Honor Economics Practice Exam

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• What is the IS-LM framework used for?
• What term refers to a stock of a resource from which a person or place can be provided with the necessary amount?
• Which term describes the tax system where the average tax rate increases with income?
• A component of aggregate demand including all spending on capital equipment, inventories, and technology by firms; excludes financial investment.
• Which term means 'In short supply; not plentiful'?
• Which term means 'Development of skills in a specific kind of work'?
• Which term is used to denote the responsiveness of quantity demanded or supplied to changes in various determinants such as income or prices of related goods?
• Which market structure is characterized by a single seller, high barriers to entry, and no competition?
• A business that is owned by many investors who buy shares of stock is called
• What is a price ceiling?
• Define price elasticity of demand and the formula.
• What is the difference between nominal and real interest rates?
• What is market power?
• How is GDP measured using the expenditure approach? List the components.
• Which type of unemployment occurs when workers lose jobs due to structural shifts in the economy, such as industry changes?
• Which statement best defines inflation and the role of the CPI?
• The ability of a country to produce a good at a lower cost than another country can.
• Which field studies individual consumers and businesses?
• Define comparative advantage and explain why trade occurs.
• Which term describes an increase in the value of an asset over time?
• An entrepreneur chooses to allocate time to building a skill instead of earning wages. The opportunity cost is:
• Give an example of a positive externality and a policy to encourage it.
• Which term represents government financial support provided to a business or market?
• Which description best fits an economy where private enterprise exists alongside substantial government regulation and promotion?
• A government payment that supports a business or market.
• What is consumer surplus and how is it measured on a demand curve?
• Which statement best describes the tragedy of the commons and a common policy solution?
• What term describes 'Cost of the next best alternative use of money, time, or resources when one choice is made rather than another'?
• Which of the following best describes a normal good?
• Which statement best describes crowding out in fiscal policy?
• Which term describes the category of spending by firms on capital equipment and inventories, excluding financial investments?
• What is a public good and why is it underprovided in a free market?
• Which term describes 'A group of buyers and sellers of a particular good or service' (different phrasing)?
• Which term describes 'Extra cost of producing one additional unit of production'?
• Which term describes a government's policy tool used to influence the economy by adjusting taxation and spending?
• Which term describes 'An economic system controlled by strong, centralized government, which usually focuses on industrial goods. With little attention paid to agriculture and consumer goods'?
• What is a sunk cost and why should it be ignored in decision-making?
• Which statement best defines deadweight loss on a supply and demand graph?
• What is a price floor?
• Explain the production possibility frontier (PPF) and the meaning of points inside, on, and outside the curve.
• Which term describes a long-term economic state characterized by high unemployment, low prices, and reduced levels of trade and investment?
• A tax in which the burden falls relatively more heavily on low-income groups than on wealthy taxpayers; the opposite of a progressive tax.
• Which policy tool is aimed at stabilizing the economy by influencing the money supply and credit conditions?
• Which curve represents the maximum combination of two goods that can be produced with available resources and technology?
• In public goods, what does non-excludable mean?
• What is the difference between a tariff and a quota?
• What is opportunity cost?
• Which term is used to describe a policy instrument that raises the cost of imported goods to protect domestic industries?
• Which term means 'The study of how people and societies use limited resources to satisfy unlimited wants' (repeated concept for testing)?
• Define externality and give examples of positive and negative externalities.
• Which term describes the tax burden that falls more heavily on low-income groups relative to high-income groups?
• Automatic stabilizers and give two examples.
• Explain the law of one price and why it might fail in reality.
• Which term describes 'The additional benefit to a consumer from consuming one more unit of a good or service'?
• Which description best captures monetary policy and its typical objectives?
• Which term describes the overall study of price, output, and employment in the economy?
• A tax by which the government takes the same share of income from everyone.
• Net Exports are defined as:
• Pure Competition barriers to entry are:
• Which term describes a decrease in the value of an asset over time?
• Which statement describes long-run equilibrium under perfect competition?
• The total amount of goods and services in the economy available at all possible price levels.
• Three Business Organizations
• What is a Nash equilibrium?
• Consumer surplus is best described as:
• The ability to produce a good using fewer inputs than another producer.
• Which feature characterizes a public good?
• Which market structure consists of a few firms, high barriers, and products that may vary?
• Which description best captures the idea of supply-side economics?
• Which concept describes the flow of goods and services from firms to households and of resources from households to firms?
• On the production possibility frontier, which point represents efficient production?
• Which term is defined as the measure of the responsiveness of quantity demanded or supplied to a change in one of its determinants?
• Define oligopoly and give an example of strategic interaction.
• Inelastic demand implies what happens to total revenue when price increases?
• Which list correctly names the three common business structures?
• Open market operations are used to influence which aspects of policy?
• Which business organization typically has limited liability for owners?
• Which term describes a regulated investment company with a pool of assets that regularly sells and redeems its shares?
• In the balance of payments, a large capital outflow from investors seeking to purchase foreign assets would be recorded in which account?
• If demand is perfectly inelastic, what happens to total revenue when price increases?
• Which term describes 'The cost of the next best alternative use of money, time, or resources when one choice is made rather than another' (alternate phrasing)?
• A period of declining real GDP, accompanied by lower real income and higher unemployment.
• Which statement best defines an exchange rate regime?
• Which type of unemployment results from economic downturns causing overall job losses?
• Which term is 'A group of buyers and sellers of a particular good or service'?
• Which unemployment type results from workers transitioning between jobs or entering the workforce?
• The amount of goods and services in the economy that will be purchased at all possible price levels.
• What is the quantity supplied and demanded at the equilibrium price called?
• Automatic stabilizers operate automatically during economic fluctuations; which pair is a classic example?
• Which statement correctly describes fiscal policy and its typical tools?
• Which term describes the total accumulation of past deficits and surpluses owed by the government?
• Which statement about a point inside the PPF is true?
• What is the price that balances quantity supplied and quantity demanded called?
• An internationally recognized definition of technical specifications that ensure worldwide consistency.
• Tariffs affect domestic consumers, producers, and government revenue in what way?
• Which term describes a government policy for dealing with the budget, especially through taxation and borrowing?
• Real GDP uses base-year prices to value output; what is true about the base year?
• What is the balance of payments and its two main accounts?
• Which term refers to a period of rising prices while output falls and unemployment rises?
• When does a country's currency appreciate?
• Which term corresponds to 'A source or supply or support'?
• In a market, a situation where quantity supplied exceeds quantity demanded is known as a surplus.
• What term refers to the total amount the national government owes, distinct from private debts?
• What is purchasing power parity (PPP) and when does it fail?
• Business organizations in which two or more persons share responsibilities, costs, profits, and losses.
• If a firm has economies of scale, what happens to average costs as output increases?
• Which term is defined as the difference between annual government spending and revenue?
• Which field studies aggregate economic activity such as inflation and GDP?
• A measurement that shows how the average price of a standard group of goods changes over time.
• The measure of how much one currency is worth in relation to another.
• Distinguish normal goods from inferior goods.
• Which type of unemployment is caused by workers between jobs or voluntarily changing jobs?
• Which term describes a tax where the burden is the same percentage of income for all?
• Define the marginal propensity to consume (MPC) and the fiscal multiplier.
• In perfect competition, why do firms earn zero economic profit in the long run?
• Which action would lead to depreciation of a country's currency in the foreign exchange market?
• A business owned by one person is called
• In a market with upward-sloping supply and downward-sloping demand, a leftward shift in demand due to a decrease in consumer income will lead to what effect on equilibrium price and quantity, ceteris paribus?
• What is monopoly deadweight loss and under what conditions does it arise?
• What is the difference between a budget deficit and the national debt?
• Which term describes a prolonged and severe downturn in economic activity?
• In the long run, a perfectly competitive firm earns zero economic profit; price equals minimum ATC.
• Which economic system is based on customs and traditions with economic roles passed down through generations?
• What term describes the situation where federal expenditures exceed federal revenues?
• Which transaction is part of the capital/financial account rather than the current account?
• GDP stands for which term?
• Which term describes a government order imposing a trade barrier that restricts imports?
• What term is defined as the study of how people and societies use limited resources to satisfy unlimited wants; the management of scarcity and choice?
• Which term describes 'A system controlled by strong centralized government, focusing on industrial goods' (alternative wording)?
• Which term means 'To distribute according to some plan or system' (reworded)?
• Which statement best describes the current account of the balance of payments?
• Disposable income not spent for consumer goods is called?
• What is the typical effect of an open market purchase by the central bank?
• A measure of the total flow of money into or out of a country.
• Which term describes demand that is not very sensitive to a change in price?
• What is the unemployment rate and what are the three types of unemployment?
• What is the name of the central bank system in the United States consisting of regional banks and a board of governors?
• Which market structure has many firms, low barriers, differentiated products, and some control over prices?
• A government order imposing a trade barrier.
• What is the term for a graph showing the maximum possible production of one good for every possible output level of another good?
• What does a positive cross-price elasticity indicate?
• A measure of whether a borrower is able to pay back a loan in a timely manner.
• Where does the marginal cost curve intersect the average total cost curve?
• Which statement describes marginal product of labor and the law of diminishing returns?
• What term describes demand that is highly responsive to price changes?
• Distinguish short run and long run in macroeconomics.
• Which policy would most directly increase a country's potential output in the long run?
• Which law states that suppliers offer more of a good at higher prices?
• Which force describes the relationship between price and the quantity producers are willing to supply?
• Which term describes the government policy that manages the economy by controlling the money supply and interest rates?
• What term refers to a certificate issued by a government or private entity promising to repay borrowed money with interest?
• Which unemployment type arises from a lack of demand during a downturn?
• How does marginal revenue relate to price in perfect competition?
• Which principle describes consumers buying more of a good when its price falls and less when it rises?
• Which term refers to internationally recognized definitions ensuring global product compatibility?
• What is a dominant strategy in game theory?
• GDP = C + I + G + X. Which components are included in this formula?
• Which example best fits a sole proprietorship?
• What is defined as a continuous rise in the price of goods and services?
• A tariff's effect on consumer surplus is best described as?
• Which term refers to a fund that pools assets and sells/redeems its shares?
• A government tax on imports or exports.
• Which statement about corporations is true?
• Which statement about marginal cost and average total cost is true?
• Which are characteristics of a perfectly competitive market?
• Define terms of trade.
• GDP stands for what?
• Which pair best captures the typical objectives of monetary policy?
• Which statement describes aggregate demand?
• Explain the difference between gross domestic product (GDP) and real GDP.
• When a firm hires more workers while other inputs are fixed, what happens to the marginal product of labor?
• What does the production possibility frontier illustrate?
• Which market structure features unlimited firms, low to no barriers to entry, one product, and price takers?
• The difference in value over a period of time of a country's imports and exports of merchandise is called what?
• Price discrimination is the practice of charging different prices to different consumers; it is most common in markets with some market power. Which option best describes this concept?
• Which tax charges the average rate rises with income?
• Which statement accurately describes how the Consumer Price Index (CPI) is measured?
• Which of the following is a factor that can affect price determination?
• If export prices rise relative to import prices, what happens to a country's terms of trade?
• Which term means 'To distribute according to some plan or system'?