Contemporary Economic Issues
Test Preparation
Course Introduction
Contemporary Economic Issues explores the significant economic challenges and debates shaping today's global landscape. The course examines topics such as globalization, unemployment, inflation, poverty, income inequality, environmental sustainability, financial crises, and the impact of technological change. Through the analysis of case studies, current data, and economic theory, students develop critical thinking skills to assess policy responses and consider the societal implications of economic decisions. The course emphasizes active discussion and research to foster an understanding of how contemporary economic issues affect individuals, communities, and nations.
Recommended Textbook
Fundamentals of Economics 6th Edition by William Boyes
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18 Chapters
2262 Verified Questions
2262 Flashcards
Source URL: https://quizplus.com/study-set/1437
Page 2
Chapter 1: Economics and the World Around You
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110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/28532
Sample Questions
Q1) When you work to support your lifestyle, you are making a tradeoff.
A)True
B)False
Answer: True
Q2) Which of the following is not physical capital?
A) An office building
B) Machinery on an assembly line
C) An industrial robot
D) Cash paid for raw materials
E) A computer used by a business
Answer: D
Q3) According to Figure 1.1, if trade occurs, what is the most Germany would be willing to pay for 1 unit of food?
A) 1 car
B) 2 cars
C) 1/2 car
D) 20 cars
E) 10 cars
Answer: B
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Page 3
Chapter 2: Markets and the Market Process
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) If the demand curve for product J shifts to the left as the price of product K increases, then J and K are complementary goods.
A)True
B)False
Answer: True
Q2) According to the data in Table 2.3, equilibrium in the bread market occurs at which price and quantity supplied?
A) $5; 72
B) $4; 36
C) $3; 66
D) $2; 36
E) $1; 72
Answer: C
Q3) Disequilibrium does not exist when
A) there is a shortage.
B) there is a surplus.
C) the existing price is above the equilibrium price.
D) the existing price is below the equilibrium price.
E) quantity demanded and quantity supplied are equal.
Answer: E
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Chapter 3: Applications of Demand and Supply
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) Refer to Table 3.4. If a price ceiling of $55 is imposed,
A) a shortage equal to 250 units will result.
B) a shortage equal to 200 units will result.
C) a surplus equal to 200 units will result.
D) the price will be forced to the equilibrium price before the ceiling.
E) the price will be above the equilibrium price.
Answer: B
Q2) The process of buying identical products in one market and selling them in another at virtually the same time is called
A) free enterprise
B) the profit motive
C) arbitrage
D) competition
E) unfettered market
Answer: C
Q3) Creative destruction is the process in which temporary losses are outweighed by long run gains.
A)True
B)False
Answer: True
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Chapter 4: The Firm and the Consumer
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) If demand is elastic, one can assume that the price elasticity of demand is between 0 and 1.
A)True
B)False
Q2) If there are few substitutes for a product, few competitors, and a short time period under consideration, then
A) the price elasticity of demand coefficient is equal to-1.
B) this product has an elastic demand.
C) a given percentage change in price will result in a much larger percentage change in the quantity demanded.
D) if price rises, total revenue (or total consumer expenditures) will also rise.
E) the price elasticity of demand is large.
Q3) If demand for a product is unit elastic, then increasing the price of the product will leave total revenue unchanged.
A)True
B)False
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Chapter 5: Costs and Profit Maximization
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) To an economist, total cost is total accounting cost plus opportunity costs not measured in accounting costs.
A)True
B)False
Q2) The objective for a firm is to maximize total revenue.
A)True
B)False
Q3) When a firm makes ____ profit, this sends a signal to others. More competitors would enter the business, increasing supply and driving prices ____.
A) zero economic profit; up
B) normal profit; down
C) positive accounting profit; down
D) positive economic profit; up
E) positive economic profit; down
Q4) Marginal revenue ultimately depends on the firms as they have the ability to set the price for their products.
A)True
B)False
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Page 7
Chapter 6: Competition
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) When oligopoly firms collude, they usually do so to
A) increase their size.
B) increase costs and raise barriers to entry.
C) avoid antitrust prohibitions.
D) increase their profits.
E) become more efficient.
Q2) When increasing size leads to lower per unit costs, we say there are
A) Diseconomies of scale
B) Economies of scale
C) Untapped resources
D) Unique resources
E) Sunk costs
Q3) In the long run, if a perfectly competitive firm cannot cover its costs, the profit-maximizing firm will
A) continue to produce as long as total revenue exceeds total fixed cost.
B) continue to produce as long as total revenue exceeds total variable cost.
C) continue to produce to maximize its opportunity costs.
D) seek more rewarding opportunities in some other industry.
E) increase output and lower price.
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Page 8
Chapter 7: Business, Society, and the Government
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) When 95% of the students in your economics receive a flu shot, the remaining 5% have less chance of getting sick with the flu. This is an example of a(n)
A) positive externality
B) negative externality
C) common good
D) adverse selection
E) moral hazard
Q2) Inefficiencies with government allocation often arise not because legislators are incompetent or ignorant, but because of problems associated with individual incentives.
A)True
B)False
Q3) The immediate cause of the 2006-2010 economic crisis was the bursting of the U.S. housing bubble.
A)True
B)False
Q4) If a firm could monopolize a market, it could restrict supply.
A)True
B)False
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Chapter 8: Government Intervention Versus Free Markets
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) At equilibrium, the yearly rate of increase in the price of a nonrenewable natural resource will equal the rate of return on investments of equivalent risk.
A)True
B)False
Q2) Discrimination on the basis of characteristics that have nothing to do with one's job performance is ____ in a market in which entry is ____.
A) costly; easy
B) costly; hard
C) not costly; easy
D) not costly; hard
E) costly; impossible
Q3) The laws of economics do apply to the medical arena, but they have simply not been allowed to operate fully.
A)True
B)False
Q4) Renewable resources are natural resources that can be replenished.
A)True
B)False
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Chapter 9: An Overview of the National and International Economies
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137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/28540
Sample Questions
Q1) In the circular flow diagram,
A) households receive income.
B) households provide resources.
C) firms receive income.
D) firms buy resources.
E) all of these are true.
Q2) The circular flow model ignores the role of international trade.
A)True
B)False
Q3) The three basic types of businesses in the United States are
A) enterprises, partnerships, and corporations.
B) corporations, proprietorships, and partnerships.
C) partnerships, firms, and proprietorships.
D) corporations, households, and proprietorships.
E) partnerships, multinationals, and corporations.
Q4) Most U.S. households consist of families with two or more children.
A)True
B)False
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Chapter 10: Macroeconomic Measures
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Given an exchange rate of 80 yen = $1, what is the U.S. dollar price of 1 yen?
A) $0.125
B) $0.0125
C) 80 yen
D) $80
E) $1.25
Q2) Other things being equal, an increase in Italian demand for U.S. computers would lead to an appreciation of the U.S. dollar relative to the Euro.
A)True
B)False
Q3) Which of the following is not a form of foreign exchange?
A) Foreign bank notes
B) Bank deposits denominated in foreign currency
C) Domestic currency
D) Checking accounts denominated in foreign currency
E) None - all of these are a form of foreign exchange
Q4) When imports exceed exports, the balance of trade shows a surplus.
A)True
B)False
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Chapter 11: Unemployment, Inflation, and Business Cycles
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) Changes in overall economic activity, as indicated by changes in output, employment, and prices, are referred to as business cycles.
A)True
B)False
Q2) Suppose Jeremy borrows $100 from Mike, at an interest rate of 7%. If the inflation rate over the year turns out to be 5%, which of the following is true?
A) The nominal rate of interest is 2%
B) The real rate of interest is 7%
C) The real rate of interest is 12%
D) The nominal rate of interest is 12%
E) The real rate of interest is 2%.
Q3) A recession is defined by ____ of falling real GDP.
A) 3 months
B) two consecutive quarters
C) three consecutive quarters
D) twelve months
E) no specific time period - the NBER business cycle dating committee determines the period of recession
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13
Chapter 12: Macroeconomic Equilibrium: Aggregate
Demand and Supply
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) Which of the following is not a nonprice determinant of demand?
A) Foreign income
B) Foreign prices
C) Increased government spending
D) Relative prices in the same country
E) Lower taxes
Q2) The long-run aggregate supply curve at the potential level of real GDP is a(n)
A) horizontal line.
B) upward-sloping curve.
C) downward-sloping curve.
D) vertical line.
E) combination of a horizontal line, an upward-sloping curve, and a vertical line.
Q3) Other things equal, investment spending declines when
A) interest rates are lowered.
B) firms operate at full capacity.
C) profit expectations are rising.
D) capacity utilization is low.
E) the cost of capital falls.
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Chapter 13: Fiscal Policy
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) The effect of an increase in government spending on real GDP is reduced if the
A) smaller the crowding-out effect.
B) larger the rate of inflation.
C) smaller the percentage of government spending financed by tax increases.
D) flatter the aggregate supply curve.
E) larger the government budget surplus.
Q2) Expansionary fiscal policy can crowd out private-sector spending; that is, an increase in government spending can reduce consumption and investment.
A)True
B)False
Q3) Crowding out takes place when the government budget deficit
A) reduces saving.
B) increases net exports.
C) reduces domestic investment.
D) increases transfer payments.
E) increases tax rates.
Q4) Some countries rely strictly on a VAT for government revenue.
A)True
B)False
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Chapter 14: Money and Banking
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) In 2010, the largest component of the M1 definition of money was
A) coins and currency in circulation.
B) savings account balances.
C) money market deposits.
D) checkable account balances.
E) travelers' checks.
Q2) Bank runs in the United States are unlikely because
A) the Federal Deposit Insurance Corporation insures commercial bank deposits.
B) depository institutions operate on a partial-reserve basis.
C) bank failures have been nonexistent since 1932.
D) today's financial institutions cannot lose money.
E) the banking deregulation act of 1980 has prohibited bank failures by law.
Q3) For a bank to grow, it should focus on a(n) ____ scale.
A) local
B) state-wide
C) national
D) international
E) unit
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Chapter 15: Monetary Policy
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125 Verified Questions
125 Flashcards
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Sample Questions
Q1) The structure of the European Central Bank
A) does not allow larger countries to dominate.
B) provides for equal representation among member countries.
C) removes monetary policy control from members' central banks.
D) provides for secrecy of the opinions of individual representatives.
E) provides all of these.
Q2) The current yield on a bond equals the annual interest payment it gives the holder.
A)True
B)False
Q3) To reduce political pressures on the Federal Reserve Board of Governors, legislation provided that
A) a given president may elect the entire board.
B) the Federal Reserve district banks may elect the board.
C) Congress may elect a board member every five years.
D) one board member's term expires every second year.
E) only bankers are allowed to be appointed as board members.
Q4) One of the functions of the Fed is to make loans to commercial banks.
A)True B)False
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Chapter 16: Macroeconomic Policy, Business Cycles, and Growth
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) In reality, why don't wages fall during recessions?
A) Wages are sticky downwards.
B) Worker morale.
C) Workers need to pay their bills.
D) The federal government says so.
E) Some workers will be laid off so that wages do not have to decrease.
Q2) Suppose that the economy grows by 4 percent, total factor productivity grows by 1 percent, and the capital stock rises by 2 percent. If both labor and capital take a 50 percent share of real GDP, then the labor force has risen by 2 percent.
A)True
B)False
Q3) If the government fiscal deficit equals $190 million, government borrowing equals $60 million, what is the change in the money supply equal to?
A) $250 million
B) $190 million
C) $130 million
D) $120 million
E) $60 million
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Chapter 17: Issues in International Trade and Finance
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) If trade is restricted, consumers pay higher prices for lower-quality goods.
A)True
B)False
Q2) Suppose that a country's government keeps the exchange rate between two or more currencies constant over time. This policy is known as a(n)
A) fixed exchange rate policy.
B) floating exchange rate policy.
C) managed floating exchange rate policy.
D) laissez-faire exchange rate policy.
E) interventionist exchange rate policy.
Q3) The Ricardian model of international trade is named after the nineteenth-century English economist who first explained and analyzed the idea of productivity-based comparative advantage. The name of this economist was
A) Ricardo Friedman.
B) Ricardo Marx.
C) Ricardo Maynard Keynes.
D) Ricky Ricardo.
E) David Ricardo.
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Chapter 18: Globalization
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) International organizations are funded by corporations, not governments.
A)True
B)False
Q2) Each of the countries that experienced a financial crisis in the 1990s had a fixed exchange rate.
A)True
B)False
Q3) Critics of globalization view international organizations as tools of corporations whose aim is to increase profits.
A)True
B)False
Q4) International organizations like the WTO and World Bank provide
A) subsidies for multinational corporations.
B) alternative investment opportunities for investors seeking diversity.
C) a forum for discussing changes in the global economy.
D) a basis for taxing global production.
E) international environmental management advice.
Q5) Financial crises result in declining stock markets.
A)True
B)False
Page 20
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