Macro Practice Test 1

125 Questions | Total Attempts: 155

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Macro Practice Test 1


Questions and Answers
  • 1. 
    1) Scarcity
    • A. 

      A) is found only in developing nations.

    • B. 

      B) occurs because there are too many people.

    • C. 

      C) occurs because of unlimited wants and limited resources available to fulfill these wants.

    • D. 

      D) is not a problem for the wealthy.

  • 2. 
    2) Economics is the study of
    • A. 

      A) supply and demand.

    • B. 

      B) how to make money in a market economy.

    • C. 

      C) the choices everybody makes to attain their goals, given their scarce resources.

    • D. 

      D) how to make money in the stock market.

  • 3. 
    3) What assumptions about humans do economists make? A) People are greedy and selfish. B) None, because economics takes humans as given. C) Humans prefer to live in a society that values fairness above all else. D) People are rational and respond to incentives.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 4. 
    4) Where are buyers and sellers brought together? A) Only in cities, towns, and villages. B) A market, which can be a location or an electronic connection. C) A market, which has to be a physical location. D) Only in shopping malls.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 5. 
    5) Which of the following best describes the assumption about human behavior that economics makes? A) People weigh religious, envy, compassion, anger aspects in all decisions they make. B) Assuming rational behavior is useful in explaining choices people make even though they may not behave rationally all the time. C) Economics assumes individuals act rationally all the time in all circumstances. D) None of these describes what economics assumes about human behavior.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 6. 
    6) What does the adjective marginal mean in economics? A) Something done at the edge of a market, like buying a table at a garage sale. B) Buying something that is illegal to buy. C) Incremental, additional, or extra of some action. D) None of these illustrate how the word marginal is used in economics.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 7. 
    7) What does marginal analysis involve? A) Comparing total costs to total benefits. B) Subtracting total costs from total benefits. C) Comparing average costs to average benefits. D) Comparing marginal costs to marginal benefits.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 8. 
    8) Every society faces economic tradeoffs, which means A) if one political party controls the government, the other party can't. B) some people live better than others do. C) producing less of one good means more of another good can be produced. D) none of these.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 9. 
    9) What forces humans to make tradeoffs? A) productive inefficiency B) confusion C) scarcity D) more than one political party
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 10. 
    10) How is the decision about what goods and services will be produced made in a market economy? A) What will be produced is determined by what society needs the most. B) Producing firms decide to produce only what the boss says must be produced. C) Lawmakers in the government vote on what will be produced. D) By consumers, firms, and government choosing which goods and services to buy.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 11. 
    11) Which of the following is correct? A) Economics is a decision science that studies the tradeoffs we are forced to make because of scarcity. B) All of these are correct. C) Every individual, no matter how rich or poor, is faced with making tradeoffs. D) Anytime you have to decide which action to take you are facing an economic tradeoff.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 12. 
    12) Which of the following is a problem inherent in centrally planned economies? A) Production managers do not satisfy consumer wants but the government's orders. B) There are no problems, everyone including consumers are satisfied. C) Too much production of low-cost, high-quality goods and services. D) None of these describe the problem inherent in a centrally planned economy.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 13. 
    13) Who ultimately decides what goods and services will be produced in a market economy? A) none of these B) producing firms C) the ruling political party D) consumers
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 14. 
    14) What explains the efficiency of markets? A) They always result in equity. B) Markets promote equal standards of living. C) The government stays out. D) Markets promote competition and voluntary exchange.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 15. 
    15) Why does voluntary exchange increase economic efficiency? A) Because the true economic value of the good or service is established. B) Because it is free and consequently does not cost anything. C) Because neither the buyer nor the seller would agree to a trade unless they both benefit. D) It doesn't, only government approved exchange is considered efficient.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 16. 
    16) Which of the following uses do economic models fulfill? A) Make economic ideas explicit and concrete for use by decision makers. B) Simplification of some aspect of economic life. C) To answer economic questions. D) All of these.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 17. 
    17) Which of the following is a positive economic statement? A) If the price of gasoline rises, a smaller quantity of it will be bought. B) The government should close income tax loopholes. C) Everyone should live at the same standard of living. D) U.S. firms should not be allowed to practice outsourcing.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 18. 
    18) Which of the following is a normative statement? A) The current high price of gasoline is the result of strong world wide demand. B) The price of gasoline is too high. C) All of these. D) None of these.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 19. 
    19) Why are so many graphs used in economics? A) Complications can be more easily overcome by abstract simplifications made possible using graphs. B) All of these reasons are why so many graphs are used in economics. C) Graphs illustrate and simplify economic ideas. D) Graphs highlight key economic relationships.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 20. 
    20) Which of the following is correct? A) All of these are correct. B) A direct relationship has a positive slope value. C) An inverse relationship has a negative slope value. D) A curved line has slope values that change at every point.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 21. 
    21) If a graph has a line that shows the amount of outsourcing in the last ten years, it is known as a A) time series graph. B) demand curve for outsourcing. C) pie chart. D) supply curve of outsourcing.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 22. 
    22) How can the influence of a third variable be shown on a two dimensional graph? A) By drawing a third axis coming out of the two axes. B) By allowing the position of the relationship line or curve to shift on the graph. C) It can't because the graph only has two dimensions. D) None of these.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 23. 
    23) Which of the following is not a factor of production? A) the manager of the local tire shop B) $1,000 C) a drill press in a machine shop D) an acre of farmland
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 24. 
    24) Why do people trade with each other instead of living on what they themselves produce? A) So you can take advantage of others and maybe get something for nothing. B) By engaging in trade people can raise their standard of living. C) To be able to amass large amounts of money like Scrooge. D) Because that is what everybody else does.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 25. 
    25) The production possibilities frontier shows A) the various products that can be produced now and in the future. B) what an equitable distribution of products among citizens would be. C) attainable combinations of two products that may be produced with available resources. D) none of these.
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

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