answer: All of the above ✔

Option A: Imposing higher taxes on capital

Option B: encouraging more labour intensive work to reduce unemployment

Option C: reducing spending in education

Option D: encouraging private investment

Correct Answer: encouraging private investment ✔

Option A: total exploitation

Option B: labour/capital productivity

Option C: total factor productivity

Option D: total productivity

Correct Answer: total factor productivity ✔

Option A: endogenous

Option B: exogenous

Option C: beta

Option D: convergence

Correct Answer: endogenous ✔

A. Steady state growth path
B. Steady state invention rate
C. Steady state level of output
Unsteady state growth path

Correct Answer: Steady state growth path ✔

Option A: economic growth is Zero

Option B: All investment is used in the manufacturing sector

Option C: Economic growth is growing

Option D: All investment is used to maintain the existing capital stock at its current level

Correct Answer: All investment is used to maintain the existing capital stock at its current level ✔

Option A: increase government spending

Option B: reduce taxation

Option C: save more

Option D: increase personal consumption

Correct Answer: save more ✔

Option A: All countries will eventually join the EEC

Option B: Poorer countries have higher capital/labour ratios than richer countries.

Option C: The gap between countries GDP per head will widen

Option D: Poorer less developed countries will catch up with richer ones.

Correct Answer: Poorer less developed countries will catch up with richer ones. ✔

Option A: imperfect labor markets

Option B: rational expectations

Option C: intertertemporal decisions of households, firms and government

Option D: sun spot cycles

Correct Answer: intertertemporal decisions of households, firms and government ✔

Option A: private sector imports and exports

Option B: economic policy

Option C: the duration of compulsory education

Option D: labor supply changes

Correct Answer: the duration of compulsory education ✔

Option A: potential output

Option B: actual output

Option C: real output

Option D: international trade

Correct Answer: potential output ✔

Option A: aggregate supply is

Option B: aggregate demand is

Option C: potential output is

Option D: real variables are

Correct Answer: aggregate demand is ✔

Option A: sun spot theory

Option B: multiplier accelerator model

Option C: Solow theory

Option D: New classical theory

Correct Answer: multiplier accelerator model ✔

Option A: capital-widening technical innovation

Option B: capital-widening Catch-up in technology

Option C: capital-deepening technical innovation

Option D: capital-deepening, catch-up in technology

Correct Answer: capital-deepening, catch-up in technology ✔

Option A: Population size, x-efficiency

Option B: Population age distribution, education

Option C: Population growth technical progress

Option D: Population growth education

Correct Answer: Population growth technical progress ✔

Option A: a higher growth rates

Option B: a fluctuating growth rate

Option C: a fluctuating growth rates

Option D: no change in the growth rate

Correct Answer: no change in the growth rate ✔

Option A: increasing the use of labor increasing the use of land

Option B: increasing the use of capital increasing the use of labour

Option C: increasing the use of land increasing the use of capital

Option D: increasing the use of all inputs, technical advances

Correct Answer: increasing the use of all inputs, technical advances ✔

Option A: Increasing government expenditure

Option B: reducing taxation

Option C: increasing the money supply

Option D: encouraging technological progress

Correct Answer: encouraging technological progress ✔

Option A: Public investment in education

Option B: Innovation and the application of new technology

Option C: The phase of the lunar cycle

Option D: Private investment in new physical caital

Correct Answer: The phase of the lunar cycle ✔

Option A: building more retail outlets

Option B: encouraging risk-taking

Option C: encouraging innovation

Option D: encouraging R & D

Correct Answer: building more retail outlets ✔

Option A: workers

Option B: non-slackers

Option C: diligent rate

Option D: participation rate

Correct Answer: participation rate ✔

Option A: gets the highest rate of interest

Option B: maximizes the level of long-run investment

Option C: maximizes the level of long-run consumption

Option D: maximizes human capital

Correct Answer: maximizes the level of long-run consumption ✔

Option A: An increase in the quantity of labor and capital

Option B: An increase in labor productivity

Option C: An increase in the money supply

Option D: An increase in technology

Correct Answer: An increase in the money supply ✔

Option A: People want less crime

Option B: People want to be happier

Option C: People want a better environment

Option D: People want higher incomes and more consumer goods.

Correct Answer: People want higher incomes and more consumer goods. ✔

Option A: it allows countries to exploit their comparative advantage, more fully

Option B: firm could more readily exploit

Option C: economies of scal

Option D: it intensified competition

Correct Answer: it is easier to book holidays in member countries ✔

Option A: a nominal exchange rate, floated

Option B: a real exchange rate, pegged

Option C: a purchasing power parity, pegged

Option D: a real exchange rate, floated

Correct Answer: a nominal exchange rate, floated ✔

Option A: appreciate

Option B: depreciate

Option C: revalue

Option D: be in short supply

Correct Answer: depreciate ✔

Option A: depreciation

Option B: appreciation

Option C: fall

Option D: devaluation

Correct Answer: appreciation ✔

Option A: enhances

Option B: undermines

Option C: encourages

Option D: facilitates

Correct Answer: undermines ✔

Option A: increased

Option B: unaffected

Option C: reduced

Option D: None of these

Correct Answer: reduced ✔

Option A: current account

Option B: interest rate

Option C: tax

Option D: price

Correct Answer: interest rate ✔

Option A: increase

Option B: reduce

Option C: do nothing to

Option D: None of the above

Correct Answer: reduce ✔

Option A: reduce its stock of foreign assets

Option B: increase its stock of foreign assets

Option C: increases its savings

Option D: increases its foreign currency reserves

Correct Answer: reduce its stock of foreign assets ✔

Option A: rise

Option B: fall

Option C: not change

Option D: fluctuate

Correct Answer: fall ✔

Option A: falls; falls; falls; surplus

Option B: is static; low; rises; deficit

Option C: falls; rises; falls; surplus

Option D: rises; falls; rises; deficit

Correct Answer: falls; rises; falls; surplus ✔

Option A: falls; rise; falls; surplus

Option B: is static; low; rise; deficit;

Option C: falls; falls; falls; surplus

Option D: rise; falls; rises; deficit

Correct Answer: rise; falls; rises; deficit ✔

Option A: depreciate

Option B: not be affected

Option C: fluctuate more than it would do therwise

Option D: appreciate

Correct Answer: appreciate ✔

Option A: depreciate

Option B: not be affected

Option C: fluctuate more than it would do therwise

Option D: appreciate

Correct Answer: depreciate ✔

Option A: not be affected

Option B: fluctuate more than if exports were lower

Option C: depreciate

Option D: appreciate

Correct Answer: appreciate ✔

Option A: not be affected

Option B: appreciate

Option C: depreciate

Option D: fluctuate more than if interest rates were high

Correct Answer: depreciate ✔

Option A: exchange rate

Option B: balance of trade

Option C: terms of trade

Option D: currency validation

Correct Answer: exchange rate ✔

Option A: balance of payments

Option B: capital account of the balance of payments

Option C: financial account of the balance of payments

Option D: balance of payments on current account

Correct Answer: balance of payments ✔

Option A: balance of payments on current account

Option B: visible trade balance

Option C: balance of trade

Option D: balance of payments

Correct Answer: balance of payments on current account ✔

Option A: balance of trade:

Option B: balance of payments

Option C: balance of payments on current account

Option D: visible trade balance

Correct Answer: visible trade balance ✔

Option A: rise; rise

Option B: rise; fall

Option C: fall; fall

Option D: fall; rise

Correct Answer: rise; fall ✔

Option A: fiscal policies

Option B: monetary policies

Option C: supply-side policies

Option D: incomes policies

Correct Answer: monetary policies ✔

A. fiscal policies
B. monetary policies
C. supply-side policies
incomes policies

Correct Answer: supply-side policies ✔

Option A: real balance effect.

Option B: cash ratio.

Option C: money illusion.

Option D: menu costs of inflation.

Correct Answer: real balance effect. ✔

Option A: Regional

Option B: structural

Option C: seasonal

Option D: demand-deficient

Correct Answer: seasonal ✔

Option A: Frictional

Option B: natural

Option C: real-wage

Option D: disequilibrium

Correct Answer: Frictional ✔

Option A: of products produced by a given industry.

Option B: produced by the government

Option C: of labour supplied by all households

Option D: of goods and services produced in an economy.

Correct Answer: of goods and services produced in an economy. ✔

Option A: Portion of unemployment that is due to the normal working of the labour market

Option B: Portion of unemployment that is due to changes in the structure of the economy that results in a significant loss of jobs in certain industries.

Option C: Unemployment that results when people become discouraged about their chances of finding a job so they stop looking for work.

Option D: Unemployment that occurs during recessions and depressions.

Correct Answer: Unemployment that occurs during recessions and depressions. ✔

Option A: a discouraged worker:

Option B: unemployed.

Option C: hard core unemployed.

Option D: unemployable

Correct Answer: a discouraged worker: ✔

Option A: Those who could claim benefit if they were to become unemployed.

Option B: The population between school leaving age and retirement age.

Option C: anyone who is working or actively seeking work

Option D: Those of working age who are seeking work and are available to for work at current wage rates.

Correct Answer: Those of working age who are seeking work and are available to for work at current wage rates. ✔

Option A: Normative economics

Option B: Positive economics

Option C: Objective economics

Option D: Reality economics

Correct Answer: Objective economics ✔

Option A: Lower interest rates

Option B: Lower taxation rates

Option C: Lower government spending

Option D: Lower inflation

Correct Answer: Lower interest rates ✔

Option A: Pay rates within the private sector

Option B: pay rates in the public sector

Option C: investment in education

Option D: Benefits available for the unemployed and sick

Correct Answer: Pay rates within the private sector ✔

Option A: Spending on health

Option B: Spending on defence

Option C: Firms investment decisions

Option D: Spending on education

Correct Answer: Firms investment decisions ✔

Option A: A policy

Option B: A way of reaching a target

Option C: A target

Option D: A strategy

Correct Answer: A strategy ✔

Option A: interest rate adjustment

Option B: central bank intervention in the Forex

Option C: domestic wage and price adjustment

Option D: devaluation

Correct Answer: domestic wage and price adjustment ✔

Option A: low inflation

Option B: low interest rates

Option C: stable nominal exchange rates

Option D: budget deficits and government debt under control

Correct Answer: all of the above ✔

Option A: permanently fixed capital movements floating exchange rates a fixed structure of interest rates

Option B: permanently fixed exchange rates, free capital movements, a single interest rates

Option C: a common currency a single central bank, common monetary policy

Option D: a common currency floating exchange rates common monetary policy

Correct Answer: permanently fixed exchange rates, free capital movements, a single interest rates ✔

Option A: European union, single market

Option B: Western European, single currency area

Option C: European Union, single currency area

Option D: Western European, single market

Correct Answer: European union, single market ✔

Option A: The ECU

Option B: currency swap agreement between member

Option C: the exchange rate mechanism

Option D: all of the above

Correct Answer: all of the above ✔

Option A: crowds out imports

Option B: crowds out public consumption

Option C: crowds out exports

Option D: reduces the budget deficit

Correct Answer: crowds out exports ✔

Option A: stable

Option B: predictable

Option C: volatile

Option D: depreciating

Correct Answer: volatile ✔

Option A: interest rates

Option B: competitiveness

Option C: trade

Option D: speculation

Correct Answer: speculation ✔

Option A: higher import prices, higher wages increases

Option B: lower export prices, lower imports volumes

Option C: higher import prices, lower export prices

Option D: higher wage increases lower import volumes

Correct Answer: higher import prices, higher wages increases ✔

Option A: money supply targets

Option B: income policy

Option C: interest rates

Option D: inflation targets

Correct Answer: interest rates ✔

Option A: buy foreign exchange, sell domestic currency

Option B: sell foreign exchange buy domestic currency

Option C: buy foreign exchange buy domestic currency

Option D: sell foreign exchange sell domestic currency

Correct Answer: sell foreign exchange buy domestic currency ✔

Option A: Price difference

Option B: balance of payments difference

Option C: current account differences

Option D: expected exchange rate changes

Correct Answer: expected exchange rate changes ✔

Option A: exports

Option B: taxes

Option C: inventories

Option D: imports

Correct Answer: taxes ✔