Pool of Questions of Economix Quizbee 2013

MICROECONOMICS

1.) What does point A on the graph below represent?

a.) elastic portion of the demand curveb.) inelastic portion of the demand curvec.) the equilibrium point of the demand curved.) there is no sufficient information

ANSWER: ASOURCE: Chapter 2 ppt of Microeconomics Pindyck and Rubinfeld slide number 38

2.) The theory of consumer behavior made assumptions regarding people’s preferences for one basket of goods over the other. Which of the following assumptions does not belong to the group?

a.) transitivityb.) diminishing marginal rate of substitutionc.) budget constraintsd.) more is better than less

ANSWER: CSOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 70 & 75

3.) What occurs when there is a situation in which the marginal rate of substitution of one good for another in a chosen market basket is not equal to the slope of the budget line?

a.) Paasche indexb.) multiplant firmc.) corner solutiond.) special case of marginal utility

ANSWER: CSOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 90

4.) Which of the following statements are correct? (Assuming X and Y are different goods)

I. The consumer is indifferent between points A, B and CII. Point E is preferred to point BIII. Point B is preferred to point F so point E is preferred to point FIV. Point D is preferred to point A

a.) I, II c.) I, II, IIIb.) I, III, IV d.) I, II, III, IVANSWER: CSOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 70-72

5.) What market basket should the consumer choose in order to maximize consumer satisfaction? (Assuming X and Y are different goods)

a.) market basket A c.) either market basket A or Bb.) market basket B d.) no sufficient informationANSWER: A

6.) Which of the following formula is consistent with marginal rate of substitution (MRS)?I. MUx ( X) + MUY ( Y)II. MRS= Px + PYIII. MUx / Px = MUY / PY IV. MUx / PY = MUY / PX

a.) I, II, III c.) I, II, IVb.) I, III, IV d.) II, III, IVANSWER: ASOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 96

7.) What curve traces the utility maximizing combinations of two goods as the price of one changes?a.) indifference curvesb.) price-consumption curvec.) product transformation curved.) market supply and demand curve equilibrium

ANSWER: BSOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 113

8.) What is evident if each seller of ice cream has limited control over the price because other sellers are offering similar products?a.) Monopolyb.) Regulated marketsc.) Competitive marketsd.) Free markets

ANSWER: CSOURCE: Economics Principles by N. Gregory Mankiw page 88

9.) Any change that increases the quantity demanded at every price shifts the demand curve to the right and is called an increase in demand. Is that statement true or false?

a.) True b.) FalseANSWER: ASOURCE: Economics Principles by N. Gregory Mankiw page 91

10.) What do you call a good for which, other things being equal, an increase in income leads to a decrease in demand?a.) Giffen goodb.) Normal goodc.) Public goodd.) Inferior good

ANSWER: DSOURCE: Economics Principles by N. Gregory Mankiw page 92

11.) Which of the following variables does not shift the supply curve?a.) Input pricesb.) Expectationsc.) Increase in price d.) Technology

ANSWER: CSOURCE: Economics Principles by N. Gregory Mankiw page 9812.) What is the curve relating the quantity of a good consumed to income?

a.) indifference curve c.) income-consumption curveb.) price-consumption curve d.) Engel curve

ANSWER: DSOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 116

13.) The Bandwagon effect is a negative network externality in which a consumer wishes to own an exclusive or unique good.a.) true b.) false


14.) A network externality is said to happen if an individual’s demand depend ona.) The change in the individual’s preferences for the product relative to other productsb.) The imposition of government restrictionsc.) The purchases of other individualsd.) Any of the above


15.) In solving the consumer’s optimization problem using the Lagrange methodology, the variable λ represents:

a.) The marginal rate of substitutionb.) The equal marginal principlec.) The marginal utility of incomed.) The value of utility at the consumer’s selected market basket


16.) To determine whether a good is a luxury or a necessity, we need to know:a.) The slope of its income-consumption curveb.) The elasticity of its demand curve at the given price levelc.) The slope of its Engel curved.) The elasticity of its Engel curve at the given income level

ANSWER: DSOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 116-117

17.) Price elasticity demand is a measure of how much the quantity demanded of a good responds to a change in price of that good, computed as the percentage change in price divided by the percentage change in the quantity demanded. Is that statement true or false?

a.) True b.) FalseANSWER: BSOURCE: Economics Principles by N. Gregory Mankiw page 114

For number 18 and 19 use the figure below:

18.) At point A in the figure above where the broken line is tangent to the TP curve

a.) MP is increasingb.) MP is decreasingc.) MP is at its maximumd.) MP is at its minimum

ANSWER: B

19.) At point A in the figure above: a.) AP is at its minimumb.) AP = MPc.) AP = 0d.) None of the above


20.) In the figure below, the slope of the broken line starting at the origin and tangent to the VC curve at point A equals

a.) The average variable cost when output is 7b.) The marginal cost when output is 7c.) The average variable cost at its minimumd.) All the above

ANSWER: DSOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 23021.) The firm’s expansion path contains the same information as:

a.) Long-run production functionb.) Long-run total cost curvec.) Long-run profit curved.) None of the above


22.) The long run average cost curve

a.) Is the envelop of all the short run average cost curvesb.) Lies below all the short run average cost curvesc.) Is tangent to all the short run average cost curvesd.) All of the above


23.) What happens when there are economies of scale?a.) Marginal cost is less than average cost and cost-output elasticity is less than 1b.) Marginal cost is greater than average cost and cost-output elasticity is less than 1c.) Marginal cost is less than average cost and cost-output elasticity is greater than 1b.) Marginal cost is greater than average cost and cost-output elasticity is greater than 1

ANSWER: ASOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 247

24.) There are diseconomies of scale when:a.) cost-output elasticity (Ec) is greater than 1 and scale of economies index is negativeb.) cost-output elasticity (Ec) is 1 and scale of economies index is negativec.) cost-output elasticity (Ec) is less than 1 and scale of economies index ispositived.) cost-output elasticity (Ec) is 1 and scale of economies index is 0

ANSWER: A SOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 258

25.) When solving a firm’s cost-minimization problem using the method of Lagrange, the variable λ represents:a.) Maximized profit b.) Marginal costc.) Profit-maximizing outputd.) None of the above


26.) The Cobb-Douglas production function ( F (K,L) = AK α L β) exhibits increasing returns to scale whena.) α+β = 1b.) α+β < 1c.) α+β > 1d.) α+β= 0


27.) The market is perfectly competitive whena.) Firms are not price takersb.) Firms can freely enter but not exit the marketc.) Heterogeneous productsd.) none of the above

ANSWER DSOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 272

28.) A firm’s producer surplus in the short run can be measured by taking:a.) Profit plus fixed costb.) The sum of overall units produced by a firm of differences between the market price of a good and the marginal cost of production c.) Revenue minus variable costd.) Any of the above


29.) In the long-run competitive market reaches its equilibrium whena.) All firms maximize profitsb.) Firms earn zero economic profitsc.) The price of the product is such that the quantity supplied by the industries is equal to the quantity demanded by consumersd.) All of the above


30.) When two goods are substitutes, their cross-price elasticity is ____________, whereas complements have a cross-price elasticity that is ______________.

a.) negative, positive c.) one, zerob.) positive, negative d.) zero, one

ANSWER: BSOURCE: Economics Principles by N. Gregory Mankiw page 123

31.) When the market price of a good (sa Php 20) is higher than the price ceiling (say Php 15), we can say that it has a binding constraint on the market. Is the statement true or false?

a.) True b.) FalseANSWER: ASOURCE: Economics Principles by N. Gregory Mankiw page 138

32.) When supply is more elastic than demand, the incidence os the tax falls more heavily on producers than on consumers. Is the statement true or false?

a.) True b.) FalseANSWER: BSOURCE: Economics Principles by N. Gregory Mankiw page 153

33.) When demand is relatively elastic, the deadweight loss of a tax is ____________, whereas when demand is relatively inelastic, the deadweight loss of a tax is _______________.

a.) large, smallb.) small, largec.) No sufficient information

ANSWER: ASOURCE: Economics Principles by N. Gregory Mankiw page 189

34.) Which of the following is not included in the benefits of international trade?a.) Increased variety of goodsb.) Lower costs through economies of scalec.) Enhanced flow of ideasd.) None of the above

ANSWER: DSOURCE: Economics Principles by N. Gregory Mankiw page 208-210

35.) What do you call the idea that taxpayers with similar abilities to pay taxes should pay the same amount?a.) Vertical equityb.) Horizontal equityc.) Pareto efficiencyd.) Informational efficiency

ANSWER: BSOURCE: Economics Principles by N. Gregory Mankiw page 274

36.) Which of the following belongs to the sources of monopoly power?a.) Number of sellersb.) Elasticity of Demandc.) Elasticity of Supplyd.) Interaction among sellers


37.) The government is better off domestically to impose a quota than to impose a tax.a.) true b.) false


38.) The benefit of a subsidy accrues mostly to buyers ifa.) Ed / Es is largeb.) Ed / Es is smallc.) Ed / Es is equal to zerod.) no sufficient information


39.) Monopolist can charge a price above marginal cost because it faces a downward-sloping demand, or average curve, so that marginal revenue is less than average revenue. Is this statement true or false?

a.) true b.) falseANSWER: ASOURCE: Microeconomics by Robert Pindyck and Daniel Rubinfeld 7th edition page 376

40.) What is the criterion of “best fit” used to choose values for regression parameters, usually by minimizing the sum of squared residuals between the actual values of the dependent variable and the fitted values?

a.) tit-for-tat strategy b.) effective yieldc.) multiple regression analysisd.) Least- squares criterion


MONEY AND BANKING

1.) Which of the following does not belong to the function of financial market?a.) Channeling funds from economic players that have saved surplus funds to those that have a shortage of fundsb.) Borrowers borrow funds directly from lenders in financial markets by selling them securities.c.) Promotes economic efficiency by producing an efficient allocation of capital, which increases production d.) Directly improves the well-being of producers by allowing them to connect with each other

ANSWER: DSOURCE: Mishkin Chapter 2 powerpoint slide # 2-3

2.) Which of the following does not belong to the structure of financial markets?a.) Exchanges and Over-the-Counter (OTC) Marketsb.) Debt and Equity Marketsc.) Goods and Services Marketsd.) Money and Capital Markets

ANSWER CSOURCE: Mishkin Chapter 2 powerpoint slide # 5-6

3.) What is a bond that is denominated in a currency other than that of the country in which it is sold?a.) Foreign bondsb.) Eurobondc.) Government bondsd.) Corporate bonds

ANSWER BSOURCE: Mishkin Chapter 2 powerpoint slide # 9

4.) What do you call the process in which the borrower ensures that he will not engage in activities that will prevent him/her to repay the loan?

a.) Moral Hazardb.) Adverse Selectionc.) Asymmetric informationd.) Monetary Hazard

ANSWER ASOURCE: Mishkin Chapter 2 powerpoint slide # 11

5.) Which of the following does not use deposits as their primary liability for the sources of funds?a.) Mutual savings banksb.) Credit unionsc.) Commercial banksd.) Mutual funds

ANSWER DSOURCE: Mishkin Chapter 2 powerpoint slide # 13

6.) All of the following are ensured for the soundness of financial intermediaries excepta.) Disclosure of informationb.) Control holding of risky assetsc.) Deposit insuranced.) Encourage competition


7.) What is the total collection of pieces of property that serve to store value?a.) Moneyb.) Wealthc.) Incomed.) Assets


8.) Which of the following is not a function of money?a.) Unit of Accountb.) Store of Valuec.) Source of stabilityd.) Medium of exchange

ANSWER CSOURCE: Mishkin Chapter 3 powerpoint slide # 4-5

9.) What do you call the paper money decreed by governments as legal tender?a.) Fiat Moneyb.) Commodity Moneyc.) E-moneyd.) Checks

ANSWER ASOURCE: Mishkin Chapter 3 powerpoint slide # 6-7

10.) Which of the following is not included in M2?a.) M1b.) savings and money depositsc.) small denomination time depositsd.) stock market mutual fund shares


11.) What is the reason why it matters which measure of money is considered?a.) It can move in different directions in the short runb.) It can move in different directions in the long run

c.) Both a and b are correctd.) None of the above


12.) What is the formula on solving the present value?a.) Future cash flow divided by one plus the interest rate raised to the number of years (1+i)n

b.) Future cash flow divided by one minus the interest rate raised to the number of years (1-i)n

c.) Present cash flow divided by one plus the interest rate raised to the number of years (1+i)n

d.) Present cash flow divided by one minus the interest rate raised to the number of years (1-i)n


13.) What are the four types of credit market instruments?a.) Banking Loan, Ratio Payment loan, Coupon Bond, Discount Bondb.) Simple Loan, Fixed Payment Loan, Coupon Bond, Discount Bondc.) Banking Loan, Ratio Payment loan, Market Bond, Government Bondd.) Simple Loan, Fixed Payment Loan, Market Bond, Government Bond


14.) What do you call the interest rate that equates the present value of cash flow payments received from a debt instrument with its value today?

a.) Nominal interest rateb.) Perpetuityc.) Fischer Indexd.) Yield to Maturity


15.) When the coupon bond is priced at its face value, the yield to maturity equals __________________.a.) the coupon rateb.) the coupon pricec.) the coupon valued.) the coupon yield


16.) The price of a coupon bond and the yield to maturity are _____________________.a.) positively relatedb.) negatively relatedc.) equally relatedd.) Does not have a relation


17.) What do you call a bond with no maturity date that does not repay principal but pays fixed coupon payments forever?a.) Free bondb.) Discount bondc.) Perpetuityd.) Market bond

ANNSWER CSOURCE: Mishkin Chapter 4 powerpoint slide # 11

18.) There is no interest-rate risk for any bond whose time to maturity matches the holding period. Is this statement true of false?a.) true b.) false


19.) Which of the following does not belong to the Theory of Asset Demand holding all other factora constant?a.) The quantity demanded of an asset is positively related to wealthb.) The quantity demanded of an asset is positively related to its expected return relative to alternative assetsc.) The quantity demanded of an asset is positively related to the risk of its returns relative to alternative assetsd.) The quantity demanded of an asset is positively related to its liquidity relative to alternative assets

ANSWER CSOURCE: Mishkin Chapter 5 powerpoint slide # 3

20.) At lower prices (higher interest rates), ceteris paribus, the quantity supplied of bonds is_________________.a.) lowerb.) higher c.) the samed.) No sufficient information


21.) Which of the following does not cause a shift in the demand for bonds?a.) Wealthb.) Riskc.) Incomed.) Liquidity


22.) What occurs when the issuer of the bond is unable or unwilling to make interest payments or pay off the face value?a.) Default riskb.) Primary riskc.) Risk premiumd.) Involuntary risk


23.) What do you call the interest rate on a long-term bond will equal an average of short-term interest rates expected to occur over the life of the long-term bond plus a liquidity premium that responds to supply and demand conditions for that bond?

a.) Yield Theoryb.) Expectations Theoryc.) Segmented Markets Theoryd.) Liquidity Premium & Preferred Habitat Theories


24.) What do you call the model in which dividends are assumed to continue growing at a constant rate forever? (The growth rate is assumed to be less than the required return on equity)

a.) Generalized Dividend Valuation Modelb.) One Period Valuation Modelc.) Gordon Growth Modeld.) Rational Expectations Model


25.) Which of the following does not include in the evidence against market efficiency?a.) January Effectb.) Mean Reversionc.) Market Overreactiond.) Large-firm Effect


26.) Which of the following does not belong to the eight basic facts of financial structures?a.) Stocks are the most important sources of external financing for businessesb.) Issuing marketable debt and equity securities is not the primary way in which businesses finance their operationsc.) Indirect finance is many times more important than direct financed.) Financial intermediaries are the most important source of external funds


27.) Which of the following does not belong to the sources of financial crises?a.) Government fiscal imbalancesb.) Problems in the banking sectorc.) Asset market effects on balance sheetsd.) Decreases in interest rates


28.) Which of the following does not belong to the four tools of asset management?a.) Find borrowers who will pay high interest rates and have low possibility of defaultingb.) Purchase securities with high returns and low riskc.) Lower risk by diversifyingd.) Balance need for liquidity against increased returns from high liquid assets


29.) The following are benefits of bank consolidation excepta.) Increased competitionb.) Increased efficiency also from economies of scale and scopec.) Lower probability of bank failure from more diversified portfoliosd.) Banks expanding into new areas


30.) Which of the following does not include in the players in the money supply process?a.) Central bank

b.) Firmsc.) Depositorsd.) Borrowers


31.) The Federal Reserve System’s (FED’s) balance sheet include everything excepta.) Government securitiesb.) Reservesc.) Discount loansd.) Stocks


32.) All of the following are tools of monetary policy excepta.) Open market operationsb.) Discount loansc.) Changes in reserve requirementsd.) Stock exchange market


33.) What sets up a standing lending facility (lombard facility) and stands ready to loan overnight any amount banks ask for at a fixed interest rate (lombard rate)?

a.) Corridor Systemb.) Contractual Clearing Balancesc.) Securities Portfoliod.) Autonomous Loans


34.) Which of the following is not included in the origins of inflationary monetary policy?a.) Cost-push inflationb.) Demand-pull inflationc.) Time-consistency problemd.) Budget deficits


35.) What do you call the rate of unemployment at which there is no tendency for inflation to change?a.) Taylor Ruleb.) NAIRUc.) Phillips Curved.) Fischer Index


36.) When a country’s currency depreciates, the country’s goods abroad become more expensive and foreign goods in that country become less expensive. Is the statement true of false?

a.) true b.) falseANSWER BSOURCE: Mishkin Chapter 17 powerpoint slide # 4

37.) What do you call a one-time percentage rise in the money supply is matched by the same one-time percentage rise in the price level that happens in the long run?

a.) Theory of Purchasing Power Parityb.) Exchange Rate Overshootingc.) Monetary Neutralityd.) Forward Transaction


38.) What do you call the attempt to influence exchange rates by buying and selling currencies?a.) Fixed exchange rate regime

b.) Dirty Floatc.) Floating exchange rate regimed.) DollarizationANSWER B

SOURCE: Mishkin Chapter 18 powerpoint slide # 7

39.) Which of the following does not belong to the Keynes’s Liquidity Preference Theory?a.) Transactions Motiveb.) Precautionary Motivec.) Speculative Demandd.) Distinguishes between real and nominal quantities of money

ANSWER C

SOURCE: Mishkin Chapter 19 powerpoint slide # 6

40.) Which of the following does not belong to the component of aggregate demand?a.) Government Spendingb.) Consumptionc.) Interest Ratesd.) Net Exports


HISTORY

1.) Who is considered as the father of modern Economics? (B)a. John Maynard Keynesb. Adam Smithc. Karl Marxd. Milton Friedman

2.) In the year 1776, the Declaration of Independence was signed. In the same year, this important work by a famous economist was published. (C)a. Principles of Economicsb. Philosophy of Economicsc. Wealth of Nationsd. An Essay to the Principles of Population

3.) Metaphor conceived by Adam Smith in his work about how the market regulates itself. (A)a. Invisible Handb. Supply and Demandc. Philips Curved. Free-Rider Problem

4.) British political economist known for his idea of comparative advantage and rent. (D)a. Karl Marxb. Alfred Marshallc. Adam Smithd. David Ricardo

5.) Which of the following did David Ricardo contribute to economics? (C)a. Short Run Supply Curveb. Utilityc. Comparative Advantaged. Supply and Demand

6.) In what year was Adam Smith’s book “Wealth of Nations” published? (B)a. 1775b. 1776c. 1777d. 1778

7.) Economist who predicted that food will eventually become scarce due to the increasing Population (D)a. Henry Georgeb. Adam Smithc. Karl Marxd. Thomas Malthus

8.) Malthus failed to consider this aspect in his prediction about food becoming scarce as population exponentially grows (B)a. Populationb. Technologyc. Fertility Rated. Resources Available

9.) David Ricardo popularized the economic theory of ______ (A)a. Rentb. Diminishing Marginal Returnsc. Diminishing Marginal Utilityd. Production

10.) The economist considered as the founder modern macroeconomics and most influential economist in the 20th century. (D)a. Thomas Malthusb. Adam Smithc. Henry George

d. John Maynard Keynes11.) Theory of Economics, characterized by the economy’s total spending and its effects on output and inflation.(A)

a. Keynesian Economicsb. Malthusian Theoryc. Invisible Handd. Liquidity Trap

12.) Which of the following statements about Keynesian Economics is NOT true? (C)a. was conceptualized by John Maynard Keynesb. served as the economic model adopted by most countries after the World War IIc. advocates a purely capitalist form of governmentd. responsible for concepts such as the ISLM and Philips Curve

13.) American Economist in the 20th century who received the Nobel Memorial Prize in Economic Sciences. (B)a. Karl Marxb. Milton Friedmanc. Thomas Malthusd. David Ricardo

14.) Milton Friedman reinterpreted what economic concept from the Keynesian Theory of Economics? (B)a. Production Functionb. Consumption Functionc. Utility Functiond. All of the above

15.) Economist responsible for conceptualizing a type of economic efficiency where, after allocating the goods, no one can be made better off without making the other worse off. (D)a. John Maynard Keynesb. Karl Marxc. Adam Smithd. Vilfredo Pareto

16.) American political economist known for conceptualizing land tax values (A)a. Henry Georgeb. Joseph Schumpeterc. Alfred Marshalld. Karl Marx

17.) Henry George’s work (1879) about inequality brought about by industrialization, cyclical nature of industrialization and land value tax as a remedy. (B)a. Manifestob. Progress and Povertyc. Principles of Economicsd. An Essay to the Principles of Industrialization

18.) Considered as the founder of Neo-Classical Economics (A)a. Alfred Marshallb. Henry Georgec. Joseph Schumpeterd. None of the Above

19.) Which historical event inspired Henry George to write about inequality and the value of land? (B)a. Renaissanceb. Industrializationc. European Colonizationd. Medieval Period

20.) Most important book written by Alfred Marshall that was dominantly used in his time. (C)a. Microeconomicsb. Macroeconomicsc. Principles of Economicsd. Economic Concepts

21.) Economist who contributed innovation based and change-oriented economics in the 20th century. (A)a. Joseph Schumpeterb. Jose Encarnacion Jr.c. John Maynard Keynesd. None of the Above

22.) This forum or group of countries was formed to further enhance economic growth and prosperity for the region to which these countries belong. An intergovernmental grouping, this forum operates on the basis of non binding commitments, open dialogue and equal respect for the views of all participants. Its 21 member economies account for 40% of the world population, 55% of the world’s GDP and about 44% of world trade. What is this group commonly called? (A)a. APECb. OPECc. ASEANd. None of the above

23.) Countries whose main export is crude oil established a group that aims to manage the exportation of such product to the world. Since then, it has greatly influenced the world price of crude oil, especially when it decides to increase or decrease its level of production. At present, it produces 40% of the world’s crude oil and about 19% of its natural gas. (A)a. OPECb. ASEANc. APECd. None of the Above

24.) This agreement was established after the Second World War to promote economic cooperation as well as to provide an agency that would address issues related to trade. (C)a. NAFTAb. GAAPc. GATTd. UNESCO

25.) When was the Asia-Pacific Economic Cooperation established? (D)a. 1986b. 1987c. 1988d. 1989

26.) What year was the Organization of Petroleum Exporting Countries established? (A)a. 1960b. 1961c. 1962d. 1963

27.) Historical event that shaped the development of modern macroeconomic theories: (C)a. Pearl Harborb. The Great Schismc. Great Depressiond. None of the Above

28.) Economist responsible for the Impossibility Theorem about the formulation of social preference. (D)a. John Hicksb. Arthur Cecil Pigouc. Henry Georged. Kenneth Arrow

29.) Joint winner of the Nobel Memorial Prize in Economics along with Kenneth Arrow (A)a. John Hicksb. Arthur Cecil Pigouc. Henry Georged. Kenneth Arrow

30.) John Hicks was responsible for the following contributions EXCEPT: (D)a. Consumer Demand Theoryb. IS/LMc. Value and Capital Bookd. Aggregate Supply and Aggregate Demand

31.) Economist known for his concept of internalizing externalities. (B)a. John Hicksb. Arthur Cecil Pigouc. Henry Georged. Kenneth Arrow

32.) When was the National Economic Development Authority created/established? (C)a. 1971b. 1972c. 1973d. 1974

33.) Who was the organizer of NEDA and also the author of a popular elementary economics book?(D)a. Jose Encarnacion Jr.b. Raul Fabellac. Arsenio Balisacand. Gerardo Sicat

34.) New Zealand economist who contributed the curve describing the relationship between inflation and unemployment. (D)a. Herman Paascheb. Ernst Engelc. Max O. Lorenzd. William Philips

35.) Philippine economist known for his contribution: Lexicographic Preferences (A) a. Jose Encarnacion Jr.b. Raul Fabellac. Arsenio Balisacan

d. Gerardo Sicat36.) German statistician and economist who contributed the curve describing the relationship between household expenditure

and household income. (B)a. Herman Paascheb. Ernst Engelc. Max O. Lorenzd. William Philips

37.) American economist who contributed the curve describing income inequalities. (C)a. Herman Paascheb. Ernst Engelc. Max O. Lorenzd. William Philips

38.) The price index was named after this economist. (A)a. Herman Paascheb. Ernst Engelc. Max O. Lorenzd. William Philips

39.) Historical phenomenon which transformed China from having an agrarian economy to a communist industrialized economy. (C)a. Treaty of Versaillesb. World War IIc. Great Leap Forwardd. Wuchang Uprising

40.) During martial law, the economy grew due to foreign investments and tourism, causing GNP to rise. (A)a. Trueb. Falsec. Can’t Say

MACROECONOMICS

1. Macroeconomics in general deals with the study of: (Answer: B)a. Individual prices, quantities and marketsb. Behavior of the economy as a whole in the aggregatec. Short term fluctuations in output and unemploymentd. Long term trends in output and living standards

2. Unemployment is a macroeconomic indicator because: (A)a. Employment reflects the state of the business cycleb. measures price stabilityc. represents the maximum sustainable level of outputd. None of the above

3. What is the most comprehensive measure of total output in an economy? (C)a. Inflationb. Employmentc. GDPd. Price Index

4. If in 2030, the Nominal GDP (in Billions of Peso) is 56 and the GDP Deflator is 0.74, what is the Real GDP? (C)a. 45b. 57c. 76d. 30

5. The following are examples of Fiscal Policy EXCEPT (D)a. Government Purchasesb. Government Spendingc. Taxationd. Banking System

6. Stronger international linkages owe it to _______ as costs of transportation and communications have declined. (B)a. Fiscal Policyb. Globalizationc. Military Conquestsd. Empire-Building

7. Which of the following institution is the key to macroeconomic monetary policy? (A)a. Central Bankb. Governmentc. NGOsd. Stock markets

8. The following goods are included in the GDP EXCEPT (C)

a. Exports of Mangoesb. Expenditures by citizens in local mallsc. Jollibee’s earnings in their branch in Americad. None, all are part of the GDP

9. Aggregate Supply is depends on the following factors EXCEPT (D)a. Price levelb. Productive Capacityc. Level of Costsd. None, Aggregate supply is dependent on all three

10. Aggregate Demand is dependent on the following factors EXCEPT (C)a. Monetary Policyb. Fiscal Policyc. Potential Outputd. None, Aggregate demand is dependent on all three

11. Microeconomic supply and demand curves (SS and DD) are not the same as Macroeconomic aggregate supply and demand curves (AS and AD) because: (D)a. They explain different phenomenab. SS and DD are used for individual commodities while AS and AD represent determination of total output and overall

price levelc. Microeconomic Supply and Demand hold different things constant compared to Macroeconomic Supply and Demandd. All of the above

For nos. 12-14, refer to the graph:

12. Based on the graph, at which point does Macroeconomic Equilibrium occur with price P1 and Output Y1? (A)a. Ab. Bc. Cd. D

13. When the aggregate demand shifts, the new equilibrium is at point: (C)a. Ab. Bc. Cd. D

14. Which of the following can be a reason why AD1 shifted to AD2? (C)a. Decrease in disposable incomeb. Expansionary Fiscal Policyc. Increase in Net Exportsd. None of the Above can be considered a reason why AD shifted

15. Which equation best describes the GDP of closed economies? (B)a. Consumption + Investmentb. Consumption + Investment + Government Spendingc. Consumption + Investment + Government Spending + Net Exportsd. Consumption only

16. To eliminate the problem of double counting: (C)

a. Prices of individual materials are meticulously countedb. Price of Raw materials used is countedc. Price of the final product is countedd. None of the Above

17. Which of the following is considered as measurements of economic success? (D)a. Outputb. Employmentc. Price Stabilityd. All of the Above

18. Which of the following makes up the largest part of the GDP? (A)a. Consumptionb. Investmentc. Government Spendingd. Net Exports

19. Which equation represents Net Exports (B)a. C+I+G+NXb. Exports – Importsc. Imports – Exportsd. C+TR-TX

20. The improvement of an existing building used for retailing shoes is an example of : (D)a. Consumptionb. Government Expendituresc. Net Exportsd. None of the Above

21. Regular expenditures such as transportation, food and recreation affects the GDP because it is part of: (A)a. Consumptionb. Government Expendituresc. Net Exportsd. Investment

For nos. 22-24, refer to the graph

22. Refer to the graph, at which point does Saving occur? (C)a. Ab. Bc. Cd. D

23. At which point does no savings occur? (B)a. Ab. Bc. Cd. D

24. At which point does the consumption and savings break-even? (A)a. Ab. Bc. Cd. D

25. What is the angle of the Income=Consumption Curve (B)a. 90 degreesb. 45 degreesc. 35 degreesd. 30 degrees

26. This shows the relationship between the level of consumption expenditures and level of disposable income. (C)a. Saving Functionb. Income Functionc. Consumption Functiond. None of the Above

27. The saving function is a mirror image of the consumption function. (A)a. Trueb. Falsec. Can’t Say

28. This is the extra amount that people consume when the receive an extra unit of disposable income (B)a. Saving Functionb. Marginal Propensity to Consumec. Marginal Propensity to Saved. None of the Above

29. The following are determinants of investment EXCEPT (D)a. Revenuesb. Costc. Expectationsd. All of the above

30. A recurring period of decline in total output, income and employment that is large in both scale and duration is called: (C)a. Economic Bubbleb. Economic Boomc. Depressiond. None of the Above

31. Aggregate demand is downward sloping because when the price level goes up, real disposable income rises leading to an increase in real consumption expenditure (B)a. Trueb. Falsec. Can’t Say

32. The exogenous business cycle theory believes that fluctuations are caused by fluctuations in: (A)a. External factors such as wars and revolutionsb. Monetary Economicsc. Financial Economicsd. None of the Above

For nos. 33-36, refer to the graph below (45 degree line is output):

33. At which quantity does the graph achieve equilibrium? (B)a. Y1b. Y2c. Y3

d. None of the above

34. At Y1, which of the following is happening? (A)a. Planned C+I is higher than Outputb. Output is higher than Planned C+Ic. Output and Planned C+I is at equilibriumd. All of the above

35. Which of the following will most likely happen if the economy finds itself in Y3 (C)a. Output will be maintainedb. Output will be increasedc. Output will be decreasedd. None of the above

36. If consumers are not buying more goods and output is decreasing, then the economy must be producing at Y_ (C)a. Y1b. Y2c. Y3d. 0

37. Which of the following are factors of growth? (D)a. Human Resourcesb. Natural Resourcesc. Capital and Technologyd. All of the above

38. Based on the neoclassical theory of growth, in the long run, it is possible for the standard of living to keep rising if economic growth consists only of accumulating capital through expansions of production with existing methods of production. (B)a. Trueb. Falsec. Can’t Say

39. What is the growth factor that increases output produced for a given bundle of inputs? (D)a. Human Resourcesb. Natural Resourcesc. Capitald. Technology

40. Improvements in technology causes the production function: (B)a. To Shift Downb. To Shift Upc. To Shift Leftd. To Shift Right

Pool of Questions of Economix Quizbee 2013

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