MULTIPLE-CHOICE

1. The economy of a country is the wealth that it gets from ....... activities.
B economie
2. The group is the world's biggest... of copper, supplying around 69% of global
output.
C. distributor
3. .... refers to the act of using, eating, or drinking something, or the amount that is
used, etc.
A. Consumption
4. ..... is concerned with the major, general fcatures of a country's economy, such as
the level of inflation, unemployment, or interest rates.
C. Macroeconomics
5. .... refer to all of the direct and indirect costs businesses face from manufacturing a
product or providing a service.
A. production costs
6. The money.............. was controlled by the federal reserve as they had the ability to
print money at any time
C. supply
7. Money markets are the markets in which only short-term ( with the maturity of a
year or less) are traded.
C. debt instrumnents
8. Both fiscal and monetary policy aim at creating a more stable ... characterized by
low inflation and positive economic growth.
A. economy
9. Central banks try to keep the core ........ rate around 2 percent to create a healthy
expectation of inflation.
D. interest
10. The investors who buy bonds get.... on the money they have loaned.
C. profit
11. It is necessary to study economics because it can help you to use your resources
more effectively.
A. economics
12. Recession is a period when the economy of a country is not successful and
conditions for business are bad.
C. recession
13. People should make choices of what time for working, learning, relaxing, and so
on.

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 C. what
14. Microeconomics is concerned with individual areas of economic activity, such as
those within a particular company or relating to a particular market.
B. Microeconomics
15. Which of the following involve a trade-off?
B. All of these answers involve trade-offs.
16. Fiscal policy is expansionary when the government increases government
spending.
A. expansionary
17. If a major copper mine collapses in South America, the price of copper will tend to
increase because supply is restricted.
C. increase
18. A primary market is a financial market in which fresh securities, such as a bond or
a stock, are sold to initial buyers.
A. fresh
19. Monetary policy involves influencing the supply and demand for interest rates and
other monetary tools.
D. interest
20. Debts held by the public are the amount of money that the government borrows
from the surplus of trust funds.
D. Federal accounts
21. Government securities with terms of more than one year are called:
A. government bonds.
22. Money that a government has required to be accepted in settlement of debts is:
B. legal tender.
23. Which of the following activities is one of the responsibilities of the Bank of
England to the banking system?
A. Assisting banks that are in a difficult financial position.
24. The difference between a bank's actual reserves and its required reserves is its:
D. excess reserves.
25. If the quantity of money demanded exceeds the quantity of money supplied then
the interest rate will:
C. rise.
26. Which of the following events will lead to an increase in the demand for money?
C. An increase in the level of aggregate output.
27. Which of the following events will lead to a decrease in the equilibrium interest
rate?
A. A decrease in the price level.
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28. The motive for holding money that encourages investors to hold bonds when
interest rates are low, with the hope of selling them when interest rates are high, is the:
B. speculation motive.
29. The opportunity cost of holding money is determined by:
B. the interest rate.
30. The demand for money represents the idea that there is:
D. a negative relationship between the interest rate and the quantity of money
demanded.
31. Government expenditures on public schools is classified as ________ policy.
B. fiscal
32. Economic policy decisions made by or involving individual states within the U.S.
are classified as ________ decisions.
B. macroeconomic
33. What is impossible in a world of scarcity?
C. Meet all of society’s wants.
34. Every day, 500 airplanes in San Francisco incur an additional 30 minutes of airport
delays when flying into or out of the airport. In Chicago, the delays amount to 15
minutes for 1,200 airplanes. If the price of time is $30/hour in San Francisco and
$20/hour in Chicago, which airport incurs the largest opportunity cost?
C. San Francisco
35. Identify which of the following microeconomic topics (issues) can have an impact
on macroeconomic topics?
C. How do people decide how much to save for the future, or whether they
should borrow to spend beyond their current means?
36. Some highways have commuter or express pass lanes. During rush hour lanes on
the highway move slowly or often are stop and go, but the express lanes continue to
move at a faster pace. Express pass users pay for a transponder and monthly fees to
have express lane access even with no other people in their cars. In this example, the
drivers who purchase these express passes are probably …
D. drivers who value speed and convenience more than those in the stop and go
lanes and are willing to pay additional express pass fees for the option of avoiding
traffic jams
37. Society gains advantages through foreign trade because …..
D. output is better aligned to reflect society’s preferences.
38. You read about a traveling situation in which some airport passengers seem to get
a “fast-pass” through security and move seamlessly through the boarding process,
while others wait in long lines. In this example, the travelers who move quickly
through the boarding process are probably …
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 A. people who value their time and convenience more than those waiting in long
lines and are therefore willing to pay additional fees for the privilege of avoiding them.
39. Suppose two countries A and B possess the exact same amount and quality of land,
labor, capital and entrepreneurship. Can we say that each country therefore produces
the exact same level of output?
C. It cannot be determined with the information given.
40. Which is NOT an example of economic capital?
D. money
41. National public debts, ……… on a world scale, have almost without exception
showna tendency to increase.
A. taken
42. The job of the Central Bank is to………. the amount of money and credit in
theeconomy.
D. control
43. The government made serious attempts to raise the ……. of living.
A. standard
44. Inflation is a great …….to long-term investors because it erodes the value of
futuredollars.
D. threat
45. Any ……………transaction or violations of the policy must be reported to
yourimmediate supervisor.
A. improper
46. Interest rate swaps often………. a fixed payment for a floating payment that is
linkedto an interest rate.
D. exchange
47. Increasing ……………. has led to a massive increase in the number of
foreignexchange transactions in recent decades.
A. globalization
4. The advance in technology can create a (an)…………in the firm’s costs.
D. decrease
49. Two goods are …………...if a fall in the price of one of the goods makes
consumersless willing to buy the other.
D. substitutes
50. The law of demand says that a higher price for a good, other things equal,
leadspeople to demand a …………quantity of the good.
A. smaller
51. Government expenditures(=spending) on public schools is classified as ... policy.
B. fiscal
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52. Which is NOT an example of economic capital?
D. money
53. Deficit spending means spending funds… from borrowing or printing instead of
taxation.
C. obtained
54. A …… market is a market in which there are many buyers and sellers of the same
good or service.
C. competitive
55. The standard…………….for international trade and investment is the US dollar.
B. currency
56. Output, the most important concept of macroeconomics, refers to the total amount
of goods and services a country produces, commonly known as the….
B. GDP
57. Macroeconomics is different from microeconomics, which concentrates more on
individuals and ………………they make economic decisions
C. how
58. The four major objectives are (i) full employment, (ii) price stability, (iii) a high,
but…..rate of economic growth, and (iv) keeping the Balance of Payments in
equilibrium.
A. stable
59. If an economy grows too quickly, then demand will outstrip supply and prices will
A. rise
60. If a government tries to reduce ……………….through reflationary measures, such
as lower interest rates or increased public spending, then the resulting reduction in
unemployment will push wages, and then prices, higher
D. unemployment
61. The relationship between price and quantity supplied is called the
B. law of supply
62. The supply of a good is….. related to the price of the inputs used to make the good.
A. negatively
63. There is a..of the good when quantity demanded is greater than quantity supplied.
C. shortage