Economics MCQs

Option A: investment, savings, government expenditure

Option B: savings, taxes net of subsidies imports

Option C: consumption investment government expenditure

Option D: consumption taxes imports

Correct Answer: savings, taxes net of subsidies imports ✔

Option A: 3>2>1

Option B: 3=2=1

Option C: 3<2<1

Option D: any measure can be larger or smaller than any other

Correct Answer: 3=2=1 ✔

Option A: produced by the government

Option B: of products produced by a given industry

Option C: of labor 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: resources and efficiency

Option B: money and efficiency

Option C: money and luck

Option D: resources and a good climate

Correct Answer: resources and efficiency ✔

Option A: legal transactions

Option B: part of the rail network

Option C: legal transactions not declared for tax and illegal activities

Option D: the water distribution system

Correct Answer: legal transactions ✔

Option A: Injections = withdrawals

Option B: There is a Bank Holiday

Option C: Injections withdrawals

Option D: None of these

Correct Answer: Injections = withdrawals ✔

Option A: consumption savings and taxes

Option B: savings government expenditure and imports

Option C: savings taxes and exports

Option D: savings taxes and imports

Correct Answer: savings taxes and imports ✔

Option A: landlords

Option B: peasants

Option C: The army

Option D: politicians

Correct Answer: landlords ✔

Option A: Increasing North Sea oil production

Option B: Reducing unemployment

Option C: Achieving a sustainable rate of economic growth

Option D: Reducing inflation

Correct Answer: Reducing unemployment ✔

Option A: three years

Option B: six months

Option C: a year

Option D: two years

Correct Answer: six months ✔

Option A: wholesale price index (WPI)

Option B: GDP deflator

Option C: Producer price index (PPI)

Option D: consumer price index

Correct Answer: consumer price index ✔

Option A: unemployment rate

Option B: labor force rate

Option C: employment rate

Option D: unemployment population ratio

Correct Answer: unemployment rate ✔

Option A: income-expenditures diagram

Option B: aggregate demand-aggregate supply diagram

Option C: circular flow diagram

Option D: income-price diagram

Correct Answer: circular flow diagram ✔

Option A: reduces, reduces

Option B: reduces, increase

Option C: increase, reduces

Option D: increases, increases

Correct Answer: increase, reduces ✔

Option A: increase, increase

Option B: falls, increase

Option C: falls, fall

Option D: increase, fall

Correct Answer: falls, fall ✔

Option A: AD = C + I

Option B: AD = C + I + G

Option C: AD = C + I + G + X + Z

Option D: AD = C + I + G + X – Z

Correct Answer: AD = C + I ✔

Option A: move into surplus

Option B: move into deficit

Option C: remain unchanged

Option D: None of the above above

Correct Answer: move into surplus ✔

Option A: C + 1

Option B: C + G

Option C: I + G

Option D: C + 1 + G

Correct Answer: C + 1 ✔

Option A: 2

Option B: 1/2

Option C: 0.2

Option D: 20

Correct Answer: 2 ✔

Option A: consumption income

Option B: investment output

Option C: savings investment

Option D: output aggregate demand

Correct Answer: output aggregate demand ✔

Option A: households to save more

Option B: firms to produce less

Option C: firms to produce more

Option D: the MPC to change

Correct Answer: firms to produce more ✔

Option A: fall

Option B: not change

Option C: fluctuate

Option D: increase

Correct Answer: increase ✔

Option A: personal saving and private investment

Option B: personal saving and personal consumption

Option C: personal consumption and private investment

Option D: None of the above

Correct Answer: personal consumption and private investment ✔

Option A: consumption

Option B: investment

Option C: exports

Option D: work in the home

Correct Answer: work in the home ✔

Option A: At the present time

Option B: corrected for tax changes

Option C: corrected for changes in interest rates

Option D: At current prices

Correct Answer: At current prices ✔

Option A: consumption investment exports

Option B: investment exports transfer payments

Option C: investment government expenditure exports

Option D: taxes exports, transfer payments

Correct Answer: investment government expenditure exports ✔

Option A: a final good

Option B: an intermediate good

Option C: an injection

Option D: a leakage

Correct Answer: an intermediate good ✔

Option A: unemployment

Option B: inflation

Option C: economic growth

Option D: All of the above

Correct Answer: All of the above ✔

Option A: compare living standards of different countries

Option B: pay wages b multinational companies

Option C: estimate the costs of economic growth

Option D: convert nominal GDP to real GDP

Correct Answer: compare living standards of different countries ✔

Option A: taxes

Option B: prices

Option C: exchange rates

Option D: interest rates

Correct Answer: prices ✔

Option A: investment + tax + exports

Option B: savings + government expenditure + exports

Option C: investment + government expenditure + imports

Option D: investment + government expenditure + exports

Correct Answer: investment + government expenditure + exports ✔

A. consumer expenditure government expenditure and investment
B. consumer expenditure investment government expenditure and exports less imports
C. consumer debt investment debt and government debt
consumer expenditure and investment

Correct Answer: consumer expenditure government expenditure and investment ✔

Option A: the slump to the expansion

Option B: peak to peak

Option C: peak to trough

Option D: trough to peak

Correct Answer: peak to peak ✔

Option A: wholesale price index (WPI)

Option B: Consumer price index (CPI)

Option C: GDP deflator

Option D: Producer price index (PPI)

Correct Answer: GDP deflator ✔

Option A: economic theory to explain the simultaneous increases in inflation and unemployment during the 1970s

Option B: The classical model to explain the prolonged existence of high unemployment during the Great Depression

Option C: fine tuning during the 1960s

Option D: the economy to grow at a rapid rate during the 1950s

Correct Answer: The classical model to explain the prolonged existence of high unemployment during the Great Depression ✔

Option A: imperfectly competitive markets:

Option B: Only the long run adjustments to equilibrium in the economy

Option C: The functioning of individual industries and the behavior of individual decision-making units business firms and households

Option D: the economy as a whole

Correct Answer: the economy as a whole ✔

Option A: reduce inflation with little or no increase in unemployment

Option B: Increase inflation but would decrease unemployment by an unusually large amount

Option C: increase inflation with little or no decrease in unemployment

Option D: reduce inflation but it would increase unemployment by an unusually large amount

Correct Answer: reduce inflation with little or no increase in unemployment ✔

Option A: H

Option B: F

Option C: E

Option D: c

Correct Answer: F ✔

Option A: d

Option B: G

Option C: E

Option D: b

Correct Answer: d ✔

Option A: b

Option B: I

Option C: a

Option D: H

Correct Answer: H ✔

Option A: Shifts the short-run Phillips curve downward and make the unemployment inflation trade-off less favorable

Option B: Shifts the short run Phillips curve upward and makes the unemployment inflation trade-off more favorable

Option C: Shifts the short run Phillips curve upward and makes the Unemployment inflation trade off more favorable

Option D: Shifts the short run Phillips curve downward and makes the unemployment inflation trade off more favorable

Correct Answer: Shifts the short run Phillips curve downward and makes the unemployment inflation trade off more favorable ✔

Option A: An increase in the minimum wage

Option B: An increase in the expected inflation

Option C: An increase in the price of foreign oil

Option D: An increase in the aggregate demand

Correct Answer: An increase in the minimum wage ✔

Option A: The economy will experience an increase in inflation

Option B: The economy will experience a decrease in inflation

Option C: Inflation will be unaffected if price expectations are unchanging

Option D: None of these answers

Correct Answer: The economy will experience an increase in inflation ✔

Option A: a higher rate of inflation is associated with a lower unemployment rate

Option B: a higher rate of growth in output is associated with a lower unemployment rate

Option C: a higher rate of inflation is associated with a higher unemployment rate

Option D: a higher rate of growth in output is associated with a higher unemployment rate.

Correct Answer: a higher rate of inflation is associated with a lower unemployment rate ✔

Option A: the trade-off between inflation and unemployment

Option B: The trade-off between output and unemployment

Option C: The positive relationship between output and unemployment

Option D: The positive relationship between inflation and unemployment

Correct Answer: the trade-off between inflation and unemployment ✔

Option A: an increase in the level of output

Option B: a decrease in the unemployment rate

Option C: an increase in the rate of inflation

Option D: All of these answers

Correct Answer: an increase in the rate of inflation ✔

Option A: a reduction in output of 20 percent

Option B: a reduction in output of 5percent

Option C: a reduction in output of 15 percent

Option D: a reduction in output of 35 percent

Correct Answer: a reduction in output of 20 percent ✔

Option A: The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 3 percent inflation

Option B: The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 9 per cent inflation

Option C: The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 6 percent inflation

Option D: The long-run Phillips curve will shift to the left

Correct Answer: The long-run Phillips curve will shift to the left ✔

Option A: F

Option B: a

Option C: H

Option D: I

Correct Answer: H ✔

Option A: H

Option B: c

Option C: d

Option D: F

Correct Answer: F ✔

Option A: in the long run the unemployment rate returns to the natural rate, regardless of inflation

Option B: Unemployment is always below the natural rate

Option C: Unemployment is always above the natural rate

Option D: Unemployment is always equal to the natural rate

Correct Answer: in the long run the unemployment rate returns to the natural rate, regardless of inflation ✔

Option A: Unemployment is equal to the natural rate of unemployment

Option B: People will reduce their expectations of inflation in the future

Option C: Unemployment is greater than the natural rate of unemployment

Option D: Unemployment is less than the natural rate of unemployment

Correct Answer: Unemployment is less than the natural rate of unemployment ✔

Option A: shifts the short run Phillips curve downward and the unemployment inflation trade-off is less favorable.

Option B: shifts the short-run Phillips curve upward and the unemployment inflation trade-off is more favorable

Option C: Shift the short-run Phillips curve downward and the unemployment inflation trade-off is more favorable

Option D: Shifts the Short run Phillips curve upward and the unemployment inflation trade-off is less favorable

Correct Answer: Shifts the Short run Phillips curve upward and the unemployment inflation trade-off is less favorable ✔

Option A: is vertical

Option B: is negatively sloped

Option C: has a slope that is determined by how fast people adjust their price expectations

Option D: is positively sloped

Correct Answer: is vertical ✔

Option A: decreases unemployment

Option B: decrease growth

Option C: increases unemployment

Option D: decreases inflation

Correct Answer: decreases unemployment ✔

Option A: The sum of the growth rate of output and the inflation rate

Option B: The sum of the natural rate of unemployment and the actual rate of unemployment

Option C: The sum of the inflation rate and the central bank’s refinancing rate

Option D: The sum of the unemployment rate and the inflation rate

Correct Answer: The sum of the unemployment rate and the inflation rate ✔

Option A: capitalism exploits the worker and socialism exploits the property owner

Option B: capitalism relies on the market to make economic decisions and socialism uses central planning

Option C: capitalism grows through rent seeking and socialism grows through government direction

Option D: capitalism relies on consumer satisfaction to dictate choices and socialism relies on producer satisfaction

Correct Answer: capitalism relies on the market to make economic decisions and socialism uses central planning ✔

Option A: monopolistic business from abroad

Option B: reactionary ruling coalitions

Option C: weak domestic middle class

Option D: All of the above

Correct Answer: All of the above ✔

Option A: Organization for Economic Cooperation and Development and Development

Option B: Oil Exporting Countries Development

Option C: Organization for Environmental cooperative Department

Option D: Open Economies Caucus on Development

Correct Answer: Organization for Economic Cooperation and Development and Development ✔

Option A: Supply

Option B: infrastructure

Option C: agriculture

Option D: services

Correct Answer: infrastructure ✔

Option A: a country is poor because it has lower productivity but high savings

Option B: as countries grow richer they save less

Option C: poverty perpetuates itself in mutually reinforcing circles on supply and demand sides

Option D: market size is large in LDCs

Correct Answer: poverty perpetuates itself in mutually reinforcing circles on supply and demand sides ✔

Option A: I and II only

Option B: II and III only

Option C: I, II and III only

Option D: IV only

Correct Answer: II and III only ✔

Option A: I and II only

Option B: II and III only

Option C: I , II and III only

Option D: I , II , III and IV

Correct Answer: I , II , III and IV ✔

Option A: I only

Option B: I and II only

Option C: I , II and III only

Option D: IV only

Correct Answer: I only ✔

Option A: directly related to savings and inversely related to the capital/output ratio

Option B: directly related to the capital/output ratio and inversely related to savings

Option C: indirectly related to savings and the capital/output ratio

Option D: directly related to savings and the capital/output ratio

Correct Answer: directly related to savings and inversely related to the capital/output ratio ✔

Option A: based on an alliance between landowners and peasants

Option B: based on an alliance between peasants and the foreign bourgeoisie

Option C: transferred from one elite to another when revolution occurs

Option D: derived from domestic opponents of nationalism

Correct Answer: transferred from one elite to another when revolution occurs ✔

Option A: the difficulty of testing the stages scientifically

Option B: conditions for takeoff are contradicted by historical evidence

Option C: characteristics of one stage are not unique to that stage

Option D: All of the above are correct

Correct Answer: All of the above are correct ✔

Option A: benefits if each acts in his/her own interest

Option B: will increase their profits in a free market

Option C: should act to maximize economic growth

Option D: should act to promote the public interest

Correct Answer: benefits if each acts in his/her own interest ✔

Option A: with an average product of labor in agriculture that is negative

Option B: with a downward-sloping supply curve of labor

Option C: with a marginal productivity of labor zero or negligible in industry

Option D: with a traditional agricultural sector and an industrial capitalist sector

Correct Answer: with a traditional agricultural sector and an industrial capitalist sector ✔

Option A: I and II only

Option B: II and III only

Option C: I, II and III only

Option D: I , II III and IV

Correct Answer: II and III only ✔

Option A: balanced growth

Option B: capitalization

Option C: elasticity of capital

Option D: indivisibilities

Correct Answer: balanced growth ✔

Option A: The preconditions for takeoff, the takeoff, the drive to maturity and the age of creative destruction

Option B: The traditional society the preconditions for takeoff, the takeoff, the drive to maturity and the age of high mass consumption

Option C: the preconditions for consumption the replication the drive to maturity and the age of high mass consumption

Option D: the learning curve the age of high mass consumption post takeoff, and the drive to maturity

Correct Answer: The traditional society the preconditions for takeoff, the takeoff, the drive to maturity and the age of high mass consumption ✔

Option A: The French Revolution

Option B: The rise of industrial and capitalist production

Option C: Political and labor revolts

Option D: a growing spiritual rationalism

Correct Answer: a growing spiritual rationalism ✔

Option A: Adam Smith

Option B: Thomas R. Malthus

Option C: John Stuart Mill

Option D: John Maynard Keynes

Correct Answer: John Maynard Keynes ✔

Option A: neoclassicism

Option B: Marxism

Option C: Rostow’s model

Option D: classical appraoch

Correct Answer: neoclassicism ✔

Option A: LDCs are overpopulated

Option B: labor contributes nothing to output in LDCs

Option C: the marginal products of labor is closed to zero in LDCs

Option D: urban unemployment is high in LDCs

Correct Answer: the marginal products of labor is closed to zero in LDCs ✔

Option A: growing government assistance create addiction to welfare programs

Option B: low income levels create pressure for money creation

Option C: low income levels create pressure for cheap imports

Option D: low per capita incomes creates low savings that keep incomes low

Correct Answer: low per capita incomes creates low savings that keep incomes low ✔

Option A: technology levels do not allow for self sufficiency

Option B: it was previously too poor to save and invest

Option C: underemployment is too widespread

Option D: resource allocation is poor

Correct Answer: it was previously too poor to save and invest ✔

Option A: much available data contradicts his thesis about the takeoff stage

Option B: there is no explanation of why growth occurs after takeoff

Option C: his hypothesis of the stages of growth is difficult to test empirically

Option D: All of the above are correct

Correct Answer: All of the above are correct ✔

Option A: 2 million barrels per day, $100, $60 million

Option B: 4 million barrels per day, $80, $160 million

Option C: 6 million barrels per day, $60, $60 million

Option D: 8 million barrels per day, $40, $20 million

Correct Answer: 4 million barrels per day, $80, $160 million ✔

Option A: lower

Option B: higher

Option C: about the same height

Option D: None of the above

Correct Answer: higher ✔

Option A: has been a matter of low priority for the Chinese government

Option B: was achieved in the early 1950s

Option C: has been opposed by a number of labor and human rights organizations in other countries

Option D: has had negligible effect on trade between china and the United States

Correct Answer: has been opposed by a number of labor and human rights organizations in other countries ✔

Option A: flying geese

Option B: import substitution

Option C: export orientation

Option D: commodity expansion

Correct Answer: flying geese ✔

Option A: inelastic demand for these products in advanced countries

Option B: large increases in the supplies of these products on world markets because of export expansion policies

Option C: sluggish demand for these products in advanced countries

Option D: All of the above

Correct Answer: All of the above ✔

Option A: relatively small; more difficult

Option B: relatively small; easier

Option C: relatively large; more difficult

Option D: relatively large; easier

Correct Answer: relatively large; easier ✔

Option A: relatively greater then

Option B: relatively less than

Option C: the same as

Option D: any of the above

Correct Answer: relatively greater then ✔

Option A: Px/Pm

Option B: Pm/Px

Option C: (Pm/Px)Qm

Option D: (Px/Pm)Qx

Correct Answer: Px/Pm ✔

Option A: absolute advantage

Option B: comparative advantage

Option C: export-led growth

Option D: import substitution

Correct Answer: import substitution ✔

Option A: resource allocation based on the principle of absolute advantage

Option B: resource allocation based on the principle of comparative advantage

Option C: trade protection for import-competing firms

Option D: trade protection for exporting-competing firms

Correct Answer: resource allocation based on the principle of comparative advantage ✔

Option A: the principle of comparative advantage

Option B: the principle of absolute advantage

Option C: an outward-looking growth strategy

Option D: an inward-looking growth strategy

Correct Answer: an inward-looking growth strategy ✔

Option A: have been steadily rising in recent decades

Option B: have been more stable than the prices of manufactured goods

Option C: fluctuate about as much as the prices of manufactured goods

Option D: tend to be very unstable from year to year

Correct Answer: tend to be very unstable from year to year ✔

Option A: multilateral contracts

Option B: production and export controls

Option C: buffer stock arrangements

Option D: tariff-rates quotas

Correct Answer: tariff-rates quotas ✔

Option A: a lack of substitutes for oil

Option B: similar cost schedules for member countries

Option C: highly inelastic world demand curve for oil

Option D: economic recession for oil importing nations

Correct Answer: economic recession for oil importing nations ✔

Option A: unstable export markets

Option B: improving terms of trade

Option C: limited access to the markets of industrial countries

Option D: highly elastic demand curves for their products

Correct Answer: improving terms of trade ✔

Option A: be a manufactured good

Option B: be a primary product

Option C: have a low price elasticity of supply

Option D: have a high price elasticity of demand

Correct Answer: have a low price elasticity of supply ✔

Option A: import substitution

Option B: export promotion

Option C: commercial dumping

Option D: multilateral contract

Correct Answer: export promotion ✔

Option A: balance of trade deficits

Option B: price inflation

Option C: constrained economic growth

Option D: improving terms of trade

Correct Answer: improving terms of trade ✔

Option A: international trade per capita

Option B: real income per capital

Option C: unemployment per capita

Option D: calories per capita

Correct Answer: real income per capital ✔

Option A: sell 4 million pounds of tin

Option B: sell 8 million pounds of tin

Option C: buy 4 million pounds of tin

Option D: buy 8 million pounds of tin

Correct Answer: sell 4 million pounds of tin ✔

Option A: sell 4 million pounds of tin

Option B: sell 8 million pounds of tin

Option C: buy 4 million pounds of tin

Option D: buy 8 million pounds of tin

Correct Answer: buy 4 million pounds of tin ✔