WGU C211 OA GLOBAL ECONOMICS EXAM ()
Actual Questions and Answers
Expert-Verified Explanation
This Exam contains:
✪ Multiple-choice and True/False Format
✪ Expert-Verified Explanations
✪ Verified with Trusted Textbooks
1. Suppose that the United States imposes a tariff on avocados imported from Mexico. What
impact will this have on the price paid for avocados by United States citizens?
A) Price will decrease
B) Price will increase
C) Price will remain the same
D) Price will fluctuate randomly
Answer: B
EXPLANATION: Tariffs raise import costs, which typically increase prices for domestic
consumers.
2. Which of the following is a consequence of a country imposing a tariff on imported goods?
A) Increase in demand for foreign goods
B) Decrease in demand for foreign produced goods
C) Increase in exports
D) Elimination of trade barriers
Answer: B
EXPLANATION: Tariffs make imports more expensive, reducing their demand.
3. Suppose that the United States imposes a tariff on salt. What impact might this tariff have on
the price for domestic consumers?
A) Consumers will pay less
B) Consumers will pay a higher price
C) Price will not change
D) Supply will increase
Answer: B
EXPLANATION: Tariffs increase costs for imported goods, leading to higher consumer prices.
4. Applying a tariff to coconuts will have the following effect:
A) Decrease the domestic price of coconuts
B) Increase the domestic price of coconuts
C) No effect on domestic prices
D) Increase domestic coconut supply
Answer: B
EXPLANATION: Tariffs add to the cost of imports, causing domestic prices to rise.
,5. Which of the following is NOT a restriction to trade?
A) Import quotas
B) Tariffs
C) Free trade areas
D) Export subsidies
Answer: C
EXPLANATION: Free trade areas reduce or eliminate trade restrictions between member
countries.
6. What is the significant difference between an import quota and a tariff?
A) Both raise revenue for the government
B) Tariffs create surplus for license holders
C) Quotas raise government revenue, tariffs do not
D) Tariffs raise government revenue; quotas create surplus for license holders
Answer: D
EXPLANATION: Tariffs generate tax revenue, while import quotas restrict quantity, benefiting
license holders.
7. Suppose that the price of a good increases (all else held constant). Which of the following would
happen along with the change in price?
A) Consumer surplus would increase
B) Consumer surplus would decrease
C) Producer surplus would decrease
D) Demand would increase
Answer: B
EXPLANATION: Higher prices reduce consumer surplus, the benefit buyers get above the price
paid.
8. Suppose that Bob goes to the market and is willing to pay $500 for a new chainsaw. Bob is able
to find the chainsaw for only $400. Which of the following follows from Bob's circumstance?
A) His consumer surplus is $100
B) His consumer surplus is $900
C) His consumer surplus is $400
D) His consumer surplus is $500
Answer: A
EXPLANATION: Consumer surplus is the difference between willingness to pay and actual price
paid.
9. Which statement is true of consumer surplus?
A) It represents the cost to buyers
B) It represents value to buyers in excess of the price paid
C) It equals producer surplus
D) It is zero in competitive markets
Answer: B
EXPLANATION: Consumer surplus measures the extra value buyers receive beyond what they
pay.
,10. Which statement is true?
A) Total surplus equals consumer surplus only
B) Total surplus equals producer surplus only
C) Total surplus equals sum of consumer and producer surplus
D) Total surplus is irrelevant to market efficiency
Answer: C
EXPLANATION: Total surplus measures overall market welfare as the sum of consumer and
producer benefits.
11. Suppose that Bob lives in the United States but has been working in Mexico for the last 5 years.
Where is the value of Bob's production counted during the last 5 years?
A) Mexico's GNP and Mexico's GDP
B) U.S. GDP and Mexico's GDP
C) U.S. GNP and Mexico's GDP
D) Mexico's GNP and U.S. GDP
Answer: C
EXPLANATION: GDP counts production within a country's borders; GNP counts production by
nationals regardless of location.
12. Which of the following statements describes gross domestic product (GDP)?
A) GDP measures a country's total income including abroad
B) GDP is the most used measure of a country's economic wellbeing
C) GDP only measures government spending
D) GDP excludes services
Answer: B
EXPLANATION: GDP is the standard metric for a country’s economic activity within its borders.
13. Which of the following is an investment included in the gross domestic product (GDP) measure?
A) Spending on used cars
B) Spending on new residential construction
C) Spending on imported goods
D) Government transfer payments
Answer: B
EXPLANATION: Investment in GDP includes spending on new capital goods and residential
construction.
14. Gross Domestic Product (GDP) measures which of the following?
A) Market value of final goods and services produced within a country in a given period
B) Total exports
C) Government expenditures only
D) Total income of nationals regardless of location
Answer: A
EXPLANATION: GDP measures final goods/services produced domestically within a timeframe.
15. Which item is NOT part of GDP?
A) Purchasing a new car
B) Purchasing a used hairdryer
, C) Services provided by businesses
D) Government spending on infrastructure
Answer: B
EXPLANATION: Used goods are not counted since they were counted when new.
16. What is the key distinction between real and nominal GDP?
A) Real GDP measures production not affected by changes in prices while nominal GDP
measures production at current prices
B) Nominal GDP accounts for inflation
C) Real GDP measures only government spending
D) Nominal GDP excludes services
Answer: A
EXPLANATION: Real GDP adjusts for inflation; nominal GDP does not.
17. What is the change in total cost equal to in the marginal cost equation?
A) Marginal cost divided by change in quantity
B) Marginal cost multiplied by change in quantity
C) Total cost minus fixed cost
D) Change in quantity minus marginal cost
Answer: B
EXPLANATION: Marginal cost times quantity change equals total cost change.
18. Which of the following is NOT part of GDP?
A) Purchasing a used hairdryer
B) Spending on new residential construction
C) Market value of final goods produced
D) Services provided by businesses
Answer: A
EXPLANATION: GDP includes new goods and services only, not resale of used items.
19. What is the key distinction between real and nominal GDP?
A) Real GDP is measured at current prices
B) Nominal GDP is adjusted for inflation
C) Real GDP measures production not affected by price changes
D) Nominal GDP excludes services
Answer: C
EXPLANATION: Real GDP adjusts for inflation, reflecting production volume; nominal GDP uses
current prices.
20. What is the change in total cost equal to in the marginal cost equation?
A) Marginal cost divided by change in quantity
B) Marginal cost multiplied by change in quantity
C) Total cost minus fixed cost
D) Change in quantity minus marginal cost
Answer: B
EXPLANATION: Marginal cost times the change in quantity gives the change in total cost.
Actual Questions and Answers
Expert-Verified Explanation
This Exam contains:
✪ Multiple-choice and True/False Format
✪ Expert-Verified Explanations
✪ Verified with Trusted Textbooks
1. Suppose that the United States imposes a tariff on avocados imported from Mexico. What
impact will this have on the price paid for avocados by United States citizens?
A) Price will decrease
B) Price will increase
C) Price will remain the same
D) Price will fluctuate randomly
Answer: B
EXPLANATION: Tariffs raise import costs, which typically increase prices for domestic
consumers.
2. Which of the following is a consequence of a country imposing a tariff on imported goods?
A) Increase in demand for foreign goods
B) Decrease in demand for foreign produced goods
C) Increase in exports
D) Elimination of trade barriers
Answer: B
EXPLANATION: Tariffs make imports more expensive, reducing their demand.
3. Suppose that the United States imposes a tariff on salt. What impact might this tariff have on
the price for domestic consumers?
A) Consumers will pay less
B) Consumers will pay a higher price
C) Price will not change
D) Supply will increase
Answer: B
EXPLANATION: Tariffs increase costs for imported goods, leading to higher consumer prices.
4. Applying a tariff to coconuts will have the following effect:
A) Decrease the domestic price of coconuts
B) Increase the domestic price of coconuts
C) No effect on domestic prices
D) Increase domestic coconut supply
Answer: B
EXPLANATION: Tariffs add to the cost of imports, causing domestic prices to rise.
,5. Which of the following is NOT a restriction to trade?
A) Import quotas
B) Tariffs
C) Free trade areas
D) Export subsidies
Answer: C
EXPLANATION: Free trade areas reduce or eliminate trade restrictions between member
countries.
6. What is the significant difference between an import quota and a tariff?
A) Both raise revenue for the government
B) Tariffs create surplus for license holders
C) Quotas raise government revenue, tariffs do not
D) Tariffs raise government revenue; quotas create surplus for license holders
Answer: D
EXPLANATION: Tariffs generate tax revenue, while import quotas restrict quantity, benefiting
license holders.
7. Suppose that the price of a good increases (all else held constant). Which of the following would
happen along with the change in price?
A) Consumer surplus would increase
B) Consumer surplus would decrease
C) Producer surplus would decrease
D) Demand would increase
Answer: B
EXPLANATION: Higher prices reduce consumer surplus, the benefit buyers get above the price
paid.
8. Suppose that Bob goes to the market and is willing to pay $500 for a new chainsaw. Bob is able
to find the chainsaw for only $400. Which of the following follows from Bob's circumstance?
A) His consumer surplus is $100
B) His consumer surplus is $900
C) His consumer surplus is $400
D) His consumer surplus is $500
Answer: A
EXPLANATION: Consumer surplus is the difference between willingness to pay and actual price
paid.
9. Which statement is true of consumer surplus?
A) It represents the cost to buyers
B) It represents value to buyers in excess of the price paid
C) It equals producer surplus
D) It is zero in competitive markets
Answer: B
EXPLANATION: Consumer surplus measures the extra value buyers receive beyond what they
pay.
,10. Which statement is true?
A) Total surplus equals consumer surplus only
B) Total surplus equals producer surplus only
C) Total surplus equals sum of consumer and producer surplus
D) Total surplus is irrelevant to market efficiency
Answer: C
EXPLANATION: Total surplus measures overall market welfare as the sum of consumer and
producer benefits.
11. Suppose that Bob lives in the United States but has been working in Mexico for the last 5 years.
Where is the value of Bob's production counted during the last 5 years?
A) Mexico's GNP and Mexico's GDP
B) U.S. GDP and Mexico's GDP
C) U.S. GNP and Mexico's GDP
D) Mexico's GNP and U.S. GDP
Answer: C
EXPLANATION: GDP counts production within a country's borders; GNP counts production by
nationals regardless of location.
12. Which of the following statements describes gross domestic product (GDP)?
A) GDP measures a country's total income including abroad
B) GDP is the most used measure of a country's economic wellbeing
C) GDP only measures government spending
D) GDP excludes services
Answer: B
EXPLANATION: GDP is the standard metric for a country’s economic activity within its borders.
13. Which of the following is an investment included in the gross domestic product (GDP) measure?
A) Spending on used cars
B) Spending on new residential construction
C) Spending on imported goods
D) Government transfer payments
Answer: B
EXPLANATION: Investment in GDP includes spending on new capital goods and residential
construction.
14. Gross Domestic Product (GDP) measures which of the following?
A) Market value of final goods and services produced within a country in a given period
B) Total exports
C) Government expenditures only
D) Total income of nationals regardless of location
Answer: A
EXPLANATION: GDP measures final goods/services produced domestically within a timeframe.
15. Which item is NOT part of GDP?
A) Purchasing a new car
B) Purchasing a used hairdryer
, C) Services provided by businesses
D) Government spending on infrastructure
Answer: B
EXPLANATION: Used goods are not counted since they were counted when new.
16. What is the key distinction between real and nominal GDP?
A) Real GDP measures production not affected by changes in prices while nominal GDP
measures production at current prices
B) Nominal GDP accounts for inflation
C) Real GDP measures only government spending
D) Nominal GDP excludes services
Answer: A
EXPLANATION: Real GDP adjusts for inflation; nominal GDP does not.
17. What is the change in total cost equal to in the marginal cost equation?
A) Marginal cost divided by change in quantity
B) Marginal cost multiplied by change in quantity
C) Total cost minus fixed cost
D) Change in quantity minus marginal cost
Answer: B
EXPLANATION: Marginal cost times quantity change equals total cost change.
18. Which of the following is NOT part of GDP?
A) Purchasing a used hairdryer
B) Spending on new residential construction
C) Market value of final goods produced
D) Services provided by businesses
Answer: A
EXPLANATION: GDP includes new goods and services only, not resale of used items.
19. What is the key distinction between real and nominal GDP?
A) Real GDP is measured at current prices
B) Nominal GDP is adjusted for inflation
C) Real GDP measures production not affected by price changes
D) Nominal GDP excludes services
Answer: C
EXPLANATION: Real GDP adjusts for inflation, reflecting production volume; nominal GDP uses
current prices.
20. What is the change in total cost equal to in the marginal cost equation?
A) Marginal cost divided by change in quantity
B) Marginal cost multiplied by change in quantity
C) Total cost minus fixed cost
D) Change in quantity minus marginal cost
Answer: B
EXPLANATION: Marginal cost times the change in quantity gives the change in total cost.
