Course: Management

Multiple-choice questions

Economics Exit Exam

1. Which of the following best describes the law of demand?

A) As price increases, quantity demanded decreases.

B) As price decreases, quantity demanded decreases.

C) As price increases, quantity demanded increases.

D) As price decreases, quantity demanded increases.

2. Which market structure is characterized by a large number of firms, identical products, and
ease of entry and exit?

A) Monopoly
 B) Oligopoly

C) Perfect competition

D) Monopolistic competition

3. Gross Domestic Product (GDP) is the total value of all _______ produced within a country's
borders in a specific period.

A) goods and services

B) imports

C) exports

D) investments

4. Which of the following is considered an expansionary fiscal policy tool?

A) Decreasing government spending

B) Decreasing taxes

C) Increasing taxes

D) Increasing government spending

5. What does the Gini coefficient measure?

A) Inflation rate

B) Income inequality

C) Unemployment rate

D) GDP growth rate

6. Which of the following is a tool of monetary policy used by central banks to influence the
money supply?
 A) Open market operations

B) Fiscal stimulus

C) Tariffs

D) Subsidies

7. The concept of "comparative advantage" is based on which economic theory?

A) Keynesian economics

B) Neoclassical economics

C) Mercantilism

D) Classical economics

8. The unemployment rate is calculated as the number of unemployed individuals divided by

A) the total population

B) the labor force

C) the working-age population

D) the employed population

9. Which of the following is an example of an externality?

A) A consumer buying a new car

B) A firm maximizing its profits

C) Pollution from a factory affecting nearby residents

D) Government subsidies for renewable energy

A) World Bank

B) International Monetary Fund (IMF)

C) World Trade Organization (WTO)

D) United Nations (UN)

11. Which of the following is NOT a determinant of demand?

A) Income

B) Price of related goods

C) Expectations

D) Cost of production

12. In which market structure do a few interdependent firms dominate the market?

A) Perfect competition

B) Monopoly

C) Oligopoly

D) Monopolistic competition

13. Which of the following is a measure of the average price level of a basket of goods and
services in an economy?

A) Consumer Price Index (CPI)

B) Gross Domestic Product (GDP)

C) Unemployment Rate
 D) Trade Balance

14. What is the primary tool of monetary policy used by central banks to control the money
supply?

A) Discount rate

B) Reserve requirement

C) Open market operations

D) Quantitative easing

15. Which type of unemployment results from changes in the business cycle?

A) Frictional unemployment

B) Structural unemployment

C) Cyclical unemployment

D) Seasonal unemployment

16. Which of the following is a characteristic of a regressive tax?

A) Tax rate decreases as income increases

B) Tax rate increases as income increases

C) Flat tax rate for all income levels

D) Tax rate varies based on expenditure

17. The Phillips curve shows the relationship between:

A) Inflation and unemployment

B) GDP and inflation

C) Interest rates and inflation

18. Which of the following is considered a long-term source of economic growth?

A) Increased government spending

B) Technological innovation

C) Decreased consumer spending

D) Trade barriers

19. Which trade theory suggests that countries should specialize in producing goods in which
they have a comparative advantage?

A) Mercantilism

B) Absolute advantage

C) Comparative advantage

D) Factor proportions theory

20. What is the primary goal of antitrust laws?

A) Promote competition and prevent monopolies

B) Increase government control over businesses

C) Stabilize prices in the market

D) Encourage collusion among firms

21. Which of the following is NOT a component of aggregate demand?

A) Consumption

B) Investment

C) Government spending
 D) Exports

22. Which type of fiscal policy involves increasing government spending and decreasing taxes to
stimulate economic growth?

A) Expansionary fiscal policy

B) Contractionary fiscal policy

C) Neutral fiscal policy

D) Austerity fiscal policy

23. Which economic indicator measures the overall health of the labor market in an economy?

A) GDP growth rate

B) Inflation rate

C) Unemployment rate

D) Consumer Price Index

24. Which of the following is an example of a public good?

A) Food

B) Healthcare

C) Education

D) National defense

25. Which organization is responsible for regulating the monetary policy of the United States?

A) Federal Reserve

B) International Monetary Fund (IMF)

C) World Bank
 D) United Nations (UN)

26. Which of the following is NOT a tool of monetary policy?

A) Open market operations

B) Reserve requirement

C) Discount rate

D) Tariffs

27. The opportunity cost of a decision is:

A) The explicit cost of the decision

B) The monetary cost of the decision

C) The value of the next best alternative foregone

D) The total cost of the decision

28. Which of the following is an example of a positive externality?

A) Pollution from a factory

B) Congestion from traffic

C) Education benefiting society

D) Noise pollution

29. Which of the following best describes the concept of "crowding out" in economics?

A) Increase in government spending crowds out private investment

B) Increase in government spending stimulates private investment

C) Decrease in government spending stimulates private investment

30. Which economic theory emphasizes the importance of aggregate demand in influencing
economic growth and employment?

A) Classical economics

B) Keynesian economics

C) Monetarism

D) Supply-side economics

31. Which of the following is NOT a factor of production?

A) Land

B) Labor

C) Money

D) Capital

32. What is the main function of the World Trade Organization (WTO)?

A) To provide financial aid to developing countries

B) To regulate international trade agreements

C) To set global interest rates

D) To promote cultural exchange between nations

33. Which of the following is a characteristic of a command economy?

A) Private ownership of the means of production

B) Centralized government control over economic decisions

C) Market forces determine resource allocation

34. Which of the following best defines the concept of inflation?

A) A general decrease in the price level of goods and services

B) A sustained increase in the average price level of goods and services

C) A situation where the economy operates at full capacity

D) A decrease in the money supply in the economy

35. What is the role of the International Monetary Fund (IMF) in the global economy?

A) To regulate international trade agreements

B) To provide financial assistance to countries facing economic crises

C) To promote cultural exchange between nations

D) To set global interest rates

36. Which of the following is an example of a fiscal policy tool that can be used to combat
inflation?

A) Decreasing government spending

B) Decreasing taxes

C) Increasing taxes

D) Increasing government spending

37. Which type of market failure occurs when a single producer controls a market and can set
prices?

A) Externalities

B) Monopoly
 C) Oligopoly

D) Perfect competition

38. The Lorenz curve is used to illustrate:

A) The relationship between inflation and unemployment

B) Income distribution within a population

C) The impact of tariffs on international trade

D) The effects of fiscal policy on economic growth

39. Which of the following is an example of a regressive tax?

A) Sales tax

B) Progressive income tax

C) Property tax

D) Corporate income tax

40. Which of the following is a key characteristic of monopolistic competition?

A) Many firms selling identical products

B) One firm dominating the market

C) Product differentiation

D) High barriers to entry

41. Which of the following is NOT a component of the circular flow of income model?

A) Government

B) Households
 C) Businesses

D) Foreign sector

42. Which of the following is a measure of the responsiveness of quantity demanded to a

A) Elasticity

B) Marginal utility

C) Equilibrium

D) Surplus

43. Which of the following is a function of the Federal Reserve System in the United States?

A) Setting fiscal policy

B) Regulating international trade

C) Conducting monetary policy

D) Implementing social welfare programs

44. Which of the following best describes the concept of opportunity cost?

A) The cost of producing an additional unit of a good

B) The benefit of consuming an additional unit of a good

C) The value of the best alternative forgone

D) The total expenditure on producing a good

45. Which of the following best describes the concept of a trade deficit?

A) Exports exceed imports

B) Imports exceed exports

D) The trade balance fluctuates between surplus and deficit

46. Which theory suggests that a country should specialize in producing goods for which it has
an absolute advantage?

A) Mercantilism

B) Comparative advantage

C) Factor proportions theory

D) Absolute advantage

47. Which of the following is an example of a public good?

A) Electricity

B) Healthcare

C) National defense

D) Clothing

48. Which type of unemployment results from a mismatch between the skills workers have and
the skills employers seek?

A) Structural unemployment

B) Frictional unemployment

C) Seasonal unemployment

D) Cyclical unemployment

49. Which of the following is a goal of fiscal policy?

A) Full employment
 B) Stable prices

C) Economic growth

D) All of the above

50. Which of the following best describes the concept of elasticity of demand?

A) The ability of a good to satisfy human wants

B) The responsiveness of quantity demanded to a change in price

C) The total amount of a good that consumers are willing to buy

D) The equilibrium price of a good