ASU ECON 211 2026 PRACTICE TEST SOLVED
RESPONSES
◉ Tess purchased an orange at Safeway in January. Lex ate a similar
orange grown in his backyard. What is true. Answer: Tess' orange is
included in consumption expenditures and GDP, Lex's is not.
◉ What is true about the CPI and the GDP deflator. Answer: The
quantities and types of goods included in the CPI are fixed over time.
◉ When the Bureau of Labor Statistics calculated the CPI it is
assumed that consumers purchase the same quantity of each good
included in the basket, regardless of the change in price relative to
other goods. This describes the **WHAT (1)** bias and usually
results in the CPI **WHAT (2)** the true cost of inflation. Answer:
(1) Substitution
(2) Overstating
◉ The factors of production used to produce output include what?.
Answer: Labor and capital
◉ What explains why poorer countries with low levels of capital
often grow faster than rich countries?. Answer: There are
diminishing marginal returns to capital.
,◉ What is Human Capital?. Answer: The knowledge and skills
workers gain from education and experience.
◉ Expenditures of **WHAT** are classified as "investment"?.
Answer: Firms
◉ **BLANK 1** are demanders of loanable funds. Quantity
demanded **BLANK 2** when interest rates increase.. Answer: 1.
Firms
2. Decreases
◉ Suppose the government budget deficit increases. All else
constant national saving **(1)** and investment **(2)**.. Answer: 1.
Decreases
2. Decreases
◉ Suppose there is an increase in the supply of loanable funds. As a
result, the interest rate **(1)** and investment **(2)** .. Answer: 1.
Decreases
2. Increases
,◉ What type of individual is considered unemployed? Give
examples.. Answer: 1. A new college graduate seeking work for the
first time.
2. A college professor who retired last year who is now seeking part-
time employment.
◉ It takes time for unemployed workers to find jobs. The type of
unemployment caused by search time is. Answer: Frictional
Unemployment
◉ The rise in unemployment caused by the economic fallout of the
corona virus will be attributed to. Answer: Cyclical Unemployment
◉ What is a negative consequence of fiat money?. Answer:
Governments may have incentive to create too much fiat money.
◉ What is NOT required for a good to function as money?. Answer: It
must have intrinsic value.
◉ Which of the following appears under "liabilities" on a bank
balance sheet?. Answer: Checking deposits
◉ A bank is considered insolvent if. Answer: Capital (equity) is less
than or equal to zero
, ◉ The "headline" or U3 unemployment rate often **(1)** the actual
level of idle labor resources because **(2)**.. Answer: 1.
Underestimates
2. Discouraged workers are not considered part of the labor force.
◉ The natural rate of unemployment excludes what type of
unemployment?. Answer: Cyclical unemployment
◉ What is currently considered money in the United States? Multiple
answers.. Answer: 1. A $50 bill
2. A money market deposit
3. A checking account depoist
◉ Which sector of the economy's spending is included in investment
expenditures?. Answer: Firms
◉ The inflation rate is measured as.... Answer: The percent change in
a price index from one year to the next.
◉ T/F: Over the past 50 years, growth in real GDP per person has
been roughly zero.. Answer: FALSE
RESPONSES
◉ Tess purchased an orange at Safeway in January. Lex ate a similar
orange grown in his backyard. What is true. Answer: Tess' orange is
included in consumption expenditures and GDP, Lex's is not.
◉ What is true about the CPI and the GDP deflator. Answer: The
quantities and types of goods included in the CPI are fixed over time.
◉ When the Bureau of Labor Statistics calculated the CPI it is
assumed that consumers purchase the same quantity of each good
included in the basket, regardless of the change in price relative to
other goods. This describes the **WHAT (1)** bias and usually
results in the CPI **WHAT (2)** the true cost of inflation. Answer:
(1) Substitution
(2) Overstating
◉ The factors of production used to produce output include what?.
Answer: Labor and capital
◉ What explains why poorer countries with low levels of capital
often grow faster than rich countries?. Answer: There are
diminishing marginal returns to capital.
,◉ What is Human Capital?. Answer: The knowledge and skills
workers gain from education and experience.
◉ Expenditures of **WHAT** are classified as "investment"?.
Answer: Firms
◉ **BLANK 1** are demanders of loanable funds. Quantity
demanded **BLANK 2** when interest rates increase.. Answer: 1.
Firms
2. Decreases
◉ Suppose the government budget deficit increases. All else
constant national saving **(1)** and investment **(2)**.. Answer: 1.
Decreases
2. Decreases
◉ Suppose there is an increase in the supply of loanable funds. As a
result, the interest rate **(1)** and investment **(2)** .. Answer: 1.
Decreases
2. Increases
,◉ What type of individual is considered unemployed? Give
examples.. Answer: 1. A new college graduate seeking work for the
first time.
2. A college professor who retired last year who is now seeking part-
time employment.
◉ It takes time for unemployed workers to find jobs. The type of
unemployment caused by search time is. Answer: Frictional
Unemployment
◉ The rise in unemployment caused by the economic fallout of the
corona virus will be attributed to. Answer: Cyclical Unemployment
◉ What is a negative consequence of fiat money?. Answer:
Governments may have incentive to create too much fiat money.
◉ What is NOT required for a good to function as money?. Answer: It
must have intrinsic value.
◉ Which of the following appears under "liabilities" on a bank
balance sheet?. Answer: Checking deposits
◉ A bank is considered insolvent if. Answer: Capital (equity) is less
than or equal to zero
, ◉ The "headline" or U3 unemployment rate often **(1)** the actual
level of idle labor resources because **(2)**.. Answer: 1.
Underestimates
2. Discouraged workers are not considered part of the labor force.
◉ The natural rate of unemployment excludes what type of
unemployment?. Answer: Cyclical unemployment
◉ What is currently considered money in the United States? Multiple
answers.. Answer: 1. A $50 bill
2. A money market deposit
3. A checking account depoist
◉ Which sector of the economy's spending is included in investment
expenditures?. Answer: Firms
◉ The inflation rate is measured as.... Answer: The percent change in
a price index from one year to the next.
◉ T/F: Over the past 50 years, growth in real GDP per person has
been roughly zero.. Answer: FALSE
