FINAL EXAM ECONOMICS QUESTIONS AND ANSWERS
1. Which one the unemployment is more severe during
recessions and depressions?
A. Frictional
B. Structural
C. Cyclical
D. Normal
ANS: C
2 .under perfect competitive market homogeneous product implies that:
A. Buyers do not distinguish between product supplied by the various firms of an industry
B. Product of each firm is regarded as a perfect substitute for the products of other firms
C. No firm can gain any competitive advantage over the other firm
D. All
ANS: D
3. To consider one student out of labor force. He/she can be;
A. Full-time student
B. A full-time retiree
C. Prisoners
D. All of the above
ANS: D
4. which goods are supposed to be included in the CPI?
A All goods & services is produced in the economy
B All goods & services is typically that consumer buy
C All goods & services in the investment component of GDP accounts
D All the goods, but not the services, in the consumption component of GDP accounts
ANS: B
5. A monopoly characterized by:
A. Free entry in to & exit of firms from the industry
B. The industry firm is single.
C. All product has perfect substitutes
D. Absence of control on strategic raw materials/factors of production
ANS: B
6. Gross domestic products (GDP) a nation include the following except one:
A. All goods & services is produced legally
B Indirect business taxes
C Imported goods & services
D Depreciation
ANS: C
7. All of following true except:
A. Firms earn above normal profit when average cost is less than price
B. Firms earn normal profit when total cost is equal total revenue
C. Firms earn zero profit when average cost is equal total price
D. Firms earn negative profit if and only if price is greater than average cost.
ANS: D
8. Which one of the following statement is true?
A. Increase the government expenditure causes increase in general price level
B. Increase money supply causes decrease in general price level
C. A decrease in taxes leads to decrease investment
D. An increase in taxes rate leads to increase investment
ANS: A
9. which one of the following is a false statement about the path business cycle?
A. During peak there is high demand to invest, save & employ
B. During recession unemployment rise
C. During the recovery of economic path unemployment decline & business expand
D.When the economy is at though inflation is the worst problem
ANS: D
10. Consider the following information for particular economy. Total population=60million Number of employed=30 million total labor force=40 million, then calculate the employment rate (in %)
A. 75
B. 25
C. 66.7
D. 50
ANS: B
11. Which market is characterized by large number of seller& differentiated products?
A. Perfectly competitive
B. Monopoly
C. Oligopoly
D. Monopolistically competitive
ANS: D
12. Consider the consumer goods: 100 goods A, 100 of goods B, 100 of goods C. In the base year good A is sold at the price of 1 birr, goods B is sold at the price of 1 birr, goods C is sold at the price of 1 birr .in the current year; good A sold at a price of 3 birr, goods B sold at a price of 5 birr; & good C sold at aprice of 10 birr. The consumer price index (CPI in %) for the current year is:
A. 100
B. 300
C. 500
D. 600
ANS: D
13. An increase in the money supply causes:
A. interest rates is to fall, investment spending to rise & aggregate demand to rise.
B. Interest rate is to raise, investment spending to rise & aggregate demand to rise.
C. Interest rate is to rise, investment spending to fall & aggregate demand to fall
D. Interest rate is to fall, investment spending to fall and aggregate demand to fall
ANS: A
14. A type of unemployment in which workers are in between jobs or at searching for a new and better job is called.......... unemployment
A. Frictional
B. Cyclical
C. Structural
D. Turnover
ANS: D
15. Which market type is the most available in the reality?
A. Perfectly competitive
B. Monopoly
C. Oligopoly
D. Monopolistically competitive
ANS: B
16. A firm is perfectly competitive market produces where:
A. Profit maximize
B. P=MC
C. MR=MC
D. All
ANS: A
17. All of the following are the characteristics of imperfect markets except:
A. If there is full information
B. If a firm is price maker
C. If products are differentiated
D. If assumption of perfect market is violated
ANS: D
18. Suppose a firm operates in a perfectly competitive market with the total cost function TC= 1/3Q^3 - 5Q^2 +20Q + 50 then find shutdown price
A. 7.5
B. 1.2
C. 2
D. 2.15
ANS: D
19. For Monopoly or oligopoly to exist, there must be barrier to entry such as:
A. Government regulation
B. Control over necessary raw materials
C. Economies of scale in production
D. All of the above
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