AnswersEconomicsAggregate Economic Behavior and the Global Economy

Practice Test Answers

17 verified answers
1
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Why do developing countries usually have less variety in their economic activities?

A
Developing countries are usually small and have limited populations and resources.
B
People prefer the lifestyle that accompanies traditional activities such as farming.
C
Focusing on one or two economic activities leads to more rapid economic development.
D
Limited access to education means that people are not trained to work in industry or technology.
2
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An exchange rate table makes it easy to compare the

A
cost to produce the currency used by a single country.
B
unemployment rates for two or more countries.
C
different currency denominations used by a single country.
D
value of the currencies for two or more countries.
3

Which best describes the effect negative incentives have on a certain course of action?

A
They make the action impossible.
B
They make the action less profitable.
C
They make the action difficult.
D
They make the action less likely.
4

Read the paragraph. Government officials in Country M have determined that they need to take action to encourage the growth of their economy. To do this, they have introduced an incentive policy that offers citizens free education. This is extended to all individuals who sign a contract agreeing to work within their specific industry for the next ten years. Country M hopes to encourage economic growth by investing in

A
resources that can be traded with other nations.
B
education to reduce unemployment and increase production.
C
research to develop goods that can be sold on a global scale.
D
new technologies to produce goods that are in great demand.
5

Does a depression always follow a recession?

A
No, a depression is indicated when the recession is exceptionally long.
B
No, the economy could decline quickly and bypass recession.
C
Yes, for recovery to occur, the trough must be reached.
D
Yes, the trough is always considered a depression.
6

How do consumers’ feelings about the economy help contribute to growth?

A
Positive consumer attitudes can end a depression.
B
Positive consumer attitudes inspire increased production.
C
Positive consumer attitudes increase job prospects.
D
Positive consumer attitudes influence spending habits.
7

What is the difference between inflation and deflation?

A
Inflation can result from rising demand and reduces the value of money. Deflation can result from falling demand and boosts the value of money.
B
Inflation can result from rising demand and boosts the value of money. Deflation can result from falling demand and reduces the value of money.
C
Inflation can result from falling demand and boosts the value of money. Deflation can result from rising demand and reduces the value of money.
D
Inflation can result from falling demand and reduces the value of money. Deflation can result from rising demand and boosts the value of money.
8

How did NAFTA affect the economies of participating countries?

A
by creating a balance of exports and imports
B
by increasing the overall volume of production
C
by creating unrestricted trade benefits
D
by raising employment rates and standards of living
9

What is a benefit associated with free trade?

A
limited market access for domestic industries
B
higher inflation due to import competition
C
increased government revenue from tariffs
D
enhanced innovation and technology
10

What are the signs of low inflation? Choose three correct answers.

A
Demand steadily rises.
B
The economy stagnates and struggles.
C
Prices continue to increase.
D
Prices continue to decrease.
E
Demand steadily falls.
F
The economy grows in a healthy way.
11

Which form of transportation has led to more efficient business in a global market?

A
cargo ships
B
high-speed trains
C
tractor trailers
D
helicopters
12

An economic incentive is best described as something that

A
motivates producers or consumers to take action.
B
benefits producers or consumers when taking action.
C
pushes producers or consumers to act on the government's behalf.
D
forces producers or consumers to act in a certain way.
13

Globalization is the process of

A
requiring or relying on something.
B
focusing on certain goods and services.
C
limiting exhange of goods and services.
D
connecting the world over time.
14

Why does an increase in literacy rates often accompany an increase in per capita income?

A
Developed countries often attempt to raise low literacy rates to improve income.
B
People who can read and who receive an education are eligible for higher-paying jobs.
C
People who have higher-paying jobs often have the time available to develop literacy skills.
D
Developing countries have higher-than-average literacy rates, which typically leads to higher income.
15

Which describes the difference between a trade surplus and a trade deficit?

A
A trade deficit is when a country loses money on products it makes, while a trade surplus happens when production leads to profits.
B
A trade surplus is when a country exports more than it imports, while a trade deficit happens when imports exceed exports.
C
A trade surplus is when a country imports more than it exports, while a trade deficit happens when exports exceed imports.
D
A trade surplus is when a country produces more than it consumes, while a trade deficit happens when consumption exceeds production.
17

Which of these statements most accurately describes the use of currencies in different parts of the world?

A
All countries are required to use the same currency.
B
Most countries use the dollar as their currency.
C
Different countries use different currencies.
D
Countries in Asia use the euro as their currency.
18

A reason that countries trade with each other is

A
to get products they cannot produce.
B
to sell goods they do not need.
C
to help their neighbors.
D
to share excess resources.

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