7 questions. Try each one, then open the answer to check yourself and read the explanation.
When Nominal GDP is 2100 and real GDP is 2000, the GDP deflator is ________
Answer: B (105)
GDP deflator = nominal GDP ÷ real GDP × 100 = 2100 ÷ 2000 × 100 = 105.
When an increase in physical inputs lead to a larger percentage increase in physical output of firm, then the firm is experiencing ________
Answer: C (increasing returns to scale)
If output grows by a bigger percentage than inputs (e.g. inputs +10%, output +20%), the firm has increasing returns to scale.
A shift in demand curve for a good may result from ________
Answer: C (a change in the price of other goods)
A change in the good's own price only moves us along the curve. The whole curve shifts when another factor changes, such as the price of a substitute or complement.
Excess supply of money will cause inflation if supply of goods and services does not increase. This is an example of ________ statement
Answer: A (positive)
A positive statement says what is and can be tested with facts; it contains no opinion about what ought to be.
Wealth is a perfect example of
Answer: B (stock variable)
Wealth is measured at a point in time, so it is a stock. Income, measured over a period, is a flow.
Which of the following indicates the negative slope of the indifference curve?
Answer: A (marginal rate of substitution)
The slope of an indifference curve measures the marginal rate of substitution: how much of one good the consumer gives up for one more unit of the other.
The point where an indifference curve is tangent to the budget line is ________
Answer: B (consumer equilibrium)
Where the highest reachable indifference curve just touches the budget line, the consumer maximises satisfaction: consumer equilibrium.