QUESTION At the beginning of May, Chanda paid $100 for her standard weekly grocery order. At the beginning of June, the same order cost $175. What would be the cause for this change? A) inflation B) economic stability C) hyperinflation D) deflation E) disinflation ANSWER Answer: C Explanation: C) Hyperinflation is defined as a […]
QUESTION Which of the following is NOT a likely driver for an economic bubble? A) sound logic B) desire for wealth C) irrational exuberance D) fast-growing business sector E) extensive availability of capital ANSWER Answer: A Explanation: A) If people operated on pure logic, they could see risks of a potential bubble and their […]
QUESTION Which of the following is NOT often identified as a potential trigger of economic contraction? A) rise in exports B) decline in consumer spending C) rise in taxes D) decrease in government spending E) decrease in investment ANSWER Answer: A Explanation: A) A rise in exports triggers economic expansion.
QUESTION Which of the following did NOT play a role in creating the housing bubble that preceded the Great Recession? A) subprime mortgage loans B) rising home prices C) mortgage-backed securities D) foreclosures E) low interest rates ANSWER Answer: D Explanation: D) Home foreclosures began as the bubble collapsed; they were a result of […]
QUESTION The United States is the world’s largest economy. What was the World Bank’s estimate for U.S. GDP in 2010? A) $754 billion B) $921 billion C) $6.2 trillion D) $14.7 trillion E) $45.7 trillion ANSWER Answer: D Explanation: D) This is the total value of all goods and services produced within U.S. borders […]
QUESTION As the economy started to recover from the Great Recession, businesses began to sell down inventories of overstocked goods. Under this scenario, demand eventually grows to be in line with available supply. As the economy strengthens and consumer demand continues to grow, what happens next? A) Prices drop. B) Prices rise. C) Supply increases. […]
QUESTION Seth is a software engineer who has been out of work for 16 months. He has sent out hundreds of resumes and never even scored an interview. Seth has decided to take time off from job hunting. How is Seth accounted for in government employment statistics? A) unemployed worker B) underemployed worker C) transitional […]
QUESTION Describe the significance of the concept of scarcity to the science of economics. What will be an ideal response? ANSWER Answer: The main idea is that all things are essentially scarce or limited, which drives the key concepts of supply and demand. Explanation: Scarcity, or some limitation in the availability of goods, is […]
QUESTION Margo operates a small chain of grocery stores in the Southwest. Each month, she buys over 8,000 packages of tortilla shells from a local food manufacturer and sells them to customers of the store. Which of the following tracks Margo’s cost to purchase the tortillas? A) wholesalers price index (WPI) B) consumer price index […]
QUESTION When the steel industry collapsed in Pennsylvania, many longtime steelworkers could not find new jobs because they lacked the skills required to work in new industries such as computer technology. Which unemployment category describes these workers? A) cyclical B) structural C) seasonal D) transitional E) frictional ANSWER Answer: B Explanation: B) Structural unemployment […]
