Principles of Economics Exam Questions
with Answers
US Population - ✔✔Approximately 335 million people in the United States
US GDP - ✔✔The total value of goods and services produced in the United States, which is
approximately $25 trillion
US debt - ✔✔The total amount of money owed by the United States government, which is
approximately $30 trillion
US deficit - ✔✔The amount by which government spending exceeds government revenue in a
given year, which is approximately $500 billion per year on average
US unemployment rate - ✔✔The percentage of the labor force that is unemployed in the
United States, typically between 4% and 5.5%
US inflation rate - ✔✔The rate at which the general level of prices for goods and services is
rising and, subsequently, purchasing power is falling, typically around 4%
No free lunch - ✔✔The concept that every action, policy, or decision involves costs and benefits
Voluntary trade - ✔✔The exchange of goods or services between parties where both parties
willingly participate
Efficiency - ✔✔The state or quality of being efficient, specifically in terms of productive
efficiency, allocative efficiency, and Pareto efficiency
, Productive efficiency - ✔✔The state where it is not possible to produce more goods without
using more inputs or produce the same amount of goods with fewer inputs
Allocative efficiency - ✔✔The state where goods are distributed to the people who value them
the most, meaning those who are willing to pay a price higher than the cost of producing the
good
Pareto efficiency - ✔✔The state where it is not possible to make someone better off without
making someone else worse off
Microeconomics - ✔✔The branch of economics that focuses on the behavior and decision-
making of individuals and firms
Macroeconomics - ✔✔The branch of economics that focuses on the behavior and decision-
making of an economy as a whole
Fiscal policy - ✔✔The use of government spending and taxation to influence the economy
Monetary policy - ✔✔The use of government actions related to money and banking to
influence the economy
Positive statements - ✔✔Statements that are factually true or can be defended with facts
Normative statements - ✔✔Statements that argue what should be or express an opinion
Optimal stopping rule - ✔✔The decision-making rule that suggests continuing to buy more as
long as the marginal benefit is greater than the marginal cost
with Answers
US Population - ✔✔Approximately 335 million people in the United States
US GDP - ✔✔The total value of goods and services produced in the United States, which is
approximately $25 trillion
US debt - ✔✔The total amount of money owed by the United States government, which is
approximately $30 trillion
US deficit - ✔✔The amount by which government spending exceeds government revenue in a
given year, which is approximately $500 billion per year on average
US unemployment rate - ✔✔The percentage of the labor force that is unemployed in the
United States, typically between 4% and 5.5%
US inflation rate - ✔✔The rate at which the general level of prices for goods and services is
rising and, subsequently, purchasing power is falling, typically around 4%
No free lunch - ✔✔The concept that every action, policy, or decision involves costs and benefits
Voluntary trade - ✔✔The exchange of goods or services between parties where both parties
willingly participate
Efficiency - ✔✔The state or quality of being efficient, specifically in terms of productive
efficiency, allocative efficiency, and Pareto efficiency
, Productive efficiency - ✔✔The state where it is not possible to produce more goods without
using more inputs or produce the same amount of goods with fewer inputs
Allocative efficiency - ✔✔The state where goods are distributed to the people who value them
the most, meaning those who are willing to pay a price higher than the cost of producing the
good
Pareto efficiency - ✔✔The state where it is not possible to make someone better off without
making someone else worse off
Microeconomics - ✔✔The branch of economics that focuses on the behavior and decision-
making of individuals and firms
Macroeconomics - ✔✔The branch of economics that focuses on the behavior and decision-
making of an economy as a whole
Fiscal policy - ✔✔The use of government spending and taxation to influence the economy
Monetary policy - ✔✔The use of government actions related to money and banking to
influence the economy
Positive statements - ✔✔Statements that are factually true or can be defended with facts
Normative statements - ✔✔Statements that argue what should be or express an opinion
Optimal stopping rule - ✔✔The decision-making rule that suggests continuing to buy more as
long as the marginal benefit is greater than the marginal cost
