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Economics MCQs

Economics

Quiz # 4, MCQs

NOTE: Attempt all Questions to see the Result at the bottom of this page.

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1)

Which of the following is NOT a stock variable?
- A) Government debt.
- B) Capital.
- C) The amount of money held by the public.
- D) Inventory investment.
Right Answer is the option "C"

2)

According to the model of aggregate supply and aggregate demand, in the long run, an increase in the money supply should cause:
- A) Both prices and output to rise.
- B) Prices to fall and output to remain unchanged.
- C) Both prices and output to fall.
- D) Prices to rise and output to remain unchanged.
Right Answer is the option "D"

3)

Keynesian economics was the predominant economic theory:
- A) Prior to the late 1700s.
- B) From the late 1700s to the early 1900s.
- C) From 1930s to 1970s.
- D) Since 1970s.
Right Answer is the option "C"

4)

According to Keynes, the economy does not self correct quickly because:
- A) With less consumption and more savings the interest rate will drop.
- B) In the short run workers are fully employed and cannot produce enough to get to long run equilibrium.
- C) Wages and prices are flexible in the short run.
- D) Wages and prices are sticky in the short run.
Right Answer is the option "D"

5)

The marginal revenue product is:
- A) Upward sloping due to the law of demand.
- B) Upward sloping due to the law of marginal utility.
- C) Downward sloping due to the law of diminishing returns.
- D) Downward sloping due to the law of supply.
Right Answer is the option "C"

6)

Cartels are:
- A) Organizations of independent firms, producing similar products, that work together to raise prices and restrict output.
- B) Organizations of interdependent firms, producing similar products, that work together to raise prices and restrict output.
- C) Organizations of independent firms, producing different products, that work together to raise prices and restrict output.
- D) Considered as part of monopolistic competition.
Right Answer is the option "A"

7)

"The situation in which two or more firms set their prices and output according to a plan agreed upon between them in order to divide the market among themselves". Which of the following best describes this situation?
- A) Strategic interaction.
- B) Monopolistic competition.
- C) Oligopoly.
- D) Collusion.
Right Answer is the option "D"

8)

Which of the following market situation is much like a pure monopoly except that its member firms tend to cheat on agreed upon price and output strategies?
- A) Duopoly.
- B) Cartel.
- C) Market sharing monopoly.
- D) Natural monopoly.
Right Answer is the option "B"

9)

Under the kinked demand curve model, an increase in marginal cost will lead to:
- A) An increase in output level and a decrease in price.
- B) A decrease in output level and an increase in price.
- C) Neither a change in output level nor a change in price.
- D) A decrease in output level and no change in price.
Right Answer is the option "D"

10)

Welfare economics is the branch of economics which deals with:
- A) Positive issues.
- B) Normative issues.
- C) Micro issues.
- D) Macro issues.
Right Answer is the option "B"