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Multiple Choice Quiz
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1
Economics is:
A)the study of the efficient allocation of money.
B)the science that answers the question of what, how, and for whom to produce.
C)the field of study that attempts to explain price movements.
D)the science that explains unemployment and inflation.
2
Economics is called a science because:
A)the laws of economics, like the laws of physics, cannot be broken.
B)the subject matter is not concerned with social issues.
C)the method of analysis is scientific.
D)economists like to use graphs.
3
When the price of oil jumps, firms cut their use of oil-based products. This is an example of:
A)the how question.
B)the what question.
C)the where question.
D)the for whom question.
4
Developed economies typically have ______ than less-developed economies.
A)better climates.
B)more money.
C)more capital and equipment.
D)smaller populations.
5
High-growth economies usually:
A)are very selective with regard to the goods they produce.
B)allocate a large share of their resources to improving their capital stock.
C)do not permit imports of cheaper foreign goods.
D)have high taxes and many social programs.
6
High-growth economies usually:
A)have very strict environment protection laws.
B)do not permit foreign ownership of natural resources.
C)favour the interests of firms over the interests of workers.
D)protect private property rights.
7
The Production Possibilities Frontier:
A)defines the trade-offs in production.
B)solves the problem of scarce resources.
C)determines the optimal production point for an economy.
D)shows the amount of labour needed to produce a certain commodity.
8
Opportunity cost in a two-good world is:
A)the difference between the amounts of the two goods produced.
B)the ratio of the amounts of the two goods produced.
C)the quantity of one good that must be sacrificed to produce one unit of another good.
D)the dollar cost of producing an additional unit of one of the two goods.
9
Which of the following explains the growth in the Canadian economy?
A)Global warming has increased the amount of land capable of being farmed.
B)Technological improvements coupled with more productive capital and more people working.
C)Canada doesn’t have a large military budget.
D)The Canadian dollar has been rising in comparison to the U.S. dollar.
10
Which of the following is an accurate example of comparative advantage?
A)The opportunity cost of producing lumber is lower in Canada than in Great Britain.
B)Wages in China are lower than wages in Canada.
C)Canada has a better hockey team than Japan.
D)Canada uses more advanced technologies than India.
11
Adam Smith’s invisible hand refers to:
A)the efficient allocation of resources resulting from well-designed government laws and regulations.
B)the effective guiding of consumer spending and saving decisions by well-designed government laws and regulations.
C)the effect of technological restrictions holding back production.
D)the efficient allocation of resources resulting from the individual pursuit of self-interest within a free market.
12
Which of the following is an example of a normative statement?
A)The questions in this test bank should be easier.
B)Canada allocates a large percentage of government spending to social programs.
C)Canada has a better hockey team than Japan.
D)The Production Possibilities Frontier is always downward-sloping.
13
The principle that incentives matter implies which of the following?
A)Human beings are unkind and purely mercenary in their behaviour.
B)Canadians should pay lower taxes if they file their returns on time.
C)More people fly first class when the price is reduced.
D)Markets are more efficient than the barter system.
14
Under which of the following circumstances can public policy improve well-being?
A)When market prices are too high.
B)When markets allocate too many resources to the production of a certain product.
C)When prices fluctuate from week to week.
D)When markets do not exist.
15
Which of the following is not an accurate statement?
A)Microeconomics deals with partial equilibrium analysis.
B)Macroeconomics can explain why individuals use public transit.
C)Microeconomics can explain the impact of higher incomes on the luxury condominium market.
D)Macroeconomics looks at fluctuations in the level of the total national economy.





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