Economics Practice Questions

economics-1Economics is on most social studies subject area teacher certification tests.

 

 

 

 

 

1. As demand increases, supply tends to

a. decrease
b. increase
c. remain the same
d. fluctuate

2. As supply increases, prices tend to

a. Rise
b. Fall
c. Remain the same
d. Fluctuate

3. As economy of scale increase, products are

a. expensive to make at first, but eventually become less expensive to make
b. cheap to make at first, but eventually become more expensive to make
c. expensive to make because they are customized to individual customers
d. sold to the highest bidder

4. Which of the following is true of a free market economy?

a. The government owns the resources but allows citizens to own private property
b. The government owns the resources and does not allow citizens to own private property
c. Resources and private property are owned by citizens
d. Resources are owned by citizens, but not private property

5. Which of the following is true of a command economy?

a. The government owns the resources but allows citizens to own private property
b. The government owns the resources and does not allow citizens to own private property
c. Resources and private property are both owned by citizens
d. Resources are owned by citizens, but not private property

6. What is capital?

a. A measure of individual income
b. The head of a company, also known as the CEO
c. The resources needed to start or expand a business
d. A meeting place for a company’s board of directors

7. What is inflation?

a. An expansion of business
b. An increase in the value of money
c. A decrease in the value of money
d. A growth in unemployment

8. A country’s labor force excludes

a. Employees that work as professionals
b. Employees that are not union members
c. Employees that are union members
d. Children that are too young to work

9. Which of the following is a good example of a blue collar occupation?

a. Miner
b. Professor
c. Scientist
d. Accountant

10. What is consumer confidence?

a. the optimism held by the general public regarding the economy
b. the trust that consumers have that the products they buy are safe
c. the demand for a product
d. the marketing used to make products seem valuable

 

Answer Key

 

1. A 
As demand increases, supply tends to decrease. Choice B is incorrect; supply and demand tend to be inversely related. Choice C is clearly incorrect; demand has a strong influence on supply. Choice D is incorrect; demand has a predictable effect on supply.

2. B
As supply increases, prices tend to decrease. Choice A is incorrect; more supply lowers prices.   Choices C and D are incorrect; supply has a predictable effect on prices.

3. A
As economies of scale increase, products are expensive to make at first, but eventually become less expensive to make. This usually applies to large items, such as airplanes and cars. Choice B is incorrect; the opposite is true.  Choice C is incorrect; in this situation products are not customized to individual customers.  Choice D is incorrect; bidding is irrelevant to production.

4. C
In a free market economy, resources and private property are owned by citizens. Choices A and D are incorrect by definition. Choice B is the definition of a command economy.

5. B
In a command economy, the government owns the resources and does not allow citizens to own private property. Choices A and D are incorrect by definition. Choice C is incorrect; this is the definition of a free market economy.

6. C
Capital is the resources (namely money) needed to start or expand a business. Choice A is incorrect; per capita income is a measure of individual income. Choices B and D are incorrect but may sound plausible.

7. C
An increase in the value of money, or more precisely, a general increase in prices and fall in the purchasing value of money. Choice A is incorrect; inflation refers to currency, not business. Choice B is incorrect; this is the definition of deflation.  Choice D is incorrect; unemployment is irrelevant to inflation.

8. D
A country’s labor force excludes Children are too young to work and are not calculated as part of the job market. Choice A is incorrect; professionals are included. Choices B and C are incorrect but the word “labor” makes it seem plausible.

9. A
A miner is a physical laborer and a good example of a blue collar occupation. Choices B, C and D are incorrect; a professor, a scientist and an accountant are all professionals.

10. A
Consumer confidence is an economic indicator which measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation.  Choices B and C are incorrect but sounds plausible.

 

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Modified: October 2nd, 2017
Published: August 22nd, 2016

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