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Economics Practice Questions
Economics Practice Questions
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1
Which combination of terms gives the general definition of the economic problem?
higher population, fewer jobs, unemployment
falling supply, rising demand, shortage
bigger families, less food, starvation
limited resources, unlimited wants, scarcity
2
Which is not an economic question that helps countries decide the type of economic system?
How to produce those products?
How much to charge for those products?
Who will consume those products?
What goods and services will be produced?
3
In recent years more golf courses have opened in China. What may be the opportunity cost of this?
wages of golf course staff
sales of golf equipment
cost of water
loss of farmland
4
What is the cause of the economic problem facing all countries?
unlimited wants in relation to limited resources
uneven distribution of income and wealth
significant quantities of unemployed resources
climate change and global warming
5
Why does specialisation increase the productivity of employees?
Time is saved by not moving between tasks.
Average cost of production increases.
Workers lose interest in their job.
Staff turnover is high
6
What is not likely to be used to measure the difference in the standard of living between countries?
Human Development Index
the rate of poverty
Gross Domestic Product per head
the rate of interest
7
What, according to the definition of opportunity cost, is sacrificed when a decision is taken?
A. an identical alternative
A. any possible alternative
A. the next best alternative
A. the least valuable alternative
8
Which would best indicate the start of an economic recession?
fluctuating levels of employment
falling interest rates
steadily increasing price levels
negative growth of GDP
9
An economy is said to have a high economic growth rate. What is most likely to be found when this occurs?
a decrease in inflation and a budget deficit
an increase in GDP and low unemployment
an increase in inflation and a reduction in investment
a decrease in the exchange rate
10
What is the definition of inflation?
an increase in output
an increase in the general prices
an increase in wages
an increase in demand
11
What is the most accurate definition of a foreign exchange rate?
a value of a currency expressed in terms of another currency
a rate determined by the demand and supply of the currency
a rate at which exports are exchanged for imports
a value of a currency as fixed by the government
12
What is the opportunity cost of choosing to go to university after high school instead of getting a full time job?
A college degree from the university
Making new friends in college
A better paying job with the degree
Money from working full time
13
A business person employs two people to make sandwiches to sell in a cafe. As well as labour, which FOP are involved?
enterprise and land only
capital and enterprise only
capital, enterprise and land
capital and land only
14
The diagram shows a production possibility curve (PPC). Why is the curve usually drawn like this?
Resources are unlimited in supply.
International free trade exists.
Some resources will be unemployed.
Opportunity cost changes.
15
Cuba is implementing a more free market system. What is a likely advantage of this?
greater equality between the different groups in society
a wider variety of goods and services produced
increased provision of public goods
less consumption of goods with external costs
