Survey of Economics Test
Bank
Course Introduction
Survey of Economics provides students with a comprehensive introduction to fundamental economic concepts, principles, and theories. The course covers both microeconomic and macroeconomic perspectives, exploring topics such as supply and demand, market structures, consumer behavior, economic performance indicators, fiscal and monetary policies, and the role of government in the economy. Emphasizing real-world applications, the course aims to develop critical thinking skills and an understanding of how economic issues impact individuals, businesses, and societies. This foundational knowledge equips students to analyze current economic events and make informed personal and professional decisions.
Recommended Textbook
Macroeconomics 14th Canadian Edition by Campbell
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18 Chapters
3156 Verified Questions
3156 Flashcards
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Page 2
R. McConnell
Chapter 1: Limits, Alternatives, and Choices
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257 Verified Questions
257 Flashcards
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Sample Questions
Q1) Microeconomics is concerned with:
A) the aggregate or total levels of income,employment,and output.
B) a detailed examination of specific economic units which comprise the economic system.
C) the concealing of detailed information about specific segments of the economy.
D) the establishing of an overall view of the operation of the economic system.
Answer: B
Q2) When an economist says that material wants are insatiable,this means that:
A) economic resources are valuable only because they can be used to produce consumer goods.
B) economic resources-land,labour,capital,and entrepreneurial ability-are scarce.
C) these wants are virtually unlimited and therefore incapable of complete satisfaction.
D) the structure of consumer demand varies from time to time and from country to country.
Answer: C
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3
Chapter 2: The Market System and the Circular Flow
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Sample Questions
Q1) The most efficient combination of resources in producing any output is that combination which:
A) comes closest to using the same quantities of land,labour,capital,and entrepreneurial ability.
B) can be obtained for the smallest money outlay.
C) uses the smallest total quantity of all resources.
D) conserves most on the use of labour.
Answer: B
Q2) Which is a major feature of pure capitalism?
A) price floors and price ceilings in markets
B) reallocation of resources from private to public uses
C) the right to own private property and control resource use
D) central planning by government to provide goods and services
Answer: C
Q3) In the factor market:
A) businesses borrow money capital from households.
B) businesses sell services to households.
C) households sell resources to businesses.
D) firms sell raw materials to households.
Answer: C
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Chapter 3: Demand, Supply, and Market Equilibrium
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284 Verified Questions
284 Flashcards
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Sample Questions
Q1) A normal good is one:
A) for which quantity demanded remains the same even as price increases.
B) for which quantity supplied falls as price increases.
C) for which demand increases when price decreases.
D) for which demand increases when income increases.
Answer: D
Q2) Suppose product X is an input in the production of product Y.Product Y in turn is a substitute in production for product Z.An increase in the price of X can be expected to:
A) decrease the quantity demanded for Z.
B) increase the quantity demanded for Z.
C) have no effect on the quantity demanded for Z.
D) decrease the supply of Z.
Answer: B
Q3) The higher a price floor is above the equilibrium price,the greater will be the surplus output.
A)True
B)False
Answer: True
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5
Chapter 4: Market Failures: Public Goods and Externalities
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122 Flashcards
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Sample Questions
Q1) Which of the following is a characteristic of a private good:
A) free-rider problem
B) external benefits
C) external costs
D) excludability
Q2) Which of the following statements is correct?
A) Private goods yield direct benefits to the purchaser and are financed by government.
B) Public goods yield widespread external benefits and are purchased by government with tax revenues.
C) Public goods are bought voluntarily out of private incomes and yield no significant external benefits.
D) Public goods are bought voluntarily out of private incomes and yield widespread external benefits.
Q3) Society's marginal cost of pollution moderation curve slopes upward because of the law of diminishing marginal utility.
A)True
B)False
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Chapter 5: Governments Role and Government Failure
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109 Flashcards
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Sample Questions
Q1) Fiscal policy is more susceptible to politicization than monetary policy.
A)True
B)False
Q2) Political corruption occurs whenever:
A) logrolling is used to secure votes for controversial legislation.
B) government officials use unlawful misdirection of governmental resources for their own personal gain.
C) special interest groups contribute to elected officials,who in turn support legislation that benefits the special interest group.
D) there is pork barrel politics involved.
Q3) Which of the following is considered a potential solution to some regulatory capture?
A) Bringing industry experts into the regulatory process.
B) Creating a standard set of regulations for all industries.
C) Deregulation of the industry.
D) Government subsidies for firms in the industry.
Q4) Government loan guarantees tend to socialize gains and privatize losses.
A)True
B)False
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Chapter 6: An Introduction to Macroeconomics
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58 Flashcards
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Sample Questions
Q1) Economic growth is best defined as the:
A) increase in consumption level as a percentage of GDP over time.
B) percentage increase in real GDP over time.
C) percentage increase in nominal GDP over time.
D) percentage decrease in the overall price levels over time.
Q2) The short-run fluctuations in output and unemployment that we see in the real world are the result of:
A) shocks and events that are going according to the plans.
B) shocks and events that are not going according to the plans.
C) the actual demand to be exactly what the firms were expecting.
D) the actual supply to be exactly what the firms were planning.
Q3) One major difference between the short-run and long-run macroeconomic analysis is that:
A) in the short-run prices are fully flexible while in long-run they are not.
B) in the short-run prices are sticky while in long-run they are fully flexible.
C) in the short-run stickiness of prices would guarantee the long-run price inflexibility.
D) the price stickiness in the long-run guarantees the flexibility of prices in the short-run.
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Chapter 7: Measuring the Economys Output
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181 Flashcards
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Sample Questions
Q1) The value of Canadian imports is:
A) added to exports when calculating GDP because imports reflect spending by Canadians.
B) subtracted from exports when calculating GDP because imports do not entail spending by Canadians.
C) subtracted from exports when calculating GDP because imports do not entail production in Canada.
D) added when calculating GDP because imports do not entail production in Canada.
Q2) If nominal GDP is 150 and the GDP price index is 200,real GDP is 75.
A)True
B)False
Q3) In calculating GDP,national income accountants:
A) treat inventory changes as an adjustment to personal consumption expenditures.
B) ignore inventories because they do not represent final goods.
C) subtract increases in inventories and add decreases in inventories.
D) add increases in inventories and subtract decreases in inventories.
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9
Chapter 8: Economic Growth
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Sample Questions
Q1) Do the recent high technological advances and productivity rates mean that the business cycle is dead?
A) Yes,the faster rate of productivity growth will eliminate recession.
B) Yes,the changes in technology have a compound,positive effect on the economy.
C) No,the trend line for economic growth is just steeper,but there can still be economic downturns.
D) No,the fact there are many start-up firms means that there will be more bankruptcies that will hurt the economy.
Q2) Economic growth lessens the burden of scarcity and provides increases in domestic output which can be used to alleviate national economic problems.
A)True
B)False
Q3) A major argument for economic growth is that it:
A) creates an equal distribution of income.
B) protects common property resources.
C) leads to a higher standard of living.
D) reduces the amount of taxation.
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Chapter 9: Business Cycles, Unemployment, and Inflation
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184 Flashcards
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Sample Questions
Q1) In an economy nominal GDP is $4,000 billion.The actual unemployment rate is 8 percent and the natural rate of unemployment is 6 percent.According to Okun's law there will be:
A) $80 billion lost in potential output.
B) $100 billion lost in potential output.
C) $160 billion lost in potential output.
D) $300 billion lost in potential output.
Q2) The production of durable goods varies more than the production of nondurable goods because:
A) durables purchases are non-postponable.
B) durables purchases are postponable.
C) nondurables purchases are postponable.
D) durables purchases and nondurable purchases are both non- postponable.
Q3) A mismatch between the geographic location of workers and the location of job openings would result in what type of unemployment?
A) wait
B) cyclical
C) frictional
D) structural
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Page 11
Chapter 10: Basic Macroeconomic Relationships
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187 Flashcards
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Sample Questions
Q1) Other things equal,a 10 percent decrease in corporate income taxes will:
A) decrease the market price of real capital goods.
B) have no effect on the location of the investment-demand curve.
C) shift the investment-demand curve to the right.
D) shift the investment-demand curve to the left.
Q2) The 45-degree line on a chart relating consumption and income shows:
A) all points where the MPC is constant.
B) all points at which saving and income are equal.
C) all the points at which consumption and income are equal.
D) the amounts households will plan to save at each possible level of income.
Q3) A $1 billion increase in investment will cause a:
A) (1/MPS)billion increase in equilibrium GDP.
B) (MPS)billion increase in equilibrium GDP.
C) (1 - MPC)billion increase in equilibrium GDP.
D) (MPC - MPS)billion increase in equilibrium GDP.
Q4) The immediate determinants of investment spending are the:
A) expected rate of return on capital goods and the real interest rate.
B) level of saving and the real interest rate.
C) marginal propensity to consume and the real interest rate.
D) interest rate and the expected price level.
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Chapter 11: The Aggregate Expenditures Model
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230 Flashcards
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Sample Questions
Q1) If the above economy was closed to international trade,the equilibrium GDP and the multiplier would be:
A) $300 and 5.
B) $350 and 4.
C) $400 and 4.
D) $350 and 5.
Q2) Refer to the above diagram for a private closed economy.Aggregate saving in this economy will be zero when:
A) C + I<sub>g</sub> cuts the 45-degree line.
B) GDP is $180 billion.
C) GDP is $60 billion.
D) GDP is also zero.
Q3) Refer to the above information.If the real interest rate is 20 percent,the equilibrium level of GDP will be:
A) $100
B) $200
C) $300
D) $400
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13
Chapter 12: Aggregate Demand and Aggregate Supply
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Sample Questions
Q1) In the above figure AD<sub>1</sub> and AS<sub>1</sub> represent the original aggregate supply and demand curves and AD<sub>2</sub> and AS<sub>2</sub> show the new aggregate demand and supply curves.The change in aggregate supply from AS <sub>1</sub> to AS<sub>2</sub> could be caused by:
A) a reduction in the price level.
B) the increased availability of entrepreneurial talent.
C) an increase in business taxes.
D) the real balances,interest-rate,and foreign trade effects.
Q2) An expected decline in the prices of consumer goods will:
A) decrease aggregate demand.
B) increase the quantity of real domestic output demanded.
C) increase aggregate demand.
D) decrease the quantity of real domestic output demanded.
Q3) The horizontal shape of the immediate short run aggregate supply implies that:
A) the total amount of output in the economy depends only on the general price level.
B) the total amount of output in the economy depends only on the volume of spending.
C) the total amount of output in the economy is fixed.
D) the total amount of spending depends on the price of inputs.
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Chapter 13: Fiscal Policy, Deficits, Surpluses, and Debt
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223 Verified Questions
223 Flashcards
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Sample Questions
Q1) If the MPC in the economy is .75,government could shift the aggregate demand curve rightward by $30 billion by cutting taxes by $10 billion.
A)True
B)False
Q2) The crowding-out effect occurs when an expansionary fiscal policy increases the interest rate,decreases investment spending,and weakens fiscal policy.
A)True
B)False
Q3) If the full-employment surplus as a percentage of GDP is zero in one year,and 2 percent of GDP the next year,it can be concluded that:
A) fiscal policy is expansionary.
B) fiscal policy is contractionary.
C) the federal government is borrowing money.
D) the federal government is lending money.
Q4) The crowding-out of investment may be avoided if a budget deficit is financed by issuing new money.
A)True
B)False
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15
Chapter 14: Money, Banking, and Money Creation
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203 Flashcards
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Sample Questions
Q1) A chartered bank has demand-deposit liabilities of $500,000,cash reserves of $150,000,and a desired reserve ratio of 20 percent.The amount by which this single chartered bank and the amount by which the banking system can increase loans are respectively:
A) $30,000 and $150,000.
B) $50,000 and $250,000.
C) $50,000 and $500,000.
D) $100,000 and $500,000.
Q2) Mortgage-backed securities are:
A) stocks backed by mortgage payments.
B) bonds backed by mortgage payments.
C) homes that are backed by mortgage payments.
D) mortgages that are backed by the government.
Q3) Refer to the above information.The amount of excess reserves is:
A) $20 billion.
B) $60 billion.
C) $120 billion.
D) $600 billion.
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Chapter 15: Interest Rates and Monetary Policy
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Sample Questions
Q1) Quantitative easing refers to the purchasing of private sector assets by a country's central bank in order to provide liquidity to the financial system.
A)True
B)False
Q2) Other things equal,an expansionary monetary policy will shift the economy's aggregate demand curve to the right.
A)True
B)False
Q3) If the quantity of money demanded exceeds the quantity supplied:
A) the supply-of-money curve will shift to the left.
B) the demand-for-money curve will shift to the right.
C) the interest rate will fall.
D) the interest rate will rise.
Q4) A monetary policy-caused reduction in the overnight lending rate will:
A) increase the prime interest rate.
B) decrease the size of the monetary multiplier.
C) increase the Bank of Canada rate.
D) decrease the prime interest rate.
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Chapter 16: Long-Run Macroeconomic Adjustments
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Sample Questions
Q1) Refer to the above graph.If the economy moves from point B<sub>3</sub> to point C<sub>3</sub> because of an increase in aggregate demand,then:
A) Refer to the above graph.If the economy moves from point B<sub>3</sub> to point C<sub>3</sub> because of an increase in aggregate demand,then:
B) real wages will rise,reducing profits and thereby negating the short-run stimulus to production and employment so that the economy moves from C<sub>3</sub> to B<sub>3</sub>.
C) nominal wages will rise,reducing profits and thereby negating the short-run stimulus to production and employment so that the economy moves from C<sub>3</sub> to B<sub>3</sub>.
D) nominal wages will rise,reducing profits and thereby negating the short-run stimulus to production and employment so that the economy moves from C<sub>3</sub> to C<sub>2</sub>.
Q2) The equilibrium price level and level of real output occur where:
A) real output is at its highest possible level.
B) exports equal imports.
C) price is at its lowest level.
D) the aggregate demand and supply curves intersect.
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Chapter 17: International Trade
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Sample Questions
Q1) As of 2012,the Euro Zone consists of the 17 members of the EU that use the Euro as a common currency.
A)True
B)False
Q2) Refer to the above diagram showing the domestic demand and supply curves for a specific standardized product in a particular nation.If the world price of this product is $1,this nation will:
A) export all of the product.
B) import all of the product.
C) import some of the product and produce some of the product domestically.
D) neither export nor import the product.
Q3) Comparative advantage can result from different climates,natural resource endowments,and capital stocks in various countries.
A)True
B)False
Q4) Refer to the above information.The terms of trade will be at or within the 1X = 1 1/2 Y to 1X= 2/3 Y range.
A)True
B)False
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Chapter 18: Exchange Rates and the Balance of Payments
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Sample Questions
Q1) Which of the following countries is a G-8 nation?
A) India
B) France
C) Mexico
D) Saudi Arabia
Q2) If the exchange rate between the Canadian dollar and the Japanese yen is $1 = 200 yen,then the dollar price of yen is:
A) $.005
B) $.05.
C) $.50.
D) 5.
Q3) A deficit on the current account:
A) normally causes a surplus on the capital account.
B) normally causes a deficit on the capital account.
C) has no relationship to the capital account.
D) means that a nation is not making any international transfers.
Q4) The export of capital is recorded as a credit on a nation's capital account in its balance of payments statement.
A)True
B)False
Page 20
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