ECON 104 – Principles of Economics (Bille Goffe)
Comprehensive Final Exam – 200 Questions with
Answers and Rationales (2026/2027)
Overview:
This comprehensive final exam covers all major topics in ECON 104, including
microeconomics, macroeconomics, money and banking, fiscal and monetary policy,
international trade, applied problem-solving, and graph analysis. The exam consists of 200
multiple-choice questions with correct answers highlighted in bold and short rationales
provided for each question to enhance understanding. It is designed for students preparing for
the final exam, allowing them to review key concepts, practice calculations, and reinforce
critical economic reasoning.
The exam is structured into six sections:
1. Microeconomics – Supply, Demand, Elasticity, and Consumer/Producer Theory (1–
50)
2. Market Structures, Costs, and Production (51–100)
3. Macroeconomics Fundamentals – GDP, Inflation, Unemployment (101–130)
4. Fiscal and Monetary Policy (131–160)
5. Money, Banking, and International Trade (161–180)
6. Applied Problems, Graph Analysis, and Real-World Scenarios (181–200)
This resource provides a thorough, exam-ready study guide, enabling students to identify
strengths, address weaknesses, and confidently prepare for the final exam.
SECTION 1 — Basic Economic Concepts
1. Economics is primarily the study of:
A. Money management
B. Government policy
C. How people allocate scarce resources
D. Business accounting
Rationale: Economics studies choices under scarcity.
2. Opportunity cost is:
A. Money spent on an investment
,B. The value of the next best alternative foregone
C. The total cost of production
D. Profit margin
Rationale: It measures trade-offs in decision-making.
3. Scarcity implies:
A. Unlimited resources
B. Limited resources relative to wants
C. No need for choices
D. Constant supply of goods
Rationale: Scarcity forces allocation decisions.
4. Which of the following is a normative statement?
A. Inflation rose by 2% last year
B. The government should reduce taxes
C. Unemployment is 5%
D. GDP increased by 3%
Rationale: Normative statements express opinions or prescriptions.
5. A production possibilities frontier (PPF) illustrates:
A. Supply and demand
B. Income inequality
C. Trade-offs and opportunity costs
D. Price levels
Rationale: PPF shows maximum feasible output combinations.
6. Efficient production occurs when:
A. All resources are idle
B. Only one good is produced
C. Cannot produce more of one good without less of another
D. Government sets prices
Rationale: Efficiency requires no wasted resources.
7. Marginal analysis involves:
A. Total cost only
B. Comparing additional benefits vs. additional costs
C. Average income
D. Aggregate demand
Rationale: Decisions are made at the margin.
,8. Which is an example of a positive economic statement?
A. The government should increase welfare benefits
B. Pollution is morally wrong
C. Raising minimum wage increases unemployment for teens
D. People ought to save more
Rationale: Positive statements are testable, factual claims.
9. Microeconomics focuses on:
A. Inflation
B. National income
C. Individual markets and decision-making
D. Fiscal policy
Rationale: Microeconomics studies households, firms, and markets.
10. Macroeconomics studies:
A. Consumer choice
B. Firm pricing
C. National output, unemployment, and inflation
D. Individual labor markets
Rationale: Macroeconomics examines aggregate economic variables.
11. Which is a resource in economics?
A. Money only
B. Goods only
C. Land, labor, capital, entrepreneurship
D. Government regulations
Rationale: Resources (factors of production) create goods/services.
12. A free market economy is characterized by:
A. Central planning
B. Private property and voluntary exchange
C. Price controls
D. Nationalized industries
Rationale: Market forces determine allocation.
13. A shift in the PPF outward indicates:
A. Recession
B. Higher unemployment
C. Economic growth
, D. Decreased resources
Rationale: Outward shift shows more production possible.
14. Normative vs. positive economics:
A. Normative is factual, positive is opinion
B. Both are factual
C. Positive describes, normative prescribes
D. Both are prescriptive
Rationale: Positive = descriptive; normative = prescriptive.
15. Specialization increases output because:
A. Workers do all tasks
B. Resources are wasted
C. People focus on tasks they are best at
D. Trade is unnecessary
Rationale: Specialization improves efficiency via comparative advantage.
SECTION 2 — Supply and Demand (16–35)
16. Law of demand states:
A. Higher prices increase quantity demanded
B. Higher prices decrease quantity demanded
C. Quantity demanded is independent of price
D. Supply determines price
Rationale: Demand curves slope downward.
17. A demand curve shifts right when:
A. Price increases
B. Income rises for a normal good
C. Price falls
D. Quantity demanded decreases
Rationale: Higher income increases demand for normal goods.
18. Law of supply states:
A. Supply decreases with price
B. Higher prices increase quantity supplied
C. Quantity supplied is fixed
D. Demand determines supply
Rationale: Sellers supply more at higher prices.
Comprehensive Final Exam – 200 Questions with
Answers and Rationales (2026/2027)
Overview:
This comprehensive final exam covers all major topics in ECON 104, including
microeconomics, macroeconomics, money and banking, fiscal and monetary policy,
international trade, applied problem-solving, and graph analysis. The exam consists of 200
multiple-choice questions with correct answers highlighted in bold and short rationales
provided for each question to enhance understanding. It is designed for students preparing for
the final exam, allowing them to review key concepts, practice calculations, and reinforce
critical economic reasoning.
The exam is structured into six sections:
1. Microeconomics – Supply, Demand, Elasticity, and Consumer/Producer Theory (1–
50)
2. Market Structures, Costs, and Production (51–100)
3. Macroeconomics Fundamentals – GDP, Inflation, Unemployment (101–130)
4. Fiscal and Monetary Policy (131–160)
5. Money, Banking, and International Trade (161–180)
6. Applied Problems, Graph Analysis, and Real-World Scenarios (181–200)
This resource provides a thorough, exam-ready study guide, enabling students to identify
strengths, address weaknesses, and confidently prepare for the final exam.
SECTION 1 — Basic Economic Concepts
1. Economics is primarily the study of:
A. Money management
B. Government policy
C. How people allocate scarce resources
D. Business accounting
Rationale: Economics studies choices under scarcity.
2. Opportunity cost is:
A. Money spent on an investment
,B. The value of the next best alternative foregone
C. The total cost of production
D. Profit margin
Rationale: It measures trade-offs in decision-making.
3. Scarcity implies:
A. Unlimited resources
B. Limited resources relative to wants
C. No need for choices
D. Constant supply of goods
Rationale: Scarcity forces allocation decisions.
4. Which of the following is a normative statement?
A. Inflation rose by 2% last year
B. The government should reduce taxes
C. Unemployment is 5%
D. GDP increased by 3%
Rationale: Normative statements express opinions or prescriptions.
5. A production possibilities frontier (PPF) illustrates:
A. Supply and demand
B. Income inequality
C. Trade-offs and opportunity costs
D. Price levels
Rationale: PPF shows maximum feasible output combinations.
6. Efficient production occurs when:
A. All resources are idle
B. Only one good is produced
C. Cannot produce more of one good without less of another
D. Government sets prices
Rationale: Efficiency requires no wasted resources.
7. Marginal analysis involves:
A. Total cost only
B. Comparing additional benefits vs. additional costs
C. Average income
D. Aggregate demand
Rationale: Decisions are made at the margin.
,8. Which is an example of a positive economic statement?
A. The government should increase welfare benefits
B. Pollution is morally wrong
C. Raising minimum wage increases unemployment for teens
D. People ought to save more
Rationale: Positive statements are testable, factual claims.
9. Microeconomics focuses on:
A. Inflation
B. National income
C. Individual markets and decision-making
D. Fiscal policy
Rationale: Microeconomics studies households, firms, and markets.
10. Macroeconomics studies:
A. Consumer choice
B. Firm pricing
C. National output, unemployment, and inflation
D. Individual labor markets
Rationale: Macroeconomics examines aggregate economic variables.
11. Which is a resource in economics?
A. Money only
B. Goods only
C. Land, labor, capital, entrepreneurship
D. Government regulations
Rationale: Resources (factors of production) create goods/services.
12. A free market economy is characterized by:
A. Central planning
B. Private property and voluntary exchange
C. Price controls
D. Nationalized industries
Rationale: Market forces determine allocation.
13. A shift in the PPF outward indicates:
A. Recession
B. Higher unemployment
C. Economic growth
, D. Decreased resources
Rationale: Outward shift shows more production possible.
14. Normative vs. positive economics:
A. Normative is factual, positive is opinion
B. Both are factual
C. Positive describes, normative prescribes
D. Both are prescriptive
Rationale: Positive = descriptive; normative = prescriptive.
15. Specialization increases output because:
A. Workers do all tasks
B. Resources are wasted
C. People focus on tasks they are best at
D. Trade is unnecessary
Rationale: Specialization improves efficiency via comparative advantage.
SECTION 2 — Supply and Demand (16–35)
16. Law of demand states:
A. Higher prices increase quantity demanded
B. Higher prices decrease quantity demanded
C. Quantity demanded is independent of price
D. Supply determines price
Rationale: Demand curves slope downward.
17. A demand curve shifts right when:
A. Price increases
B. Income rises for a normal good
C. Price falls
D. Quantity demanded decreases
Rationale: Higher income increases demand for normal goods.
18. Law of supply states:
A. Supply decreases with price
B. Higher prices increase quantity supplied
C. Quantity supplied is fixed
D. Demand determines supply
Rationale: Sellers supply more at higher prices.
