MACROECONOMICS EC112 QUESTIONS AND ANSWERS 2025
Technological progress has made it possible for firms such as Apple and Alivecor to develop small
electronic devices, including smartwatches, smartphones, and products that can be attached to the
smartwatches and smartphones, to serve consumers who have become more health conscious and wish
to monitor various health conditions. These firms are reacting to which of the three key economic ideas?
A) firms attempt to maximize revenues
B) optimal decisions are made at the margin
C) people are rational
D) people respond to economic incentives - (ANSWER)d
The term "market" in economics refers to ______________
A) a place where money changes hands.
B) a legal institution where exchange can take place.
C) a group of buyers and sellers of a product and the arrangement by which they come together to
trade.
D) an organization which sells goods and services. - (ANSWER)c
Which of the following best describes an assumption economists make about human behavior?
A) They assume that individuals act rationally all the time in all circumstances.
B) They assume that rational behavior is useful in explaining choices people make even though people
may not behave rationally all the time.
C) They assume that people take into account the question of fairness in all decisions they make.
D) They assume that individuals act randomly. - (ANSWER)b
1. In the first six months of 2003, branches of Commerce Bank in New York City were robbed 14 times.
The New York City Police recommended steps the bank could take to deter robberies, including the
installation of plastic barriers called "bandit barriers." The police were surprised the bank did not take
their advice. According to a deputy commissioner of police, "Commerce does very little of what we
recommend. They've told our detectives they have no interest in ever putting in the barriers."
It would seem that Commerce Bank would have a strong incentive to install "bandit barriers" to deter
robberies. Why wouldn't they do it?
,MACROECONOMICS EC112 QUESTIONS AND ANSWERS 2025
A) The banks would rather delay installation of any theft deterring equipment in anticipation of new,
lower-cost innovations in the security devices market.
B) The banks must have weighed the cost of installing bandit barriers against the benefits and decided
that they have "no interest in - (ANSWER)b
Economics promotes which of the following as the way to make the best decision?
A) Continue an enjoyable activity as long as you do not have to pay for it.
B) Continue an enjoyable activity until it is no longer enjoyable.
C) Continue an enjoyable activity until you cannot afford to pursue it.
D) Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost. -
(ANSWER)d
Which of the following is an example of a "how much" decision?
A) Octavia is debating whether to buy a pair of Jimmy Choo shoes or Steve Madden boots.
B) Humberto has taken a second job to earn money to buy a Harley-Davidson SuperLow Sportster.
C) You plan on going to Las Vegas for your birthday and are deciding if you should fly or drive.
D) Diana is trying to decide if she should open her pet shop on Sundays. - (ANSWER)d
Every society faces economic trade-offs. This means ______
A) me people live better than others do.
B) not everyone can have enough goods to survive.
C) producing more of one good means less of another good can be produced.
D) society's output cannot be made available to all. - (ANSWER)c
Which of the following statements is false?
A) Anytime you have to decide which action to take you are facing an economic trade-off.
B) Trade-offs do not apply when the consumers purchase a product for which there is excess supply,
such as a stock clearance sale.
,MACROECONOMICS EC112 QUESTIONS AND ANSWERS 2025
C) Every individual, no matter how rich or poor, is faced with making trade-offs.
D) Economics is a social science that studies the trade-offs we are forced to make because of scarcity. -
(ANSWER)b
Who, in a modern mixed economy, decides what goods and services will be produced with the scarce
resources available in that economy?
A) the government
B) producers
C) consumers
D) consumers and producers
E) the government, consumers, and producers - (ANSWER)e
In a market economy, who decides what goods and services will be produced?
A) only the producers
B) only consumers
C) consumers and producers
D) the government - (ANSWER)c
How does a market system prevent people from getting as many goods and services as they wish?
A) Governments interfere with the market mechanism to influence the allocation of goods and services.
B) In a market system, firms can charge any price they want, thus preventing poor people from getting
as many goods and services as they wish.
C) The market system allocates goods and services to those who are able to pay for those products and
therefore income is a limiting factor.
D) The government imposes taxes on those who earn beyond a certain amount of income. - (ANSWER)c
When every good or service is produced up to the point where the last unit provides a marginal benefit
to society equal to the marginal cost of producing it, ________ occurs
A) allocative efficiency
, MACROECONOMICS EC112 QUESTIONS AND ANSWERS 2025
B) productive efficiency
C) equity
D) efficient central planning - (ANSWER)a
Which of the following statements about positive economic analysis is true?
A) Positive analysis uses an economic model to estimate the costs and benefits of different course of
actions.
B) There is much less disagreement among economists over normative economic analysis than over
positive economic analysis.
C) There is much more disagreement among economists over positive economic analysis than over
normative economic analysis.
D) Unlike positive economic analysis, normative economic analysis can be tested. - (ANSWER)a
Which of the following is a microeconomics question?
A) When will the government better secure the borders?
B) Why hasn't the federal government raised the minimum wage?
C) How does Fiat decide on the price of the 500 Pop model?
D) What determines the level of U.S. imports and exports? - (ANSWER)c
Which of the following is a macroeconomics question?
A) What determines the minimum wage?
B) What determines the production of video game consoles?
C) What factors determine the price of Oreo cookies?
D) What determines the salaries of college professors? - (ANSWER)a
The production possibilities frontier model assumes all of the following except____________
A) labor, capital, land and natural resources are fixed in quantity.
B) the economy produces only two products.
C) any level of the two products that the economy produces is currently possible.
Technological progress has made it possible for firms such as Apple and Alivecor to develop small
electronic devices, including smartwatches, smartphones, and products that can be attached to the
smartwatches and smartphones, to serve consumers who have become more health conscious and wish
to monitor various health conditions. These firms are reacting to which of the three key economic ideas?
A) firms attempt to maximize revenues
B) optimal decisions are made at the margin
C) people are rational
D) people respond to economic incentives - (ANSWER)d
The term "market" in economics refers to ______________
A) a place where money changes hands.
B) a legal institution where exchange can take place.
C) a group of buyers and sellers of a product and the arrangement by which they come together to
trade.
D) an organization which sells goods and services. - (ANSWER)c
Which of the following best describes an assumption economists make about human behavior?
A) They assume that individuals act rationally all the time in all circumstances.
B) They assume that rational behavior is useful in explaining choices people make even though people
may not behave rationally all the time.
C) They assume that people take into account the question of fairness in all decisions they make.
D) They assume that individuals act randomly. - (ANSWER)b
1. In the first six months of 2003, branches of Commerce Bank in New York City were robbed 14 times.
The New York City Police recommended steps the bank could take to deter robberies, including the
installation of plastic barriers called "bandit barriers." The police were surprised the bank did not take
their advice. According to a deputy commissioner of police, "Commerce does very little of what we
recommend. They've told our detectives they have no interest in ever putting in the barriers."
It would seem that Commerce Bank would have a strong incentive to install "bandit barriers" to deter
robberies. Why wouldn't they do it?
,MACROECONOMICS EC112 QUESTIONS AND ANSWERS 2025
A) The banks would rather delay installation of any theft deterring equipment in anticipation of new,
lower-cost innovations in the security devices market.
B) The banks must have weighed the cost of installing bandit barriers against the benefits and decided
that they have "no interest in - (ANSWER)b
Economics promotes which of the following as the way to make the best decision?
A) Continue an enjoyable activity as long as you do not have to pay for it.
B) Continue an enjoyable activity until it is no longer enjoyable.
C) Continue an enjoyable activity until you cannot afford to pursue it.
D) Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost. -
(ANSWER)d
Which of the following is an example of a "how much" decision?
A) Octavia is debating whether to buy a pair of Jimmy Choo shoes or Steve Madden boots.
B) Humberto has taken a second job to earn money to buy a Harley-Davidson SuperLow Sportster.
C) You plan on going to Las Vegas for your birthday and are deciding if you should fly or drive.
D) Diana is trying to decide if she should open her pet shop on Sundays. - (ANSWER)d
Every society faces economic trade-offs. This means ______
A) me people live better than others do.
B) not everyone can have enough goods to survive.
C) producing more of one good means less of another good can be produced.
D) society's output cannot be made available to all. - (ANSWER)c
Which of the following statements is false?
A) Anytime you have to decide which action to take you are facing an economic trade-off.
B) Trade-offs do not apply when the consumers purchase a product for which there is excess supply,
such as a stock clearance sale.
,MACROECONOMICS EC112 QUESTIONS AND ANSWERS 2025
C) Every individual, no matter how rich or poor, is faced with making trade-offs.
D) Economics is a social science that studies the trade-offs we are forced to make because of scarcity. -
(ANSWER)b
Who, in a modern mixed economy, decides what goods and services will be produced with the scarce
resources available in that economy?
A) the government
B) producers
C) consumers
D) consumers and producers
E) the government, consumers, and producers - (ANSWER)e
In a market economy, who decides what goods and services will be produced?
A) only the producers
B) only consumers
C) consumers and producers
D) the government - (ANSWER)c
How does a market system prevent people from getting as many goods and services as they wish?
A) Governments interfere with the market mechanism to influence the allocation of goods and services.
B) In a market system, firms can charge any price they want, thus preventing poor people from getting
as many goods and services as they wish.
C) The market system allocates goods and services to those who are able to pay for those products and
therefore income is a limiting factor.
D) The government imposes taxes on those who earn beyond a certain amount of income. - (ANSWER)c
When every good or service is produced up to the point where the last unit provides a marginal benefit
to society equal to the marginal cost of producing it, ________ occurs
A) allocative efficiency
, MACROECONOMICS EC112 QUESTIONS AND ANSWERS 2025
B) productive efficiency
C) equity
D) efficient central planning - (ANSWER)a
Which of the following statements about positive economic analysis is true?
A) Positive analysis uses an economic model to estimate the costs and benefits of different course of
actions.
B) There is much less disagreement among economists over normative economic analysis than over
positive economic analysis.
C) There is much more disagreement among economists over positive economic analysis than over
normative economic analysis.
D) Unlike positive economic analysis, normative economic analysis can be tested. - (ANSWER)a
Which of the following is a microeconomics question?
A) When will the government better secure the borders?
B) Why hasn't the federal government raised the minimum wage?
C) How does Fiat decide on the price of the 500 Pop model?
D) What determines the level of U.S. imports and exports? - (ANSWER)c
Which of the following is a macroeconomics question?
A) What determines the minimum wage?
B) What determines the production of video game consoles?
C) What factors determine the price of Oreo cookies?
D) What determines the salaries of college professors? - (ANSWER)a
The production possibilities frontier model assumes all of the following except____________
A) labor, capital, land and natural resources are fixed in quantity.
B) the economy produces only two products.
C) any level of the two products that the economy produces is currently possible.
