1.
Assuming a country is growing at 5% for GDP and 3% population growth
rate, what is the approximate growth rate of GDP per capita?
A) 2%
B) 3%
C) 5%
D) 7%
Answer: A) 2%
2. Cash transfer programs to poor households are expected to result in the
following impact on poverty rates:
A) Increased poverty rate
B) Decreased poverty rate
C) No impact on poverty rates
D) Uncertain impact on the poverty rate
Answer: B) Decreased poverty rate
3. So a city imposes a price ceiling on rental apartments? What is a long-
term outcome to expect?
A) Improved quality of apartments
B) Mechanism of decreasing quantity of apartments supplied
C) Decrease in demand for apartments
D) Surplus of apartments
Answer: B) Mechanism of decreasing quantity of apartments supplied
4. In a monopolistic competitive setting, advertising is mostly used to:
A) Decrease price
B) Differentiate the product
C) Reduce costs
D) Make demand perfectly elastic
Answer: B) Differentiate the product
5. The government imposes a tax on products carrying negative
externalities, and the optimal level of taxation is expected to be equal to:
A) The total social cost of the externality
B) The marginal external cost of the externality
C) The average cost of the externality
D) The marginal private cost
Answer: B) The marginal external cost of the externality
6. What happens to employment if the minimum wage law is raised above
the equilibrium level?
A) Employment rises:
B) Employment falls:
C) Employment remains unchanged:
D) Employment and unemployment both rise:
Answer: B) Employment falls
7. If a country's currency depreciated, this would cause net exports to:
A) Decrease:
B) Increase:
C) Remain unchanged:
D) Have an indeterminate effect:
Answer: B) Increase
8. What problems can asymmetric information create in insurance
markets?
A) Adverse selection:
B) Moral hazard:
C) Both A and B:
D) Neither A nor B:
Answer: C) Both A and B
9. The Phillips curve illustrates a trade-off between:
A) Inflation and unemployment
B) GDP and inflation
C) Economic growth and unemployment
D) Trade balance and inflation
Answer: A) Inflation and unemployment
10.Which of the following represents a primary limitation of GDP as an
economic well-being measure?
A) It does not consider income distribution
B) It excludes non-market transactions
C) It is unaffected by price changes
D) It does not consider government spending
Answer: A) It does not consider income distribution
11. In order to maximize profits, the firm with a downward-sloping
demand curve should:
A) Set price equal to marginal cost
B) Set price above marginal cost
C) Set price below marginal cost
D) Set price equal to average total cost
Answer: B) Set price above marginal cost
12. Which of the following is an example of a common-pool resource?
A) A private garden
B) A public park
C) A fishery in international waters
D) A national defence system Answer: C) A fishery in international waters
13. According to revealed preference theory, individuals' preferences can
be inferred from:
A) Their stated preferences
B) Their choices in the market
C) Their social behaviour
D) Their financial status
Answer: B) Their choices in the market
14. If a country experiences a sudden increase in labor force participation,
what happens to its aggregate supply?
A) Shifts leftward
B) Shifts rightward
C) Becomes steeper
D) Becomes flatter
Answer: B) Shifts rightward
15. Which of the following describes a regressive tax?
A) Tax rate increases with income
B) Tax rate decreases with income
C) Tax rate remains constant
D) Tax burden is equally distributed
Answer: B) Tax rate decreases with income
16. Signing a free trade agreement typically leads to:
A) Decreased trade
B) Increased trade
C) No change in trade
D) Uncertain impact on trade Answer: B) Increased trade
17. Investing in employee training primarily aims to:
A) Decrease employee turnover
B) Increase productivity and efficiency
C) Standardize job roles
D) Maintain competitive pricing Answer: B) Increase productivity and
efficiency
18. The primary goal of antitrust policy is to:
A) Promote monopolies
B) Increase market concentration
C) Prevent anti-competitive behaviour
D) Regulate prices
Answer: C) Prevent anti-competitive behaviour
19. Increasing government spending on infrastructure is likely to:
A) Decrease aggregate demand
B) Increase aggregate demand
C) Have no impact on aggregate demand
D) Have an uncertain impact Answer: B) Increase aggregate demand
20. When income tax rates are raised, what is the usual effect on tax
revenue?
A) Increase in tax revenue
B) Decrease in tax revenue
C) No impact on tax revenue
D) Uncertain impact on tax revenue
Answer: A) Increase in tax revenue
