Economics Practice Questions: Macroeconomics and Microeconomics

Posted on Aug 27, 2024 in Mathematics

Economics Practice Questions

Macroeconomics

  1. If the economy experiences an increase in resources, what will happen to the production possibilities frontier (PPF)?
  2. If a market economy experiences a change in technology, what will happen to the PPF?
  3. If the price of a good becomes more profitable, what will happen to the supply of that good?
  4. Which of the following will cause a decrease in the interest rate?
  5. When an economy experiences a recession, what happens to the unemployment rate?
  6. Other things being equal, an increase in government spending will have what effect on aggregate demand in the short run?
  7. In the short run, if the economy is operating at a level of output that is less than potential output, what will happen to the unemployment rate?
  8. At what output level will the economy be operating at potential output?
  9. In Figure 10-11, what will happen to the long-run aggregate supply curve if there is a major technological advancement?
  10. At which output level will the economy be operating at potential output?
  11. Which of the following will cause a shift in the aggregate demand curve?
  12. The action of the Federal Reserve to increase the interest rate on loans will have what effect on the economy?
  13. In the foreign exchange market, an increase in the demand for U.S. dollars will have what effect on the exchange rate?
  14. Which of the following will cause a decrease in the real interest rate?
  15. Other things being equal, if consumers expect the price level to increase in the future, they will likely spend ______ and save ______.
  16. If resources become more productive, what will happen to profits?
  17. The short-run aggregate supply curve is upward sloping because an increase in the price level will cause firms to ______.
  18. The vertical portion of the long-run aggregate supply curve indicates that an increase in the price level ______.
  19. When an economy experiences a recession, what happens to the relationship between the actual and natural rates of unemployment?
  20. When prices rise, what happens to the relationship between output and the natural rate of unemployment?
  21. The resource that is most likely to be affected by a change in the price level is ______.
  22. Which of the following groups will benefit from an increase in the interest rate?
  23. Glenda has a utility function of U = 10X – 0.5X2. What is her marginal utility when X = 7?
  24. A positive inflation rate indicates ______.
  25. Suppose the nominal interest rate is 5% and the inflation rate is 2%. What is the real interest rate?
  26. If there is a shortage of a good, what will happen to the price and quantity supplied?
  27. The money interest rate is equal to ______.
  28. In the expected inflation theory, the nominal interest rate will ______.
  29. Which of the following equations correctly represents the relationship between the money interest rate, the real interest rate, and the inflation premium?
  30. You just bought a new car. What will happen to the demand for gasoline in the short run?
  31. Which of the following best describes the short-run aggregate supply curve?
  32. An increase in the money supply will have what effect on the economy’s potential output?
  33. If a currency appreciates, what will happen to the aggregate demand curve?
  34. If Asian economies experience a recession, what will happen to the aggregate demand curve in the United States?
  35. Which of the following will cause a decrease in aggregate demand?
  36. Within the AD/AS model, an increase in government spending will have what effect on the economy?
  37. Which of the following will cause a shift in the short-run aggregate supply curve?
  38. If there is a decrease in the price level, what will happen to the unemployment rate?
  39. How will an increase in the money supply affect the economy in the short run?
  40. Which of the following will cause an increase in the unemployment rate?

Microeconomics

  1. When economic growth occurs, what happens to the PPF?
  2. If a country loses resources, what happens to the PPF?
  3. In a market economy, what happens to the price of a good if all of the other factors that affect demand and supply remain constant?
  4. Which of the following is a reason why scarcity exists?
  5. Under social responsibility, what does a firm include in its decision making?
  6. Positive economics is concerned with ______.
  7. Which of the following will cause an increase in the capital stock?
  8. The opportunity cost of a decision is ______.
  9. Transactions costs are ______.
  10. The point where the PPF intersects the vertical axis represents ______.
  11. Consider a situation where there is a significant increase in the demand for a good. What will happen to the price of that good?
  12. The wealth of nations is based on the idea that ______.
  13. The PPF is bowed outward because of ______.
  14. Refer to questions 2-6. Which of the following is a normative statement?
  15. Refer to questions 2-6. Which of the following is a positive statement?
  16. Refer to questions 2-6. Which of the following is not a positive statement?
  17. In an economy, there are 1500 units of labor and 5 units of capital. If each unit of capital requires 300 units of labor, what is the maximum output that can be produced?
  18. If the minimum wage is increased, what will happen to the number of people who would like to work?
  19. Consider two countries, Country A and Country B. Country A’s standard of living is higher than Country B’s. What can we conclude about the relationship between the two countries’ PPFs?
  20. The opportunity cost of producing a good is ______.
  21. If a supply curve shifts to the right, what will happen to the equilibrium price and quantity of a good?
  22. As the price of jeans increases, what will happen to the demand for complementary goods?
  23. If the demand for a good increases, what can we conclude about the good?
  24. Consider a city where there are many different types of restaurants. What can we conclude about the relationship between the different types of restaurants?
  25. If resource H becomes more scarce, what will happen to the supply curve for the good that uses resource H?
  26. In year 1, the demand for a good is higher than the supply. In year 2, the demand for the good is lower than the supply. What can we conclude about the equilibrium price of the good in year 2 compared to year 1?
  27. At the price ceiling, what will happen to the quantity demanded and supplied?
  28. Refer to question 3.3. What will happen to the equilibrium price if there is a price increase?
  29. Refer to question 3.3. What will happen to the equilibrium quantity if there is a decrease in the price of a complementary good?
  30. An effective price ceiling will ______.
  31. An effective price floor will ______.
  32. Assume that the government imposes a price ceiling on the supply of health care services. What will happen to the supply of health care services?