ECON FOCUSED QUIZ 1 BASIC ASSUMPTIONS THROUGH EFFICIENCY AS A GOAL (PP. 6-8)

1. Who wrote An Inquiry into the Nature and Causes of the

Wealth of Nations?

a. Adam Smith

b. Sir William Petty

c. Ronald Coase

d. Vilfredo Pareto

e. Joseph Schumpeter

2. How many items does the average supermarket carry?

a. 100,000

b. 10,000

c. 5,000

d. 50,000

e. 1,000

3. Which of the following elements does economic

analysis NOT require?

a. observation

b. speculation

c. measurement

d. theory

e. description

4. Economics is defined as the study of

a. government’s relationship with businesses

b. elasticity in market curves

c. shifts in supply and demand

d. change in GDP

e. allocating scarce resources

5. All resources share

a. desirability

b. availability

c. utility

d. efficacy

e. scarcity

6. Why do trade-offs occur?

a. Trends are not stable.

b. Human desire is satiable.

c. Technological advances improve available

options.

d. Markets are continually expanding.

e. All resources are scare.

7. If you win a free ticket to a baseball game and take a

day off from work to attend, your opportunity cost is

equal to the

a. value of the ticket minus the potential wages

b. potential wages minus the value of the ticket

c. value of the ticket

d. potential wages from work

e. sum of the potential wages and the value of the

ticket

8. Someone who compares the benefits of different

choices before making a decision is using

a. positive economics

b. savings

c. normative economics

d. opportunity calculation

e. rationality

9. Which of the following assumptions of gains from trade

is INCORRECT?

a. benefits outweigh costs

b. everyone is better off

c. exchange is voluntary

d. specialization encourages trade

e. individuals involved have similar resources

10. Economic models are intentionally

a. complex

b. accurate

c. simplistic

d. narrow

e. detailed

11. The difference between positive and normative

economics is that

a. positive economics relies on value and opinions

while normative economics explains what is

happening

b. positive economics analyzes what should

happen while normative economics explains

trends and predicts future changes

c. positive economics deals with the upward

sloping supply curve while normative economics

deals with the downward sloping demand curve

d. positive economics deals with the upward

sloping demand curve while normative

economics deals with the downward sloping

supply curve

e. positive economics explains trends and predicts

future changes while normative economics

analyzes what should happen

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12. If minimum wage is increased, the result is

a. stable unemployment and consumer costs

b. increased unemployment and higher consumer

costs

c. increased unemployment and lower consumer

costs

d. decreased unemployment and lower consumer

costs

e. decreased unemployment and higher consumer

costs

13. How is economic efficiency achieved?

a. calculating opportunity costs

b. analyzing value judgments

c. changing consumption

d. evaluating allocation of scare resources

e. making rational decisions

14. The principle that one person’s wellbeing cannot be

increased without decreasing the wellbeing of someone

else is called

a. Pareto efficiency

b. the tragedy of the commons

c. Coase Theorem

d. Okun’s law

e. the Keynesian model

15. Vilfredo Pareto’s nationality was

a. British

b. German

c. Italian

d. French

e. Austria-Hungarian

ECON FOCUSED QUIZ 2 MICRO AND MACROECONOMICS AND SECTION I SUMMARY (PP. 8)

1. The difference between macroeconomics and

microeconomics is that

a. macroeconomics encompasses a whole country

while microeconomics focuses on individuals

b. macroeconomics encompasses every country while

microeconomics focuses on one country

c. macroeconomics uses the supply and demand

curves while microeconomics uses the aggregate

supply and demand curves

d. macroeconomics revolves around individual

markets while microeconomics uses GDP

calculations

e. macroeconomics is concerned about business

economic activity while microeconomics focuses

on government economic activity

2. Macroeconomics and microeconomics share

a. modes of analysis

b. focus on activity types

c. similar assumptions of human behavior

d. economic scales

e. views about which factors are vital

3. Scarcity is caused by limited

a. wealth

b. money

c. savings

d. human desires

e. resources

4. An opportunity cost is

a. what must be given up when making a choice

b. the difference between income and expenditures

c. the cost of production

d. the net cost of diminishing returns to scale

e. spending on capital equipment

5. Which of the following components of the economy deals

with microeconomics?

a. increase in net exports

b. inflationary policy

c. the bond market

d. supply and demand in an individual market

e. tax leading to a shift in aggregate demand curve

6. Every choice involves

a. the tragedy of the commons

b. expansion

c. the Coase Theorem

d. trade-offs

e. currency

7. The two main divisions of economics are called

a. expansion and recession

b. savings and investment

c. supply and demand

d. macroeconomics and microeconomics

e. cartels and monopolies

8. Why is efficiency important?

a. to analyze the effects of policies

b. to increase opportunity cost

c. to cause the supply curve to shift

d. to model economic predictions

e. to maximize overall wellbeing

9. Which type of economics deals with assessing

comparative merits?

a. macroeconomics

b. normative economics

c. positive economics

d. Keynesian economics

e. microeconomics

10. Which of the following activities would NOT be considered

a trade-off?

a. spending money on a new alpaca

b. going on vacation to Mumbai

c. reading a book while waiting in line

d. buying shoes for $50

e. watching TV when you have a test the next day

11. Given $100 dollars and ten people, which of the following

scenarios is NOT Pareto efficient?

a. One person has $99, one person has $1, and eight

people have $0.

b. Everyone has $10.

c. No one has any money.

d. One person has $100 and 9 people have $0.

e. One person has $91 while the other 9 people have

$1.

12. Positive economic analysis does NOT include

a. theory

b. value judgments

c. measurement

d. observation

e. description

ECON FOCUSED QUIZ 3 PERFECTLY COMPETITIVE MARKETS THROUGH DEMAND (PP. 9-11)

1. Which of the following concepts PRIMARILY

coordinates exchange in a market economy?

a. price mechanism

b. altruism

c. government decree

d. competition

e. Pareto efficiency

2. The main focus of microeconomics is

a. the interaction of supply and demand in

individual markets

b. the severity and duration of short-term business

cycles

c. the economies of small and medium-sized

countries

d. fluctuations in the level of national

unemployment

e. subtopics of macroeconomics such as inflation

3. Which of the following characteristics LEAST applies to

the perfectly competitive market?

a. readily available knowledge about market price

b. highly standardized goods

c. large number of sellers

d. large number of buyers

e. buyer and seller influence of the market price

4. Which of the following terms BEST describes any

institution in which buyers acquire a good or service

that sellers are vending in exchange for money or

another good?

a. stock exchange

b. organization

c. commodity exchange

d. market

e. grocery store

5. Supermarkets, the New York Stock Exchange, and

auction houses are all examples of

a. perfectly competitive markets

b. commodity markets

c. monopolies

d. highly organized markets

e. microcosms

6. Why do buyers in the gasoline market most likely know

the relative prices of different sellers?

a. Gas stations frequently advertise prices on

television.

b. Gasoline purchases account for the majority of a

consumer’s annual spending.

c. Buyers in this market often participate in

extensive online research.

d. Gas stations usually post prices on large signs

near the street.

e. The government requires all gas stations to sell

gasoline at a fixed price.

7. Which of the following descriptions BEST categorizes

the market for gasoline?

a. minimally competitive

b. perfectly competitive

c. monopolistic

d. somewhat competitive

e. highly competitive

8. Why do individual firms in a perfectly competitive

market lack price-setting power?

a. The market price is set by the government, not

by the market participants.

b. Anti-trust legislation prevents firms from acting

individually.

c. Individual firms collude with each other to

maintain high prices.

d. They account for only a small percentage of the

total quantity supplied in the market.

e. Prices are set by the individual buyers, not the

individual firms.

9. Which of the following people is LEAST likely to

demand a new Corvette?

a. a car dealership

b. a middle-class car enthusiast

c. a high school student

d. a heart surgeon

e. an wealthy businessman

10. Which of the following factors MOST determines the

quantity demanded of a good?

a. producer costs

b. personal tastes

c. price

d. scarcity

e. utility

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11. A typical demand curve plots

a. quantity demanded on the x-axis and quantity

supplied on the y-axis

b. quantity demanded on the x-axis and price on

the y-axis

c. time on the x-axis and quantity demanded on

the y-axis

d. quantity demanded on the x-axis and time on

the y-axis

e. price on the x-axis and quantity demanded on

the y-axis

12. To obtain the market demand curve, an economist

would need to calculate the

a. horizontal sum of the individual demand curves

b. vertical sum of the individual demand curves

c. average of the individual demand curves

d. total area under the individual demand curves

e. derivative of the individual demand curves

13. Which of the following relationships does the law of

demand establish?

a. a negative relationship between price and the

quantity demanded

b. a positive relationship between price and the

quantity demanded

c. a positive relationship between time and the

quantity demanded

d. a positive relationship between the quantity

demanded and the quantity supplied

e. a negative relationship between time and the

quantity demanded

14. Which of the following phenomena BEST explains the

slope of the demand curve?

a. unwillingness of suppliers to supply a good for a

lower price

b. more limited access to markets in a reduced

amount of time

c. increasing opportunity cost at higher prices

d. diminishing marginal utility at higher prices

e. increasing availability of resources over time

15. The primary difference between a demand schedule

and a demand curve is that a demand

a. schedule incorporates both the law of supply

and the law of demand while a demand curve

does not

b. schedule follows the law of demand while a

demand curve does not

c. schedule is typically shown in table form while a

demand curve is shown on a graph

d. curve follows the law of demand while a

demand schedule does not

e. curve is typically shown in table form while a

demand schedule is shown on a graph

ECON FOCUSED QUIZ 4 SHIFTS IN THE DEMAND CURVE THROUGH SHIFTS IN THE SUPPLY CURVE (PP. 11-16)

1. Which factor does NOT shift the demand curve?

a. income

b. expectations

c. number of buyers

d. tastes

e. technology

2. As income rises, the demand for beef rises. Therefore,

beef is considered a(n)

a. positive good

b. luxury good

c. normal good

d. inferior good

e. negative good

3. When the price of llamas rises, the demand for alpacas

rises. Llamas and alpacas are

a. luxury goods

b. inferior goods

c. complements

d. substitutes

e. normal goods

4. A new ad showing the harmful effects of cigarettes

makes smoking unpopular. Which factor causes the

demand curve to shift in this situation?

a. number of buyers

b. income

c. expectations

d. tastes

e. price of related goods

5. How do economists derive the demand curve?

a. multiplying the demand curves of all consumers

b. averaging the demand curves of all consumers

c. finding the demand curve that was used most

often

d. averaging the demand curves of the largest and

smallest consumers

e. adding up the demand curves of all consumers

6. Dan believes he will receive a raise next month, so he

buys a new alpaca instead of a used alpaca. Which

factor causes the demand curve to shift in this

situation?

a. tastes

b. luxury good effect

c. number of buyers

d. prices of related goods

e. expectations

7. Which factor MOST influences quantity supplied?

a. number of consumers

b. technology

c. amount of taxes

d. price

e. expectations

8. The relationship illustrated by the law of supply is

a. inverse

b. positive

c. exponential

d. quadratic

e. negative

9. Suppliers will continue to produce as long as the price

they receive exceeds

a. variable cost

b. marginal cost

c. opportunity cost

d. fixed cost

e. total cost

10. On the supply curve, which element is plotted on the

vertical axis?

a. profit

b. price

c. quantity demanded

d. opportunity cost

e. quantity supplied

11. In order to obtain the market supply curve, the

individual supply curves are added

a. vertically

b. every other

c. randomly

d. diagonally

e. horizontally

12. An increase in minimum wage would cause the supply

curve to

a. follow demand

b. grow steeper

c. flatten

d. shift left

e. shift right

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13. A new machine allows iPhones to be made more

efficiently. Which of the following factors causes the

supply curve to shift?

a. input prices

b. number of sellers

c. expectation

d. innovation

e. technology

14. If the price of wheat is expected to decrease in the

future, how will suppliers react now?

a. They will produce less wheat.

b. They will hold on to their wheat until later.

c. The will maintain the same production level.

d. They will produce more wheat.

e. They will leave the market.

15. The suppliers in the milk market are making high

profits, causing more suppliers to enter the market.

Which of the following effects does this change have

on the market?

a. quantity supplied stays the same

b. quantity demanded decreases

c. quantity supplied increases

d. quantity demanded increases

e. quantity supplied decreases

16. When summer arrives, more people buy ice cream. The

demand curve for ice cream shifts

a. diagonally

b. left

c. down

d. right

e. up

17. Which two items are usually considered complements?

a. beef and chicken

b. orange juice and apple juice

c. hamburgers and hot dogs

d. cake and ice cream

e. Coke and Pepsi

18. At lower prices, suppliers will produce

a. a good more efficiently

b. less of a good

c. more of a good

d. the same amount of a good

e. a good less efficiently

19. When Jon receives a pay cut, he buys more generic

brands. In this situation, generic brands are a(n)

a. complement

b. luxury good

c. inferior good

d. normal good

e. coping good

20. The price of apples rise. Assuming apple juice and

orange juice are complements, which of the following

outcomes will happen in the market for orange juice?

a. supply falls

b. supply rises

c. demand falls

d. nothing changes

e. demand rises

ECON FOCUSED QUIZ 5 EQUILIBRIUM THROUGH CHANGES IN MARKET EQUILIBRIUM (PP. 16-23)

1. A market will settle at the

a. balanced point

b. resting point

c. perfect point

d. equality point

e. equilibrium point

2. A market is in equilibrium when

a. no participant has any reason to change his or

her behavior

b. there is a price floor

c. the price and quantity of goods are equal

d. there is no deadweight loss

e. the largest consumer has no reason to alter his

or her behavior

3. Market equilibrium depends on the interaction of

a. supply and demand

b. suppliers and wholesalers

c. government and financial markets

d. consumers and banks

e. exports and imports

4. Given a surplus of wheat, wheat suppliers will

a. raise their price

b. produce more

c. lower their price

d. declare bankruptcy

e. leave the market

5. Excess demand of a good results in

a. lower prices

b. a surplus

c. a market failure

d. a shortage

e. an externality

6. Competitive markets tend to gravitate towards the

a. highest price

b. highest quantity

c. price floor

d. equilibrium point

e. lowest price

7. In a competitive market, price informs demanders of

a. the profits the supplier will receive

b. the opportunity cost of providing a good

c. the marginal cost of providing a good

d. the variable cost of providing a good

e. the total cost of providing a good

8. In a competitive market, goods are given to buyers who

a. desire the lowest quantity of the good

b. are able to pay the most

c. are indifferent about the price of the good

d. value the goods the most highly

e. do not value the good

9. A marginal buyer is a buyer who

a. purchases the good last

b. receives little benefit from purchasing a good

c. is indifferent about purchasing a good

d. does not value the good

e. will purchase the good at any price

10. If the price of concert tickets is $70, which price

illustrates the amount that a marginal buyer would be

willing to pay?

a. $60

b. $90

c. $70

d. $50

e. $80

11. Consumer surplus is the

a. value that consumers receive

b. opportunity cost of all producers

c. result of a price ceiling

d. result of excess demand

e. value that the largest consumer receives

12. Lauren is willing to sell her painting for $20, but she

receives $32 for it. Her producer surplus is

a. $8

b. $12

c. $32

d. $20

e. $10

13. How is total surplus calculated?

a. multiplying producer surplus by two

b. multiplying consumer surplus by producer

surplus

c. adding consumer surplus, producer surplus, and

deadweight loss

d. multiplying consumer surplus by two

e. adding consumer and producer surplus

FOCUSED QUIZ 5 PAGE 9 OF 74 DEMIDEC RESOURCES ©2015

14. A well-intentioned social planner would MOST want to

a. maximize consumer surplus

b. maximize output

c. minimize cost

d. maximize total surplus

e. maximize producer surplus

15. A new technology for building iPhones would MOST

likely cause a(n)

a. increase in supply

b. price floor

c. increase in demand

d. decrease in supply

e. decrease in total surplus

16. An increase in supply will

a. decrease quantity

b. decrease total surplus

c. decrease efficiency

d. increase price

e. increase total surplus

17. Which force drives competitive markets to equilibrium?

a. high profits

b. self-interested actions

c. declining well-being

d. government regulation

e. statistical analysis

18. A price above the equilibrium price creates a(n)

a. shortage

b. deadweight loss

c. efficient outcome

d. surplus

e. price floor

19. On a graph, which space indicates producer surplus?

a. below the market price and above the supply

curve

b. between the price and quantity

c. between the supply and demand curves

d. above the market price and below the supply

curve

e. below supply curve and above the horizontal

axis

20. How many equilibrium points are possible?

a. 1

b. infinite

c. 0

d. 4

e. 2

ECON FOCUSED QUIZ 6 ELASTICITY AND USING ELASTICITY (PP. 23-29)

1. Which concept is used to determine the size of the

changes of price and quantity?

a. elasticity

b. directional shifts

c. logrolling

d. liquidity

e. equilibrium

2. How is elasticity of demand calculated?

a. percentage change in quantity demanded

divided by percentage change in price

b. percentage change in price divided by

percentage change in quantity demanded

c. change in quantity demanded divided by

change in price

d. percentage change in quantity demanded

multiplied by percentage change in price

e. change in quantity demanded multiplied by

change in price

3. The elasticity value is conventionally written as a(n)

a. absolute value

b. squared value

c. inverse function

d. reciprocal

e. negative value

4. Demand is elastic when

a. both price and demand changes 1%

b. price changes 1% and demand changes less

than 1%

c. price changes 1% and demand stays constant

d. price changes 1% and demand changes more

than 1%

e. price changes more than 1% and demand

changes 1%

5. Which factor does NOT influence elasticity?

a. market definition

b. number of buyers

c. substitutes

d. necessities

e. time horizon

6. When goods have close substitutes, the elasticity of

a. supply is high

b. demand is unit elastic

c. demand is high

d. demand is low

e. demand is low

7. Which type of demand curve has the highest elasticity?

a. a completely horizontal line

b. a steep sloping curve

c. a gently sloping curve

d. a curve with a slope of 1

e. a completely vertical line

8. How does elasticity relate to slope?

a. Slope is the reciprocal of elasticity.

b. Slope is the absolute value of elasticity.

c. Slope is elasticity squared.

d. Slope is the square root of elasticity.

e. Slope is the opposite of elasticity.

9. Demand for a necessity with no substitutes is

a. unit elastic

b. perfectly elastic

c. elastic

d. inelastic

e. perfectly inelastic

10. When a 1% change in price yields a 1% change in

quantity, the curve for demand is

a. elastic

b. perfectly elastic

c. unit elastic

d. inelastic

e. perfectly inelastic

11. When resources are scarce, elasticity of

a. supply is unit elastic

b. supply is low

c. demand is low

d. supply is high

e. demand is high

12. How is total revenue calculated?

a. quantity divided by price

b. price divided by quantity

c. quantity subtracted from price

d. price added to quantity

e. price multiplied by quantity

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13. How can total revenue increase?

a. Price falls when demand is elastic or price rises

when demand is inelastic.

b. Price falls when demand is perfectly inelastic.

c. Price falls when demand is elastic or inelastic.

d. Price rises when demand is elastic or price falls

when demand is inelastic.

e. Price rises when demand is elastic or inelastic.

14. Which of the following goods is MOST likely to have an

elastic demand?

a. milk

b. gas

c. cars

d. toilet paper

e. clothing

15. How do technology updates like BGH affect the

economy of farming?

a. Technology shifts the supply curve to the left.

b. Farmers increase their sales quantity with

technology.

c. Technology impacts market price.

d. Technology increases income.

e. More farmers enter the market with technology.

ECON FOCUSED QUIZ 7 PRICE CONTROLS (PP. 29-32)

1. Which of the following goods is BEST known for having

government price floors placed upon it?

a. automobiles

b. corn

c. paper

d. gold

e. laptop computers

2. At which governmental level are laws which force

employers to pay their workers a “living wage” MOST

commonly passed?

a. state

b. international

c. city

d. federal

e. county

3. Which of the following cities is BEST known for

establishing price controls on residential housing?

a. Los Angeles

b. Chicago

c. Seattle

d. New York City

e. Miami

4. In 1979, in response to global political turmoil, the

federal government imposed a price ceiling on

a. coal

b. oil

c. uranium

d. gold

e. natural gas

5. A price ceiling on residential housing will always result

in all of the following outcomes EXCEPT

a. a reduction in total consumer surplus

b. a shortage

c. deadweight loss

d. a reduction in total producer surplus

e. inefficiency

6. In the short run, the supply of housing in the residential

housing market tends to be

a. perfectly inelastic

b. elastic

c. unit elastic

d. inelastic

e. perfectly elastic

7. In the short run, the demand for housing in the

residential housing market tends to be

a. inelastic

b. perfectly elastic

c. perfectly inelastic

d. elastic

e. unit elastic

8. In the long run, the supply of housing in the residential

housing market tends to be

a. unit elastic

b. perfectly inelastic

c. perfectly elastic

d. elastic

e. inelastic

9. In the long run, the demand for housing in the

residential housing market tends to be

a. elastic

b. inelastic

c. perfectly inelastic

d. perfectly inelastic

e. unit elastic

10. Which of the following reasons BEST explains why price

ceilings in the residential housing market result in

discrimination during the tenant selection process?

a. There are no laws prohibiting discrimination in

the housing market.

b. Housing discrimination leads to more racially

homogeneous neighborhoods.

c. Landowners do not want to deal with tenants

they do not know.

d. Tenants of certain demographics are more likely

to pay their rent payments on time.

e. The available housing is not rationed by the

price mechanism.

11. Compared to the effects observed in the short run, the

long run effects of a price ceiling will result in a larger

a. increase in the quantity sold

b. increase in price

c. decrease in excess demand

d. surplus

e. shortage

FOCUSED QUIZ 7 PAGE 13 OF 74 DEMIDEC RESOURCES ©2015

12. Compared to the effects observed in the short run, the

long run effects of a price floor will result in a

a. smaller surplus

b. larger increase in excess supply

c. larger increase in price

d. larger increase in the quantity sold

e. larger shortage

13. At the competitive market, equilibrium goods are

rationed based on

a. the personal tastes of the buyers

b. personal connections between the buyers and

sellers

c. the price buyers are willing and able to pay

d. government decree

e. compliance with price controls

14. Which of the following phenomena would MOST likely

occur if San Francisco established a price ceiling on

low-cost housing?

a. immigration of low-income families into San

Francisco

b. emigration of upper-class families out of San

Francisco

c. emigration of low-income families out of San

Francisco

d. immigration of upper-class families into San

Francisco

e. immigration of middle-class families into San

Francisco

15. The price ceiling imposed during the political turmoil of

1979 was PRIMARILY designed to help

a. energy suppliers

b. financial institutions

c. manufacturing plants

d. lower-class families

e. transportation companies

ECON FOCUSED QUIZ 8 TAXES (PP. 32-35)

1. Which of the following statements about taxes is TRUE?

a. Taxes are revenue for public expenditures.

b. Only the national government can use taxes.

c. Suppliers are not affected by taxes.

d. The government passes laws to regulate the

burdens of taxation.

e. Consumers always pay the burden of taxes.

2. Taxes on consumers cause a(n)

a. upward shift on demand curve

b. downward shift on demand curve

c. shift to the left on supply curve

d. downward shift on supply and demand curves

e. shift to the right on demand curve

3. How do taxes on consumers affect suppliers?

a. Revenue received decreases.

b. Quantity sold increases.

c. Suppliers pay the tax.

d. Suppliers are not affected.

e. Suppliers benefit from the taxes.

4. On whom does the burden of a tax fall?

a. only the suppliers

b. the consumers and suppliers

c. the government

d. only the consumers

e. the government, the consumers, and the

suppliers

5. The effect of taxes is to

a. benefit suppliers

b. prevent mutually beneficial exchange

c. increase total surplus

d. increase equilibrium quantity

e. increase demand of a good

6. In which direction does the supply curve shift when

suppliers are taxed?

a. leftward

b. downward

c. rightward

d. does not change

e. upward

7. When suppliers are taxed, the new equilibrium point is

located at

a. a higher price and lower quantity

b. a lower price and higher quantity

c. the same price and lower quantity

d. a lower price and lower quantity

e. a higher price and the same quantity

8. The reduction of social welfare caused by a tax is called

a. tax triangle

b. tax revenue

c. deadweight loss

d. burden of the tax

e. change of total surplus

9. Taxes create

a. a price wedge

b. crowding out

c. inflation

d. barriers to entry

e. market competition

10. The true cost of the tax is on

a. consumers

b. the payer of the tax

c. the government

d. suppliers

e. both consumers and suppliers

11. If a good before a tax sells 20 items for $2 and after a

tax sells 15 items for $2.20, the tax revenue is

a. $3

b. $10

c. $7

d. $4

e. $1

12. The share of the burden of a tax between consumers

and suppliers is expressed as a

a. fraction

b. sum

c. ratio

d. decimal

e. percentage

FOCUSED QUIZ 8 PAGE 15 OF 74 DEMIDEC RESOURCES ©2015

13. Tax revenue is

a. maximized to reduce deadweight loss

b. what suppliers receive minus what consumers

pay

c. total surplus minus deadweight loss

d. money transferred to the government

e. the differences of the quantity of a good before

and after the tax

14. Less elastic supply and demand curves cause

a. a lower impact of how the tax disturbs the

market

b. an increased deadweight loss

c. larger effects of the tax

d. reductions of the burden on consumers

e. larger effects on equilibrium quantity

15. The burden of a tax depends on

a. scarcity

b. revenue

c. externality

d. surplus

e. elasticity

ECON FOCUSED QUIZ 9 INTERNATIONAL TRADE THROUGH COMPARATIVE ADVANTAGE (PP. 35-37)

1. The primary reason the modern economy is so

interdependent is that

a. individual countries’ financial systems are

connected through the World Bank

b. countries want to take advantage of gains from

trade

c. countries borrow and lend money through

international networks

d. the International Monetary Fund promotes

international trade

e. many countries invest in the stock exchange

2. Exchange makes people better off because it allows

individuals to

a. work out externalities through discussion

b. produce a variety of goods and services

c. learn from the experiences of others

d. specialize in the activity they do best

e. teach each other knowledge and skills

3. In one day, Jake can clean his room, tutor his sister, or

make $50 shoveling snow. Jake values his sister’s

education more than making money. Jake’s opportunity

cost of cleaning his room is the

a. improvement in his sister’s education if he had

chosen to spend his time tutoring her

b. benefit he receives from not having his mother

berate him about his dirty room

c. $50 he would have gained from shoveling snow

d. enjoyment he gains from organizing and

cleaning

e. money he would have gained if he had charged

money tutoring other children

4. In the same amount of time, Tina can harvest 100

bushels of wheat or 40 bushels of corn. Tina’s

opportunity cost of harvesting 20 bushels of wheat is

a. 5 bushels of corn

b. 8 bushels of corn

c. 50 bushels of wheat

d. 20 bushels of corn

e. 5 bushels of wheat

5. The purpose of a production possibility frontier graph

is to

a. depict the maximum possible outputs for two

products

b. determine a firm’s profit maximizing price level

c. determine what combination of products

provides a user with the most satisfaction

d. understand how equilibrium quantity changes

with shifting supply and demand

e. determine the optimal level of production given

demand

6. Which variables are graphed on the axes of a

production possibility frontier?

a. demand (x-axis) vs. supply (y-axis)

b. supply (x-axis) vs. demand (y-axis)

c. quantity of product 1 (x-axis) vs. quantity of

product 2 (y-axis)

d. quantity (x-axis) vs. utility (y-axis)

e. quantity (x-axis) vs. price (y-axis)

7. In one afternoon, Jess can bake 20 cookies or 15

cupcakes. If quantity of cookies is graphed on the x-axis

and quantity of cupcakes is graphed on the y-axis, the

x-intercept of the graph is

a. 0.75

b. 1.3

c. 5

d. 15

e. 20

8. In one afternoon, Jess can bake 20 cookies or 15

cupcakes. If quantity of cookies is graphed on the x-axis

and quantity of cupcakes is graphed on the y-axis, the

slope of the line is

a. -0.75

b. 0.75

c. -1.33

d. 5

e. 1.33

9. Which point(s) on the production possibility frontier

represent(s) the MOST Pareto efficient output?

a. points on the curve

b. the point halfway between the x- and y-

intercept

c. points inside the curve

d. the point where the x-value equals the y-value

e. points outside the curve

FOCUSED QUIZ 9 PAGE 17 OF 74 DEMIDEC RESOURCES ©2015

10. The slope of the production possibility frontier reflects

a. preference the individual has for the product on

the y-axis

b. opportunity cost of producing the product on

the y-axis

c. opportunity cost of producing the product on

the x-axis

d. preference the individual has for the product on

the x-axis

e. monetary cost of producing the product on the

y-axis

11. In one hour, Sam can catch 5 fish or gather 10 coconuts

and Pam can catch 2 fish or gather 4 coconuts. Which

of the following statements is true?

a. Sam has the absolute advantage in this

situation.

b. Sam should specialize in catching fish while Pam

should specialize in gathering coconuts.

c. Pam has a comparative advantage in gathering

coconuts.

d. Pam has the absolute advantage in this

situation.

e. Pam should specialize in catching fish while Sam

should specialize in gathering coconuts.

12. In one hour, Sam can catch 5 fish or gather 10 coconuts

and Matt can catch 9 fish or gather 8 coconuts. The

optimal outcome would be for

a. Sam to catch 5 fish and Matt to gather 8

coconuts

b. Sam to gather 8 coconuts and catch 1 fish and

Matt to catch 9 fish

c. Sam to gather 10 coconuts and Matt to catch 9

fish

d. Sam to gather 6 coconuts and catch 2 fish and

Matt to gather 4 coconuts and catch 4 fish

e. Sam to gather 6 coconuts and catch 2 fish and

Matt to catch 3 fish and gather 5 coconuts

13. A worker in Alpacanada can produce 300 sleds or 2

clarinets while a worker in Llamaland can produce 200

sleds or 1 clarinet. Llamaland has

a. no advantage in either product

b. the absolute advantage in sleds

c. the comparative advantage in clarinets

d. the comparative advantage in sleds

e. the absolute advantage in clarinets

14. In one day, Carol’s Cookie Company can make 600

chocolate chip cookies or 900 sugar cookies and

Sophie’s Sweet Shop can make 1000 chocolate chip

cookies or 900 sugar cookies. Which of the following

statements is true?

a. Carol should specialize in producing chocolate

chip cookies while Sophie should specialize in

producing sugar cookies.

b. Carol has an absolute advantage in producing

chocolate chip cookies.

c. Sophie’s opportunity cost of producing one

sugar cookie is 0.9 chocolate chip cookies.

d. Carol has a comparative advantage in producing

chocolate chip cookies.

e. Sophie has a lower opportunity cost for

producing chocolate chip cookies.

ECON FOCUSED QUIZ 10 COMPETITIVE MARKET EQUILIBRIUM THROUGH COMPARATIVE ADVANTAGE (PP. 18-37)

1. Technological progress that allows suppliers to produce

goods at lower prices increases

a. equilibrium price

b. consumer surplus

c. equilibrium supply

d. demand for the goods

e. producer surplus

2. Public health campaigns educating people on the

negative effects of cigarette smoking affect the

cigarette market by

a. decreasing only the quantity of cigarettes

b. increasing the price and quantity of cigarettes

c. increasing only the price of cigarettes

d. increasing the price and lowering the quantity

of cigarettes

e. lowering the price and quantity of cigarettes

3. Which concept describes how much the quantity

demanded changes in response to a change in the

price of a good?

a. market equilibrium

b. price elasticity of demand

c. competitive market model

d. law of demand

e. externalities

4. Why is the result of calculating the price elasticity of

demand always negative?

a. the law of returns

b. Say’s law

c. the law of increasing costs

d. the law of demand

e. Okum’s law

5. Demand is said to be elastic if a one percent change in

a. price results in a one percent decrease in the

quantity demanded

b. quantity demanded results in no change in price

c. price results in a greater than one percent

change in the quantity demanded

d. quantity demanded results in a less than one

percent change in price

e. quantity demanded results in a greater than one

percent change in the quantity demanded

6. If a one percent change in price results in a less than

one percent change in the quantity demanded, then its

price elasticity of

a. demand is inelastic

b. demand is elastic

c. supply is inelastic

d. supply is elastic

e. supply is unit elastic

7. If a particular soda has many close substitutes, then it is

likely that its price elasticity of

a. supply is unit elastic

b. supply is high

c. demand is high

d. demand is unit elastic

e. supply is low

8. Because gasoline is regarded as a necessity, its price

elasticity of

a. demand is unit elastic

b. supply is low

c. demand is low

d. demand is high

e. supply is unit elastic

9. If the price elasticity of demand is perfectly inelastic,

then an increase in price will

a. shift the supply curve to the left

b. decrease the quantity demanded

c. not change the quantity demanded

d. increase the quantity demanded

e. shift the supply curve to the right

10. The price elasticity of supply reflects the

a. effect a one percent change in price has on

quantity demanded

b. direction supply will shift in response to a

change in demand

c. ease with which suppliers can alter the quantity

of production

d. change in consumer behavior following a

change in supply

e. rate at which the Federal Reserve buys bonds in

response to a shift in supply

FOCUSED QUIZ 10 PAGE 19 OF 74 DEMIDEC RESOURCES ©2015

11. If it is easy for new businesses to begin supplying a

product in a market or for those in the market to leave,

then the price elasticity of

a. demand will be unit elastic

b. supply will be more elastic

c. demand will be more elastic

d. supply will be unit elastic

e. supply will be less elastic

12. Because there is no way to produce more Van Gogh

paintings, the price elasticity of supply of Van Gogh

paintings is

a. unit elastic

b. inelastic but not perfectly inelastic

c. perfectly inelastic

d. perfectly elastic

e. elastic but not perfectly elastic

13. It is assumed that adopting a technological innovation

in a demand inelastic market will reduce total revenue.

Which economic concept explains why suppliers would

still adopt this technology?

a. government regulation

b. game theory

c. monopolistic behavior

d. consumer lobbying

e. competition between firms

14. If the Alpacanadian government imposes a price ceiling

that is above equilibrium price, then

a. price decreases and quantity demanded

decreases

b. price and quantity demanded increase

c. price decreases while the quantity demanded

remains the same

d. price and quantity demanded remain the same

e. price increases while quantity demanded

decrease

15. If the Alpacanadian government imposes a price floor

above equilibrium price, then

a. only consumer surplus is reduced

b. both consumer and producer surplus are

reduced

c. only producer surplus is reduced

d. consumer surplus increases and producer

surplus decreases

e. total surplus remains the same

16. Taxes are collected by every level of government

PRIMARILY in order to

a. control the market

b. fund electorate campaigns

c. fix income inequality

d. regulate interstate trade

e. pay for public expenditures

17. Regardless of whether the consumer or the supplier

legally pays the tax, ultimately

a. taxes prevent price discrimination

b. suppliers pay more of the tax

c. both consumers and producers share the

burden of the tax

d. consumers pay more of the tax

e. taxes increase consumer surplus

18. Deadweight loss describes the

a. decrease in consumer surplus caused by price

ceilings

b. amount of money taxes raise for the

government

c. change in price equilibrium caused by price

floors

d. reduction in social welfare caused by taxes

e. shift of the demand curve caused by taxes

19. Exchange and trade between people encourages

a. isolation

b. consumption

c. independence

d. regulation

e. specialization

20. The tradeoff between producing one good over

another can be represented using a(n)

a. elasticity diagram

b. production possibility frontier

c. equilibrium graph

d. production tradeoff Venn Diagram

e. supply and demand chart

21. Trade is beneficial to both parties when

a. there is more than one trading partner

b. both parties have free trade agreements

c. only one party specializes

d. both parties differ in comparative advantage

e. one party has an absolute advantage

FOCUSED QUIZ 10 PAGE 20 OF 74 DEMIDEC RESOURCES ©2015

22. Although Country A has the absolute advantage in

producing cars and bicycles over Country B, if both

countries trade cars and bicycles

a. only Country A may benefit

b. neither country benefits

c. both countries benefit if Country B has a

comparative advantage

d. both countries take losses

e. only Country B may benefit

23. When the time horizon increases, the price elasticity of

a. supply becomes unit elastic

b. demand will not change

c. supply will increase

d. demand becomes unit elastic

e. supply will not change

24. If the price elasticity of supply of a product is inelastic,

then a one percent increase in price results in a

a. greater than one percent increase in quantity

b. less than one percent increase in quantity

c. greater than one percent decrease in quantity

d. one percent increase in quantity

e. less than one percent decrease in quantity

25. If the price elasticity of a product’s demand is inelastic,

then a one percent increase in price results in a

a. greater than one percent decrease in quantity

b. less than one percent decrease in quantity

c. one percent decrease in quantity

d. less than one percent increase in quantity

e. greater than one percent increase in quantity

ECON FOCUSED QUIZ 11 THE PROFIT MOTIVE AND THE BEHAVIOR OF FIRMS I (PP. 37-40)

1. Which of the following entities are PRIMARILY responsible

for producing goods and services in a market economy?

a. investors

b. state governments

c. commodity markets

d. buyers

e. firms

2. According to the law of supply, the quantity supplied of a

good is MOST likely to increase when the

a. price increases

b. price decreases

c. quantity demanded increases

d. timeframe considered is shortened

e. timeframe considered is lengthened

3. The fundamental goal of MOST firms is to maximize

a. total profit

b. total revenue

c. total cost

d. the quantity of goods and services produced

e. the quality of goods and services produced

4. How would an economist calculate a firm’s total profit?

a. subtract marginal cost from marginal revenue

b. add total cost and marginal revenue

c. subtract total fixed costs from marginal revenue

d. multiply the quantity sold of a good by its price

e. subtract total cost from total revenue

5. How would an economist calculate total revenue?

a. subtract average total cost from total profit

b. multiply the price of a good by its marginal cost

c. subtract average fixed cost from total fixed cost

d. multiply the quantity sold of a good by its selling

price

e. multiply marginal revenue and the price received

for a good

6. Steven, a pizza maker in a perfectly competitive market,

sells 200 pizzas for $10 each in an eight-hour day. Steven

pays 5 employees $10 each per hour, pays $1000 for

ingredients, pays $100 per day in rent, and could

personally earn $300 per day if he worked a different job.

Steve’s total daily accounting costs are

a. $1800

b. $200

c. $1500

d. $500

e. $2000

7. Expenditures that are not affected by the quantity

produced in the short run are MOST frequently referred to

as

a. fixed costs

b. marginal costs

c. royalties

d. variable costs

e. inelastic costs

8. Quantity-dependent expenditures are MOST frequently

known as

a. progressive costs

b. elastic costs

c. sunk costs

d. fixed costs

e. variable costs

9. Which of the following definitions provides the BEST

approximation for marginal cost?

a. the marginal revenue minus the marginal profit

b. the change in fixed costs divided by the change in

total costs

c. the change in progressive costs divided by the

change in quantity

d. the total cost divided by the total quantity

e. the change in total cost divided by the change in

quantity

10. At realistic quantities of production, how does marginal

cost change as output increases in a perfectly competitive

market?

a. decrease continuously

b. increase, then eventually begin to decrease

c. remain constant

d. decrease, then eventually begin to increase

e. increase continuously

11. In a perfectly competitive market, individual sellers face a

demand curve that is

a. backward bending

b. upward sloping

c. vertical

d. horizontal

e. downward sloping

12. At realistic quantities of production, how will marginal

revenue change as output increases in a perfectly

competitive market?

a. increase, then eventually begin to decrease

b. increase continuously

c. remain constant

d. decrease continuously

e. decrease, then eventually begin to increase

FOCUSED QUIZ 11 PAGE 22 OF 74 DEMIDEC RESOURCES ©2015

13. Which of the following factors of production contributes

MOST to diminishing returns to scale?

a. patents

b. raw materials

c. labor

d. entrepreneurship

e. capital equipment

14. Isaiah, a taco maker in a perfectly competitive market, sells

1500 tacos for $1 each in an eight-hour day. Isaiah pays 5

employees $10 each per hour, pays $800 for ingredients,

pays $200 per day in rent, and could personally earn $200

per day if he worked a different job. Isaiah’s total daily

economic costs are

a. $1600

b. $100

c. $1400

d. $1500

e. -$100

15. The supply curve of a typical firm in a perfectly

competitive market is

a. downward sloping

b. horizontal

c. vertical

d. backward bending

e. upward sloping

16. Which of the following actions should a firm in a perfectly

competitive market take if its marginal cost is $5 at a

particular quantity and the price of the good is $4 at that

quantity?

a. increase output until marginal cost equals

marginal revenue

b. increase the price until price equals marginal cost

c. decrease the price to $3 to increase the quantity

demanded

d. decrease output until marginal cost equals the

minimum point of the average variable cost curve

e. decrease output until marginal cost equals $4

17. In the long run, which of the following outcomes is MOST

likely if individual firms in a perfectly competitive market

are earning economic profit?

a. The market supply curve will shift to the left.

b. The market supply curve will shift to the right.

c. The market demand curve will shift to the left.

d. Accounting profits for all firms will decrease to

zero.

e. The market demand curve will shift to the right.

18. A health report links hamburger consumption to increased

risk of heart disease. Which of the following outcomes

would result in the market for hamburgers if it is assumed

to be perfectly competitive and originally in equilibrium?

a. The market supply curve will shift to the left.

b. The individual firms’ marginal costs will increase at

all quantities.

c. The total profit earned by the suppliers in the

market will remain constant.

d. Suppliers will exit the market.

e. The market demand curve will shift to the right.

19. Juan, an egg roll producer in a perfectly competitive

market, sells 2000 egg rolls for $2 each in an eight-hour

day. Juan pays 10 employees $15 each per hour, pays

$1200 for ingredients, pays $300 per day in rent, and

could personally earn $400 per day if he worked a

different job. Juan’s total daily economic profit is

a. $4000

b. $3100

c. $2700

d. $900

e. $1300

20. Luigi, a hammock producer in a perfectly competitive

market, sells 500 hammocks for $10 each in an eight-hour

day. Luigi pays 25 employees $10 each per hour, pays

$800 for parts, pays $100 per day in rent, and could

personally earn $500 per day if he worked a different job.

Luigi’s total daily revenue is

a. $5000

b. $2900

c. $1600

d. $2100

e. $3400

ECON FOCUSED QUIZ 12 THE PROFIT MOTIVE AND THE BEHAVIOR OF FIRMS II (PP. 37-40)

1. Which of the following terms describes the economic

actors who supply goods and services?

a. offices

b. businesses

c. companies

d. firms

e. corporations

2. A firm’s goal is to maximize

a. total revenue

b. marginal revenue

c. total product

d. economic profits

e. accounting profits

3. How do economists calculate profits?

a. adding up marginal revenue for each product

b. multiplying the difference between marginal

cost and revenue by quantity

c. subtracting total costs from total revenue

d. subtracting marginal revenue from marginal

cost

e. multiplying quantity by the price level

4. Unlike accounting costs, economic costs consist of

a. both implicit cost and opportunity cost

b. only implicit cost

c. only explicit cost

d. both explicit cost and monetary cost

e. both opportunity cost and monetary cost

5. Joe runs a small boat factory. To produce 10 boats, Joe

pays $700 for raw materials, $200 for machinery, and

$500 for labor. He can sell each boat for $300. Joe’s

explicit cost of producing 10 boats is

a. $16000

b. $900

c. $700

d. $1400

e. $14000

6. Joe runs a small boat factory. It costs $1500 to produce

10 boats. He can sell each boat for $300. Joe could also

spend his time working at a competing company for

$1000. Joe’s economic cost of producing 10 boats is

a. $300

b. $2500

c. $150

d. $1000

e. $1500

7. Joe runs a small boat factory. It costs $1500 to produce

10 boats. He can sell each boat for $300. Joe could also

spend his time working at a competing company for

$1000. Joe’s economic profit is

a. $3000

b. $1500

c. $500

d. $150

e. $2500

8. Bob runs a bread company. All of the following costs

are variable costs EXCEPT

a. cost of electricity to run machines

b. cost of flour

c. rent for factory space

d. workers’ wages

e. cost of bread

9. Company A increases output from 100 to 125 products.

Total costs increase from $600 to $700. The marginal

cost is

a. $125

b. $100

c. $25

d. $10

e. $4

10. Carol wants to expand her successful cookie company

by hiring 50% more workers. However, because of poor

communication between the workers, output increases

by only 30%. This example illustrates the concept of

a. diminishing returns to scale

b. Okun’s law

c. law of supply

d. economies of scale

e. Coase Theorem

11. The slope of the demand curve of a firm in a perfectly

competitive market is

a. vertical

b. upward-sloping

c. unit elastic

d. downward-sloping

e. horizontal

FOCUSED QUIZ 12 PAGE 24 OF 74 DEMIDEC RESOURCES ©2015

12. In a perfectly competitive market, marginal revenue is

equal to

a. variable cost

b. total revenue

c. profit

d. demand

e. marginal cost

13. A firm’s profit-maximizing quantity occurs where

a. total revenue is highest

b. marginal cost is lowest

c. total cost is lowest

d. marginal cost intersects marginal revenue

e. total cost intersects marginal revenue

14. Assuming all other factors to be constant, when more

producers enter a market, we can expect

a. demand curve to shift inwards

b. more consumers to enter the market

c. equilibrium point to slide downwards

d. equilibrium price to fall

e. market supply curve to shift inwards

15. Which of the following statements regarding firms in

perfectly competitive markets is FALSE?

a. Suppliers will enter a market if positive

economic profits exist.

b. Producers can earn positive economic profits in

the long run.

c. Firms do not have the power to set their own

prices.

d. Firms allocate resources efficiently by

comparing prices with costs.

e. Firms face a horizontal demand curve.

ECON FOCUSED QUIZ 13 IMPERFECT COMPETITION: MONOPOLY THROUGH WELFARE CONSEQUENCES (PP. 40-43)

1. All of these markets are prone to monopoly EXCEPT

a. electricity

b. cable television

c. natural gas

d. water

e. mobile phones

2. Markets with only one or very few suppliers are

a. perfectly competitive

b. uncompetitive

c. partially competitive

d. imperfectly competitive

e. competitive

3. Which of the following statements regarding firms in

imperfectly competitive markets is FALSE?

a. Firms face a downward sloping demand curve.

b. The firms’ objective is to maximize economic

profit.

c. Firms possess market power.

d. Firms are not price takers.

e. Firms are entirely free to choose any selling

price.

4. All of the following conditions lead to the rise of

monopolies EXCEPT

a. barriers to entry

b. difficulty of profit-making

c. government regulation

d. high upfront costs

e. high degree of competition

5. The DeBeers company once had a monopoly on

a. railroads

b. coal

c. diamonds

d. electricity

e. radio

6. James created a new kind of smartwatch and applied

for a patent from the Patent and Trademark Office.

Now only James is legally allowed to capitalize on his

design. Which of the following kinds of monopolies

does this situation exemplify?

a. invention monopoly

b. copyright monopoly

c. natural monopoly

d. geographic monopoly

e. government-created monopoly

7. Natural monopolies occur when

a. the government nationalizes the industry

b. large fixed costs are associated with entering an

industry

c. a supplier holds a patent on supplying a

product

d. a supplier holds a copyright requiring producers

to pay royalties

e. one company owns all of a key resource

8. When the government grants a patent, the inventor is

awarded exclusive rights to using the technology in

exchange for

a. allowing others to emulate their invention for a

small fee

b. revealing the details of the innovation after a

specified period of time

c. promising to use the technology in ways that

would benefit society

d. free government use of the product

e. promising to share his intellectual property with

the developing world

9. Given the downward-sloping demand curve for a

monopoly, as the price of a food falls, total revenue

a. increases continuously

b. increases then decreases

c. decreases continuously

d. decreases then increases

e. stays constant

10. Monopolists decide how much to supply by increasing

supply until

a. accounting profit exceeds economic profit

b. marginal cost equals marginal revenue

c. total cost equals total revenue

d. marginal revenue equals market price

e. economic profit is zero

11. When the marginal revenue of a monopoly is greater

than marginal cost, increasing supply causes

a. marginal revenue to increase

b. economic profit to decrease

c. total revenue to decrease

d. economic profit to increase

e. marginal cost to decrease

FOCUSED QUIZ 13 PAGE 26 OF 74 DEMIDEC RESOURCES ©2015

12. Compared to the market equilibrium of a perfectly

competitive market, equilibrium in a monopoly is

located at

a. a lower quantity and higher price

b. a higher quantity and a higher price

c. the same quantity and a lower price

d. a lower quantity and lower price

e. the same quantity and a higher price

13. Which statement about monopolies and competitive

markets is TRUE?

a. Competitive markets arise from government

intervention while monopolies arise from barrier

to entry.

b. Monopolies seek to maximize profit while

completive markets seek to maximize revenue.

c. Monopolies increase social welfare while

competitive markets decrease welfare.

d. Only competitive markets can practice price

discrimination.

e. Monopolists can earn economic profit in the

long run while firms in competitive markets

cannot.

14. Monopolies restrict supply to a level less than socially

optimal because increasing output would

a. reduce producer and consumer surplus

b. increase accounting profit while decreasing

economic profit

c. increase revenue at the expense of reducing

monopoly surplus

d. reduce revenue from buyers who place a higher

value on the product

e. cost more than the value provided to

consumers

15. In a monopoly, there is a transfer of

a. consumer surplus to monopoly surplus

b. consumer surplus to deadweight loss

c. producer surplus to monopoly surplus

d. producer surplus to consumer surplus

e. deadweight loss to producer profit

ECON FOCUSED QUIZ 14 DEALING WITH MONOPOLIES THROUGH MONOPOLISTIC COMPETITION (PP. 43-45)

1. Why is the Sherman Anti-Trust Act of 1890 significant?

a. It marked the first time the federal government

used legislation to deter anticompetitive

business activity.

b. It was immensely successful in lifting the

country from the 1890-91 recession.

c. Its success led the federal government to accept

Keynesian economic views.

d. It laid the foundation for free market capitalism

and the proliferation of big business.

e. It was the first major policy enacted by the

Federal Reserve.

2. Which method is NOT effective for dealing with the

negative effects of monopolies?

a. public ownership of the industry

b. fragmentation of large mergers

c. prevention of monopoly formation

d. close regulation of monopoly prices

e. reduction of market demand

3. Which practice is NOT an example of price

discrimination?

a. Office supply stores hold sales during the back-

to-school season.

b. Movie theaters charge different prices to adults,

children, and seniors.

c. Airlines charge higher fares for business class

travelers.

d. Colleges offer financial aid to students with a

lower ability to pay.

e. Retailers charge less to customers who buy in

bulk.

4. Which term describes the practice of charging

customers different prices for the same product?

a. price fixing

b. marginal cost pricing

c. predatory pricing

d. monopolistic pricing

e. price discrimination

5. Which of the following outcomes is NOT a result of

price discrimination?

a. increase in the firms’ overall economic profit

b. reduction in social welfare compared to

monopolistic firms not practicing price

discrimination

c. benefit to consumers with lower willingness to

pay because of the more affordable price

d. capture of additional surplus from consumers

with higher willingness to pay

e. broadened range of customers

6. Economists call a market with only a few sellers a(n)

a. monopolistically competitive market

b. cartel

c. monopoly

d. imperfectly competitive market

e. oligopoly

7. The markets for breakfast cereals and washing

machines are examples of

a. perfect competition

b. monopolistic competition

c. monopolies

d. monopsonies

e. oligopolies

8. A key difference between oligopolies and competitive

markets is that

a. competitive firms choose output where

marginal cost equals marginal revenue while

oligopolistic firms do not

b. oligopolistic firms are price takers while

competitive firms have market power

c. competitive firms have the opportunity to

collude while oligopolistic firms do not

d. oligopolistic firms sell differentiated products

while competitive firms sell identical products

e. oligopolistic firms are interdependent while

competitive firms are not

9. Collectively speaking, oligopolistic firms would be

better off if they

a. acted in their own self-interest

b. decreased prices

c. increased production

d. acted like a perfectly competitive firm

e. restricted production

FOCUSED QUIZ 14 PAGE 28 OF 74 DEMIDEC RESOURCES ©2015

10. Which statement about cartels is FALSE?

a. Cartels are not illegal under US antitrust law.

b. Cartel formation creates monopoly-like

conditions.

c. Cartel formation enables participating firms to

maximize profit.

d. OPEC is an example of an internal cartel formed

by various countries.

e. Significant economic forces tend to undermine

a cartel’s collusive efforts.

11. Why is collusion between oligopolistic firms difficult to

maintain?

a. Each firm can increase profits by encouraging

more firms to join the industry.

b. Each firm can increase profits by secretly

reporting collusion to the federal government.

c. Each firm can increase profits by increasing

price above the agreed amount.

d. Each firm can increase profits by producing less

output than the agreed amount.

e. Each firm can increase profits by producing a

higher quantity than the agreed amount.

12. The MOST common type of imperfectly competitive

market is

a. monopolistic competition

b. cartel

c. monopoly

d. monopsony

e. oligopoly

13. In a monopolistic competitive market,

a. many firms sell completely differentiated

products

b. one firm sells one product

c. many firms sell slightly differentiated products

d. one firm sells several differentiated products

e. many firms sell identical products

14. In the long-run, a monopolistically competitive firm will

a. earn zero economic profit

b. produce at a greater output compared to a

perfectly competitive firm

c. lose product distinction

d. produce at the level where price equals average

total cost

e. suffer a loss because of its advertising budget

15. Which statement about monopolistically competitive

markets is FALSE?

a. Firms do not possess market power.

b. There are no barriers to market entry.

c. Firms produce at the level where marginal

revenue equals marginal cost.

d. Social inefficiencies arise from this type of

market structure.

e. Firms seek to differentiate their products

through advertising.

ECON FOCUSED QUIZ 15 CREATIVE DESTRUCTION THROUGH PRIVATE RESPONSES TO EXTERNALITIES (PP. 45-48)

1. Why are producers willing to participate in a perfectly

competitive market and earn zero economic profit?

a. They wish to avoid government regulation.

b. They have resilience against market failure.

c. Their activities increase social welfare.

d. There is a high cost to leave the market.

e. Economic profits are a bonus.

2. How can self-interested firms create opportunities to

earn economic profits?

a. by not paying taxes

b. by trading with other firms

c. by escaping the constraints of competitive

markets

d. by creating incentive programs for employees

e. by utilizing vertical consolidation

3. Driven by the prospect of economic profit, firms aim to

establish market power through

a. lobbying

b. trading

c. renting

d. innovation

e. boycotts

4. Individuals who take on the risk of attempting to create

new products or services are

a. accountants

b. oligarchs

c. marketers

d. Chief Executive Officers

e. entrepreneurs

5. Patents allow someone who has made a scientific

innovation to operate a

a. legal monopoly

b. special interest group

c. business firm

d. cartel

e. commercial bank

6. Firms define the desirable characteristics of their

product and hold trade secrets in order to

a. differentiate their product

b. prevent government regulation

c. consolidate with another firm

d. prevent corporate espionage

e. maintain comparative advantage

7. Which factor both helps to create barriers to entry but

also breaks down existing market imperfections?

a. inflation

b. monopolies

c. trading

d. innovation

e. taxes

8. Whose impact did Joseph Schumpeter describe as a

type of “creative destruction”?

a. exporting firms

b. entrepreneurs

c. commercial banks

d. oligopolies

e. nonprofit organizations

9. Which circumstances cause competitive markets to fail

to produce socially desirable outcomes?

a. market failure

b. budget deficit

c. consumer fraud

d. market recession

e. shared consumption

10. Which of the following outcomes is produced when

one party’s actions affect another party without an

exchange of resources?

a. regulation

b. externality

c. penalty

d. elasticity

e. speculation

11. One of the two groups of causes that lead to market

failures is the

a. frictional unemployment

b. private investment spending

c. open market purchases

d. failure to establish private property rights

e. excessive deregulation

12. Goods and services whose ownerships cannot be

determined are

a. shareholder stocks

b. nondurable goods

c. public goods

d. durable goods

e. public works

FOCUSED QUIZ 15 PAGE 30 OF 74 DEMIDEC RESOURCES ©2015

13. If a firm’s good or service causes a negative externality,

then the

a. firm will voluntary increase supply beyond

market equilibrium

b. equilibrium supply is below the socially

optimum level

c. government must set a price ceiling

d. market price is below the socially optimum level

e. demand curve needs to be shifted by some

market force

14. Goods and services with negative externalities

a. always need government regulation

b. usually cease production

c. are easily resolved by private parties

d. are the cause of structural unemployment

e. have an equilibrium supply greater than socially

optimal

15. One example of a negative externality is

a. taxation

b. pollution

c. supply-chain restriction

d. inflation

e. money laundering

16. Monopolists have an incentive to find ways to

a. regulate cartels

b. price discriminate

c. maintain absolute advantage

d. encourage deflation

e. lower cyclic unemployment

17. Which of the following processes tends to break down

any cartel’s efforts to restrict output?

a. opportunities for private profit

b. externalities

c. U.S. government regulation

d. market failures

e. collective bargaining

18. Which of the following approaches is one possible

solution to the problem of externalities?

a. stop producing goods that cause negative

externalities

b. shifting consumption to substitute goods

c. combining the activities that produce the

externality within a single firm

d. letting the invisible hand of the market solve the

problem

e. allowing the government to set price floors for

the good

19. According to the Coase Theorem, the private market

should be able to resolve inefficiencies as long as

a. private property can be established

b. the externality benefits one of the parties

involved

c. the externality is negative

d. the parties can negotiate

e. the externality can be reversed

20. Which of the following statements is FALSE?

a. The existence of externalities creates incentives

for market participants to attempt to solve the

problems they create.

b. Externalities can have both positive and

negative consequences.

c. Public goods are developed when it is

impossible to establish private property rights.

d. In general, there will be too much of an activity

that generates negative externalities and too

little of an activity that generates positive

externalities.

e. The true social cost of production of a good

with a negative externality is equal to the

explicit cost plus the cost of treating the

negative externality.

ECON FOCUSED QUIZ 16 GOVERNMENT REGULATION THROUGH PUBLIC AND PRIVATE GOODS (PP. 48-52)

1. When conditions for the Coase Theorem are NOT met,

a. the price floor does not affect market

equilibrium

b. a firm will not receive a bank loan

c. the government may resolve the problem

d. the consumer pays the majority of the tax

e. a cartel will function like a monopoly

2. How can governments resolve externalities?

a. by increasing the money supply

b. by decreasing the discount rate

c. by imposing tariffs

d. by deregulating the stock market

e. by using taxes and subsidies

3. Who provides many public goods?

a. nonprofits

b. the government

c. private firms

d. the Federal Reserve

e. banks

4. Using taxes to remedy the effect of externalities is most

effective when

a. it is possible to eliminate the externality

b. it is possible to estimate the value of the

externality

c. the conditions for the Coase Theorem are met

d. property rights are able to be established

e. the externality only affects a small population of

individuals

5. If the value of an externality cannot be estimated, then

a. quotas are more effective than taxes

b. taxes provide no benefit

c. property rights are able to be established

d. the market produces at the socially optimum

level

e. a permit market must be created

6. The United States Environmental Protection Agency

auctioned off the rights to emit sulfur dioxide to the

highest bidders in order to deal with sulfur dioxide

emissions, thereby imposing a

a. fixed interest rate

b. quota

c. price floor

d. tax

e. price ceiling

7. When a public good is supported by advertising or

private donations, it is likely that

a. the supply will be too low

b. consumers will not purchase the good

c. the private market would more efficiently

distribute the resources

d. the marginal cost of production is high

e. consumers will be excluded

8. One possible solution to the tragedy of the commons

problem is to

a. create property rights of the jointly owned

resource

b. impose price ceilings on the disputed good

c. deregulate the market

d. invest in long term bonds and high yield debts

e. increase the money supply

9. If you eat a slice of pizza, then there is one less slice of

pizza for your friend. This relationship indicates that

pizza is a

a. transaction cost

b. net export

c. durable good

d. rival good

e. negative externality

10. Goods are differentiated by rivalry in consumption and

excludability in order to determine whether the goods

can be

a. supplied

b. regulated

c. purchased

d. privatized

e. traded

11. A radio broadcast is an example of a

a. common resource

b. private good

c. virtual company

d. non-rival good

e. physical capital

12. Which of the following examples illustrates that a good

is not always a rival good or a non-rival good?

a. gasoline

b. pizza

c. tornado sirens

d. national defense

e. highway usage

FOCUSED QUIZ 16 PAGE 32 OF 74 DEMIDEC RESOURCES ©2015

13. Collective goods

a. need little regulation

b. have high marginal costs of production

c. have a high degree of rivalry

d. have low excludability

e. can easily be privatized

14. Which of the following features do private goods and

common resources share?

a. high excludability

b. low excludability

c. high rivalry of consumption

d. low marginal costs of production

e. low scarcity

15. Pay-per-view movies are an example of a good that is

a. non-rival and non-excludable

b. non-rival and excludable

c. non-rival and non-excludable

d. neither rival nor non-rival and excludable

e. rival and excludable

16. Conventional private goods are characterized by being

a. neither rival nor non-rival

b. rival and non-excludable

c. non-rival and non-excludable

d. non-rival and excludable

e. rival and excludable

17. Goods that suffer from the tragedy of the commons are

a. rival and excludable

b. non-rival and excludable

c. neither rival nor non-rival

d. rival and non-excludable

e. non-rival and non-excludable

18. Goods that are rival in consumption but not owned are

the source of

a. non-rival products

b. unemployment

c. deficits

d. deflation

e. externalities

19. Goods that have a low degree of rivalry but a high

degree of excludability are

a. common resources

b. public goods

c. durable goods

d. collective goods

e. private goods

20. Haircuts are an example of

a. collective goods

b. public goods

c. private goods

d. common resources

e. durable goods

ECON FOCUSED QUIZ 17 INSTITUTIONS, ORGANIZATIONS, AND GOVERNMENT (PP. 52-54)

1. The actions of self-interested individuals are converted

into socially desirable outcomes with the help of

a. regulation

b. inflation

c. deregulation

d. markets

e. taxation

2. Circumstances in which producers have a degree of

market power depart from

a. perfect competition

b. underground economics

c. price stability

d. private markets

e. non-price competition

3. Economists believe that the differences in the standards

of living around the world come from differences in the

organization of

a. market economies

b. reserve requirements

c. public welfare

d. collective decision-making

e. private markets

4. Collective decision-making begins with

a. markets

b. institutions

c. organizations

d. stock exchanges

e. commodities

5. In economic terms, markets, marriage, and child-

rearing practices are all examples of

a. institutions

b. commodities

c. organizations

d. externalities

e. policies

6. In economic terms, commodity and stock exchanges,

corporations, and organized religion are examples of

a. organizations

b. markets

c. capital

d. firms

e. goods and services

7. The difference between institutions and organizations is

a. institutions structure human interaction

b. organizations consist of only formal rules and

structures

c. institutions do not participate in the free market

d. organizations structure institutions

e. the government does not regulate

organizations

8. Which important limitation constrains institutions and

organizations?

a. the reserve requirement

b. shareholder demands

c. market competition

d. unemployment

e. the need for voluntary cooperation

9. Which of the following factors often undermines

agreements to form institutions or organizations such

as cartels?

a. stockholders

b. taxation

c. regulation

d. self-interest

e. deregulation

10. The government, unlike private institutions and

organizations, can

a. contribute to public welfare

b. run deficits

c. tax its citizens

d. trade internationally

e. form oligopolies

11. Which government ability upholds taxation?

a. ability to use force

b. ability to set the national budget

c. ability to set the reserve requirement

d. ability to regulate firms

e. ability to set price floors

12. The whole system of voluntary exchange rests on

a. federal spending

b. the circulation of money

c. labor force mobility

d. government protection of national security

e. a system of private property

FOCUSED QUIZ 17 PAGE 34 OF 74 DEMIDEC RESOURCES ©2015

13. Government can correct

a. substitute product problems

b. tax deductions

c. market failures

d. productivity problems

e. large firm problems

14. Individuals would be LESS likely to enter into contracts

without

a. inflation

b. standard currency

c. sales tax

d. government enforcement

e. opportunity costs

15. Government employees are self-interested economic

agents, which may lead to

a. innovative economic systems

b. unconstrained government

c. structural unemployment

d. inefficiencies and corruption

e. greater voluntary cooperation

16. In establishing government, all citizens give up a small

amount of

a. individual autonomy

b. opportunity benefit

c. individual security

d. freedom of thought

e. property rights

17. For pork barrel projects to earn the support of a

majority of legislators, legislators often engage in

a. lobbying

b. contracts

c. logrolling

d. speculation

e. collusion

18. Socially unproductive activities that direct economic

benefits to one party instead of another are called

a. side effects

b. free enterprise

c. risk reduction

d. rent seeking

e. non-rival products

19. Which of the following statements is true about the

collective decision-making process?

a. It is involuntary.

b. It is usually informal.

c. It is controlled by the government.

d. It usually begins with institutions.

e. It is observed mainly in cartels.

20. In the US, which of the following powers is reserved for

the government?

a. prevention of corruption

b. power to create monopolies

c. regulation of business

d. application of force

e. power to protect human rights

ECON FOCUSED QUIZ 18 SECTION II SUMMARY (PP. 54-55)

1. Externalities or breakdowns in the system of private

property cause

a. market failures

b. monopolies

c. unemployment

d. imperfect competition

e. inflation

2. All buyers and sellers of a specific good or service form

a. a market

b. oligopoly

c. monopoly

d. normative economics

e. firm

3. A situation in which there are a large number of well-

informed buyers and sellers is a(n)

a. monopoly

b. externality market

c. imperfect market

d. market failure

e. perfectly competitive market

4. According to the law of demand,

a. the quantity demanded is negatively related to

the price

b. the quantity demanded changes as consumer

expectations change

c. perfectly competitive markets have elastic

demand

d. perfectly competitive markets have inelastic

demand

e. supply does not affect demand

5. Demand depends on all of these categories EXCEPT

a. supply

b. income

c. the number of buyers

d. the prices of related goods

e. expectations

6. According to the law of supply,

a. the quantity supplied is a positive function of

the price

b. supply is independent of quantity

c. the quantity supplied is a negative function of

the price

d. imperfect markets have inelastic supply

e. supply is always inelastic

7. Supply depends on all of these categories EXCEPT

a. the prices of inputs

b. the number of sellers

c. the technology used to produce the good or

service

d. demand

e. expectations

8. Imperfect competition gives rise to economic profits,

which encourages

a. innovation

b. inflation

c. lobbying

d. rent seeking

e. market failure

9. The competitive market equilibrium maximizes

a. use of public goods

b. externalities

c. total surplus

d. rent seeking

e. opportunity cost

10. Which measure indicates the responsiveness of supply

and demand to price changes?

a. GDP

b. Coase Theorem

c. elasticity

d. potential output

e. equilibrium

11. A government might intervene in a market in all of the

following ways EXCEPT

a. offering subsidies

b. setting price floors

c. imposing taxes

d. providing public goods

e. setting price ceilings

12. Imperfect competition arises because of

a. unemployment

b. inflation

c. trade

d. barriers to entry

e. economic growth

FOCUSED QUIZ 18 PAGE 36 OF 74 DEMIDEC RESOURCES ©2015

13. Which of the following categories of economic activity

may provide some gains, but often draws opposition?

a. free trade

b. isolated economy

c. pork barrel politics

d. monopolistic competition

e. structural unemployment

14. Economic actors that supply goods and services and

seek to maximize their economic profits are called

a. marketers

b. governments

c. organizations

d. firms

e. institutions

15. In competitive markets, the entry and exit of firms

insures that the firms in those markets

a. form cartels

b. innovate rapidly

c. always have customers

d. earn zero economic profits

e. make economic profit

ECON FOCUSED QUIZ 19 MACROECONOMICS ISSUES AND ECONOMIC GROWTH (PP. 56-59)

1. In the period between 1900 and 2005, the average

output per person in the United States has increased by

a factor of

a. 4

b. 1

c. 2

d. 8

e. 0

2. Which of the following is NOT one of the topics that

macroeconomics addresses?

a. unemployment

b. price level

c. size of economies

d. supply and demand of individual markets

e. inflation

3. Real Gross Domestic Product is adjusted to remove the

effects of

a. investment

b. underground economies

c. inflation

d. international trade

e. economic growth

4. Which factor limits consumption at the level of the

overall economy?

a. regulation

b. population

c. unemployment per capita

d. taxation

e. production

5. Which of the following factors is one reason for the

rising level of production in the United States?

a. increased outsourcing

b. growth in population

c. post-Great Depression reforms

d. increase in lobbying

e. inflation of the Euro

6. The average output per person of a country is

measured by

a. gross national product

b. bona fide output

c. gross domestic product per capita

d. household net national product

e. production possibility frontier

7. Average labor productivity is total output divided by

total number of

a. people

b. firms

c. hours worked

d. suppliers

e. workers

8. Which indicator BEST tracks economic growth?

a. changes in the level of unemployment

b. changes in household income

c. changes in real GDP

d. changes in the consumer price index

e. changes in nominal GDP

9. Which of the following countries has the LOWEST gross

domestic product?

a. China

b. Ghana

c. Japan

d. United States

e. Germany

10. The economy’s total output divided by the number of

workers employed is the

a. per capita income

b. civilian labor force

c. marginal product of labor

d. GDP deflator

e. average labor productivity

11. GDP per capita measures output per

a. year

b. worker

c. person

d. decade

e. month

12. Which of the following measures does NOT increase

with higher levels of production?

a. fertility

b. life spans

c. internet access

d. healthcare

e. literacy

ECON FOCUSED QUIZ 20 RECESSIONS AND EXPANSIONS THROUGH INTERNATIONAL TRADE (PP. 59-62)

1. The period between a trough and a peak in economic

activity is called a(n)

a. advantage

b. economic quarter

c. capital gain

d. expansion

e. surplus period

2. The period between 1929 to 1933 was history’s largest

a. deregulation era

b. depression

c. world conflict

d. trade surplus

e. expansion

3. The fluctuations in expansion and recession are called

a. business cycles

b. market changes

c. economic shifts

d. inflations

e. employment cycles

4. One of the main focuses of macroeconomic policy is to

a. increase international trade

b. reduce recessions

c. reduce collusion

d. meet quotas

e. run trade surpluses

5. The percentage of the labor force that would like to

work but cannot find work is the

a. standard of employment

b. percentage of human capital

c. unemployment rate

d. inflation rate

e. default employment

6. The labor force is made up of all individuals who are

a. full-time workers

b. employed

c. suppliers

d. employed or unemployed

e. working for profitable organizations

7. An increase in the price of a particular good causes

consumers to

a. invest in commodities of that good

b. reduce consumption

c. decrease savings

d. increase demand

e. purchase more complementary products

8. An increase in the price of all goods is called

a. inflation

b. a market increase

c. growth

d. an impulse gain

e. economic expansion

9. Until the late 1950s, the United States generally

a. ran a trade surplus

b. saw little to no economic growth

c. saw a high rate of inflation

d. was in a recession

e. faced economic uncertainty

10. National economies are tied together with

a. tourism

b. international trade

c. currency exchange rates

d. waterway agreements

e. inflation policies

11. Which of the following statements concerning the

unemployment rate is FALSE?

a. The unemployment rate falls during expansions.

b. The unemployment rate was highest during the

Great Depression.

c. The unemployment rate rises during recessions.

d. There are three types of unemployment rates.

e. The unemployment rate is sometimes zero.

12. In which period was the annual rate of inflation in the

United States the HIGHEST?

a. 1916 to 1919

b. 2003 to 2006

c. 1946 to 1949

d. 1928 to 1931

e. 1979 to 1982

ECON FOCUSED QUIZ 21 MEASURING TOTAL OUTPUT THROUGH EXPENDITURES EQUAL PRODUCTION (PP. 63-67)

1. Aggregation is

a. a comparison of individual markets

b. the analysis of the details of the market

economy

c. the measure of a nation’s total output

d. the overall economic behavior condensed to

one variable

e. an important focus in microeconomics

2. The total output of a national economy is called

a. net domestic product

b. gross domestic product

c. trade surplus

d. expansion

e. aggregate supply and demand

3. Which of the following types of goods are included in

calculating GDP?

a. intermediate goods and capital goods

b. final goods, intermediate goods, and capital

goods

c. final goods and normal goods

d. final goods and intermediate goods

e. final goods and capital goods

4. A simplified economy produces two goods. Good 1

sells 10 units for $4 each, and Good 2 sells 15 units for

$2 each. The GDP of this economy is equal to

a. $38

b. $70

c. $75

d. $6

e. $50

5. Materials used in the production of another product

are called

a. final goods

b. capital goods

c. normal goods

d. intermediate goods

e. inferior goods

6. Vertical integration is

a. one company’s provision of intermediate

products to another company’s final products

b. a company’s ownership of producing both final

products and its required intermediate products

c. the purchase of competitor companies to

develop a monopoly

d. collaboration between two companies to trade

materials

e. the purchase of capital goods to increase

production

7. Capital goods are goods that are

a. used to produce other goods but are not used

up in production

b. rival to the demand for final goods

c. purchased by the final consumers

d. used to produce other goods and are used up

in production

e. related to the buyers’ income

8. The specified time period for GDP calculations is usually

a. annually or quarterly

b. every 10 years

c. monthly or bimonthly

d. weekly

e. daily

9. A thirty-year old house is sold for $200,000 and the real

estate agent receives 5% commission. The contribution

to GDP is equal to

a. $210,000

b. $200,000

c. $190,000

d. $10,000

e. $50,000

10. Who was commissioned by the U.S. Department of

Commerce to create a method of computing total

output?

a. Simon Kuznets

b. Sir William Petty

c. Adam Smith

d. William Stanley Jevons

e. John Maynard Keynes

FOCUSED QUIZ 21 PAGE 40 OF 74 DEMIDEC RESOURCES ©2015

11. Which of the following statements does NOT express a

limitation of GDP?

a. difficulty of deciding whether a good is final or

intermediate

b. inability to include infrastructure investment

c. inability to include externalities

d. exclusion of non-market activity

e. lack of inclusion of the national defense budget

12. An effect of women entering the labor force is a(n)

a. decrease in commercial housecleaning

b. increase in GDP

c. decline in commercial childcare

d. shift from market to non-market activity

e. increase in total production

13. Investment is the purchase of

a. production to make sellable products

b. goods by households except for housing

c. capital goods by firms and housing by

households

d. financial assets such as stocks and bonds

e. goods by the government

14. The difference between the purchase of domestically

produced goods by foreigners and the purchase of

foreign produced goods by domestic consumers is

equal to

a. government purchases

b. consumption

c. gross domestic product

d. net exports

e. investment

15. Gross domestic product is NOT equal to

a. expenditures

b. total output

c. investment

d. income

e. production

ECON FOCUSED QUIZ 22 MEASURING INFLATION (PP. 68-70)

1. The Consumer Price Index measures

a. scarcity

b. unemployment

c. externalities

d. inflation

e. elasticity

2. How is the Consumer Price Index measured?

a. by dividing the real GDP from the nominal GDP

b. by finding the percentage change in GDP

c. by determining the cost of a basket of goods

and services

d. by adding up the total consumption

e. by calculating the average consumption per

person

3. Consumer Price Index in year t is equal to

a. cost of bundle in year t / cost of bundle in base

year

b. cost of bundle in base year / cost of bundle in

year t

c. 100 x (cost of bundle in year t) / (cost of bundle

in base year)

d. 100 / (cost of bundle in year t) / (cost of bundle

in base year)

e. 100 x (cost of bundle in base year) / (cost of

bundle in year t)

4. Which of the following factors MOST influences the

impact of an item’s price change on the Consumer

Price Index?

a. quantity

b. elasticity

c. excludability

d. scarcity

e. rivalry

5. The Consumer Price Index can be used to determine

changes in

a. gross domestic product

b. output gap

c. unemployment rate

d. velocity of money

e. cost of living

6. Using the Consumer Price Index can lead to a(n)

a. failure to account for changing rates

b. overstatement of true increases in price

c. understatement of total consumption

d. focus on one economic class

e. inability to calculate inflation rate

7. Which of the following factors is NOT a reason for the

Consumer Price Index bias?

a. frequent additions to the basket

b. substitution bias

c. technological advancements

d. new goods and services

e. unmeasured quality change

8. Which of the following modifications is an example of

unmeasured quality change?

a. inventions like the cell phone

b. technological change to products

c. additions of services in the basket

d. shift to less expensive goods

e. achieving the same wellbeing at a lower cost

9. Who headed a commission that concluded the rate of

error in price inflation by the Consumer Price Index?

a. Vilfredo Pareto

b. Michael Boskin

c. Simon Kuznets

d. William Stanley Jevons

e. John Maynard Keynes

10. By which percentage was the Consumer Price Index

overstated in 1996?

a. 2.5%

b. 1.3%

c. 7.1%

d. 0.2%

e. 5.8%

11. How is the GDP deflator defined?

a. W + I + R + P

b. nominal GDP = (GDP deflator/100) x (real GDP)

c. 1/ 1-MPC

d. 1/ RRR

e. (current GDP – last year’s GDP) / last Year’s GDP

x 100

FOCUSED QUIZ 22 PAGE 42 OF 74 DEMIDEC RESOURCES ©2015

12. In comparison to the Consumer Price Index, the GDP

deflator is

a. less volatile

b. less flexible

c. less predictable

d. more diverse

e. more accurate

13. Which of the following factors is a reason that CPI rose

more than the GDP deflator in the 1970s?

a. beginning of deregulation

b. introduction of personal computing technology

c. distrust in the government

d. rising oil prices

e. widespread inflation

14. According to both the CPI and the GDP deflator, the

cost of living was MOST stable during the

a. 2000s

b. 1970s

c. 1960s

d. 1980s

e. 1990s

15. In 2006, a bundle of two pants, three t-shirts, and one

pair of shoes cost approximately

a. 1.5 times as much as it did in 2000

b. 1.75 times as much as it did in 2000

c. 2 times as much as it did in 2000

d. 1.25 times as much as it did in 2000

e. 2.25 times as much as it did in 2000

ECON FOCUSED QUIZ 23 UNEMPLOYMENT THROUGH CYCLICAL UNEMPLOYMENT (PP. 70-71)

1. Which of the following circumstances generally means

that workers feel secure in their jobs?

a. generous benefits

b. minimal taxes

c. low unemployment rate

d. relaxed immigration laws

e. low inflation

2. Which of the following groups is NOT included in the

labor force?

a. mothers looking after children at home

b. recently graduated students looking for a job

c. recently fired coal miners on the job market

d. part-time employees at fast food restaurants

e. full-time surgeons working in public hospitals

3. Which United States agency is responsible for

measuring the unemployment rate?

a. Census Bureau

b. Bureau of Labor Statistics

c. Bureau of Economic Analysis

d. Economics and Statistics Administration

e. Bureau of Industry and Security

4. The Bureau of Labor Statistics surveys approximately

60,000 households each month in order to calculate

a. the GDP

b. spending power

c. the unemployment rate

d. the discount rate

e. the inflation rate

5. Which of the following requirements must be met for

someone to be considered unemployed?

a. She must have made an effort to find paid

employment in the last four weeks.

b. She must not have earned income last week.

c. She must not have worked within the last year.

d. She must have been fired in the last two

months.

e. She must not have worked in the last two

weeks.

6. Which of the following people would MOST likely be

considered unemployed?

a. a recent graduate looking for a paying job

b. an engineer taking a two week unpaid vacation

c. a stay-at-home father not looking for work

d. a surgeon on a week-long sick leave

e. a student working part time for minimum wage

7. The labor force participation rate in the United States in

2009 was roughly

a. 66%

b. 87%

c. 60%

d. 50%

e. 80%

8. The ratio of those in the labor force to the working-age

population is called the

a. consumer employment index

b. labor force participation rate

c. employment power parity

d. population density

e. economic activity rate

9. For which of the following groups is the unemployment

rate the HIGHEST?

a. teenagers

b. college graduates

c. adults over 60 years of age

d. 20-year-olds

e. adults between the ages of 30 and 45

10. Which of the following groups would be experiencing

frictional unemployment?

a. part-time employees

b. new workers entering the labor force

c. laid-off employees in outdated industries

d. those working jobs below their level of

education

e. recently retired workers

11. The portion of total unemployment attributable to the

mismatch between job openings and job-seekers is

known as

a. cyclical unemployment

b. dynamic unemployment

c. underemployment

d. frictional unemployment

e. structural unemployment

12. Unemployment due to recessionary causes is called

a. dynamic unemployment

b. frictional unemployment

c. underemployment

d. cyclical unemployment

e. structural unemployment

ECON FOCUSED QUIZ 24 ECONOMIC GROWTH, PRODUCTIVITY, AND LIVING STANDARDS (PP. 71-75)

1. The phenomenon of sustained substantial economic

growth around the world began a little more than

a. twenty years ago

b. fifty years ago

c. three hundred years ago

d. one hundred years ago

e. two hundred years ago

2. Which of the following components is considered a

factor of production?

a. taxes

b. profits

c. labor

d. wages

e. rents

3. Households save their income primarily through

a. microloans

b. open operations

c. financial markets

d. investment

e. aggregate exchange

4. How does the government receive income from

households in the circular flow model?

a. interest

b. taxes

c. debts

d. donations

e. loans

5. The MOST influential reason why there are differences

in GDP per person between nations is the level of

a. government interference

b. average labor productivity

c. natural resources

d. money inflation

e. literacy rate

6. Tools, machinery, and factories are examples of

a. physical capital

b. net exports

c. legal environment

d. economic growth

e. natural resources

7. How are physical capital and human capital different?

a. Human capital is intangible.

b. Improving human capital does not involve

opportunity cost.

c. Human capital is limited.

d. Improving human capital does not require

sacrificing current consumption.

e. Human capital is a fixed quantity in the short-

run.

8. How has average labor productivity increased

throughout history?

a. revisions in legal framework

b. increases in natural resources

c. changes in political environments

d. changes in worker incomes nationally

e. advances in technological knowledge

9. Who introduced the moving assembly line?

a. William Vanderbilt

b. Henry Ford

c. John D. Rockefeller

d. Thomas Edison

e. Andrew Carnegie

10. New knowledge is considered a

a. common resource

b. collective good

c. power good

d. public good

e. private good

ECON FOCUSED QUIZ 25 FINANCIAL MARKETS THROUGH MUTUAL FUNDS (PP. 75-76)

1. Economists use the term “investment” to describe the

purchase of new

a. mutual funds

b. bank accounts

c. capital equipment

d. bonds

e. stocks

2. Institutions through which individuals can supply funds

to those that wish to borrow for investment are called

a. bank markets

b. financial markets

c. supply markets

d. investment markets

e. stock markets

3. A bond is similar to a(n)

a. IOU certificate

b. front cash

c. partial ownership

d. principal amount

e. safe credit

4. A bond must be repaid at the date of

a. cost

b. maturity

c. payment

d. interest

e. longevity

5. The original amount borrowed through a bond is

known as the

a. origin

b. principal

c. capital

d. interest

e. price

6. Which aspect of a bond compensates lenders for risk?

a. time horizon

b. rating

c. interest rate

d. default rate

e. principal

7. How does a borrower default on a bond?

a. exchanging the bond for another

b. offering ownership in exchange

c. declaring bankruptcy

d. selling the bond

e. denying the payment of interest

8. Each share of common stock represents

a. a predicted return

b. debt owed to the shareholder

c. a unit of consumer surplus

d. partial ownership of a firm

e. a percentage of interest owed

9. Shareholders gain firm profits through the payments of

a. dividends

b. interest

c. stocks

d. credit

e. bonds

10. The sale of stocks is classified as

a. investment finance

b. debt finance

c. equity finance

d. surplus finance

e. mutual finance

11. Mutual funds are MOST attractive for their

a. low cost

b. diversification

c. predictability

d. guaranteed returns

e. avoidance of money managers

12. The price of a share of a stock depends MOST on the

a. the perceived risk of ownership

b. supply of and demand for shares

c. the rate at which the stocks are sold

d. prices of bonds

e. rate of interest earned by shareholders

ECON FOCUSED QUIZ 26 INVESTMENT IN AGGREGATE THROUGH COORDINATING SAVING (PP. 77-79)

1. All of the following components directly contribute to

GDP EXCEPT

a. net exports

b. net interest payments

c. consumption

d. government spending

e. investment

2. The expression (C+I+G) represents

a. national savings in an open economy

b. expenditures in an open economy

c. private savings in a closed economy

d. income in a closed economy

e. government savings in a closed economy

3. The expression (Y-C-T) represents

a. national savings in an open economy

b. income in a closed economy

c. private savings in a closed economy

d. expenditures in an open economy

e. government savings in a closed economy

4. Which of the following positive economic statements is

TRUE if the expression (T-G) yields a negative value?

a. The government is running a trade surplus.

b. The country will soon default on its loans as

GDP is negative.

c. The government should reduce its discretionary

spending.

d. A more progressive taxation system should be

implemented to increase tax revenues.

e. The government is running a budget deficit.

5. Which of the following statements BEST explains why

government deficit spending slows the long-term

growth rate of an economy?

a. It reduces private investment in capital goods.

b. It reduces the interest rate for savings.

c. It decreases the value of the net exports

component of GDP.

d. It worsens a government’s credit rating.

e. It causes political instability, resulting in an

increase in unproductive rent-seeking activities.

6. If Alpacanada, a country in an open economy, has $60

billion in national savings and net capital outflows of

$15 billion, then its total investment equals

a. $75 billion

b. $30 billion

c. $45 billion

d. $15 billion

e. $60 billion

7. To calculate a nation’s net capital outflows

a. subtract the total value of the net exports

component of GDP from the investment

component of GDP

b. subtract the total value of the net interest

payments component of GDP from the value of

the net exports component of GDP

c. add the value of the investment component of

GDP and the value of the net exports

component of GDP

d. subtract the total value of domestic assets

purchased by foreigners from the total value of

foreign assets purchased by domestic citizens

e. add the total value of domestic assets

purchased by foreigners and the total value of

foreign assets purchased by domestic citizens

8. InBev is a brewing company owned by investors from

Brazil and

a. Argentina

b. Portugal

c. Belgium

d. Spain

e. Chile

9. Which major American brewing company did InBev

purchase in 2008?

a. Anheuser-Busch

b. Heineken

c. Samuel Adams

d. Coors

e. Miller

10. Which of the following hypothetical actions is an

example of a foreign direct investment?

a. Toyota purchases Apple stock

b. Mitsubishi purchases the Empire State Building

c. GM buys Chinese government bonds

d. the U.S. government purchases Toyota stock

e. Chinese consumers purchase Hewlett-Packard

computers for personal home use

FOCUSED QUIZ 26 PAGE 47 OF 74 DEMIDEC RESOURCES ©2015

11. In an open economy, a country’s net exports ALWAYS

equal its

a. net capital outflows

b. national income minus its national savings

c. national income minus its consumption

d. national savings

e. national income

12. If the national income of a hypothetical country in an

open economy is $100 billion, its total consumption is

$30 billion, its total investment is $10 billion, its net

interest payments are $20 billion, and its net capital

outflows are $25 billion, then its total government

spending is

a. $35 billion

b. $45 billion

c. $55 billion

d. $15 billion

e. $25 billion

13. Which of the following statements BEST explains why

affluent, self-interested Americans invest in factories in

located in India?

a. International trade law requires that American

capitalists must invest some of their money in

foreign businesses.

b. They expect that investing in India will enable

them to consume more goods and services in

the future.

c. They wish to help the impoverished Indian

people by giving money to Indian factories.

d. They hope to reduce the interest rate paid in the

Indian market for savings.

e. The United States government often pressures

American capitalists to invest their money

overseas.

14. On a graph depicting the market for savings, the

variable graphed on the y-axis is the

a. real interest rate

b. nominal interest rate

c. federal funds rate

d. inflation rate

e. reserve ratio

15. If the real interest rate of a loan is 7% and the rate of

inflation is 6%, then the nominal interest rate is

a. 7%

b. 6%

c. 1%

d. 8%

e. 13%

16. The supply curve in the market for savings is

a. backward bending

b. vertical

c. downward sloping

d. horizontal

e. upward sloping

17. The demand curve in the market for savings is

a. horizontal

b. downward sloping

c. backward bending

d. vertical

e. upward sloping

18. How would a new technological innovation that allows

machines to produce higher quality products affect the

market for savings?

a. It would increase the equilibrium required

reserve ratio.

b. It would increase the equilibrium real interest

rate.

c. It would decrease the equilibrium discount rate.

d. It would decrease the equilibrium federal funds

rate.

e. It would decrease the equilibrium nominal

interest rate.

19. How will the market for savings be affected if the

government begins to deficit spend?

a. The quantity supplied of savings will decrease.

b. The supply of savings will increase.

c. The supply of savings will decrease.

d. The demand for savings will decrease.

e. The quantity demanded of savings will decrease.

20. How would a tax hike on income made from financial

markets affect the market for savings?

a. increase the equilibrium required reserve ratio

b. increase the equilibrium real interest rate

c. decrease the equilibrium federal funds rate

d. decrease the equilibrium discount rate

e. decrease the equilibrium nominal interest rate

ECON FOCUSED QUIZ 27 WHAT IS MONEY? THROUGH MONEY AND INFLATION IN THE LONG RUN (PP. 79-87)

1. Which of the following assets is considered to be a

viable form of money?

a. a house

b. a painting

c. government bonds

d. gold

e. stock

2. Which of the following statements BEST explains why

many people hold currency instead of placing all of

their wealth in a savings account?

a. Currency is a form of money while savings

deposits are not.

b. Savings deposits are highly risky assets.

c. Currency can be exchanged for goods and

services quickly.

d. Currency tends to gain value at a fairly constant

rate.

e. Currency earns a higher rate of return than

savings deposits.

3. A new nation, the United States of Alpaca, has chosen

to use apples as a form of money. Which of the

following reasons BEST explains why apples are a poor

choice of money?

a. Apples are a form of commodity money rather

than fiat money.

b. Apples lack intrinsic value as a form of money.

c. Apples cannot function well as a medium of

exchange.

d. Apples cannot function well as a long-term

store of value.

e. The apple cannot function well as a unit of

account.

4. Which of the following assets is the MOST liquid?

a. a checking deposit

b. currency

c. stock

d. real estate

e. a savings deposit

5. All of the following assets are examples of commodity

money EXCEPT

a. silver

b. grain

c. cigarettes

d. euros

e. gold

6. All of the following assets are considered to be M1

money EXCEPT

a. savings deposits

b. checking deposits

c. cash

d. traveler’s checks

e. coins

7. How would an increase in the use of credit cards

influence the economy?

a. It would increase real GDP.

b. It would decrease the velocity of money.

c. It would increase the M2 money supply.

d. It would decrease the demand for money.

e. It would increase the M1 money supply.

8. Which of the following statements does NOT accurately

describe the Federal Reserve System?

a. It was created in 1933 to stimulate the economy

during the Great Depression.

b. Banks tend to avoid borrowing money from the

Federal Reserve unless they are desperate for

funds.

c. It is managed by seven governors who serve

fourteen year terms.

d. The Federal Reserve Board implements much of

its policy through its twelve regional banks.

e. Governors must be appointed by the President

and confirmed by the Senate.

9. Which Federal Reserve regional bank ALWAYS

possesses a voting member position on the Federal

Open Market Committee?

a. Denver

b. San Francisco

c. New York City

d. Atlanta

e. Dallas

10. The Federal Open Market Committee meets once every

a. six weeks

b. year

c. two weeks

d. two months

e. month

FOCUSED QUIZ 27 PAGE 49 OF 74 DEMIDEC RESOURCES ©2015

11. Which of the following values is the maximum amount

of increase in the money supply if the reserve ratio is

decreased from 0.5 to 0.1, the original money supply

was $400, and the public holds no currency?

a. $1600

b. $4000

c. $40

d. $160

e. $2000

12. If the reserve ratio is 0.2 and banks hold $50 in

reserves, then the money multiplier is

a. 60

b. 10

c. 5

d. 0.2

e. 50

13. If $120 billion of currency exists in the economy, the

public holds $50 billion in currency, the reserve ratio is

0.4, and banks hold no excess reserves, then the money

supply is

a. $225 billion

b. $100 billion

c. $275 billion

d. $90 billion

e. $350 billion

14. Which of the following quantities changes the LEAST

frequently?

a. discount rate

b. amount of currency in circulation

c. required reserve ratio

d. federal funds rate

e. money supply

15. For many years did the United States economy

experience annual deflation from 1960 to 2008?

a. 0

b. 12

c. 2

d. 6

e. 23

16. During which of the following time periods did the

price level in the United States economy fall by 16%?

a. 1946 to 1949

b. 1920 to 1922

c. 1907 to 1909

d. 2001 to 2003

e. 1929 to 1933

17. In the long-run, the supply curve in the market for

money is

a. vertical

b. horizontal

c. downward sloping

d. backward bending

e. upward sloping

18. In the long-run, the demand curve in the market for

money is

a. upward sloping

b. vertical

c. horizontal

d. downward sloping

e. backward bending

19. Which of the following long-run outcomes MUST result

if the money supply triples while the velocity of money

remains constant?

a. real GDP decreases by a factor of three

b. real GDP triples

c. price level triples

d. value of money triples

e. nominal GDP triples

20. An example of a real quantity is

a. 2000 dollars per computer

b. 1.36 dollars per euro

c. 1600 dollars per ounce of gold

d. 50 dollars per hour

e. 40 hours per computer

ECON FOCUSED QUIZ 28 CHARACTERISTICS OF SHORT-RUN THROUGH THE KEYNESIAN MODEL (PP. 87-97)

1. Business cycles began to occur around the

a. end of the nineteenth century

b. end of the eighteenth century

c. beginning of the twentieth century

d. beginning of the nineteenth century

e. middle of the nineteenth century

2. During which time period did the United States

economy experience the MOST rapid growth?

a. 1929 to 1933

b. 1946 to 1949

c. 1941 to 1945

d. 1920 to 1922

e. 1979 to 1982

3. After how many consecutive quarters of negative

economic growth will a recession typically be declared?

a. three

b. six

c. four

d. five

e. two

4. The institution that officially declares whether the

economy is in a recession or expansion phase is the

a. Department of Commerce

b. Federal Reserve Board

c. Council of Economic Advisors

d. National Bureau of Economic Research

e. Bureau of Labor Statistics

5. During which of the following time periods did the

unemployment rate in the United States economy dip

beneath 3%?

a. 2004 to 2006

b. 1979 to 1982

c. 1993 to 1995

d. 1967 to 1969

e. 1971 to 1973

6. During which of the following time periods did the

inflation rate in the United States economy reach its

HIGHEST level since World War II?

a. 1993 to 1995

b. 1979 to 1981

c. 1967 to 1969

d. 2005 to 2007

e. 1971 to 1973

7. To calculate the natural rate of unemployment

a. add structural unemployment and seasonal

unemployment

b. subtract structural unemployment from total

unemployment

c. add frictional unemployment and structural

unemployment

d. add frictional unemployment and seasonal

unemployment

e. subtract frictional unemployment from total

unemployment

8. The outcome MOST likely to occur if a change in

societal values results in a permanent mass exodus of

women from the workplace is a(n)

a. increase in cyclical unemployment

b. increase in frictional unemployment

c. increase in structural unemployment

d. decrease in structural unemployment

e. decrease in cyclical unemployment

9. Arthur Okun was an economic advisor to President

a. Franklin D. Roosevelt

b. Harry S. Truman

c. Herbert Hoover

d. John F. Kennedy

e. Dwight Eisenhower

10. A team of economists notices that the current output in

Alpacanada is 4% below potential output. If the natural

rate of unemployment in Alpacanada is 5%, then the

current rate of unemployment in Alpacanada is

a. 1%

b. 9%

c. 5%

d. 7%

e. 3%

11. Which microeconomic assumption applies the LEAST

well to the short-run macroeconomic model?

a. rationality

b. trade-offs

c. scarcity

d. gains from trade

e. flexible prices

FOCUSED QUIZ 28 PAGE 51 OF 74 DEMIDEC RESOURCES ©2015

12. In the short-run, if aggregate demand increases, then

firms in the market will

a. increase the quantity of goods supplied

b. exit the market

c. decrease the price for goods

d. increase the price for goods

e. decrease the quantity of goods supplied

13. All of the following purchases may contribute to the

consumption component of aggregate demand EXCEPT

a

a. personal computer

b. pepperoni pizza

c. hair cut

d. new house

e. new automobile

14. Which expenditure contributes to the government

spending component of aggregate demand?

a. unemployment insurance payments

b. the purchase of Chinese bonds

c. interest payments on government debt to China

d. Social Security payments

e. the purchase of a B-52 bomber for the United

States military

15. The current output of the economy in the United States

of Alpaca matches its potential output. In the long-run,

an increase in aggregate demand would MOST likely

result in a(n)

a. decrease in the natural rate of unemployment

b. increase in the price level

c. increase in nominal GDP

d. increase in the natural rate of unemployment

e. increase in real GDP

16. This 1936 John Maynard Keynes book explained short-

run economic fluctuations and established the

Keynesian model.

a. A Tract on Monetary Reform

b. The General Theory of Employment, Interest, and

Money

c. Economic Possibilities for Our Grand Children

d. The End of Laissez-Faire

e. A Treatise on Money: The Pure Theory of Money

and the Applied Theory of Money

17. The variable an economist plots on the x-axis of the

Keynesian model is

a. price level

b. nominal GDP

c. real GDP

d. time

e. nominal interest rate

18. In the Keynesian model, a typical short-run aggregate

supply curve is

a. vertical

b. downward sloping

c. upward sloping

d. backward bending

e. horizontal

19. In the Keynesian model, a typical long-run aggregate

supply curve is

a. backward bending

b. upward sloping

c. downward sloping

d. horizontal

e. vertical

20. In the Keynesian model, a typical aggregate demand

curve is

a. vertical

b. horizontal

c. downward sloping

d. upward sloping

e. backward bending

ECON FOCUSED QUIZ 29 AGGREGATE DEMAND CURVE THROUGH AGGREGATE SUPPLY CURVE (PP. 93-95)

1. If the price level of the economy doubles, real GDP

decreases by a factor of two, and the money supply

remains constant, then the velocity of money

a. decreases by a factor of four

b. quadruples

c. remains constant

d. decreases by a factor of two

e. doubles

2. A typical aggregate demand curve is

a. vertical

b. horizontal

c. backward bending

d. downward sloping

e. upward sloping

3. An increase in the price level leads to an increase in the

a. quantity of savings

b. real interest rate in the market for savings

c. quantity of government bonds demanded

d. quantity of consumption spending

e. quantity of investment spending

4. Which of the following statements BEST explains the

effect that a decrease in the price level in the British

economy will have on the United States economy?

a. It will decrease aggregate demand.

b. It will increase aggregate demand.

c. It will decrease short-run aggregate supply.

d. It will increase long-run aggregate supply.

e. It will increase short-run aggregate supply.

5. How will the short-run equilibrium price level and real

GDP change if investment spending increases?

a. The equilibrium price level will decrease while

real GDP will increase.

b. The equilibrium price level will increase while

real GDP will decrease.

c. Both the equilibrium price level and real GDP

will decrease.

d. The equilibrium price level will decrease while

real GDP will remain constant.

e. Both the equilibrium price level and real GDP

will increase.

6. Economically, the September 11, 2001 attacks against

the Twin Towers and the Pentagon resulted in a(n)

a. decrease in short-run aggregate supply

b. increase in aggregate demand

c. increase in short-run aggregate supply

d. increase in long-run aggregate supply

e. decrease in aggregate demand

7. The net change MOST likely to occur if a government

with a balanced budget begins to deficit spend is a

a. leftward shift in the short-run aggregate supply

curve

b. leftward shift of the aggregate demand curve

c. rightward shift in the long-run aggregate supply

curve

d. rightward shift of the short-run aggregate

supply curve

e. rightward shift of the aggregate demand curve

8. A typical short-run aggregate supply curve in the

Keynesian model is

a. vertical

b. backward bending

c. horizontal

d. upward sloping

e. downward sloping

9. Which of the following outcomes will result if the price

of Pepsi rises but the price of Coke does not change,

assuming that Pepsi and Coke are substitutes?

a. The quantities supplied of Coke and Pepsi both

decrease.

b. The quantity of Coke supplied increases, while

the quantity of Pepsi supplied decreases.

c. The quantity of Pepsi supplied increases, while

the quantity of Coke supplied does not change.

d. The quantities supplied of Coke and Pepsi both

increase.

e. The quantity of Pepsi supplied increases, while

the quantity of Coke supplied decreases.

10. In the short-run, if anticipated sales exceed actual sales,

then MOST firms will

a. decrease production without changing their

prices

b. decrease both their level of production and their

prices

c. increase production without changing their

prices

d. decrease their prices

e. increase their prices

FOCUSED QUIZ 29 PAGE 53 OF 74 DEMIDEC RESOURCES ©2015

11. In the long-run, if actual output exceeds potential

output, then MOST firms will

a. increase production without changing their

prices

b. decrease production without changing their

prices

c. decrease their prices

d. increase both their level of production and their

prices

e. increase their prices

12. A decrease in the price level producers expect will

MOST likely result in a

a. leftward shift in the aggregate demand curve

b. leftward shift in the long-run aggregate supply

curve

c. rightward shift of the short-run aggregate

supply curve

d. rightward shift in the long-run aggregate supply

curve

e. leftward shift of the short-run aggregate supply

curve

13. A decrease in the price level producers expect will

MOST likely result in a new equilibrium point in the

Keynesian model with a

a. lower real GDP and a lower price level

b. higher real GDP and a lower price level

c. higher real GDP and a higher price level

d. lower real GDP and a higher price level

e. higher real GDP but the same price level

14. An increase in the price level producers expect will

MOST likely result in a new equilibrium point in the

Keynesian model with a

a. lower real GDP and a lower price level

b. higher real GDP and a higher price level

c. higher real GDP and a lower price level

d. lower real GDP and a higher price level

e. lower real GDP but the same price level

15. A series of tornadoes destroys half of the annual grain

crop in the United States of Alpaca. The result is a

a. rightward shift in the long-run aggregate supply

curve

b. leftward shift in the short-run aggregate supply

curve

c. rightward shift in the aggregate demand curve

d. rightward shift in the short-run aggregate

supply curve

e. leftward shift in the aggregate demand curve

16. A series of tornadoes destroys half of the annual grain

crop in the United States of Alpaca. The result is a new

equilibrium point in the Keynesian model with a

a. higher price level and a higher real GDP

b. higher price level and a lower real GDP

c. lower price level and the same real GDP

d. lower price level and a higher real GDP

e. lower price level and a lower real GDP

17. An unusually long and productive agricultural growing

season nationwide will MOST likely result in a(n)

a. increase in long-run aggregate supply

b. increase in short-run aggregate supply

c. decrease in short-run aggregate supply

d. increase in aggregate demand

e. decrease in long-run aggregate supply

18. An unusually long and productive agricultural growing

season nationwide will MOST likely result in a new

equilibrium point in the Keynesian model with a

a. higher price level and a higher real GDP

b. higher price level and a lower real GDP

c. higher real GDP and the same price level

d. lower price level and a higher real GDP

e. lower price level and a lower real GDP

19. Economists attribute the dramatic rise in the price level

in 1973 PRIMARILY to

a. the Vietnam War

b. a sudden spike in consumer demand

c. an increase in government spending

d. an OPEC-led oil embargo

e. widespread crop failure

20. How did the stock market crash of 1929 DIRECTLY

affect the United States economy?

a. It decreased aggregate demand.

b. It increased aggregate demand.

c. It decreased short-run aggregate supply.

d. It increased short-run aggregate supply.

e. It decreased long-run aggregate supply.

ECON FOCUSED QUIZ 30 KEYNESIAN MODEL THROUGH USING FISCAL AND MONETARY POLICY (PP. 95-100)

1. How would an economist calculate the unemployment

rate of an economy whose actual output equals its

potential output?

a. add frictional unemployment to structural

unemployment

b. subtract cyclical unemployment from structural

unemployment

c. subtract structural unemployment from cyclical

unemployment

d. subtract frictional unemployment from cyclical

unemployment

e. add cyclical unemployment to frictional

unemployment

2. The PRIMARY cause of the 2001 recession in the United

States economy was a(n)

a. reduction in investment spending

b. reduction in United States exports

c. reduction in consumption spending

d. reduction in government spending

e. increase in the price of oil

3. In October of 2001, accounting fraud was discovered at

a. Enron

b. Chevron

c. Bear Stearns

d. Gazprom

e. JP Morgan Chase

4. When the economy slipped into recession in 2001, the

new short-run equilibrium point in the Keynesian model

was at

a. the original price level and the original level of real

GDP

b. a lower price level and a higher real GDP

c. a higher price level and a lower real GDP

d. a higher price level and a higher real GDP

e. a lower price level and a lower real GDP

5. Which of the following shifts played the LARGEST role in

the recovery of the United States economy from the

recession of 2001?

a. a leftward shift in aggregate demand

b. a rightward shift in aggregate demand

c. a leftward shift in short-run aggregate supply

d. a rightward shift in short-run aggregate supply

e. a leftward shift in long-run aggregate supply

6. After the United States recovered from the recession of

2001, the new long-run equilibrium point was at a

a. higher price level and a lower real GDP

b. lower price level but the original level of real GDP

c. lower price level and a higher real GDP

d. lower price level and a lower real GDP

e. higher price level and a higher real GDP

7. The PRIMARY cause of the 1973 recession in the United

States economy was a(n)

a. reduction in consumer spending

b. reduction in exports

c. increase in the price of oil

d. reduction in government spending

e. reduction in investment spending

8. When the economy slipped into a recession in 1973, the

new short-run equilibrium point in the Keynesian model

was at a

a. lower price but the original employment rate

b. higher price level and a lower employment rate

c. lower price level and a higher employment rate

d. higher price level and a higher employment rate

e. lower price level and a lower employment rate

9. Which of the following shifts played the LARGEST role in

the recovery of the United States economy from the

recession of 1973?

a. a leftward shift in long-run aggregate supply

b. a leftward shift in aggregate demand

c. a rightward shift in aggregate demand

d. a leftward shift in short-run aggregate supply

e. a rightward shift in short-run aggregate supply

10. After the United States recovered from the recession of

1973, the long-run equilibrium point was at

a. a higher price level and a higher employment rate

b. the original price level and the original

employment rate

c. a lower price level and the original employment

rate

d. a higher price level and the original employment

rate

e. a lower price level and a lower employment rate

11. Empirical evidence demonstrates that typical short-run

economic deviations from the general long-run trend tend

to last about

a. two to three months

b. three to five years

c. seven to ten years

d. one to three years

e. six months to a year

FOCUSED QUIZ 30 PAGE 55 OF 74 DEMIDEC RESOURCES ©2015

12. If the velocity of money in an economy increases by 2%,

the supply of money remains constant, and the potential

output of the economy increases by 4%, then, in the long-

run, the price level should

a. fall by approximately 2%

b. fall by approximately 6%

c. rise by approximately 2%

d. rise by approximately 6%

e. rise by approximately 4%

13. If no inflationary expectations exist in an economy and the

money supply shrinks, then economists will MOST likely

observe a(n)

a. decrease in short-run aggregate supply

b. increase in short-run aggregate supply

c. increase in long-run aggregate supply

d. decrease in aggregate demand

e. increase in aggregate demand

14. Which of the following statements BEST describes the

relative frequency of inflation and deflation in the United

States economy since World War II?

a. Deflation has occurred slightly more often than

inflation.

b. Inflation and deflation have occurred with

relatively equal frequency.

c. Inflation has occurred significantly more often than

deflation.

d. Inflation has occurred slightly more often than

deflation.

e. Deflation has occurred significantly more often

than inflation.

15. Which of the following outcomes will MOST likely result if

the people of a hypothetical nation, the United States of

Alpaca, grow accustomed to falling prices?

a. the short-run aggregate supply curve will shift

leftward while the demand curve will

simultaneously shift leftward

b. the long-run aggregate supply curve will shift

rightward while the demand curve will

simultaneously shift rightward

c. the short-run aggregate supply curve will shift

rightward while the aggregate demand curve will

simultaneously shift rightward

d. the aggregate demand curve will shift leftward

while the short-run aggregate supply curve will

simultaneously shift rightward

e. the aggregate demand curve will shift rightward

while the short-run aggregate supply curve will

simultaneously shift leftward

16. All of the following changes represent a shift in monetary

policy EXCEPT a(n)

a. decrease in the money supply

b. decrease in the discount rate

c. increase in the federal funds rate

d. increase in total government spending

e. increase in the required reserve ratio for banks

17. If the current output of an economy exceeds its potential

output, then an activist economist would MOST likely

propose that the government decrease

a. the discount rate

b. the required reserve ratio for banks

c. the quantity of bonds purchased by the Federal

Reserve

d. tax rates

e. the federal funds rate

18. The United States government’s estimates of GDP operate

on a lag of approximately

a. one month

b. three months

c. two years

d. six months

e. one year

19. Construction on a newly authorized government project is

MOST likely to begin

a. eighteen months after authorization

b. one month after authorization

c. ten months after authorization

d. two weeks after authorization

e. four months after authorization

20. When the government uses contractionary monetary

policy, the short-run result in the Keynesian model is a(n)

a. increase in the price level and a decrease in

potential output

b. decrease in the price level and a decrease in actual

output

c. increase in the price level and a decrease in actual

output

d. increase in the price level and an increase in actual

output

e. decrease in the price level and an increase in

actual output

ECON FOCUSED QUIZ 31 SECTION III SUMMARY (PP. 100-101)

1. Since 1900, the population of the United States has

grown by approximately

a. 100%

b. 200%

c. 300%

d. 400%

e. 500%

2. Since 1900, the real GDP of the United States economy

has grown by a factor of approximately

a. eight

b. sixteen

c. sixty-four

d. four

e. thirty-two

3. Which of the following statements BEST describes the

relative frequency of recessionary and expansionary

periods in the United States economy between 1945

and 2008?

a. Recessions and expansions occurred with

approximately equal frequency.

b. Expansionary periods occurred slightly more

often than recessionary periods.

c. Expansionary periods occurred significantly

more often than recessionary periods.

d. Recessionary periods occurred significantly

more often than expansionary periods.

e. Recessionary periods occurred slightly more

often than expansionary periods.

4. Which of the following statements BEST describes the

relative duration of recessionary and expansionary

periods in the United States economy between 1945

and 2008?

a. The average duration of recessions slightly

exceeded the average duration of expansions.

b. The average duration of recessions significantly

exceeded the average duration of expansions.

c. The average duration of expansions slightly

exceeded the average duration of recessions.

d. The average duration of expansions significantly

exceeded the average duration of recessions.

e. The average duration of expansions

approximately equaled the average duration of

recessions.

5. A discouraged worker without a job will cease to be

considered part of the labor force after he has stopped

actively attempting to obtain work for

a. one week

b. three weeks

c. four weeks

d. two weeks

e. three days

6. Which United States government agency calculates the

Consumer Price Index?

a. Bureau of Labor Statistics

b. Federal Reserve

c. Department of Commerce

d. National Bureau of Economic Research

e. Treasury

7. Which of the following worker demographics faced the

LOWEST unemployment rate in August of 2009?

a. adult women

b. teenagers

c. African-Americans

d. whites

e. adult men

8. All of the following countries enjoy a relatively high

GDP per capita due to their natural resources EXCEPT

a. Japan

b. Russia

c. Qatar

d. Kuwait

e. Saudi Arabia

9. Since 1900, the average labor productivity of the United

States economy has grown by a factor of approximately

a. two

b. sixteen

c. eight

d. thirty-two

e. four

10. The supply curve in the market for money is BEST

described as

a. horizontal

b. upward sloping

c. backward bending

d. vertical

e. downward sloping

ECON FOCUSED QUIZ 32 INDIAN ECONOMY: INTRODUCTION AND ECONOMY AT INDEPENDENCE (PP. 102-105)

1. Approximately which percentage of the world’s

economy did India comprise before 1800?

a. 31%

b. 24%

c. 10%

d. 2.5%

e. 17%

2. Which percentage of global GDP does India contribute

today?

a. 24%

b. 10%

c. 2.5%

d. 31%

e. 17%

3. Which percentage of the world’s population does India

comprise?

a. 29%

b. 34%

c. 17%

d. 41%

e. 24%

4. India’s per capita income in 2014 was approximately

a. $500

b. $3,500

c. $5,500

d. $2,500

e. $1,500

5. India’s economic policies in the 1950s are BEST

described as

a. semi-socialist

b. communist

c. libertarian

d. eclectic

e. social democratic

6. Which of the following major changes in India’s

economy occurred in the 1980s?

a. market liberalization

b. mass urbanization

c. introduction of GMOs

d. industrialization

e. development of service industries

7. Which of the following international circumstances

MOST contributed to India’s 1991 economic crisis?

a. political crisis

b. rising oil prices

c. poor weather conditions

d. collapse of the Soviet Union

e. American recession

8. By how many percentage points has India reduced

poverty from 1981 to 2005?

a. 10%

b. 50%

c. 30%

d. 20%

e. 80%

9. Which of the following regions has seen the greatest

reduction in poverty from 1981 to 2005?

a. Middle East

b. Sub-Saharan Africa

c. China

d. India

e. South America

10. The United Nations projects that, within the next fifteen

years, India will become the world’s

a. most highly populated nation

b. wealthiest nation

c. most industrialized nation

d. greatest consumer of beef

e. biggest nuclear threat

11. Which of the following religious groups remains the

MOST disadvantaged within India?

a. Sikhs

b. Buddhists

c. Parsis

d. Jains

e. Muslims

12. A caste is BEST described as a

a. type of tribe

b. religious grouping

c. cultural identity

d. geographical clan

e. form of social class

FOCUSED QUIZ 32 PAGE 58 OF 74 DEMIDEC RESOURCES ©2015

13. Which of the following Indian policies has existed for

the longest period?

a. Rural Electrification Scheme

b. Mid-Day Meal Scheme

c. Integrated Child Development Services

d. Public Distribution System

e. National Rural Employment Guarantee Act

14. The Mahatma Gandhi National Rural Employment

Guarantee Act serves to

a. ensure a minimum yearly employment

b. set a minimum wage for rural workers

c. guarantee farmers’ minimum income

d. guarantee one full-time job per household

e. create rural non-agricultural jobs

15. India’s Public Distribution System is primarily

concerned with the allocation of

a. oil

b. water

c. food

d. electricity

e. seeds

16. The Indian government introduced an integrated

service network in 1975 to address

a. transport infrastructure

b. rural infrastructure

c. caste equality

d. children’s needs

e. higher education

17. India’s Mid-Day Meal Scheme provides lunch for

a. Dalits

b. government laborers

c. widows

d. manual workers

e. primary school children

18. Approximately which percentage of India’s population

survived on less than $2 a day in 1983?

a. 85%

b. 95%

c. 40%

d. 70%

e. 60%

19. Approximately which percentage of India’s population

survived on less than $2 a day in 2014?

a. 70%

b. 40%

c. 85%

d. 60%

e. 55%

20. How did Great Britain FIRST establish a foothold in pre-

colonial India?

a. trading

b. partnership with France

c. political alliances

d. cultural exchange

e. conquest

21. Why did Great Britain formalize its colonial rule of India

after 1857?

a. It sought to suppress discontent amongst Indian

princes.

b. It wished to prevent challenges from other

colonial powers.

c. It feared further Indian uprisings.

d. It planned to develop its economy.

e. It wanted higher profits.

22. Which of the following roles did Mohandas Gandhi play

in India’s independence?

a. campaigned for caste equality

b. developed the idea of India as a nation

c. united various religious parties

d. led its decolonization movement

e. led its first government

23. India was last decolonized by

a. Great Britain

b. France

c. Portugal

d. the Netherlands

e. Spain

24. Which of the following aspects of a modern financial

system did India have in 1947?

a. gold reserves

b. floating currency rate

c. international corporations

d. Bretton Woods membership

e. stock exchange

25. Who was the first prime minister of India?

a. Narendra Modi

b. Richard Mountbatten

c. Mahatma Gandhi

d. Jawaharlal Nehru

e. Indira Gandhi

ECON FOCUSED QUIZ 33 INDIA’S ECONOMY IN 1947 THROUGH INDIA’S ECONOMY IN 2014 (PP. 105-115)

1. Which school of thought most influenced Jawaharlal

Nehru’s policies?

a. Maoist

b. Keynesian

c. Fabian

d. Stalinist

e. Hayekian

2. In India, government-owned companies initially

dominated the sector of

a. heavy industry

b. agriculture

c. light manufacturing

d. food distribution

e. textiles

3. Which of the following industries did the Indian

government nationalize between 1947 and 1960?

a. electricity

b. mining

c. oil

d. retail trade

e. banking

4. Nehru’s economic policies allowed only Indian small

businesses to specialize in goods such as

a. electronics

b. textile production

c. construction materials

d. machine tools

e. processed foods

5. Why did Jawaharlal Nehru discourage foreign

investment in India?

a. to prevent American pressure

b. to allow more gradual growth

c. to encourage local companies’ growth

d. to support government-backed investors

e. to avoid financial instability

6. Jawaharlal Nehru’s economic policies MOST

encouraged the formation of

a. major national corporations

b. regional companies

c. small family farms

d. integrated conglomerates

e. international businesses

7. Which of the following economic programs did the

Indian government introduce in 1951?

a. Public Distribution System

b. Child Development Scheme

c. Minimum Support Price

d. Five Year Plan

e. Subsidies Schedule

8. Which country MOST influenced the Indian

government’s economic policies under Nehru?

a. the Soviet Union

b. United States

c. Great Britain

d. China

e. Argentina

9. On which sector did India’s economy primarily depend

in the 1960s?

a. subsistence farming

b. salt extraction

c. natural gas production

d. textile production

e. coal mining

10. Which of the following liberalizations occurred in the

Indian economy during the 1970s and 1980s?

a. power utility privatization

b. foreign investment allowances

c. lifting of import restrictions on equipment

d. currency reforms

e. banking privatization

11. Which factor accounts for a sharp rise in global oil

prices in 1990?

a. political conflict

b. fears of peak oil

c. a weak American dollar

d. massive Chinese growth

e. an OPEC boycott

12. Why did India’s low export earnings pose a special

challenge in 1991?

a. It lacked foreign currency to pay debts.

b. It needed foreign currency to pay for higher

imports.

c. It surpassed its maximum trade deficit.

d. It violated the IMF’s loan terms.

e. It could not alter its currency peg.

FOCUSED QUIZ 33 PAGE 60 OF 74 DEMIDEC RESOURCES ©2015

13. India’s 1991 economic crisis took the form of

a. a stock market crash

b. food shortages

c. central bank insolvency

d. a lack of foreign currency reserves

e. the insurance industry collapse

14. Which of the following institutions made foreign

currency loans to India in 1991?

a. Alliance of Non-Aligned Countries

b. Comintern

c. International Monetary Fund

d. United States Federal Bank

e. World Bank

15. The International Monetary Fund made loans to India in

1991 on the condition that it

a. remove its currency peg

b. repay the loans within 10 years

c. privatize all government industries

d. make its currency fully exchangeable

e. liberalize its economy

16. India’s main unit of currency is the

a. rupiah

b. rupee

c. paise

d. mohur

e. ananas

17. How did India manage its currency before 1991?

a. relying on gold-backed valuation

b. setting a fixed exchange rate

c. setting a banded exchange rate

d. setting a free-floating exchange rate

e. linking it to a basket of currencies

18. In 1991, India changed its currency by

a. devaluing it

b. increasing its gold backing

c. making it fully convertible

d. tying its value to the American dollar

e. redenominating it

19. Which major infrastructural investment did India

introduce in 1999?

a. internet broadband

b. a nationwide electricity supply

c. a highway system

d. major port upgrades

e. a telecoms system

20. In the technology industry, the year 2000 was

associated with

a. fears of computer malfunctions

b. influx of investment

c. rise in computer purchases

d. installation of new undersea cables

e. expiration of broadband rights

21. In which of the following industries did India prove

dominant after 2000?

a. software engineering

b. life insurance

c. ship-building

d. retail trading

e. wireless infrastructure

22. In 2010, India’s economy grew

a. 14.2%

b. 3.5%

c. 4.9%

d. 7.6%

e. 10.3%

23. In 2012, India’s economy grew

a. 10.3%

b. 14.2%

c. 3.5%

d. 4.9%

e. 7.6%

24. Which of the following changes have spurred recent

hopes of Indian economic reforms?

a. agricultural drought

b. financial crisis

c. grassroots protests

d. new government

e. high unemployment

25. Which of the following factors MOST hinders India’s

economic growth?

a. insufficient regulations

b. unskilled manpower

c. barriers to export

d. widespread corruption

e. a lack of foreign investment

ECON FOCUSED QUIZ 34 INDIA’S ECONOMY IN 2014 THROUGH CONSTITUENTS OF AGRICULTURE (PP. 108-110)

1. Which rank does India hold in terms of the world’s

largest economies?

a. 10th

b. 15th

c. 2nd

d. 5th

e. 7th

2. How much was India’s economy worth in 2013?

a. $1.88 trillion

b. $1.2 trillion

c. $880 billion

d. $630 billion

e. $2.6 trillion

3. The definition of service industries does NOT include

a. communications

b. construction

c. education

d. food production

e. information technology

4. Which of the following sectors employs the LARGEST

share of Indian workers?

a. heavy industry

b. light manufacturing

c. government

d. services

e. agriculture

5. Which percentage of India’s GDP does agriculture

contribute?

a. 31%

b. 17%

c. 26%

d. 57%

e. 45%

6. Which percentage of India’s GDP does industry

contribute?

a. 57%

b. 35%

c. 26%

d. 49%

e. 17%

7. The service industry employs this percentage of

working Indians.

a. 20%

b. 31%

c. 47%

d. 15%

e. 41%

8. Which of the following sectors is MOST crucial to Indian

economic development?

a. agriculture

b. services

c. technology

d. heavy industry

e. manufacturing

9. India’s agriculture is MOST affected by

a. low soil yield

b. food hoarding

c. overpopulation

d. over-cultivation

e. food spoilage

10. The need for Indian manufacturing jobs will grow with

a. higher education rates

b. higher foreign investment

c. an aging population

d. the mechanization of agriculture

e. improved infrastructure

11. In which of the following factors does India MOST lag

other emerging economies?

a. access to technology

b. physical infrastructure

c. telecommunications service

d. child mortality rates

e. education levels

12. For which of the following reasons did India’s service

industry grow faster than other sectors?

a. lack of government regulation

b. high foreign investment

c. government incentives

d. global demand for services

e. targeted education policies

FOCUSED QUIZ 34 PAGE 62 OF 74 DEMIDEC RESOURCES ©2015

13. Approximately which share of Indian graduates is

thought to be workforce-ready?

a. two-thirds

b. one-quarter

c. three-quarters

d. one-third

e. one-half

14. How did the Indian government respond to insurance

scheme scandals in 2010?

a. It mandated minimum insurance payments.

b. It appointed an insurance commissioner.

c. It nationalized major insurers.

d. It reduced insurance industry margins.

e. It fined the companies involved.

15. Currently, the Indian government MOST hinders

business planning through

a. high tax rates

b. foreign trade restrictions

c. overregulation

d. corruption

e. an unstable regulatory environment

16. Which percentage of Indian GDP did life insurance

contribute in 2009?

a. 3.1%

b. 4.6%

c. 0.4%

d. 1.5%

e. 1.1%

17. On which of the following government actions does

India’s telecommunications sector currently depend?

a. approval of fiber broadband

b. auctioning of wireless capacity

c. removal of foreign investment caps

d. privatization of government companies

e. reforms to technological education

18. Who was elected India’s Prime Minister in May 2014?

a. Sonia Gandhi

b. Indira Gandhi

c. Mayawati

d. Narendra Modi

e. Amit Shah

19. In his election campaign, the new Indian Prime Minister

promised to focus on

a. low-skill service

b. technology

c. power generation

d. transport

e. high-yield agriculture

20. Which of the following Indian economic sectors offers

the HIGHEST potential for growth at present?

a. education

b. banking

c. food retail

d. insurance

e. hospitality

21. Which of the following institutions MOST contributed

to Indian agricultural growth after independence?

a. World Bank

b. International Monetary Fund

c. Rockefeller Foundation

d. Peace Corps

e. Comintern

22. Which of the following changes had the largest impact

during India’s Green Revolution?

a. improvement of food transport systems

b. cyclic crop planting

c. introduction of more durable crops

d. nutrition education

e. larger-scale farming

23. The White Revolution in India refers to a drastic shift in

a. crop production

b. education

c. politics

d. mining safety

e. milk production

24. Approximately which percentage of Indian agriculture

production is spoiled?

a. 40%

b. 60%

c. 78%

d. 15%

e. 26%

25. Which of the following factors MOST hinders food

security in India?

a. lack of market access

b. low-yielding crops

c. over-planting of export crops

d. lack of affordability

e. government distribution policies

ECON FOCUSED QUIZ 35 IMPEDIMENTS TO GROWTH THROUGH CONSTITUENTS OF MANUFACTURING (PP. 110-112)

1. An average Indian farm has a size of approximately

a. 1 acre

b. 15 acres

c. 3 acres

d. 300 acres

e. 30 acres

2. Which of the following factors LEAST contributes to

current shifts in Indian agriculture?

a. policy changes

b. technological improvements

c. rural emigration

d. corruption

e. reduced need for labor

3. In which of the following ways does India’s Minimum

Support Price MOST affect the economy?

a. altering food supply

b. inhibiting foreign investment

c. clogging transport infrastructures

d. contributing to malnutrition

e. preventing utility privatization

4. Approximately how many cubic meters of natural gas

reserves does India have?

a. 0.8 trillion

b. 200 billion

c. 1.4 trillion

d. 140 billion

e. 640 billion

5. Which of the following incentives do Indian politicians

MOST often promise?

a. construction jobs

b. subsidized food

c. transport subsidies

d. free electricity

e. political favors

6. In Indian agriculture, rationing electricity leads to

a. communications difficulties

b. difficulty in selling crops

c. an inability to process crop harvests

d. transport disruptions

e. a lack of irrigation supplies

7. How does the Indian government regulate agricultural

crop sales?

a. government-licensed physical markets

b. buyer subsidies

c. seed banks

d. regional harvest quotas

e. crop price bands

8. Why does the buyer possess leverage over the farmer

in Indian agricultural markets?

a. There are regional sale quotas.

b. Farmers fear food spoilage.

c. There are government mandates to sell.

d. Sellers have incomplete information.

e. Buyers possess monopolies on the market.

9. Crop losses after harvest in India are estimated to equal

up to

a. 35%

b. 7%

c. 29%

d. 18%

e. 40%

10. Which of the following changes would MOST benefit

India’s agriculture supply chain?

a. increasing the availability of information

b. improving storage systems

c. reducing middlemen

d. removing government licenses

e. improving telecommunications

11. In which of the following ways have

telecommunications improvements helped farmers?

a. politically mobilizing them

b. reducing price differentials

c. quickening field-to-market transport

d. informing them about best practices

e. enabling farming cooperatives

12. The term teledensity refers to the

a. density of phone coverage

b. number of phones per 100 people

c. degree of internet access

d. level of technological knowledge

e. miles of phone cable per acre

FOCUSED QUIZ 35 PAGE 64 OF 74 DEMIDEC RESOURCES ©2015

13. Rural areas in India have an average teledensity of

a. 23.7

b. 44.4

c. 70.2

d. 37.8

e. 93.5

14. Urban areas in India have an average teledensity of

a. 58.3

b. 145.6

c. 70.2

d. 185.2

e. 93.5

15. Most of India’s rainfall comes from

a. year-round light rains

b. coastal rains

c. northern rains

d. flash floods

e. seasonal monsoons

16. Which season lasts for about four months in India?

a. the dry season

b. monsoon season

c. fire season

d. tsunami season

e. spring

17. Which main technology would enable greater

agricultural water security in India?

a. aquifer construction

b. desalination technology

c. reverse osmosis plants

d. rainwater harvesting

e. reduction of pesticide runoff

18. The adoption of drip irrigation in India would help to

address the problem of

a. uneven crop lands

b. lack of moist soils

c. inconsistent water supply

d. over-saturation of soil

e. lack of knowledge about crops’ water needs

19. Which industry prevails in India’s industrial sector?

a. food processing

b. high-technology manufacturing

c. light manufacturing

d. resource extraction

e. automobiles

20. In India, which of the following manufacturing sectors is

highly competitive internationally?

a. computers

b. semiconductors

c. pharmaceuticals

d. luxury perfumes

e. steel

21. Which resource forms India’s largest reserves?

a. natural gas

b. petroleum

c. iron

d. manganese

e. coal

22. India’s coal reserves rank worldwide as the

a. 3rd largest

b. 8th largest

c. 5th largest

d. 10th largest

e. largest

23. Approximately how many tons of coal reserves does

India have?

a. 1.4 trillion

b. 5 billion

c. 237 billion

d. 60 billion

e. 14 billion

24. India has about 5 billion

a. gallons of water shortfall per year

b. cubic meters of iron reserves

c. barrels of oil reserve

d. dollars worth of clothing production per year

e. bushels of cotton production per year

25. India’s Minimum Support Price applies to

a. transport

b. labor hiring

c. staple agricultural crops

d. retail food sales

e. electricity provision

ECON FOCUSED QUIZ 36 CONSTITUENTS OF MANUFACTURING THROUGH THE FUTURE (PP. 112-115)

1. Which percentage of its GDP does India aim to have

manufacturing contribute by 2025?

a. 25%

b. 30%

c. 60%

d. 40%

e. 50%

2. In which of the following areas does India’s

manufacturing sector LEAST need reform?

a. labor

b. technology

c. internal barriers to trade

d. electricity provision

e. infrastructure

3. India’s electricity system is governed through

a. a national utilities board

b. state-level control

c. free market equilibrium

d. maximum prices

e. equitable provision requirements

4. How have manufacturers in India independently

responded to unreliable electricity supplies?

a. setting up an electricity cooperative

b. building their own power plants

c. siphoning excess electricity from the grid

d. buying their own transformers

e. buying non-conventional energy

5. Which of the following factors MOST impedes

increased hiring in India?

a. union regulations

b. high wages

c. obstacles to firing workers

d. low education levels

e. affirmative action requirements

6. Which of the following requirements does India’s

Industrial Dispute Act stipulate with regards to

employment in larger companies?

a. employee background checks

b. required consent for firing

c. mandatory unionization

d. foreign worker hiring caps

e. minimum wage

7. At which size do Indian companies fall under the firing

provisions of the Industrial Dispute Act?

a. $1 million in revenue

b. operations in more than one state

c. $10 million in revenue

d. 1000 workers

e. 100 workers

8. Of how many states is India composed?

a. 29

b. 10

c. 31

d. 18

e. 43

9. India’s system of state-level governance causes MOST

problems for manufacturing in

a. hiring workers

b. taxation management

c. importing foreign equipment

d. receiving foreign investment

e. receiving business permits

10. Which of the following factors MOST delays natural

resource processing in India?

a. transportation difficulties

b. poor weather conditions

c. business permits

d. electricity brownouts

e. labor strikes

11. Which of the following challenges MOST hinders Indian

natural resource extraction?

a. safety issues

b. lack of buyers

c. transport difficulties

d. lack of fair auctions

e. labor shortages

12. Why would a hydrocarbon company be LEAST likely to

consider India a good market?

a. high investment returns

b. low competition

c. cheap labor

d. untapped markets

e. high prices

FOCUSED QUIZ 36 PAGE 66 OF 74 DEMIDEC RESOURCES ©2015

13. In his policy plans, Narendra Modi has focused MOST

heavily on

a. finance

b. coal mining

c. agriculture

d. infrastructure

e. retail

14. Industrial development zones in India have

a. higher manufacturing subsidies

b. specialized vocational education institutions

c. separate trade and infrastructure systems

d. independent city governments

e. direct factory to port links

15. Which of the following states does India’s largest

industrial zone connect to Mumbai?

a. Haryana

b. Rajasthan

c. Uttar Pradesh

d. Kerala

e. Andhra Pradesh

16. The terminus of the Mumbai industrial corridor lies in

a. Kolkata

b. Lucknow

c. Ahmedabad

d. Delhi

e. Kampur

17. India’s largest industrial corridor has a length of

a. 1,483 km

b. 1,483 miles

c. 720 miles

d. 720 km

e. 4,010 km

18. The Mumbai industrial corridor in India is noted for its

dedicated

a. business ministry

b. freight path

c. engineering university

d. broadband network

e. light rail transport

19. Wastage of electricity in India’s state grids has been

estimated to range up to

a. 57%

b. 28%

c. 15%

d. 64%

e. 72%

20. Which of the following causes MOST contributes to

electricity loss in India?

a. wasteful usage

b. defective meters

c. sabotage

d. inefficient distribution

e. uncovered subsidies

21. Which of the following factors MOST contributes to

electricity loss in India?

a. inefficient appliances

b. transmission losses

c. lack of voltage capacity

d. short circuiting

e. faulty equipment

22. Local politicians in India are particularly reluctant to

crack down on

a. electricity theft

b. labor law rigidity

c. industrial underdevelopment

d. agricultural prices

e. poor infrastructure

23. Which of the following reasons BEST explains the

outdated state of India’s electricity infrastructure?

a. lack of technical expertise

b. fragmentation of governance

c. lack of voter interest

d. lack of government funding

e. political corruption

24. Which of the following Indian cities is one of three with

a major electricity micro-grid?

a. Chennai

b. Kolkata

c. Hyderabad

d. Bangalore

e. Kanpur

25. Which of the following Indian cities MOST recently

privatized its electricity supply?

a. Lucknow

b. Pune

c. Mumbai

d. Surat

e. New Delhi

ECON FOCUSED QUIZ 37 OUTLOOK FOR THE FUTURE THROUGH GROWTH OF FOREIGN TRADE (PP. 114-117)

1. Transmission and distribution losses for the three main

India micro-grids are approximately

a. 75%

b. 15%

c. 50%

d. 30%

e. 0.5%

2. The term “load shedding” in India’s electricity sector

refers to

a. electricity theft

b. blackouts

c. peak demand

d. brownouts

e. transmission losses

3. Which of the following Indian states has publicly

declared its intention to relax its labor laws?

a. Gujarat

b. Maharashtra

c. Telangana

d. Uttar Pradesh

e. Haryana

4. How has Rajasthan altered the Industrial Dispute Act?

a. increased the threshold for implementation

b. exempted utility companies

c. introduced a no-fault firing policy

d. established an arbitration board

e. simplified bureaucratic procedures

5. A national consumption tax would require an Indian

constitutional amendment to

a. impose a nationwide tax

b. change the states’ power of taxation

c. allocate tax income to the reserves

d. empower the central government to collect

taxes

e. override existing taxes

6. The most likely method of applying a nationwide

production tax in India would be through a

a. goods and services tax

b. excise tax

c. bank tax

d. corporate tax

e. tariff

7. A nationwide production tax would increase India’s

GDP by approximately

a. 1%

b. 0.2%

c. 0.5%

d. 2.5%

e. 3%

8. In the 1950s, the Indian government set customs duties

with the primary aim of

a. reducing foreign imports

b. encouraging local exports

c. stabilizing its currency value

d. earning governmental revenue

e. reducing foreign exploitation

9. In the 1950s, the Indian government placed maximum

limits on the share of

a. investment directed to foreign corporations

b. foreign investment in local companies

c. GDP invested on services

d. agricultural harvest exported

e. military spending

10. Which of the following goods formed the largest share

of Indian imports before 1990?

a. processed food

b. coal

c. manufacturing equipment

d. military

e. hydrocarbons

11. For which main reason did India have a negative

balance of payments in the 1950s?

a. reduced remittances

b. food import needs

c. importation of capital equipment

d. lack of export industries

e. repayments of international loans

12. The value of India’s trade in the 1973 to 1974 fiscal year

totaled approximately

a. $7 billion

b. $26 billion

c. $28 billion

d. $10 billion

e. $2 billion

FOCUSED QUIZ 37 PAGE 68 OF 74 DEMIDEC RESOURCES ©2015

13. The value of India’s trade in the 1990 fiscal year totaled

approximately

a. $42.9 billion

b. $37.8 billion

c. $57.6 billion

d. $12.8 billion

e. $90.2 billion

14. By which percentage did India’s oil imports increase

after the start of the 1990 Gulf War?

a. 20%

b. 120%

c. 200%

d. 80%

e. 60%

15. Approximately which percentage of India’s imports did

oil constitute in 1991?

a. 28%

b. 42%

c. 14%

d. 7%

e. 35%

16. In 1991, India’s oil imports cost approximately

a. $0.6 billion

b. $6 billion

c. $26 billion

d. $10 billion

e. $1.2 billion

17. Which of the following trade milestones did India reach

in March 1994?

a. nearly neutral balance of payments

b. over $300 billion of foreign direct investment

c. over $500 billion of exports

d. trade surplus in imports and exports

e. overtaking of China in total trade value

18. How has India’s balance of payments changed since

1994?

a. increased inflows

b. increased outflows

c. increased surplus

d. stabilization

e. increased deficit

19. Which of the following factors has MOST helped reduce

foreign currency outflows in India recently?

a. tourism

b. international subsidies

c. foreign trade investments

d. remittances

e. goods payments

20. Which value of services did India export in the first half

of 2014?

a. $37.8 billion

b. $12.8 billion

c. $100 billion

d. $42.9 billion

e. $69 billion

21. In May of 2014, India’s services trade surplus was

a. $6 billion

b. $1.2 billion

c. $20 billion

d. $10.8 billion

e. $30.8 billion

22. After which of the following years did India’s trade

increase sharply?

a. 1990

b. 1974

c. 2004

d. 1984

e. 1994

23. The approximate value of India’s total trade in 2014 was

a. $308 billion

b. $240 billion

c. $775 billion

d. $620 billion

e. $1.2 trillion

24. The value of India’s total exports in 2014 was

a. $620 billion

b. $450 billion

c. $775 billion

d. $310 billion

e. $240 billion

25. The value of India’s total imports in 2014 was

a. $240 billion

b. $310 billion

c. $620 billion

d. $775 billion

e. $450 billion

ECON FOCUSED QUIZ 38 INDIA’S INBOUND FOREIGN INVESTMENT THROUGH FOOD INFLATION (PP. 117-120)

1. In the 1980s, India’s yearly foreign investment averaged

a. $1.5 billion

b. $3 billion

c. $200 million

d. $100 million

e. $650 million

2. In the year after its 1991 reforms, India’s foreign direct

investment grew

a. 100%

b. 50%

c. 1000%

d. 200%

e. 500%

3. Which of the following international industries was

slowest to enter India after the 1991 reforms?

a. hospitality

b. software

c. power utilities

d. manufacturing

e. banking

4. Ten years after its 1991 reforms, India had a foreign

direct investment of

a. $20.5 billion

b. $1.9 billion

c. $5.6 billion

d. $10.2 billion

e. $36.2 billion

5. In 2008, India reached a peak foreign direct investment

equal to

a. $43.4 billion

b. $5.6 billion

c. $65.2 billion

d. $30.1 billion

e. $102.4 billion

6. Which of the following factors MOST influenced the

drop in Indian foreign direct investment after 2008?

a. Industry leaders feared labor unrest.

b. The rupee’s value rose sharply.

c. India’s domestic hiring slowed.

d. Poor governance deterred investors.

e. International money shifted to other regions.

7. India’s yearly foreign direct investment at present

averages around

a. $30 billion

b. $40 billion

c. $20 billion

d. $10 billion

e. $50 billion

8. Which of the following economic sectors does NOT

have foreign investment in India?

a. retail trading

b. power

c. gambling

d. banking

e. insurance

9. Which of the following economic sectors has only

limited foreign investment in India?

a. gambling

b. software

c. insurance

d. power

e. textiles

10. India’s current attitude towards foreign investment is

BEST described as

a. pro-Western

b. fully liberalized

c. partially open

d. closed

e. hostile

11. India’s “facilitation payments” are another name for

a. middlemen charges

b. export fees

c. bureaucratic fees

d. minor bribes

e. import taxes

12. The Indian press’s attitude toward corruption is BEST

described as

a. complicit

b. disapproving

c. ambivalent

d. apologist

e. strongly opposed

FOCUSED QUIZ 38 PAGE 70 OF 74 DEMIDEC RESOURCES ©2015

13. Which of the following factors is MOST likely to reduce

corruption in India?

a. political reform

b. economic privatization

c. press campaigns

d. political centralization

e. international pressure

14. Which of the following companies does the Indian

government NOT own?

a. State Bank of India

b. Air India

c. Ashok Leyland

d. Life Insurance Corporation

e. Bharat Heavy Electronics

15. Which of the following companies does the Indian

government NOT own?

a. Oil and Natural Gas Corporation

b. Gas Authority of India

c. Indian Oil Corporation

d. Hindustan Aeronautics

e. Reliance Life Insurance

16. Which major challenge do India’s government-owned

companies face?

a. reduced government subsidies

b. uncompetitive prices

c. stringent labor guidelines

d. outdated equipment

e. political interference

17. Which of the following unique advantages does India’s

Life Insurance Corporation offer?

a. subsidized insurance rates

b. government-backed insurance

c. transferable policy benefits

d. unlimited life policies

e. non-discriminatory insurance

18. Indian voters would MOST likely vote for a politician

who promised

a. a railway to Mumbai

b. transport vouchers

c. more progressive taxation

d. anti-corruption reforms

e. service industry development

19. Which share of India’s population lives in cities?

a. one-third

b. one-quarter

c. one-half

d. one-fifth

e. one-eighth

20. In 2011, India had an urban population of

a. 285 million

b. 377 million

c. 1.25 billion

d. 604 million

e. 930 million

21. In 2013, India had a population of

a. 850 million

b. 1.45 billion

c. 1.1 billion

d. 1.25 billion

e. 1 billion

22. By 2028, India is projected to have a population of

a. 1.45 billion

b. 1.1 billion

c. 1.6 billion

d. 1.25 million

e. 950 million

23. The majority of India’s population is aged

a. 25 and below

b. 60 and above

c. 25 to 35

d. 45 to 60

e. 35 to 45

24. India’s demographics raise the urgent question of

a. upgrading workers’ skill sets

b. providing employment

c. increasing female employment

d. improving tertiary education

e. providing old-age care

25. Which of the following factors MOST worsens the

impact of poor monsoon seasons in India?

a. overplanting

b. wastage

c. poor crop selection

d. middlemen inflation

e. hoarding

ECON FOCUSED QUIZ 39 THE BIG PICTURE AND SECTION IV SUMMARY (PP. 120-121)

1. India’s economic development differs from other

emerging economies primarily in terms of its

a. lack of capital markets

b. agricultural density

c. degree of government intervention

d. service sector growth

e. slow pace of reform

2. Which aspect of newly independent India caused the

MOST international concern?

a. its high government subsidies

b. its reliance on agriculture

c. its alignment with the Soviet Union

d. its lack of trade links

e. its democratic structure

3. A newly emerging economy would be MOST likely to

develop its

a. tourism sector

b. trade

c. textile production

d. natural gas industry

e. steel industry

4. India’s MOST important economic question currently is

a. whether to privatize its economy

b. on what mode of growth to focus

c. what model of state-society relationship to

adopt

d. how to reduce its trade deficit

e. how to reduce its dependence on agriculture

5. India’s economy is MOST often compared to that of

a. United States

b. China

c. Argentina

d. Pakistan

e. Brazil

6. Which party has dominated India’s politics since

independence?

a. Nationalist Congress Party

b. Communist Party of India

c. Congress Party

d. Bahujan Samaj Party

e. Bharatiya Janata Party

7. The Soviet Union’s policies MOST directly influenced

India’s

a. economic planning

b. political structure

c. bureaucratic organization

d. agricultural structure

e. labor policies

8. The 1984 Bhopal disaster involved

a. a gas leak

b. an oil explosion

c. soil pollution

d. a labor riot massacre

e. water contamination

9. The Bhopal disaster caused India to develop a(n)

a. wariness of foreign investment

b. impetus for privatization

c. anti-corruption taskforce

d. increase in corporate oversight

e. increase in export tariffs

10. Which company caused the 1984 Bhopal disaster?

a. Ashok Leyland

b. Bharati Shipyards

c. Union Carbide

d. Coal India

e. Union Gas of India

11. Which of the following industries did the 1999 reforms

MOST affect?

a. mining, oil, and coal

b. insurance and hospitality

c. tourism and textiles

d. banking and finance

e. telecommunications and construction

12. Which major military move did India make in 1998?

a. dismantling its standing army

b. instituting mandatory military service for all 18-

year-olds

c. ending a defense treaty with China

d. building a biochemical warfare laboratory

e. declaring itself a nuclear weapons state

FOCUSED QUIZ 39 PAGE 72 OF 74 DEMIDEC RESOURCES ©2015

13. Which tax reform does India MOST need?

a. improving corporate governance

b. introducing property tax

c. taxing more of the population

d. improving auditing standards

e. taxing foreign currency outflows

14. Which of the following manufacturing reforms does

India MOST need?

a. financial liberalization

b. lower corporate taxes

c. use of foreign business expertise

d. reduced banking reserve requirements

e. nationwide industrial customs

15. Which labor reform does India MOST need?

a. improved human capital

b. reduced barriers to hiring and firing

c. early childhood education

d. higher urbanization rates

e. improved maternal health

16. Which of the following agricultural reforms is NOT

among those India MOST needs?

a. increasing farm sizes

b. increased use of GMO seeds

c. simplifying land transactions

d. alternative sources of irrigation

e. faster farm-to-market transport

17. Which aspect of trade is LEAST beneficial to India?

a. services

b. finance

c. investment

d. goods

e. currency flows

18. In which of the following areas does India have the

LEAST advantage?

a. insurance

b. finance

c. software

d. mining

e. telecommunications

19. In which of the following areas is India’s government

MOST involved?

a. electricity

b. financial services

c. telecommunications

d. wheat production

e. clothes manufacturing

20. How did India deal with Great Britain’s economic legacy

after independence?

a. made it more equitable

b. built on its economic infrastructure

c. adapted its legal framework

d. rejected its approach completely

e. expropriated foreign holdings

21. Which of the following resources has posed the

GREATEST challenge to India?

a. telecommunications network

b. legal infrastructure

c. food

d. oil

e. human capital

22. Which of the following factors has MOST contributed

to higher Indian growth rates?

a. a stronger rupee

b. higher literacy rates

c. reduced subsidies

d. greater transparency

e. economic privatization

23. The impact of foreign direct investment in India is BEST

described as

a. bad for inequality

b. leveling caste differences

c. economically beneficial

d. increasing competitiveness

e. politically destabilizing

24. Which of the following factors poses the LEAST

challenge to Indian manufacturing?

a. labor issues

b. corruption

c. uncompetitive pricing

d. poor technology

e. customs barriers

25. In which “modern” industry did India FIRST establish

global competitiveness?

a. management consultancy

b. computer services

c. business hospitality

d. tourism

e. medical services

ECON FOCUSED QUIZ 40 REVIEW: THE INDIAN ECONOMY (PP. 102-120)

1. How did Nehru’s government restrict private business

manufacturing?

a. required manufacturing licenses

b. banned foreign-owned businesses

c. reserved key resources for government

companies

d. established bureaucratic obstacles

e. required minimum local investment percentages

2. Which percentage of India’s GDP did life insurance

contribute in 2013?

a. 4.5%

b. 0.3%

c. 3.1%

d. 8.2%

e. 1%

3. Nehru’s economic policies were MOST successful in

a. making agriculture competitive

b. industrializing the economy

c. keeping the banking system solvent

d. promoting national companies

e. balancing India’s foreign reserves

4. India’s balance of payments in 2014 was

a. $100 billion

b. -$10 billion

c. $50 billion

d. -$50 billion

e. -$100 billion

5. Remittances refer to

a. money sent back from foreign citizens

b. business taxes paid in foreign currency

c. export tariff rebates

d. repayments of foreign loans

e. overseas investment returns

6. By how many millions did India’s urban population

increase from 2001 to 2011?

a. 81 million

b. 101 million

c. 201 million

d. 71 million

e. 91 million

7. In which of the following areas is India MOST

economically independent?

a. power

b. technology

c. food

d. transport

e. communications

8. Where did World Bank’s “Doing Business” report rank

India in terms of ease of doing business?

a. #101

b. #49

c. #76

d. #10

e. #134

9. For which of the following reasons is India LEAST likely

to be regarded as inhospitable to doing business?

a. labor resistance

b. regulatory environment

c. bureaucratic inefficiency

d. corruption

e. streamlined procedures

10. The role of services in India’s GDP MOST closely

resembles that of

a. Japan

b. China

c. United States

d. Malaysia

e. Vietnam

11. Narendra Modi’s service sector plans are MOST likely to

benefit a(n)

a. domestic helper

b. engineering graduate

c. low-caste laborer

d. newly arrived urban resident

e. rice farmer

12. Which of the following Indian businesses is MOST likely

to be efficiently run?

a. Coal India Limited

b. Hindustan Construction Company

c. Gujarat Mineral Development Corporation

d. Fortis Healthcare

e. eClerx.com

FOCUSED QUIZ 40 PAGE 74 OF 74 DEMIDEC RESOURCES ©2015

13. Which of the following changes would be LEAST

beneficial for Indian agriculture?

a. wireless-based technology

b. electricity reform

c. drip irrigation systems

d. widespread use of tractors

e. more GMO plants

14. Which percentage of India’s GDP comes from

manufacturing?

a. 49%

b. 38%

c. 26%

d. 13%

e. 57%

15. India’s industrial corridors primarily serve to

a. encourage foreign investment

b. facilitate business networking

c. provide easy access to services

d. enable vertical integration of manufacturing

e. connect cities and ports

16. In which of the following areas has India’s system of

regional states MOST hindered economic

development?

a. auditing

b. taxation

c. agriculture

d. foreign imports

e. transport

17. Compared to Nehru’s policies, the new Indian

government’s economic policies are more

a. pro-rural

b. nationalist

c. anti-corruption

d. equitable

e. growth-focused

18. The average Indian is MOST likely to be working in a

a. rice paddy

b. coal mine

c. clothes factory

d. foreign business

e. call center

19. India has undertaken the LEAST reform in the area of

a. insurance

b. infrastructure

c. electricity

d. labor

e. trade

20. Besides manufacturing, MOST of India’s industrial

earnings come from

a. construction

b. steel production

c. defense

d. forestry

e. mining

21. India’s independence movement drew MOST from its

leader’s work in

a. United States

b. China

c. Soviet Union

d. South Africa

e. Malaysia

22. Which of the following factors MOST hindered India’s

interest in allowing foreign investment in the 1980s?

a. lack of foreign investor interest

b. political tensions

c. internal corruption

d. foreign business practices

e. lack of investor opportunities

23. Which of the following economic areas saw the LEAST

reform in India in the 1990s?

a. finance

b. currency

c. insurance

d. transport

e. communications

24. India’s First War of Independence refers to the

a. 1898 Baloch uprising

b. 1947 partition

c. 1946 Telangana rebellion

d. 1858 Central India campaign

e. 1857 Indian Rebellion

25. Which of the following Indian companies would LEAST

likely be government-run?

a. Allahabad Bank

b. Bharti Airtel

c. Cadila Healthcare

d. Cosmic Circuits

e. Bharat Aluminum