Can You Pass This Toughest Economics Exam? Quiz

50 Questions | Total Attempts: 321

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Economics Quizzes & Trivia

In life, when you pass through what people consider to be a difficult situation, there is a little chance that most situations may be a challenge for you. The quiz below is one of the toughest economic exam quizzes that I have got to prepare so far, and if you pass it, you are all good. Why don’t you try it out and share it with friends?


Questions and Answers
  • 1. 
    When a given percent change in price generates a LARGER percent change in the quantity demanded:
    • A. 

      Demand is inelastic.

    • B. 

      Demand is elastic.

    • C. 

      The consumer is NOT being responsive to the change in price.

    • D. 

      Both A and C

  • 2. 
    If Spain can produce wine with fewer resources than cloth, and China can produce cloth with fewer resources than wine; then, according to the principles of free trade:
    • A. 

      Spain has a comparative advantage in the production of wine

    • B. 

      China has a comparative advantage in the production of wine.

    • C. 

      Both countries should produce a surplus of both of these products.

    • D. 

      Both countries should put a tariff on one of these products to promote free trade between them.

    • E. 

      Both A and D above.

  • 3. 
    The point where marginal revenue is most equal to marginal cost in a firm is important because it is also where:
    • A. 

      Prices are the highest

    • B. 

      Profits are the highest

    • C. 

      Total costs are the highest

    • D. 

      Output is the lowest

  • 4. 
    Among high income occupations, those whith the LOWEST correlation (connection) between high pay and job performance are:
    • A. 

      Movie stars like Tom Hanks

    • B. 

      "superstar" professional athletes

    • C. 

      Entertainers like Garth Brooks.

    • D. 

      Doctors

    • E. 

      Corporate CEO's of Fortune 100 companies

  • 5. 
    The "Gini Coeficcient" measures:
    • A. 

      The degree of concentration of any industry, using only the largest four firms.

    • B. 

      The degree of concentration of any industry, using all the firms in the industry.

    • C. 

      The potency of a drink consumed by the people in the lowest household income group.

    • D. 

      The value of Italy's imports plus its exports as a percent of GDP.

    • E. 

      None of the above

  • 6. 
    Which of the following is NOT an "other factor" determining the price elasticity of DEMAND for a product?
    • A. 

      The number of substitutes available for the product

    • B. 

      The percent of income required to purchase the product.

    • C. 

      The amount of technology required to produce the product

    • D. 

      Whether the product is perceived as a luxury or a necessity by the consumer

  • 7. 
    Which of the following statements is correct about the five household income groups (from the lowest to the highest in the bar chart presented in class) -- used to plot the Lorenz curve for the US?
    • A. 

      The lowest income group is actually receiving a smaller share of total national income than considered equitable

    • B. 

      The highest income group is actually receiving a larger share of total national income than considered equitable.

    • C. 

      Both the lowest and the highest income groups each contain 20% of the total population.

    • D. 

      All the income groups together do not show a "reverse L" distribution of income that exists in most "Third World" countries.

    • E. 

      All of the above

  • 8. 
    The official poverty definition used by the government is a threshold of income inadequate to provide:
    • A. 

      Three times the cost of a minimum food budget

    • B. 

      Minimum biological needs.

    • C. 

      The average income of the poorest twenty percent of the families in the populations.

    • D. 

      The average US. welfare allowance.

  • 9. 
    Which of the following statements about poverty in the US is correct?
    • A. 

      Spending more on poverty aids always just increase the rate of poverty

    • B. 

      As a percent of Federal budget expenditures, we are spending more on poverty today than in 1960.

    • C. 

      The "War on Poverty" in the 1960s was a complete failure

    • D. 

      In the US, people in poverty tend to remain in poverty their entire life.

  • 10. 
    A tariff:
    • A. 

      Legally specifies the maximum amount of import ceilings.

    • B. 

      Increases the supply of imported goods into the country that has established the tariff.

    • C. 

      Is a special tax applied only to internationally traded goods, and is paid by the exporter of the goods.

    • D. 

      Helps increase incomes in foreign countries

  • 11. 
    A fundamental reason that countries engage in trade is that:
    • A. 

      It is more expensive to buy some good from other countries than to produce them at home

    • B. 

      It improves the standard of living in the country

    • C. 

      Domestic markets are continually shrinking.

    • D. 

      Importing more goods than exporting foods and reduces a country's balance of trade deficit

  • 12. 
    The more UNequal the distribution of income in an economy:
    • A. 

      The more social and political stability

    • B. 

      The more developed the economy

    • C. 

      The disparity between a Lorenz curve and its 45 degree line is greater.

    • D. 

      The disparity between a Lorenz curve and its 45 degree line is less.

  • 13. 
    The distribution of income in the United States:
    • A. 

      Has improved since 1935, but worsened since 1972

    • B. 

      Has worsened since 1935, but improved since 1972

    • C. 

      Is about the same as the distribution of income in most of the less developed countries

    • D. 

      Is better than the distribution of income in the countries of Western Europe and Japan

  • 14. 
    Monopolistically Competitive (MC) industries are made up primarily of:
    • A. 

      A few big businesses, most of which control a large share of their total industry market.

    • B. 

      Farmers who have no control over market price.

    • C. 

      Only the big businesses that are regulated public utility firms.

    • D. 

      Small businesses that we deal with on a daily basis

  • 15. 
    A major reason why the firms in the "competitive" industries (PC and MC) are efficient is that:
    • A. 

      They can produce at low output levels and make high profits

    • B. 

      They can earn consistently high profits over the long run.

    • C. 

      They must watch their costs carefully

    • D. 

      They can charge high prices to consumers

  • 16. 
    A price that is maintained ABOVE market equilibrium will generate:
    • A. 

      A surplus

    • B. 

      A shortage

    • C. 

      A condition where the quantity demanded is equal to the quantity supplied.

    • D. 

      Both A and C

  • 17. 
    Which of the following sentences about US foreign trade is correct
    • A. 

      Our exports have exceeded our imports since 1981

    • B. 

      Our foreign trade is only about 1% of total world trade.

    • C. 

      Our imports have exceeded our exports since 1981

    • D. 

      Our imports and exports together are smaller than for most countries

  • 18. 
    If several consumers who would not be likely to purchase a certain product in a store are now purchasing it on the internet, and the PRICE IS THE SAME on the internet (including shipping) as in the store, this best illustrates:
    • A. 

      A shift in the demand curve for the product

    • B. 

      A "change in demand" for the product

    • C. 

      A "change in the quantity demanded" for the product

    • D. 

      Both A and B

    • E. 

      Both A and C

  • 19. 
    PROTECTIONISTS argue that tariffs and quotas:
    • A. 

      Improve our protected industries and therefore the entire economy

    • B. 

      Reduce incomes in countries overseas and therefore the demand for our exports

    • C. 

      Protect a few of our inefficient industries at the expense of several other healthy individuals

    • D. 

      Increase GDP in countries worldwide

  • 20. 
    A change in the "QUANTITY DEMANDED" for a product:
    • A. 

      Results whenever one of the "factors other than price" underlying the demand curve changes.

    • B. 

      Results when the price of the product increases or decreases.

    • C. 

      Means a shift in position of the whole demand curve.

    • D. 

      Means a movement along a given demand curve

    • E. 

      Both A and B

  • 21. 
    The balance trade for the US is the same as the
    • A. 

      Current account of our balance of payments

    • B. 

      Capital account of our balance of payments

    • C. 

      Reserve account of our balance of payments

    • D. 

      Account of our special drawing rights (SDR) in the IMF.

  • 22. 
    The long run effect of tarrifs on goods imported into the US leads to
    • A. 

      Lower foreign sales by US exporters

    • B. 

      Higher employment in the whole U.S.

    • C. 

      Higher incomes in foreign countries

    • D. 

      A stronger national defense in the US

  • 23. 
    Whenever the US dollar appreciates relative to the major currencies of the world, the result of this will be that:
    • A. 

      The prices of our imports decrease.

    • B. 

      The prices of our exports increase

    • C. 

      The balance of trade deficit always decreases.

    • D. 

      Both A and B

  • 24. 
    Which of the following statements about US expenditures on foreign aid is correct?
    • A. 

      They have been increasing since 1960

    • B. 

      They have been decreasing since 1960

    • C. 

      They have remained the same since 1960

    • D. 

      They have reduced the rare of poverty overseas by one half

  • 25. 
    When economists say that the demand for labor is a "derived" demand, they mean that the demand for labor
    • A. 

      Will shift outward to the right as the demand for the product they are producing shifts inward to the left

    • B. 

      Will shift outward to the right as the demand for the product they are producing shifts outward to the right

    • C. 

      Will shift inward to the left as the demand for the product they are producing shifts outward to the right

    • D. 

      Will remain where it is when the demand for the product they are producing shifts inward to the left.

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