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application of economics MCQs

Practise focused application of economics questions with marked answers for exam preparation and subject revision.

application of economics Mcqs

1. Suppose two economists are arguing about policies that deal with unemployment One economist says the government should fight unemployment because it is the greatest social evil The other economist response Nonsense Inflation is the greatest social evil These economists ?
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A. none of these answers.

B. really dont disagree at all It just appears that they disagree.

C. disagree because they have different scientific judgments.

D. disagree because they have different values.

2. The scientific method requires that ?
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A. The scientific use precision equipment.

B. only theories are tested.

C. the scientist be objective

D. only correct theories are tested

E. the scientist uses test tubes and have clean lab.

3. Suppose two economists are arguing about policies that deal with unemployment. One economist says. The government could lower unemployment by one percentage point if it would just increase government spending by 50 billion dollars the other economist responds Nonsense and poppycock! If the government spent an additional 50 billion dollars it would reduce unemployment by only one tenth of one percent. and that effect would only be temporary! These economists ?
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A. disagree because they have different values

B. Disagree because they have different scientific judgments

C. None of these answers

D. really dont disagree at all. It just appears that they disagree

4. In making which of the following statements is an economist acting more like a scientist ?
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A. The rate of inflation should be reduced because it robs the elderly of their savings.

B. A reduction in unemployment benefits will reduce the unemployment benefits will reduce the unemployment rate.

C. The unemployment rate should be reduced because unemployment robs individuals of their dignity.

D. The state should increase subsidies to universities because the future of our country depends on education.

5. Positive statements are ?
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A. Macroeconomic

B. Microeconomics

C. statements of description that can be tested

D. Statements of prescription that involve value judgments.

6. Which of the following statements regarding the circular-flow diagram is true ?
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A. If BAe Systems sells a military aircraft, the transaction takes place in the market for factors for production

B. None of these

C. The factors of production are owned by households

D. If Susan works for BAe Systems and receives a salary payment, the transaction takes place in the market for good and services.

7. Which of the following is not a factor of production ?
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A. capital

B. land

C. labor

D. money

8. Economic growth is depicted by ?
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A. a movement from inside the curve toward the curve.

B. a movement along a production possibilities frontier toward capital goods.

C. a shift in the production possibilities frontier inward

D. a shift in the production possibilities frontier outward.

9. Which of the following will not shift a countrys production possibilities frontier outward ?
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A. an advance in technology

B. a reduction in unemployment

C. an increase in the capital stock

D. an increase in the labor force

10. Which of the following statements is normative ?
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A. People work harder if the wage is higher

B. Printing too much money causes inflation

C. The unemployment rate should be lower

D. Large government deficits cause an economy to grow more slowly

11. Points on the production possibilities frontier are ?
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A. normative

B. unattainable

C. inefficient

D. efficient

12. In which of the following cases is the assumption most reasonable ?
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A. To model the benefits of trade. an economist assumes that there are two people and two goods

B. To address the impact of money growth on inflation, an economist assumes that money is strictly coins.

C. To address the impact to taxes on income distribution an economist assumes that everyone earns the same income.

D. To estimate the speed at which a beach ball falls, a physicist assumes that if falls in a vacuum.

13. Economic models are ?
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A. created to duplicate reality.

B. useless if they are simple.

C. Usually made of wood and plastic

D. built with assumptions.

14. Which of the following issues is related to microeconomics ?
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A. The impact of the deficit on saving

B. the impact of oil prices on car production

C. The impact of money on inflation

D. The impact of technology on economics growth

15. Which of the following is most likely to produce scientific evidence about a theory ?
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A. An economist employed by the Trades union congress doing research on the impact of trade policy on workers wages

B. An economist permanently employed at a leading university analyzing the impact of bank regulations on lending to small businesses

C. A radio talk show host collecting data from listeners on how capital markets respond to taxation

D. A lawyer employed by Renault addressing the impact of air bags on passenger safety.

16. Which of the following statements about microeconomics and macroeconomics is not true ?
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A. Microeconomics is a building block for macroeconomics

B. Macroeconomics is concerned with economy-wide phenomena

C. Microeconomics and macroeconomics cannot be entirely separated

D. The study of very large industries is a topic within macroeconomics

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