WGU E010 OBJECTIVE ASSESSMENT FINAL EXAM
PRACTICE QUESTIONS COMPLETE WITH 100% VERIFIED
ANSWERS
1. A binding price ceiling below equilibrium will cause:
A) A surplus
B) A shortage
C) Increased supply
D) No change in quantity demanded
Rationale: A price ceiling below equilibrium keeps prices artificially low,
increasing quantity demanded and decreasing quantity supplied →
shortage.
2. Which of the following is a normative economic statement?
A) The unemployment rate is 4.5%
B) The government should increase the minimum wage
C) Inflation is 2% annually
D) GDP grew by 3% last quarter
Rationale: Normative statements involve value judgments (“should”).
Positive statements describe facts.
3. If the cross-price elasticity of demand between two goods is positive,
the goods are:
,A) Substitutes
B) Complements
C) Inferior goods
D) Normal goods
Rationale: Positive cross-price elasticity → price of one up → demand
for other up → substitutes.
4. A decrease in the price of a complementary good will cause the
demand curve for the original good to:
A) Shift left
B) Shift right
C) Become vertical
D) Remain unchanged
Rationale: Complement price down → original good more attractive →
demand increases (shift right).
5. The opportunity cost of a choice is:
A) The total cost of all alternatives
B) The next best alternative foregone
C) The monetary cost only
D) The sum of sunk costs
Rationale: Opportunity cost = value of best forgone alternative.
6. Which market structure has many sellers, differentiated products,
and easy entry?
,A) Perfect competition
B) Monopoly
C) Monopolistic competition
D) Oligopoly
Rationale: Monopolistic competition = many firms, product
differentiation, low barriers.
7. When marginal cost is less than average total cost, average total cost
is:
A) Increasing
B) Decreasing
C) Constant
D) At its minimum
Rationale: MC < ATC pulls ATC down.
8. Fiscal policy includes changes in:
A) Interest rates
B) Money supply
C) Government spending and taxes
D) Reserve requirements
Rationale: Fiscal policy = government spending & taxation (monetary
policy = interest rates & money supply).
9. Gross Domestic Product (GDP) is the market value of all:
A) Final goods and services produced within a country in a year
, B) Intermediate goods produced domestically
C) Goods produced by domestic firms overseas
D) Transactions in an economy
Rationale: GDP counts final goods & services within geographic
borders.
10. If the nominal interest rate is 6% and inflation is 2%, the real interest
rate is:
A) 8%
B) 4%
C) 3%
D) 12%
Rationale: Real ≈ nominal − inflation (6% − 2% = 4%).
11. A firm experiencing economies of scale will have a:
A) Rising long-run average cost curve
B) Falling long-run average cost curve
C) Constant long-run average cost
D) Vertical long-run average cost
Rationale: Economies of scale = output up → long-run average cost
down.
12. Which would shift the aggregate demand curve to the left?
A) Increased consumer confidence
B) Higher government spending
PRACTICE QUESTIONS COMPLETE WITH 100% VERIFIED
ANSWERS
1. A binding price ceiling below equilibrium will cause:
A) A surplus
B) A shortage
C) Increased supply
D) No change in quantity demanded
Rationale: A price ceiling below equilibrium keeps prices artificially low,
increasing quantity demanded and decreasing quantity supplied →
shortage.
2. Which of the following is a normative economic statement?
A) The unemployment rate is 4.5%
B) The government should increase the minimum wage
C) Inflation is 2% annually
D) GDP grew by 3% last quarter
Rationale: Normative statements involve value judgments (“should”).
Positive statements describe facts.
3. If the cross-price elasticity of demand between two goods is positive,
the goods are:
,A) Substitutes
B) Complements
C) Inferior goods
D) Normal goods
Rationale: Positive cross-price elasticity → price of one up → demand
for other up → substitutes.
4. A decrease in the price of a complementary good will cause the
demand curve for the original good to:
A) Shift left
B) Shift right
C) Become vertical
D) Remain unchanged
Rationale: Complement price down → original good more attractive →
demand increases (shift right).
5. The opportunity cost of a choice is:
A) The total cost of all alternatives
B) The next best alternative foregone
C) The monetary cost only
D) The sum of sunk costs
Rationale: Opportunity cost = value of best forgone alternative.
6. Which market structure has many sellers, differentiated products,
and easy entry?
,A) Perfect competition
B) Monopoly
C) Monopolistic competition
D) Oligopoly
Rationale: Monopolistic competition = many firms, product
differentiation, low barriers.
7. When marginal cost is less than average total cost, average total cost
is:
A) Increasing
B) Decreasing
C) Constant
D) At its minimum
Rationale: MC < ATC pulls ATC down.
8. Fiscal policy includes changes in:
A) Interest rates
B) Money supply
C) Government spending and taxes
D) Reserve requirements
Rationale: Fiscal policy = government spending & taxation (monetary
policy = interest rates & money supply).
9. Gross Domestic Product (GDP) is the market value of all:
A) Final goods and services produced within a country in a year
, B) Intermediate goods produced domestically
C) Goods produced by domestic firms overseas
D) Transactions in an economy
Rationale: GDP counts final goods & services within geographic
borders.
10. If the nominal interest rate is 6% and inflation is 2%, the real interest
rate is:
A) 8%
B) 4%
C) 3%
D) 12%
Rationale: Real ≈ nominal − inflation (6% − 2% = 4%).
11. A firm experiencing economies of scale will have a:
A) Rising long-run average cost curve
B) Falling long-run average cost curve
C) Constant long-run average cost
D) Vertical long-run average cost
Rationale: Economies of scale = output up → long-run average cost
down.
12. Which would shift the aggregate demand curve to the left?
A) Increased consumer confidence
B) Higher government spending
