Economics Quiz PDF

## Economics Questions ### Question 1 (0.5 point): According to the law of demand and supply, which of the following statements is correct? *Choose all that apply* - When the price increases, the demand increases. - When the price increases, the demand decreases. - When the price increases, the s...

## Economics Questions ### Question 1 (0.5 point): According to the law of demand and supply, which of the following statements is correct? *Choose all that apply* - When the price increases, the demand increases. - When the price increases, the demand decreases. - When the price increases, the supply increases. - When the price increases, the supply decreases. ### Question 2 (0.5 point): What factors can influence supply? *Choose all that apply* - Changes in the cost and availability of inputs - Advances in technology - Changes in the prices of related goods and services - Changes in the number of producers ### Question 3 (0.6 point): Figure 1 shows country A's demand curve for gasoline. 1. When the market price is $3 per gallon, what is the quantity demanded for gasoline? (0.2 point) 2. Calculate the consumer surplus when consumers value the second gallon of gasoline at the market price of $2 per gallon. Write out the steps with your answer. (0.4 point) ### Question 4 (0.6 point): Figure 2 shows country A's supply curve for gasoline. 1. When the market price is $5 per gallon, what is the quantity supplied for gasoline? (0.2 point) 2. Calculate the producer surplus when producers value the third gallon of gasoline at the market price of $5 per gallon. Write out the steps with your answer. (0.4 point) ### Question 5 (0.3 point): Figure 3 shows country A's supply and demand curves for gasoline. If international trade is allowed, which of the following could be the country's equilibrium market price for gasoline? *Choose all that apply* - $2 - $3 - $4 ### Question 6 (0.4 point): According to the law of increasing opportunity cost, which of the following figures can NOT be used to describe a nation's production possibilities frontier (PPF) if the nation can only produce food and computers? *Choose all that apply* The figure will show a downward sloping curve with food on the Y axis and computers on the X axis. The curve should also be concave down. ### Question 7 (0.4 point): Which of the following statements is correct about absolute advantage, comparative advantage, and international trade? *Choose one only* - Only the absolute advantage can explain international trade - Only the comparative advantage can explain international trade - Both the absolute and comparative advantage can explain international trade - Neither the absolute nor the comparative advantage can explain international trade ### Question 8 (0.3 point): Which of the following statements is correct about imposing a tax? *Choose one only* - When a tax is imposed, only consumers pay for it - When a tax is imposed, only producers pay for it - When a tax is imposed, both consumers and producers pay for it - None of the above is correct ### Question 9 (0.3 point): Policymakers can use a variety of instruments to alter trade flows. Which of the following instruments can be used to restrict a domestic country's imported goods or services? *Choose all that apply* - Tariffs - Quotas - Voluntary export restraints - Export subsidies ### Question 10 (0.3 point): Which of the following statements is correct about trade barriers? *Choose all that apply* - Trade barriers are second-best policy responses - Trade barriers can create deadweight losses and economic inefficiencies - Due to tariff, there is a decrease in domestic consumer surplus - Due to tariff, there is a decrease in domestic producer surplus ### Question 11 (0.3 point): Which of the following statements is correct about imposing a quota on imported goods? *Choose one only* - Imposing a quota leads to a decrease in the domestic market price - Quota directly influence the price of the goods sold in the domestic market - The domestic government does not benefit from imposing a quota on imported goods - None of the above is correct ### Question 12 (1.3 points): The following diagram depicts a market in a small country, where D is the country's demand curve, SDomestic is the country's supply curve, and SROW is the global price. Use the graph to answer the questions below. 1. Without trade, what are the equilibrium price and quantity in this country? (0.2 point) 2. Under free trade without trade barriers, what are the domestic market price, amount of domestic quantity supplied, domestic quantity demanded, and imports in this country? (0.4 point) 3. Suppose the country imposes a $0.25 tariff per unit with trade, draw a horizontal line in the graph to denote the post-tariff market price in the country. (0.1 point) 4. Under the scenario in question (c) *i.e. trade with a $0.25 tariff per unit*, what are the domestic market price, domestic quantity supplied, domestic quantity demanded, and imports in this country? (0.4 point) 5. Compared to free trade without trade barriers, how does the domestic market price change after imposing a $0.25 tariff per unit? (0.1 point) 6. Compared to free trade without trade barriers, how do the imports change after imposing a $0.25 tariff per unit? (0.1 point) ### Question 13 (0.5 point): Which of the following statements about the foreign exchange market is correct? *Choose all that apply* - The foreign exchange market is a global market - The foreign exchange market is a twenty-four-hour market - The foreign exchange market is where people can trade currencies ### Question 14 (0.5 point): An exchange rate expresses the value of one currency relative to another currency as the number of units of one currency required to purchase one unit of the other currency. Which of the following statements is correct? *Choose all that apply* - Exchange rates can vary over time - A nominal exchange rate is adjusted for changes in the two nations' price levels - There are no risks in foreign exchange markets - Exchange rates can change when the demand for or supply of a currency changes ### Question 15 (0.3 point): Which of the following materials served as the underlying commodity to establish convertibility for national currencies between the mid-1870s and 1914? *Choose one only* - Gold - Silver - Diamond ### Question 16 (0.4 point): Which of the following statements about the Bretton-Woods system is correct? *Choose all that apply* - The name came from the place where a conference was held - It established the dollar-standard exchange-rate system - It created the International Monetary Fund ### Question 17 (0.8 point): The figure below depicts a situation in which the equilibrium market dollar-per-pound exchange rate. Please answer the following questions. 1. What is the equilibrium exchange rate in this market? (0.2 point) 2. Under the Bretton Woods agreement, if the exchange rate becomes 2.80 $/£ (0.4 point) - What is the quantity of pounds supplied? - What is the quantity of pounds demanded? 3. In the scenario described in part (b), what would the Bank of England do to keep the exchange rate at 2.80 $/£? (0.2 point)