ECON 101 FINAL EXAM PRACTICE
QUESTIONS WITH ANSWERS
100% PASS
2. Suppose you are forced to take a pay cut of 5% when the economy is
experiencing overall deflation of
5%. If in response to your pay cut you also reduce your consumption by 5%, then
economists would say:
A) the quantity theory of money held.
B) you are exhibiting money illusion.
C) you made a rational decision.
D) your real wage decreased by 5%. - CORRECT ANSWER-B
3. Continued long-run economic growth requires that economies:
A) continue to increase their investment rates.
B) reach their steady-state levels of capital and output.
C) have high levels of capital stock.
,D) have institutions in place that encourage research and development of new
ideas. - CORRECT ANSWER-D
4. The average rate of inflation in the United States over the past 10 years has been
around 2.4%. If this
trend continues, prices in the United States will double in about _____ years.
A) 29
B) 10
C) 18
D) 39 - CORRECT ANSWER-A
5. Which of the following is NOT true regarding the natural rate of
unemployment?
A) The natural rate of unemployment equals the sum of the frictional and
structural rates.
B) If the economy is operating at the natural rate of unemployment, cyclical
unemployment is equal to
zero.
C) The natural rate of unemployment correlates positively with the level of GDP
growth in an
economy.
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, D) The actual rate of unemployment varies around the natural rate over time. -
CORRECT ANSWER-A
7. Because of spillovers, the social benefit of research and development:
A) is greater than the private benefit, therefore the private market produces less
than the socially
efficient quantity.
B) is greater than the private benefit, therefore the private market produces more
than the socially
efficient quantity.
C) is less than the private benefit, therefore the private market produces more than
the socially
efficient quantity.
D) is less than the private benefit, therefore the private market produces less than
the socially efficient
quantity. - CORRECT ANSWER-A
8. In the Solow model, if a country's saving rate increased from 10% to 12% and it
was operating at its
steady state before the change, we would expect to see:
A) a decrease in both the capital stock and output.
QUESTIONS WITH ANSWERS
100% PASS
2. Suppose you are forced to take a pay cut of 5% when the economy is
experiencing overall deflation of
5%. If in response to your pay cut you also reduce your consumption by 5%, then
economists would say:
A) the quantity theory of money held.
B) you are exhibiting money illusion.
C) you made a rational decision.
D) your real wage decreased by 5%. - CORRECT ANSWER-B
3. Continued long-run economic growth requires that economies:
A) continue to increase their investment rates.
B) reach their steady-state levels of capital and output.
C) have high levels of capital stock.
,D) have institutions in place that encourage research and development of new
ideas. - CORRECT ANSWER-D
4. The average rate of inflation in the United States over the past 10 years has been
around 2.4%. If this
trend continues, prices in the United States will double in about _____ years.
A) 29
B) 10
C) 18
D) 39 - CORRECT ANSWER-A
5. Which of the following is NOT true regarding the natural rate of
unemployment?
A) The natural rate of unemployment equals the sum of the frictional and
structural rates.
B) If the economy is operating at the natural rate of unemployment, cyclical
unemployment is equal to
zero.
C) The natural rate of unemployment correlates positively with the level of GDP
growth in an
economy.
COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED
, D) The actual rate of unemployment varies around the natural rate over time. -
CORRECT ANSWER-A
7. Because of spillovers, the social benefit of research and development:
A) is greater than the private benefit, therefore the private market produces less
than the socially
efficient quantity.
B) is greater than the private benefit, therefore the private market produces more
than the socially
efficient quantity.
C) is less than the private benefit, therefore the private market produces more than
the socially
efficient quantity.
D) is less than the private benefit, therefore the private market produces less than
the socially efficient
quantity. - CORRECT ANSWER-A
8. In the Solow model, if a country's saving rate increased from 10% to 12% and it
was operating at its
steady state before the change, we would expect to see:
A) a decrease in both the capital stock and output.
