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Economics - Economics Section 1 Online Exam Quiz

Important questions about Economics - Economics Section 1. Economics - Economics Section 1 MCQ questions with answers. Economics - Economics Section 1 exam questions and answers for students and interviews.

1. Under perfect competition, what will a firm least likely earn in the long run?

Options

A : Normal profits.

B : Zero economic profit.

C : Positive economic profit.

D :

2. Two analysts made the following comments about labor productivity. Analyst 1 : Labor productivity is calculated by dividing total labor employed by total output. Analyst 2 : Marginal labor productivity is the most useful measure for analyzing the labor productivity as it considers addition to total product from increasing one more unit of labor. Which analyst is most likely correct?

Options

A : Analyst 1.

B : Analyst 2.

C : Both.

D :

3. The point at which the benefit of employing one more labor starts to decrease is most likely termed as:

Options

A : decreasing marginal productivity of labor.

B : declining marginal productivity of labor.

C : diminishing marginal productivity of labor.

D :

4. The Production Manager of a manufacturing company has gathered the following information:

Options

A : 1

B : 3

C : 5

D :

5. The Production Manager of a manufacturing company has gathered the following information:

Options

A : 0

B : 1

C : 3

D :

46. A firm operates in an industry where the average cost of production is falling over the relevant range of consumer demand. The barriers to entry are very high and the firm has significant pricing power. The best characterization of this firm’s market is:

Options

A : monopoly

B : oligopoly.

C : monopolistic competition

D :

47. Because of a sharp increase in real estate values, the household sector has decreased the fraction of disposable income that it saves. If output and investment spending remain unchanged, which of the following is the most likely scenario?

Options

A : A decrease in net exports and increased capital inflow.

B : A decrease in net exports and decreased capital outflow.

C : An increase in net exports and decreased capital outflow.

D :

48. The curve that represents combination of income and the real interest rate at which planned expenditure equals income is most likely the:

Options

A : LM curve.

B : IS curve.

C : Aggregate demand curve.

D :

49. The curve that represents combinations of income and the interest rate at which the demand for real money balances equals supply is most likely the:

Options

A : IS curve.

B : LM curve.

C : Aggregate demand curve

D :

50. Which of the following best describes the relationship depicted by the IS curve?

Options

A : When interest rates are high, investments rise and therefore income must rise as well.

B : When interest rates are high, investments fall and therefore income must fall as well.

C : Interest rates have no impact on the investment and income.

D :

51. Which of the following best describes the relationship depicted by the LM curve?

Options

A : When income increases, the demand for money increases and therefore interest rate must increase as well.

B : When income increases, the demand for money decreases and therefore interest rate must decrease as well.

C : Income has no impact on the demand for money and interest rates.

D :

52. Which of the following best describes the relationship shown by the AD curve?

Options

A : When price level decreases, the quantity of goods and services demanded decreases.

B : When price level decreases, the quantity of goods and services demanded increases.

C : Price level has no impact on the quantity of goods and services demanded.

D :

53. A decrease in government spending would most likely shift the:

Options

A : IS curve and the LM curve.

B : IS curve and the aggregate demand curve.

C : LM curve and the aggregate demand curve.

D :

54. A decrease in the nominal money supply would most likely shift the:

Options

A : IS curve and the LM curve.

B : IS curve and the aggregate demand curve.

C : LM curve and the aggregate demand curve.

D :

55. A decrease in the price level would most likely shift the:

Options

A : IS curve.

B : LM curve.

C : Aggregate demand curve.

D :

56. As the price level increases along the aggregate demand curve, the interest rate is most likely to:

Options

A : decline.

B : increase.

C : remain unchanged.

D :

57. Two analysts make the following statements: Analyst 1 : The short run aggregate supply curve is vertical and the long run aggregate supply curve is upward sloping. Analyst 2 : The short run aggregate supply curve is upward sloping and the long run aggregate supply curve is vertical. Which analyst is most likely correct?

Options

A : Analyst 1.

B : Analyst 2.

C : Both.

D :

58. If rents were automatically adjusted for changes in the price level, the shortrun aggregate supply curve would most likely be:

Options

A : flatter.

B : steeper.

C : unchanged.

D :

59. In the short run, the aggregate supply curve is best described as:

Options

A : flat because the price is more flexible than output in the short run.

B : flat because output is as flexible as prices in the short run.

C : upward sloping because input prices do not fully adjust to the price level in the short run.

D :

60. Decreased household wealth will most likely cause a decrease in:

Options

A : household saving.

B : investment expenditures.

C : consumption expenditures.

D :

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