Econ 40 Final Practice Exam I.
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Which of the following is true?
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The Japanese rebuilt their economy after World War II by selling its goods to their own rapidly growing population.
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Slow U.S. population growth in the 19th century forced American farmers and manufacturers to seek foreign markets to propel its rapid economic growth.
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The Japanese rebuilt their economy after World War II by targeting the large U.S. market, while their own market remained largely closed to U.S. manufactured goods
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America's rapid population growth in the 19th century slowed its economic growth rate.
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Econ 40 Final Practice Exam I assesses understanding of key economic events and policies from the 20th century. It covers topics like post-WWII economic recovery, market dynamics in the 1920s, and inflation trends in the 1970s, essential for students of economic history.
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- 2.
Which statement is true?
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In 1900 most Americans still lived on farms.
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Except for the stock market, most of our economy was depressed in the 1920s.
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There was a depression within three years after World War I.
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None of the statements are true.
Correct Answer
A. There was a depression within three years after World War I.Explanation
The statement "There was a depression within three years after World War I" is true. After World War I, the United States experienced a post-war economic recession known as the "Depression of 1920-1921." This depression was characterized by a sharp decline in industrial production, high unemployment rates, and a contraction in the overall economy. It lasted for about 18 months before the economy began to recover.Rate this question:
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- 3.
Which was a decade of high inflation and high unemployment?
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The 1920s
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The 1940s
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The 1950s
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The 1960s
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The 1970s
Correct Answer
A. The 1970sExplanation
The 1970s was a decade of high inflation and high unemployment. This was due to several factors, including the oil crisis of 1973 and 1979, which led to a significant increase in oil prices and caused a sharp rise in inflation. Additionally, the 1970s saw a decline in productivity growth and an increase in government regulation, which further contributed to the high unemployment rates during this period.Rate this question:
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- 4.
In the late 1920s, you could buy $10,000 worth of stock by putting down as little as
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$100
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$1,000
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$2,500
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$5,000
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$10,000
Correct Answer
A. $1,000Explanation
During the late 1920s, it was possible to purchase $10,000 worth of stock by only investing $1,000. This indicates that the margin requirement, or the amount of money an investor had to put down as a percentage of the total investment, was 10%. This allowed individuals to leverage their investments and potentially earn higher returns. However, it also increased the risk as any losses would be magnified. The low margin requirement was one of the factors that contributed to the stock market crash of 1929 and the subsequent Great Depression.Rate this question:
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- 5.
The economic expansion which began in 1933 was due to
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The fact that business had hit bottom and was ready to rebound.
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The efforts of the Roosevelt Administration to stimulate the economy.
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Both the efforts of the Roosevelt Administration and the readiness of business to rebound.
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Neither the efforts of the Roosevelt Administration nor the readiness of business to rebound.
Correct Answer
A. Both the efforts of the Roosevelt Administration and the readiness of business to rebound.Explanation
The correct answer is both the efforts of the Roosevelt Administration and the readiness of business to rebound. This is because the economic expansion in 1933 was a result of multiple factors. The Roosevelt Administration implemented various policies and programs, such as the New Deal, to stimulate the economy and create jobs. At the same time, businesses had reached a low point during the Great Depression and were ready to recover. Therefore, it was a combination of government efforts and the natural cycle of business that led to the economic expansion.Rate this question:
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- 6.
Which statement is false?
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Before the Civil War about three quarters of the farms of over 500 acres were located in the South
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The great abundance of land was the most influential factor in our economic development during the 19th century.
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Although the percentage of Americans living on farms has declined substantially over the last 70 years, the actual number of people living on farms has remained constant.
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None of the statements are false.
Correct Answer
A. Although the percentage of Americans living on farms has declined substantially over the last 70 years, the actual number of people living on farms has remained constant. -
- 7.
Who said the nation was "ill-fed, ill-clothed, and ill-housed?"
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Herbert Hoover
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Franklin D. Roosevelt
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Lyndon B. Johnson
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Jimmy Carter
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Ronald Reagan
Correct Answer
A. Franklin D. RooseveltExplanation
Franklin D. Roosevelt said the nation was "ill-fed, ill-clothed, and ill-housed" during his presidency. This statement reflects the challenging economic conditions of the Great Depression era, which Roosevelt aimed to address through his New Deal programs. These programs aimed to provide relief, recovery, and reform to the American people, including measures to improve access to food, clothing, and housing for those suffering from poverty and unemployment. Roosevelt's presidency is often associated with his efforts to combat the economic hardships of the time and bring about positive change for the nation.Rate this question:
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- 8.
Which statement is false?
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Had the stock market not crashed and the rest of the world not gone into a depression, the U.S. depression might have been avoided.
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The end of 1930 thousands of banks had failed.
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. By the first week in March 1933 every single bank in the United States had shut its doors.
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None of the statements are false.
Correct Answer
A. None of the statements are false.Explanation
The given correct answer states that none of the statements are false. This means that all the statements provided in the question are true. The first statement suggests that if the stock market had not crashed and the rest of the world had not gone into a depression, the U.S. depression could have been avoided. The second statement states that by the end of 1930, thousands of banks had failed. The third statement indicates that by the first week in March 1933, every single bank in the United States had closed. As none of these statements are false, the correct answer is that none of the statements are false.Rate this question:
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- 9.
Choosing from among the following, the worst recession was in
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1937-1938
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1980
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1990-1991
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2001
Correct Answer
A. 1937-1938Explanation
The worst recession among the given options was in 1937-1938. This period is known as the Recession of 1937-1938 or the Roosevelt Recession. It occurred during the Great Depression and was characterized by a sharp decline in economic activity, including a significant drop in industrial production and a rise in unemployment rates. The recession was caused by the government's decision to reduce fiscal stimulus and tighten monetary policy, which led to a contraction in the economy. This downturn was severe and had a negative impact on the overall economic recovery during the Great Depression.Rate this question:
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- 10.
When General Dwight D. Eisenhower ran for the presidency for the first time, he said he would
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End the recession and end inflation.
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End the recession and end the Korean War.
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End inflation and end the Korean War
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End the recession, the Korean War, and inflation
Correct Answer
A. End inflation and end the Korean WarExplanation
During his presidential campaign, General Dwight D. Eisenhower promised to address two major issues: inflation and the Korean War. This answer choice accurately reflects his intentions to tackle both problems. He did not mention ending the recession specifically, so that option is not included in the answer.Rate this question:
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- 11.
In the decades before the Civil War, the South _________________________.
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Opposed the extension of slavery into the territories
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Supported the extension of slavery into the territories
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Cooperated with the North to establish both free and slavery territories
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None of the choices are true
Correct Answer
A. Supported the extension of slavery into the territoriesExplanation
In the decades before the Civil War, the South supported the extension of slavery into the territories. This means that they were in favor of spreading slavery to new regions and expanding its reach. This support for the extension of slavery was one of the major factors that led to the tensions between the North and the South and eventually culminated in the Civil War.Rate this question:
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- 12.
Which statement is true?
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In 1900 most Americans lived on farms.
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Our nation's industrial base was largely destroyed by World War I.
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John D. Rockefeller controlled the U.S. automobile industry during the first two decades of the 20th century.
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. Andrew Carnegie was the leading steel producer in the U.S. in 1900.
Correct Answer
A. . Andrew Carnegie was the leading steel producer in the U.S. in 1900.Explanation
In 1900, Andrew Carnegie was indeed the leading steel producer in the U.S. He built a vast steel empire and his company, Carnegie Steel Company, dominated the American steel industry during that time. Carnegie's innovative methods and vertical integration allowed him to control a significant portion of the market and make him the leading figure in the steel industry.Rate this question:
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- 13.
The most important factor in reversing the economic decline of 1929-1933 was that
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The federal government finally balanced its budget.
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The stock market began to rise.
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People became more optimistic.
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The federal government began to spend a huge amount of money.
Correct Answer
A. The federal government began to spend a huge amount of money.Explanation
The correct answer is that the federal government began to spend a huge amount of money. During the economic decline of 1929-1933, the federal government implemented various policies and programs to stimulate the economy. One of the most significant actions taken was the increase in government spending. The government invested heavily in infrastructure projects, job creation programs, and social welfare initiatives. This increased spending injected money into the economy, creating demand and stimulating economic growth. As a result, the economy began to recover from the decline.Rate this question:
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- 14.
Which statement is false?
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The rate of inflation rose during the Eisenhower Administration.
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Our economy has not had an unemployment rate below 5 percent since the early 1940s.
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President Reagan believed the federal government should "tax, tax, tax, spend, spend, spend", its way to prosperity.
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All of the statements are false.
Correct Answer
A. All of the statements are false.Explanation
All of the statements are false because the rate of inflation did not rise during the Eisenhower Administration, our economy has had an unemployment rate below 5 percent since the early 1940s, and President Reagan did not believe in taxing and spending as a means to prosperity.Rate this question:
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- 15.
Which of the following is true?
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The completion of the transcontinental railroad system in the 1880s eventually made the United States the world's first mass market.
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Southern manufacturers were hurt by the high protective tariffs of the 19th century that kept out cheaper British manufactured goods.
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The national railroad network created an "American economy" rather than just a series of regional economies located in one country.
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Agricultural inventions such as John Deere's steel plows greatly improved farm productivity.
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All of the choices are true.
Correct Answer
A. All of the choices are true.Explanation
The completion of the transcontinental railroad system in the 1880s allowed for the transportation of goods and people across the entire United States, leading to the development of a mass market. Southern manufacturers were indeed negatively impacted by the high protective tariffs of the 19th century, as these tariffs made it more difficult for them to compete with cheaper British manufactured goods. The national railroad network connected different regions of the country, creating an integrated American economy rather than separate regional economies. Agricultural inventions such as John Deere's steel plows did contribute to improved farm productivity. Therefore, all of the choices are true.Rate this question:
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- 16.
Which of the following was considered a mild recession?
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1937-1938
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1973-1975
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1981-1982
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1990-1991
Correct Answer
A. 1990-1991Explanation
The recession that occurred in 1990-1991 is considered a mild recession because it was relatively short-lived and had a less severe impact on the economy compared to other recessions. This recession lasted for only eight months and was primarily caused by a combination of factors such as the savings and loan crisis, high oil prices, and a decline in consumer spending. While it did lead to a significant increase in unemployment and a decline in GDP, the economy quickly recovered and resumed its growth trajectory.Rate this question:
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- 17.
Assuming that a society always operates on its production possibilities curve, an outward shift of the curve implies
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Economic growth has occurred
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. the society is making more efficient use of its available resources
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Consumer demand has increased
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The present value of capital resources has increased
Correct Answer
A. Economic growth has occurredExplanation
An outward shift of the production possibilities curve indicates that the society is now able to produce more goods and services than before. This suggests that the economy has experienced economic growth, as it is now operating at a higher level of productivity and efficiency. The society has likely found ways to utilize its available resources more effectively, leading to an increase in output. Therefore, the correct answer is that economic growth has occurred.Rate this question:
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- 18.
The reason that opportunity costs arise is that
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People have unlimited wants.
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There are no alternative decisions that could be made.
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An economy relies on money to facilitate exchange of goods and services.
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Resources are scarce.
Correct Answer
A. Resources are scarce.Explanation
Opportunity costs arise because resources are scarce. This means that there is a limited amount of resources available to fulfill unlimited wants and needs. When a decision is made to allocate resources towards one option, it means that those resources cannot be used for alternative options. Therefore, the opportunity cost is the value of the next best alternative that is forgone.Rate this question:
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- 19.
The production possibilities curve tells us that if full employment exists and a nation wishes to permanently increase its production of military goods, it must
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Also increase its production of nonmilitary goods
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Reduce its output of nonmilitary goods
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Suffer inflation.
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Suffer unemployment.
Correct Answer
A. Reduce its output of nonmilitary goodsExplanation
The production possibilities curve shows the maximum combination of goods that can be produced given the available resources and technology. If a nation wants to permanently increase its production of military goods, it would need to reallocate some of its resources from producing nonmilitary goods to military goods. This means reducing its output of nonmilitary goods in order to increase the production of military goods. This is because resources are limited and reallocating them towards one type of good means there are fewer resources available for producing the other type of good.Rate this question:
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- 20.
Chart refers to units of butter & guns. Plots H,F,G,I During most of our involvement in World War II we temporarily operated at point
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F
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G
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H
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I
Correct Answer
A. FExplanation
During most of our involvement in World War II, the country operated at point F on the chart referring to units of butter and guns. This suggests that during this time, the country was producing and allocating more resources towards guns (military equipment) rather than butter (consumer goods). This is likely due to the increased demand for military equipment and the need to prioritize defense during wartime.Rate this question:
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- 21.
Graph refers to consumer goods. Plots X, Y Imagine that country X is at point X of this production possibilities frontier and country Y is at point Y.
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Country X will probably grow faster then country Y.
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Country Y will probably grow faster then country X
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The two countries will probably grow at about the same speed.
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There is no way of predicting which country will grow faster.
Correct Answer
A. Country Y will probably grow faster then country XExplanation
Based on the information given, it can be inferred that country Y is at a point further along the production possibilities frontier compared to country X. This suggests that country Y is currently utilizing its resources more efficiently and has the potential for greater growth. Therefore, country Y will probably grow faster than country X.Rate this question:
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- 22.
Hypothetical Production Schedule for a Two-Product Economy (Table) If the economy were producing at point C and moves to point B
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4 units of capital goods are gained, while the capacity to produce 32 consumer goods are lost.
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Of capital goods are gained at an opportunity cost of producing 40 consumer goods.
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16 units of capital goods are gained at an opportunity cost of producing 72 consumer goods
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4 units of capital goods are gained, while the capacity to produce 72 consumer goods are lost
Correct Answer
A. 4 units of capital goods are gained, while the capacity to produce 32 consumer goods are lost.Explanation
Moving from point C to point B in the production schedule results in gaining 4 units of capital goods but losing the capacity to produce 32 consumer goods. This means that the economy is reallocating some of its resources from producing consumer goods to producing capital goods. As a result, the economy can produce more capital goods, but at the cost of producing fewer consumer goods.Rate this question:
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- 23.
Hypothetical Production Schedule for a Two-Product Economy (Table) If the economy were producing at point E and moves to point D,
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Resources will shift from producing capital goods to producing consumer goods.
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Resources will shift from producing consumer goods to producing capital goods.
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More capital goods can be produced without any sacrifice in consumer goods production.
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More consumer goods can be produced without any sacrifice in capital goods production.
Correct Answer
A. Resources will shift from producing consumer goods to producing capital goods.Explanation
Moving from point E to point D on the production schedule indicates a shift in the allocation of resources. Specifically, resources will shift from producing consumer goods to producing capital goods. This means that the economy will prioritize the production of capital goods, which are used to produce other goods and services, over consumer goods, which are directly consumed by individuals. This shift suggests that the economy is focusing on long-term growth and investment rather than immediate consumption.Rate this question:
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- 24.
Which statement about entrepreneurship in America is true?
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Alexander Graham Bell and Thomas Edison were two of the most famous American inventors who became entrepreneurs.
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The American entrepreneur led the way to the country's economic success
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Often the entrepreneur is an innovator
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The vast majority of entrepreneurs in America either work for themselves or have just one or two employees.
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All of the statements are true.
Correct Answer
A. All of the statements are true.Explanation
All of the statements are true. Alexander Graham Bell and Thomas Edison were indeed famous American inventors who became entrepreneurs. American entrepreneurs have played a significant role in the country's economic success. Entrepreneurship often involves innovation, making the statement "Often the entrepreneur is an innovator" true. Lastly, the majority of entrepreneurs in America either work for themselves or have a small number of employees, making the statement "The vast majority of entrepreneurs in America either work for themselves or have just one or two employees" true as well.Rate this question:
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- 25.
The United States was able to produce temporarily outside its production possibilities curve for several years during World War II by doing which of the following?
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Recruiting housewives to work in tank and airplane factories
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Convincing workers who qualified for retirement to put off retirement.
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Pressing older machinery and equipment into use.
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Expansion of the work week.
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All of the choices are true
Correct Answer
A. All of the choices are trueExplanation
During World War II, the United States was able to produce temporarily outside its production possibilities curve by implementing various strategies. Recruiting housewives to work in tank and airplane factories increased the labor force, enabling higher production levels. Convincing workers who qualified for retirement to postpone retirement extended the availability of skilled workers. Pressing older machinery and equipment into use allowed for increased production capacity. Lastly, expanding the work week provided more hours for production. Therefore, all of these choices are true and contributed to the United States' ability to produce outside its production possibilities curve during the war.Rate this question:
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- 26.
. The price mechanism deals _____ with the issue of an equitable income distribution and ____ with the issue of efficiency.
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Well; well
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Poorly; poorly
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Well; poorly
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Poorly; well
Correct Answer
A. Poorly; wellExplanation
The price mechanism deals poorly with the issue of an equitable income distribution because it tends to concentrate wealth in the hands of a few individuals, leading to income inequality. However, it deals well with the issue of efficiency because it allocates resources based on supply and demand, allowing for the most efficient use of resources in the production of goods and services.Rate this question:
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- 27.
Which of the following is NOT an example of a command-and-control regulation to limit pollution?
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Fuel economy standards for all new cars
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A 50-cent tax on gasoline
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Mandating the use of catalytic converters on all new vehicles
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A ban on leaded gasoline
Correct Answer
A. A 50-cent tax on gasolineExplanation
A 50-cent tax on gasoline is not an example of a command-and-control regulation to limit pollution because it is a market-based instrument rather than a direct regulatory measure. Command-and-control regulations typically involve specific mandates and requirements, whereas a tax on gasoline aims to influence behavior by increasing the cost of polluting activities. This tax can incentivize individuals to reduce their consumption of gasoline and choose more environmentally friendly alternatives, but it does not directly dictate the use of specific technologies or impose specific restrictions on pollution levels.Rate this question:
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- 28.
Which of these is NOT an example of opportunity cost?
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Lobster catchers in Point Judith, Rhode Island continued to trap lobsters at the cost of depleting the lobster population.
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President George W. Bush's administration has pushed for oil exploration in the Arctic National Wildlife Refuge in Alaska at the cost of environmental preservation.
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Lobster catchers in Port Lincoln, Australia paid a licensing fee for the right to own lobster traps.
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The "bridge to nowhere" to be built near Anchorage, Alaska comes at the cost of adding to the federal budget deficit.
Correct Answer
A. Lobster catchers in Port Lincoln, Australia paid a licensing fee for the right to own lobster traps.Explanation
This answer is correct because paying a licensing fee for the right to own lobster traps is not an example of opportunity cost. Opportunity cost refers to the value of the next best alternative that is forgone when a decision is made. In the other examples, there is a clear trade-off or sacrifice being made. The lobster catchers in Point Judith are depleting the lobster population, President George W. Bush's administration is sacrificing environmental preservation, and the "bridge to nowhere" is adding to the federal budget deficit. However, paying a licensing fee does not involve giving up an alternative option or sacrificing something else.Rate this question:
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- 29.
A socialist economy is characterized by
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An extensive reliance on markets to allocate final goods and services.
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An extensive reliance on the profit motive to govern resource allocation decisions.
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Elimination of the problem of scarcity since all basic necessities are available to all citizens.
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Public ownership of productive resources.
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High levels of unemployment and inflation.
Correct Answer
A. Public ownership of productive resources.Explanation
A socialist economy is characterized by public ownership of productive resources. This means that the government or the community as a whole owns and controls the means of production, such as factories, land, and natural resources. In a socialist economy, the profits generated from these resources are typically used for the benefit of society as a whole, rather than being privately owned and controlled by individuals or corporations. This approach aims to promote equality and ensure that resources are used in a way that benefits the entire society.Rate this question:
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- 30.
Statement I: China's southern provinces have become "export platforms", sending out streams of consumer goods to Japan, Europe, and North America. Statement II: China has become a wealthy nation as a result of getting rid of its communist economic system.
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Statement I is true and statement II is false.
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Statement II is true and statement I is false.
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Both statements are true.
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Both statements are false.
Correct Answer
A. Statement I is true and statement II is false.Explanation
The explanation for the correct answer is that statement I is true because China's southern provinces have indeed become major exporters of consumer goods to various countries. However, statement II is false because China's economic system is still largely communist, although it has implemented some market-oriented reforms. Therefore, only statement I is true and statement II is false.Rate this question:
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- 31.
Karl Marx and Friedrich Engels said
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"The theory of the Communists may be summed up in the single sentence: Abolition of private property."
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. "The vice of capitalism is that it stands for the unequal sharing of blessings; whereas the virtue of socialism is that it stands for the equal sharing of misery."
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"It is not the employer who pays wages-he only handles the money. It is the product that pays wages."
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"Capital is past savings accumulated for future production."
Correct Answer
A. "The theory of the Communists may be summed up in the single sentence: Abolition of private property."Explanation
The correct answer is "The theory of the Communists may be summed up in the single sentence: Abolition of private property." This answer accurately reflects the main idea of Karl Marx and Friedrich Engels' theory of communism. They believed that in order to achieve a more equal society, private property should be abolished and resources should be collectively owned and shared by all members of society. This idea is central to the communist ideology and distinguishes it from other economic systems.Rate this question:
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- 32.
Our government helps the free enterprise system work by doing all of the following, except
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Enforcing business contracts.
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Using a central planning agency to direct the production process.
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Defining property rights.
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Lowering some of the barriers to competition
Correct Answer
A. Using a central planning agency to direct the production process.Explanation
The government helps the free enterprise system work by enforcing business contracts, defining property rights, and lowering some of the barriers to competition. However, using a central planning agency to direct the production process goes against the principles of a free enterprise system, which is based on individual freedom and market forces. In a free enterprise system, businesses are expected to make their own production decisions based on market demand and competition.Rate this question:
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- 33.
Which does not fit with the others?
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"The invisible hand"
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Government regulations
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A government "five-year plan"
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Government planning
Correct Answer
A. "The invisible hand"Explanation
The correct answer is "The invisible hand" because it is the only option that does not pertain to government intervention or control. "Government regulations," "a government five-year plan," and "government planning" all involve the role of the government in making decisions and implementing policies. However, the concept of "the invisible hand" refers to the idea that the market forces of supply and demand, rather than government intervention, guide the economy.Rate this question:
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- 34.
Which of the following is a typical attribute of a socialist country?
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Taxes are very high, particularly on the wealthy classes.
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Government owns some of the means of production.
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Cradle-to-grave security for its citizens.
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A large-scale redistribution of income program from the wealthy and well-to-do to the middle class, working, class and the poor.
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All of the choices are attributes of a socialist country.
Correct Answer
A. All of the choices are attributes of a socialist country.Explanation
A socialist country typically exhibits all of the mentioned attributes. High taxes, especially on the wealthy, are implemented to fund social programs and services. The government owns some means of production, aiming for collective control and distribution of resources. Cradle-to-grave security ensures social welfare and protection for citizens. Lastly, a large-scale redistribution of income program aims to reduce income inequality and support the middle class, working class, and the poor. Therefore, all of the choices are indeed typical attributes of a socialist country.Rate this question:
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- 35.
Which statement is false?
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Throughout the 1980s, the Soviet Union devoted most of its capital and talent to its military establishment rather than to market reform.
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In the late 1970s, China began reforms, which eventually transformed it to a more market-oriented economy.
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Russia has been more successful than China in becoming a market-oriented economy.
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None of the above statements are false.
Correct Answer
A. Russia has been more successful than China in becoming a market-oriented economy.Explanation
The given correct answer is "Russia has been more successful than China in becoming a market-oriented economy." This statement is false because China has been more successful than Russia in transitioning to a market-oriented economy. China's economic reforms in the late 1970s led to significant growth and liberalization of its economy, while Russia's transition has been more challenging and marked by corruption and inefficiencies. China's economic rise and integration into the global market have made it one of the world's largest economies, while Russia has faced economic stagnation and dependence on natural resources.Rate this question:
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- 36.
An example of a public good is
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National defense.
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A lighthouse.
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Flood control protection from the Tennessee Valley Authority (TVA).
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Police protection.
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All of the choices are examples of a public good.
Correct Answer
A. All of the choices are examples of a public good.Explanation
All of the options listed - national defense, a lighthouse, flood control protection from the Tennessee Valley Authority (TVA), and police protection - are examples of public goods. Public goods are goods or services that are non-excludable and non-rivalrous, meaning that they are available to everyone and one person's use does not diminish their availability to others. In this case, all of the options listed are provided by the government and are available to all members of the public without discrimination. Therefore, they all qualify as examples of public goods.Rate this question:
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- 37.
Q.D Price Q.S 30 $10 64 40 8 55 50 6 50 60 4 40 70 2 20 When the price is $2
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Quantity supplied is greater than quantity demanded and, therefore, price must rise to get to equilibrium.
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Quantity supplied is less than quantity demanded and, therefore, price must fall to get to equilibrium.
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Quantity demanded is greater than quantity supplied and, therefore, price must rise to get to equilibrium.
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Quantity demanded is greater than quantity supplied and, therefore, price must fall to get to equilibrium.
Correct Answer
A. Quantity demanded is greater than quantity supplied and, therefore, price must rise to get to equilibrium.Explanation
When the price is $2, the quantity demanded is 70 and the quantity supplied is 2. Since the quantity demanded is greater than the quantity supplied, there is excess demand in the market. In order to reach equilibrium, where quantity demanded equals quantity supplied, the price must rise to incentivize suppliers to increase their quantity supplied. Therefore, the correct answer is that quantity demanded is greater than quantity supplied and, therefore, price must rise to get to equilibrium.Rate this question:
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- 38.
Refers to graph (intersecting lines "X") If the government set a price $24, there would be a price ___________, that would cause a ___________ of ______ units.
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Floor, shortage, 10
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Floor, surplus, 10
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Ceiling, shortage, 10
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Ceiling, surplus, 10
Correct Answer
A. Floor, surplus, 10Explanation
If the government set a price of $24, it would create a price floor. This means that the price cannot go below $24. In this case, the price floor would cause a surplus of 10 units. This means that there would be more supply than demand at the price of $24, resulting in an excess of 10 units that cannot be sold.Rate this question:
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- 39.
When demand falls and supply rises, equilibrium price will __________ and equilibrium quantity will __________.
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Fall; either rise, fall or stay the same
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Rise; rise
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Either rise, fall or stay the same
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Fall; fall
Correct Answer
A. Fall; either rise, fall or stay the sameExplanation
When demand falls, it means that consumers are less willing to purchase the product at the current price. On the other hand, when supply rises, it means that producers are offering more of the product to the market. These two factors together result in a decrease in the equilibrium price, as there is less demand for the product and more supply available. The equilibrium quantity can either rise, fall, or stay the same depending on the magnitude of the changes in demand and supply.Rate this question:
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- 40.
An increase in supply means that quantity supplied rises
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At least one price.
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At a few prices.
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At most prices.
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At all prices.
Correct Answer
A. At all prices.Explanation
An increase in supply means that the quantity supplied rises at all prices. This is because when supply increases, producers are willing and able to supply more of the good or service at any given price. In other words, they are willing to produce and sell more units of the product at all price levels. This is a fundamental concept in economics, as it shows the relationship between supply and price in a market.Rate this question:
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- 41.
Which statement is true?
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The quantity demanded is determined by the quantity supplied.
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The quantity supplied is determined by the quantity demanded.
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The quantity demanded is determined by sellers and the quantity supplied is determined by buyers.
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None of these statements are true.
Correct Answer
A. None of these statements are true.Explanation
The correct answer is "None of these statements are true." This means that none of the statements provided accurately describe the relationship between quantity demanded and quantity supplied. In reality, the quantity demanded is determined by buyers, while the quantity supplied is determined by sellers. Therefore, none of the given statements are correct.Rate this question:
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- 42.
Which situation below would represent a surplus in the fertilizer market?
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Quantity demanded is 1.2 million; quantity supplied is 1.1 million.
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Market price $2.00 per bag; equilibrium price $2.25 per bag.
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Market price $2.50 per bag; equilibrium price $2.00.
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Quantity supplied this year is 25% greater than quantity supplied last year.
Correct Answer
A. Market price $2.50 per bag; equilibrium price $2.00.Explanation
A surplus in the fertilizer market occurs when the quantity supplied exceeds the quantity demanded. In this situation, the market price ($2.50 per bag) is lower than the equilibrium price ($2.00 per bag), indicating that there is excess supply in the market. This means that there are more bags of fertilizer available than consumers are willing to buy, leading to a surplus.Rate this question:
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- 43.
Which of the following government programs will create a surplus?
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Rent control
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The minimum wage law
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Usury laws
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Price controls on oil
Correct Answer
A. The minimum wage lawExplanation
The minimum wage law can create a surplus because it sets a minimum wage that employers must pay to their employees. This ensures that workers receive a fair wage and can afford their basic needs. By increasing the income of workers, they have more money to spend, which can stimulate economic growth and increase consumer demand. This can lead to an increase in production and job creation, ultimately resulting in a surplus.Rate this question:
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- 44.
If the government set a price floor at $8
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There would be a temporary surplus, then prices would fall to equilibrium.
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There would be a permanent surplus, at least until the price floor was lifted.
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The price would rise back to the equilibrium price.
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The price floor would not have any effect on this market.
Correct Answer
A. There would be a permanent surplus, at least until the price floor was lifted.Explanation
If the government sets a price floor at $8, it means that the price cannot fall below this level. This would lead to a situation where the price is artificially kept higher than the equilibrium price. As a result, there would be a permanent surplus in the market because the quantity supplied would exceed the quantity demanded at the higher price. This surplus would continue until the price floor is lifted, allowing the market to reach equilibrium again.Rate this question:
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- 45.
If price was set by the government at $4, there would be a price _____________, that would cause a ___________ of _______ units.
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Floor, surplus, 8
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Floor, surplus, 10
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Ceiling, shortage, 8
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Ceiling, shortage, 12
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Ceiling, shortage, 14
Correct Answer
A. Ceiling, shortage, 12Explanation
If the government sets the price at $4, it creates a price ceiling. This means that the price cannot go above $4. This would cause a shortage of 12 units, as the quantity demanded at that price would exceed the quantity supplied.Rate this question:
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- 46.
The equilibrium quantity is about
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14.5.
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15.0.
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15.5.
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16.0.
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16.5.
Correct Answer
A. 15.5.Explanation
The equilibrium quantity refers to the quantity at which the demand and supply in a market are balanced. In this case, the correct answer is 15.5, which means that at this quantity, the demand for the product is equal to the supply. It indicates that the market is in a state of equilibrium, with neither a shortage nor a surplus of the product.Rate this question:
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- 47.
What happens to equilibrium quantity when simultaneously the demand curve shifts left and the supply curve shifts right?
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Equilibrium quantity will increase.
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Equilibrium quantity will decrease.
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Equilibrium quantity will remain the same.
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Equilibrium quantity may increase, decrease, or remain the same depending on the magnitude of the shifts in demand and supply.
Correct Answer
A. Equilibrium quantity may increase, decrease, or remain the same depending on the magnitude of the shifts in demand and supply.Explanation
When the demand curve shifts left and the supply curve shifts right simultaneously, the equilibrium quantity may increase, decrease, or remain the same depending on the magnitude of the shifts in demand and supply. If the decrease in demand is greater than the increase in supply, the equilibrium quantity will decrease. If the increase in supply is greater than the decrease in demand, the equilibrium quantity will increase. If the magnitude of the shifts is equal, the equilibrium quantity will remain the same. The direction and magnitude of the shifts in demand and supply determine the final impact on the equilibrium quantity.Rate this question:
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- 48.
All of the following could shift the demand curve, except
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A shift of the supply curve
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A rise in income
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A change in the price of substitutes
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An increase in population in the age group buying that good
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A successful advertising campaign convincing people that they want more of this good
Correct Answer
A. A shift of the supply curveExplanation
An increase in population in the age group buying that good, a rise in income, a change in the price of substitutes, and a successful advertising campaign convincing people that they want more of this good can all potentially shift the demand curve. However, a shift of the supply curve does not affect the demand curve directly. The supply curve represents the relationship between the price of a good and the quantity supplied, while the demand curve represents the relationship between the price of a good and the quantity demanded. Therefore, a shift in the supply curve would impact the quantity supplied, not the quantity demanded, and would not cause a shift in the demand curve.Rate this question:
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- 49.
An increase in the price of IBM personal computers is likely to
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Decrease the demand for IBM computers.
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Increase the demand for Apple computers (Macs).
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Increase the demand for IBM computers.
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Decrease the demand for Apple computers (Macs).
Correct Answer
A. Increase the demand for Apple computers (Macs).Explanation
An increase in the price of IBM personal computers is likely to decrease the demand for IBM computers because as the price goes up, consumers may be less willing or able to purchase them. This decrease in demand for IBM computers may lead consumers to consider alternative options, such as Apple computers (Macs), thereby increasing the demand for Apple computers.Rate this question:
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Dec 19, 2012Quiz Created by
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