FBLA Economics Objective Test UPDATED
ACTUAL Exam Questions and CORRECT
Answers
As supply decreases and demand decreases, what effect does this have on equilibrium price and
quantity? - CORRECT ANSWER - Price indeterminant, quantity decreases
Which of the following would all decrease supply? - CORRECT ANSWER - Higher
business taxes, higher resource costs, fewer suppliers
Suppose a price floor is placed on wheat, what is the likely effect? - CORRECT
ANSWER - A surplus
Suppose a binding price ceiling is placed on gasoline, what is the likely effect? - CORRECT
ANSWER - A shortage
A supply increase will - CORRECT ANSWER - a decrease in equilibrium price
An equal increase in demand and supply will always result in an increase in the market price. -
CORRECT ANSWER - False
Comparative advantage argues that if two countries specialize and engage in free trade -
CORRECT ANSWER - they will both gain
The appreciation of the yen versus the dollar means a vacation for Japanese tourists coming to
the United States is - CORRECT ANSWER - cheaper
The appreciation of the yen versus the dollar means the value of the dollar has - CORRECT
ANSWER - depreciated
, Monetary policy to fight demand-pull inflation would - CORRECT ANSWER - increase
reserve requirement, raise discount rate, and buy government securities
Government borrowing that leads to less private borrowing and investing is called - CORRECT
ANSWER - crowding out effect
A fiscal policy to fight demand-pull infaltion would - CORRECT ANSWER - raise taxes
A recession caused by too little aggregiate demand would require which of the following
policies? - CORRECT ANSWER - expansionary fiscal policy
Suppose $200 cash is deposited in a bank and the reserve requirement ratio is 10%. How much
can demand deposits expand? - CORRECT ANSWER - $1,800
Suppose $200 cash is deposited in a bank and the reserve requirement ratio is 10%. What is
considered the excess reserves? - CORRECT ANSWER - $180
Suppose $200 cash is deposited in a bank and the reserve requirement ratio is 10%. What is
considered required reserves? - CORRECT ANSWER - $20
In competitive markets, the long-run economic profit is - CORRECT ANSWER - zero
If maintenance costs rise for industry, what effect will this have on expected return? - CORRECT
ANSWER - Expected return decreases
If the expected return rises and interest rates remain constant, what happens to investment
spending? - CORRECT ANSWER - gross investment increases
Accounting profits include the entrepreneur's implicit costs of doing business - CORRECT
ANSWER - false
ACTUAL Exam Questions and CORRECT
Answers
As supply decreases and demand decreases, what effect does this have on equilibrium price and
quantity? - CORRECT ANSWER - Price indeterminant, quantity decreases
Which of the following would all decrease supply? - CORRECT ANSWER - Higher
business taxes, higher resource costs, fewer suppliers
Suppose a price floor is placed on wheat, what is the likely effect? - CORRECT
ANSWER - A surplus
Suppose a binding price ceiling is placed on gasoline, what is the likely effect? - CORRECT
ANSWER - A shortage
A supply increase will - CORRECT ANSWER - a decrease in equilibrium price
An equal increase in demand and supply will always result in an increase in the market price. -
CORRECT ANSWER - False
Comparative advantage argues that if two countries specialize and engage in free trade -
CORRECT ANSWER - they will both gain
The appreciation of the yen versus the dollar means a vacation for Japanese tourists coming to
the United States is - CORRECT ANSWER - cheaper
The appreciation of the yen versus the dollar means the value of the dollar has - CORRECT
ANSWER - depreciated
, Monetary policy to fight demand-pull inflation would - CORRECT ANSWER - increase
reserve requirement, raise discount rate, and buy government securities
Government borrowing that leads to less private borrowing and investing is called - CORRECT
ANSWER - crowding out effect
A fiscal policy to fight demand-pull infaltion would - CORRECT ANSWER - raise taxes
A recession caused by too little aggregiate demand would require which of the following
policies? - CORRECT ANSWER - expansionary fiscal policy
Suppose $200 cash is deposited in a bank and the reserve requirement ratio is 10%. How much
can demand deposits expand? - CORRECT ANSWER - $1,800
Suppose $200 cash is deposited in a bank and the reserve requirement ratio is 10%. What is
considered the excess reserves? - CORRECT ANSWER - $180
Suppose $200 cash is deposited in a bank and the reserve requirement ratio is 10%. What is
considered required reserves? - CORRECT ANSWER - $20
In competitive markets, the long-run economic profit is - CORRECT ANSWER - zero
If maintenance costs rise for industry, what effect will this have on expected return? - CORRECT
ANSWER - Expected return decreases
If the expected return rises and interest rates remain constant, what happens to investment
spending? - CORRECT ANSWER - gross investment increases
Accounting profits include the entrepreneur's implicit costs of doing business - CORRECT
ANSWER - false
