Contemporary Economic Issues
Solved Exam Questions
Course Introduction
This course provides an in-depth exploration of major economic issues shaping today's world, examining topics such as globalization, income inequality, poverty, unemployment, technological change, environmental sustainability, and financial crises. Through analysis of current events, policy debates, and case studies, students will develop critical thinking skills to evaluate economic problems and understand their impacts on various populations. By integrating economic theory with real-world applications, the course encourages informed discussion and solutions to complex contemporary challenges faced by economies locally and globally.
Recommended Textbook
Principles of Macroeconomics A Streamlined Approach 3rd Edition by Robert H. Frank
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13 Chapters
2266 Verified Questions
2266 Flashcards
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Page 2
Chapter 1: Thinking Like an Economist
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) In deciding how many guitars to buy for his shop before the Christmas season, Mark is making a(n) ______ decision.
A) microeconomic
B) macroeconomic
C) normative
D) irrational
Answer: A
Q2) The average benefit of n units of an activity is the:
A) total benefit of n units divided by n.
B) n divided by the total benefit of n units.
C) n times the total benefit of n units.
D) extra benefit from carrying out one additional unit of the activity.
Answer: A
Q3) The Cost-Benefit Principle predicts that a person:
A) is more likely to take an action if its cost increases.
B) is more likely to take an action if its benefit increases.
C) should take an action if its cost increases.
D) should take an action if its benefit increases.
Answer: B
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Page 3
Chapter 2: Supply and Demand
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173 Verified Questions
173 Flashcards
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Sample Questions
Q1) A seller's reservation price is generally equal to:
A) the buyer's reservation price.
B) the seller's average cost.
C) the seller's marginal cost.
D) the market price.
Answer: C
Q2) Efficiency occurs if the:
A) market is in equilibrium.
B) socially optimal quantity of goods and services is being produced.
C) individually rational quantity of goods and services is being produced.
D) government does not interfere with market prices.
Answer: B
Q3) In a market in which the government has set a price ceiling below the equilibrium price:
A) the quantity demanded will equal quantity supplied.
B) there will be excess supply.
C) a black market might develop.
D) quantity supplied will exceed quantity demanded.
Answer: C
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Page 4
Chapter 3: International Trade and Trade Policy
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184 Verified Questions
184 Flashcards
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Sample Questions
Q1) If the United States is a net importer of bananas, free trade will benefit the
A) domestic banana producers.
B) rich citizens of the Unite States.
C) poor citizens of the United States.
D) domestic banana consumers.
Answer: D
Q2) Suppose that a country with a closed economy opens itself to international trade and becomes a net exporter. In that case, domestic suppliers will supply _____ of that good after it
Opens itself to international trade.
A) more
B) same amount
C) none
D) less
Answer: A
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Chapter 4: Macroeconomics: the Birds-Eye View of the Economy
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) If average labor productivity increases while population and the number of employed workers remain constant, then output per person:
A) increases.
B) decreases.
C) remains constant.
D) may increase or decrease.
Q2) Macroeconomists would be most likely to study which of the following?
A) average annual earnings of lawyers
B) average annual earnings of doctors
C) average annual earnings of self-employed workers
D) average annual earnings of all employed workers in the United States
Q3) If living standards in a country, as measured by output per person, increase, then total output must have:
A) increased more rapidly than population increased.
B) increased at the same rate that population increased.
C) increased more slowly than population increased.
D) decreased more rapidly than population decreased.
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Page 6
Chapter 5: Measuring Economic Activity: GDP, Unemployment,
and Inflation
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272 Verified Questions
272 Flashcards
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Sample Questions
Q1) To correct a nominal quantity for changes in the price level, one should:
A) add a price index to it.
B) subtract a price index from it.
C) divide it by a price index.
D) multiply it by a price index.
Q2) GDP equals the value added by producers of:
A) intermediate goods and services only.
B) final goods and services only.
C) intermediate goods and services, as well as final goods and services.
D) intermediate and final goods only.
Q3) Which of the following would be included in the GDP of the United States?
A) Boeing builds a plane in Seattle that is sold to Air Canada.
B) Chrysler produces a car in Germany that is sold in Michigan.
C) Nestle produces a candy bar in Switzerland that is sold in San Francisco.
D) Planet Hollywood serves customers in a restaurant in Hong Kong.
Q4) Which of the following would increase the investment component of U.S. GDP?
A) You purchase a vacation at Disney World in Florida.
B) You purchase shares of Disney stock.
C) Disney World purchases tires for the monorail from a firm in Ohio.
D) A French man purchases a vacation at a Disney theme park in France.
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Chapter 6: Economic Growth, Productivity, and Living Standards
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Sample Questions
Q1) Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only debone 30 chicken breasts per hour, while Tom's experience allows him to debone 60 chicken breasts per hour. Both Mike and Tom work 40 hours per week. Their average hourly productivity as a team is ______ chicken breasts.
A) 30
B) 45
C) 60
D) 90
Q2) An example of a government policy to provide a framework within which the private sector can operate productively is:
A) the taxation of savings.
B) the suppression of political dissent.
C) establishing well-defined property rights.
D) government ownership of capital.
Q3) Long-lived goods used to produce other goods and services are called:
A) financial capital.
B) human capital.
C) physical capital.
D) inventories.
Page 8
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Chapter 7: The Labor Market: Workers, Wages, and Unemployment
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) In the United States there is evidence of:
A) an increase in in job creation since 2000.
B) increasing wage inequality.
C) increasing wage equality.
D) an increase in the proportion of the population over 16 employed since 2000.
Q2) If the price of TVs produced by XYZ-TV Company falls from $1,000 to $750 per TV set, then the:
A) supply of labor to the XYZ-TV Company increases.
B) supply of labor to the XYZ-TV Company decreases.
C) demand for labor by the XYZ-TV Company increases.
D) demand for labor by the XYZ-TV Company decreases.
Q3) A Luddite is:
A) someone who opposes the introduction of new technologies.
B) a worker whose real wage rises as a result of globalization.
C) a fictional character from American folk history.
D) a consumer who refuses to buy imported goods, even if they are cheaper.
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Page 9
Chapter 8: Saving and Capital Formation
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174 Flashcards
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Sample Questions
Q1) At the household level, higher saving rates lead to ______ and greater economic security.
A) greater current consumption
B) greater wealth
C) less wealth
D) less current income
Q2) An increase in net taxes (taxes paid by the private sector to the government less transfer payments and interest payments made by the government to the private sector) will:
A) increase private saving.
B) decrease public saving.
C) increase public saving.
D) reduce investment in new capital equipment.
Q3) If the shares of stock that Doug owns go up in value from $10,000 to $15,000, then Doug's wealth:
A) increases by $15,000.
B) decreases by $5,000.
C) increases by $5,000.
D) does not change.
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Page 10
Chapter 9: Money, The Federal Reserve, and Global Financial Markets
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184 Flashcards
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Sample Questions
Q1) In an open economy, an increase in capital inflows ______ the equilibrium domestic real interest rate and ______ the quantity of domestic investment.
A) increases; increases
B) increases; decreases
C) decreases; decreases
D) decreases; increases
Q2) The two main responsibilities of the Federal Reserve System are to ______ and to ______.
A) apprehend counterfeiters; regulate the stock market
B) enable banks to make affordable mortgages; control the exchange rate of the U.S. dollar
C) insure bank deposits; print currency
D) conduct monetary policy; oversee financial markets
Q3) When the actual reserve/deposit ratio is less than the desired reserve/deposit ratio banks:
A) do nothing because this is a profitable situation.
B) stop making loans.
C) send the extra reserves to the central bank.
D) make more loans in order to earn interest.
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Chapter 10: Short-Term Economic Fluctuations and Fiscal Policy
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190 Verified Questions
190 Flashcards
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Sample Questions
Q1) If firms maintain preset prices in the short run, then the primary cause of output gaps is changes in:
A) potential output.
B) prices.
C) capital and technology.
D) economy-wide spending.
Q2) In reference to short-term economic fluctuations, the "peak" refers to:
A) a period in which the economy is growing at a rate significantly above normal.
B) the high point of economic activity prior to a downturn.
C) the high point of economic activity prior to a recovery.
D) a particularly strong and protracted expansion.
Q3) According to the Congressional Budget Office, from the 1970s to the 2000s, the natural rate of unemployment in the United States:
A) increased.
B) remained relatively stable.
C) fell.
D) fell to zero, and has since become negative.
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Page 12
Chapter 11: Stabilizing the Economy: The Role of
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163 Flashcards
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Sample Questions
Q1) The ______ is the interest rate commercial banks pay to the Fed; the ______ is the interest rate commercial banks charge each other for short-term loans.
A) federal funds rate; discount rate
B) discount rate; federal funds rate
C) nominal interest rate; real interest rate
D) nominal interest rate; prime rate of interest
Q2) If the Federal Reserve wants to increase the money supply, it should:
A) increase reserve requirements.
B) increase the discount rate.
C) conduct open-market purchases.
D) increase the interest that it pays on reserves.
Q3) If the Fed wishes to increase nominal interest rates, it must engage in an open market ______ of bonds that ______ the money supply.
A) sale; increases
B) sale; decreases
C) sale; does not change
D) purchase; increases
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13
Chapter 12: Inflation and Aggregate Supply
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163 Flashcards
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Sample Questions
Q1) At a constant rate of exchange between currencies, higher inflation makes domestic goods sold abroad ____expensive and, hence, ____ short-run equilibrium output.
A) more; increases
B) less; increases
C) less; decreases
D) more; decreases
Q2) Lower rates of inflation increase planned spending because:
A) the Fed reacts to the lower inflation by lowering interest rates.
B) the reduction in wealth, resulting from the reduced real value of money, restrains spending.
C) resources are redistributed from high-spending households to low-spending households.
D) the prices of domestic goods sold abroad increase (with a constant exchange rate).
Q3) An upward shift in the Fed's reaction function is equivalent to:
A) a decline in the Fed's long-term target for inflation.
B) an increase in the Fed's long-term target for inflation.
C) an upward shift of short-run aggregate supply
D) a downward shift of short-run aggregate supply
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Chapter 13: Exchange Rates and the Open Economy
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168 Flashcards
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Sample Questions
Q1) When the Fed tightens U.S. monetary policy, domestic interest rates ______, making U.S. assets relatively more attractive to foreign investors, and ______ the equilibrium exchange rate.
A) rise; increasing
B) fall; increasing C) fall; decreasing D) rise; decreasing
Q2) All else equal, compared to the case of a closed economy, monetary policy is ______ effective in an open economy with a ______ exchange rate.
A) more; fixed
B) more; flexible
C) less; real
D) less; nominal
Q3) The gold standard is an example of a ______ exchange rate system.
A) fixed
B) flexible
C) nominal
D) dollarized
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