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Economics Practice
Economics Practice
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Questions
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Answers
1
In wartime, a previously efficient country might move to producing the following combination of goods
B to C
A to X
C to B
D to C
2
Which is true about tariffs?
They encourage growth of the most efficient industries
They benefit some groups at the expense of others
They decrease employment in protected industries
They increase the market for exports
3
During periods of inflation, the value of the dollar
increases
decreases
stays the same
varies in different ways at different times
4
A reason the federal government might reduce taxes is
slow down inflation
decrease business spending on equipment and infrastructure
slow down a fast rise in interest rates
increase customer spending and stimulate the economy
5
The study of why people make one choice rather than another when buying, selling, spending, and saving is
economics
microeconomics
trade-off
choice
6
In wartime, a previously inefficient country might move to producing the following combination of goods
B to C
A to C
A to B
X to D
7
Why do basketball players make more than farmers?
Basketball players are entertainers.
Employers of ball players are monopolists.
Given the demand, good basketball players are scarcers than farmers.
There are fewer basketball players than farmers.
8
What is the actual price of the pizza slice?
$1.00
$4.00
$3.50
2.25
9
A government budget deficit is when
the national debt increases
taxes decrease
government spending is more than tax revenues
government spending increases
10
According to this supply curve for pizza, what happens to the supply as the price increases?
It depends on the product
It stays the same
It decreases
It increases
11
If your income rises by 50%, while prices rise by 100%, your
real income has fallen
none of the above
real income is not affected
real income has risen
12
A basic economic problem is making decisions about resources within our limits. Limits are known as
socialism
scarcity
marginal utility
goods
13
Deciding whether to buy a pizza or a new pair of underwear involves
conspicuous consumption
opportunity costs
free products
a command economic system
14
People who believe people should pay according to their ability to pay would favor a/an
excise tax
a general sales tax
a residential property tax
a progressive income tax
15
According to the demand curve, what happens to the demand for pizza as the price goes down
It decreases
D
It stays the same
It increases
16
Making the decision to go to prom instead of going on a spring break trip to Cancun is an example of a
opportunity cost
poor decision
economics
trade off
17
People are always forced to choose which wants and needs to meet. The decision leaves us with
free enterprise
the opportunity cost
the factors of production
capital
18
If raspberries become too expensive, consumers switch to strawberries. This is called the
substitution effect
cheapness effect
utility
marginal utility
19
An economic system in which decisions are made only by the government is called a
market economy
mixed economy
command or planned economy
traditional economy
20
What happens to price if the number of pizza shops in New Rochelle increases significantly?
The price stays the same
The price decreases
None of the above
The price of pizza increases
