AnswersEconomicsMacroeconomics

Practice Test Answers

14 verified answers
1
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How do consumers’ feelings about the economy help contribute to growth?

A
Positive consumer attitudes increase job prospects.
B
Positive consumer attitudes influence spending habits.
C
Positive consumer attitudes inspire increased production.
D
Positive consumer attitudes can end a depression.
2
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Which is an example of how a denomination is divisible?

A
Three American dollars may buy a small snack.
B
An American dollar may equal one-half of one Euro.
C
An American dollar is equal to four quarters.
D
Five American dollars may be worth less next year.
3

Which best describes the circular flow model?

A
The model represents the changing relationships between actors.
B
The model represents the flow of goods and services between sectors.
C
The model represents the movement of money throughout the economy.
D
The model represents the interactions within sectors.
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
new technologies to produce goods that are in great demand.
B
education to reduce unemployment and increase production.
C
resources that can be traded with other nations.
D
research to develop goods that can be sold on a global scale.
5

When individuals are looking for jobs but are unable to find work, they are said to be [Dropdown 1] .

Answer:

unemployed

6

What is the difference between inflation and deflation?

A
Inflation can result from rising demand and boosts the value of money. Deflation can result from falling demand and reduces the value of money.
B
Inflation can result from rising demand and reduces the value of money. Deflation can result from falling demand and boosts 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.
7

Does a depression always follow a recession?

A
Yes, the trough is always considered a depression.
B
No, a depression is indicated when the recession is exceptionally long.
C
No, the economy could decline quickly and bypass recession.
D
Yes, for recovery to occur, the trough must be reached.
8

The level of investment in markets often indicates

A
the state of the economy.
B
the success of individual companies.
C
the stability of the government.
D
the stability of a currency.
9

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

A
Demand steadily rises.
B
Demand steadily falls.
C
Prices continue to decrease.
D
The economy stagnates and struggles.
E
Prices continue to increase.
F
The economy grows in a healthy way.
10

One fact about all currency is that it

A
has a changing value.
B
grows increasingly valuable.
C
loses value over time.
D
maintains a stable value.
11

Which best describes the economic impact of defaulting on bank loans?

A
The economy suffers because people have less money to spend.
B
The economy suffers because businesses are scared to take out loans.
C
The economy suffers because people are scared to take out loans.
D
The economy suffers because banks have less money to loan to others.
12

In the circular flow model, factors of production flow to firms. Which are the primary factors of production? Choose three correct answers.

A
labor
B
services
C
land
D
goods
E
capital
13

How do bank loans help the nation’s economy?

A
They ensure consumer spending and confidence.
B
They allow businesses to expand and improve.
C
They ensure the success of new businesses.
D
They allow consumers to quickly pay off debts.
14

Which best describes why investing can be such a challenge?

A
All investments involve major risks.
B
All investments are totally unpredictable.
C
There are no guaranteed investments.
D
There is never a sure way to protect investments.

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