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Micro Economics

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Demand Test #1

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1 / 20

If the price of automobiles were to decrease substantially, the demand curve for automobiles would most likely

shift rightward.

shift leftward.

remain unchanged.

become steeper.

2 / 20

If the price of automobiles were to increase substantially, the demand curve for gasoline would most likely

shift leftward.

shift rightward.

become flatter.

become steeper.

3 / 20

As the price of a good increases, the change in the quantity demanded can be shown by

shifting the demand curve leftward.

shifting the demand curve rightward.

moving down along the same demand curve.

moving up along the same demand curve.

4 / 20

Holding all other factors constant, consumers demand more of a good the

higher its price.

lower its price.

steeper the downward slope of the demand curve.

steeper the upward slope of the demand curve.

5 / 20

According to the Law of Demand, the demand curve for a good will

shift leftward when the price of the good increases.

shift rightward when the price of the good increases.

slope downward.

slope upward.

6 / 20

The demand curve for a good connects points describing how much consumers

Actually bought at different prices during a particular period.

Actually bought at different prices in different periods.

Would have been willing and able to buy at different prices during a particular period.

Would have been willing and able to buy at different prices in different periods.

7 / 20

When two goods are substitutes, a shock that raises the price of one good causes the price of the other good to

remain unchanged.

decrease.

increase.

change in an unpredictable manner.

8 / 20

If pizza and tacos are substitutes, a decrease in the price of tacos would lead to a

decrease in the demand curve for pizza.

decrease in the quantity demanded of pizza.

decrease in the price of pizza.

All of the above.

9 / 20

An increase in the demand curve for orange juice would be illustrated as a

leftward shift of the demand curve.

rightward shift of the demand curve.

movement up along the demand curve.

movement down along the demand curve.

10 / 20

If the price of automobiles were to decrease substantially, the demand curve for public transportation would most likely

shift rightward.

shift leftward.

remain unchanged.

remain unchanged while quantity demanded would change.

11 / 20

The market demand for a product is found by

Horizontally summing the individual demand curves.

Vertically summing the individual demand curves.

Both horizontally and vertically summing the individual demand curves.

None of the above

12 / 20

Bo Dacious buys 10 classical albums and 15 tubes of suntan lotion along with quantities of other goods. Suppose that the price of records rises by 90 cents per album and the price of suntan lotion falls by 60 cents per tube. Other prices and Bo’s income remain unchanged. What will Bo do?

Buy more albums and less suntan lotion.

Buy fewer albums and more suntan lotion.

Buy the same number of albums and more suntan lotion.

Remain where she is since her present position is the best attainable one after prices change.

13 / 20

If price rises, what happens to quantity demanded for a product?

It increases.

It decreases.

It does not change.

Uncertain-economic theory has no answer to this question.

14 / 20

If price rises, what happens to demand curve for a product?

It increases.

It decreases.

It does not change.

Uncertain-economic theory has no answer to this question.

15 / 20

The demand curve for a typical good has

A negative slope because some consumers switch to other goods as the price of the good rises.

A negative slope because the supply of the good rises as demand rises.

A negative slope because the good has less "snob appeal" as its price falls.

An inverse slope because as the price goes up, the good has more profitability.

16 / 20

all Giffen goods are essentially inferior but it is not necessary that all inferior goods are Giffen goods.

True

False

17 / 20

When Income of a consumer increases, the demand for Giffen goods will

Increase

decrease

remain unchanged

May increase or decrease

18 / 20

When price of a good increases, the demand curve of its complimentary good

shifts rightwards

shifts leftwards

remains unchanged

becomes horizontal

19 / 20

The Demand Curve for Inferior Goods (Not Giffen) is

Positively Sloped

Negatively Sloped

Not Defined

None of the above

20 / 20

If two commodities are complementary, then a rise in the price of one commodity will induce

A rise in the price of the other commodity

An upward shift of demand curve

No shift in demand for the other commodity

A backward shift in demand for the other commodity

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Macro Economics

1 votes, 5 avg

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Rational Expectations Test #1

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1 / 10

Rational expectations theory assumes that:

Individuals are irrational and react emotionally to changes.

Individuals use a naive approach to form expectations.

Individuals use all available information and economic models to make forecasts.

Past trends are the sole basis for forming expectations.

2 / 10

In which of the following fields is the rational expectations hypothesis most commonly applied?

Psychology

Macroeconomics and financial economics

Behavioral sciences

Sociology

3 / 10

According to rational expectations, forecast errors:

Are predictable.

Are systematic and occur in patterns.

Are random and not systematically biased.

Depend entirely on past trends.

4 / 10

Which economist is most closely associated with the development of the rational expectations theory?

John Maynard Keynes

Robert Lucas

Milton Friedman

Paul Samuelson

5 / 10

What is the central assumption of the rational expectations theory?

Individuals form expectations based only on past data.

Individuals make predictions based on all available information and their understanding of the economy.

Expectations are always biased due to psychological factors.

Future outcomes are random and cannot be predicted.

6 / 10

If individuals form rational expectations about inflation, what is the likely outcome of an announced increase in the money supply?

Inflation will rise unexpectedly.

Inflation expectations will not change.

Inflation expectations will adjust immediately, and actual inflation may rise accordingly.

The economy will experience deflation.

7 / 10

Which of the following is a key criticism of the rational expectations theory?

It assumes that individuals rely solely on past data.

It underestimates individuals' access to information.

It assumes that individuals always have perfect knowledge and understanding of the economy.

It does not account for government intervention in the economy.

8 / 10

Rational expectations theory implies that government policy interventions:

Are highly effective in the short run.

Are anticipated by individuals and may be neutralized by their reactions.

Always lead to long-term economic growth.

Are necessary to stabilize the economy.

9 / 10

Which of the following theories directly opposes the rational expectations hypothesis?

Behavioral economics

Classical economics

Keynesian economics

Monetarist theory

10 / 10

The idea of rational expectations was first developed by

John F. Muth

Robert Lucas

Milton Friedman

All of These

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Adaptive Expectations Test #1

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1 / 10

What is the primary assumption of the adaptive expectations theory?

Individuals form expectations based on current information only.

Expectations are formed by averaging past experiences and gradually adjusting to new information.

Future expectations are independent of past trends.

Expectations are always perfectly rational and fully accurate.

2 / 10

According to adaptive expectations theory, how do individuals update their expectations?

Using complex statistical models.

By considering historical errors and adjusting expectations gradually.

By predicting based on theoretical models.

By ignoring past trends altogether.

3 / 10

In which of the following fields is adaptive expectations theory commonly applied?

Physics

Behavioral economics

Macroeconomics

Sociology

4 / 10

Which of the following equations represents the essence of adaptive expectations?

E(t+1) = Y(t)

E(t+1) = E(t) + λ{Y(t) −E(t)}

E(t+1) = {1 - λ}E(t) + λ{Y(t + 1)}

E(t+1) = (1/n).∑Y(t)

5 / 10

Which of the following best describes the adjustment parameter ( $λ\lambda$ ) in the adaptive expectations formula?

The speed at which expectations adjust to new information.

The percentage change in expectations over time.

The difference between expected and actual outcomes.

The constant rate of inflation in the economy.

6 / 10

According to adaptive expectations, if inflation last year was 5% and individuals expected it to be 4%, what will their expectation for next year be, assuming ?

4.5%

5.5%

7 / 10

The adaptive expectations hypothesis was prominently criticized because it:

Assumes perfect foresight.

Relies too heavily on past data and ignores future projections.

Overestimates individuals' ability to adjust expectations.

Assumes expectations are not influenced by psychological factors.

8 / 10

Which theory challenges the assumption of adaptive expectations?

Rational expectations theory

Keynesian economic theory

Classical economic theory

Prospect theory

9 / 10

In the context of inflation, adaptive expectations imply that:

Individuals perfectly predict future inflation.

Inflation expectations are completely independent of past inflation.

Past inflation trends influence future inflation expectations.

Expectations do not change regardless of actual inflation.

10 / 10

Adaptive expectations are most likely to fail in environments characterized by:

Stable economic conditions.

Gradual economic changes.

Unexpected and sudden economic shocks.

Perfectly competitive markets.

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Statistics

1 votes, 5 avg

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Probability Test #1

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1 / 20

What is the probability of 53 Sundays in a leap year

1/7

1/365

2/365

2/7

2 / 20

Tickets numbered 1 to 200 are mixed and a ticket is drawn at random from them. What is the probability that the ticket drawn is a multiple of 3

3/200

33/100

13/100

None of the above

3 / 20

Two dice are thrown simultaneously. What is the probability of getting two numbers whose product is even?

1/2

3/4

3/8

5/16

4 / 20

What is the Probability of getting a sum 9 from two throws of a dice

1/6

1/8

1/9

1/12

5 / 20

Two dice are rolled simultaneously. The probability that total score is prime number is

1/6

5/12

1/2

7/9

6 / 20

Let A and B be two mutually exclusive events with positive probability each, defined on the same sample space. Find the correct answer:

A and B are necessarily independent

A and B are necessarily dependent

A and B are necessarily equally likely

None of the above

7 / 20

An unbiased coin is tossed until a head appears. The expected number of tosses required is

Infinite

8 / 20

A card is drawn at random from an ordinary deck of cards. If an ace is drawn you win Rs. 100; if a king is drawn you win Rs. 75; if a queen is drawn you win Rs. 50; and if a jack is drawn you win Rs. 25. What is the probability of winning at least Rs. 25? What would you expect to win on average?

1/4 ; Rs. 62.50

4/13 ; Rs. 62.50

1/13 ; Rs. 19.23

4/13 ; Rs. 19.23

9 / 20

Among 25 articles, 9 are defective, 6 have only minor defects and 3 have major defects. The probability that, if a selected article is defective, then the defect is major is

1/3

0.25

0.24

0.08

10 / 20

A student must choose one of the subjects - Physics, Chemistry or Mathematics for study. She is equally likely to choose Physics or Chemistry and twice as likely to choose Mathematics. The probability that student chooses Mathematics is

1/3

1/4

1/2

None of the above

11 / 20

If A and B are independent events, P(A) = 0.5, P(A U B) = 0.7, then P(B) is

0.5

0.2

0.4

0.35

12 / 20

A car with six spark plugs is known to have two defective spark plugs. If two plugs are pulled at random, then the probability that both are defective is :

1/3

1/8

1/15

None of the above

13 / 20

If E(XY) = 36, E(X) = 9, E(Y) = 4 then

X and Y are independent

X and Y are uncorrelated

X and Y are mutually exclusive

None of the above

14 / 20

Events A and B are equally likely and are independent. The probability of the event A and B is 0.36. The probability of A is :

0.9

0.4

0.6

None of the above

15 / 20

If P(A) = P(B) = p, then P[A ∩ B]

is greater than or equal to p^2

is less than equal to p^2

is equal to 2p

cannot be determined

16 / 20

Given P(A) = 0.5, P(B) = 0.4 if A and B are independent then P(A U B) is

0.2

0.7

0.9

none of the above

17 / 20

If a fair coin is tossed twice, the probability of getting 'head' at least once is

1/2 + 1/2

(1/2)*(1/2)

3/4

2/4

18 / 20

If two fair dice are tossed, the probability that the sum of the points on the dice equals 7 is

1/12

3/6

2/6

1/6

19 / 20

If A and B are independent events then

P(A U B) = P(A) / P(B)

P(A ∩ B) = P(A)*P(B)

P(A / B) = P(A) / P(B)

All of the above

20 / 20

Given P(A) = 0.4, P(A U B) = 0.7, and A and B are independent, P(B) is equal to

0.5

0.2

0.4

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Mathematical Economics

Econometrics

International Economics

3 votes, 5 avg

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Ricardian Theory Test #1

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1 / 10

Malaysia has 200 units of labor, while there are 400 units of labor in Indonesia. When they produce, the countries have the following unit labor requirements.

Malaysia Indonesia

Cameras 10 20

Rugs 10 40

For which product does Malaysia have comparative advantage?

Cameras

Rugs

None

Both

2 / 10

Malaysia has 200 units of labor, while there are 400 units of labor in Indonesia. When they produce, the countries have the following unit labor requirements.

Malaysia Indonesia

Cameras 10 20

Rugs 10 40

What is the relative price of rugs to cameras in Indonesia if there is no trade?

1/4

1/2

3 / 10

Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of com or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Sylvania will now be able to consume a maximum of

30 units of corn and 30 units of wheat.

40 units of corn and 30 units of wheat.

40 units of corn and 20 units of wheat.

10 units of corn and 40 units of wheat.

4 / 10

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become:

better off, its producers of fish will become better off, and on balance the citizens of Denmark will become better off

worse off, its producers of fish will become better off, and on balance the citizens of Denmark will become worse off

better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off

5 / 10

30 units of corn and 30 units of wheat

40 units of corn and 30 units of wheat

40 units of corn and 20 units of wheat

10 units of corn and 40 units of wheat

6 / 10

The Ricardian Theory of comparative advantage states that a country has a comparative advantage in widgets if

Output per worker of widgets is higher in that country.

That country's exchange rate is low.

Wage rates in that country are high.

The output per worker of widgets as compared to the output of some other product ishigher in that country.

7 / 10

The production possibilities of two countries, Homeland and Foreign, capable of producing two goods, cloth and wheat, are given as follows:

Output per labour year

Country Cloth Wheat

Homeland 250 200

Foreign 300 400

Homeland and Foreign would be willing to trade with each other if the relative price of cloth is set at

1.5

0.5

None of the above, as there is no scope for trade

8 / 10

The production possibilities of two countries, Homeland and Foreign, capable of producing two goods, cloth and wheat, are given as follows:

Output per labour year

Country Cloth Wheat

Homeland 250 200

Foreign 300 400

Then each country can benefit if

Homeland Specializes in the production and export of cloth, while importing wheat from the foreign country

Foreign Country Specializes in the production and export of cloth, while importing wheat from the Homeland

Homeland and Foreign both specializes in Wheat production in order to maximize world production of Wheat

There is no scope for specialization and trade

9 / 10

The theory of Comparative Advantage in a two country, two commodity world can only work if

labour and capital are mobile

labour is mobile capital is not

capital is mobile labour is not

labour and capital are immobile

10 / 10

The fixed labour requirements per unit of wine and clothing production before trade for England and Portugal are given below :
Wine Clothing

England 6 10

Portugal 3 5

If trade opens up between England and Portugal, what will be the pattern of trade according to comparative advantage?

England exports clothing and Portugal exports wine

England exports wine and Portugal exports clothing

Neither country will trade in any good

Cannot Say

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Public Economics

Development Economics

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Amartaya Sen's Capability Approach Test #1

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1 / 20

Which of the following best describes "functionings" in Sen’s approach?

A. The services provided by the government.

B. The activities and states of being that make up a person’s life.

C. The material possessions a person has.

D. The healthcare facilities available in a country.

2 / 20

What is a key difference between the "Capability" approach and utilitarianism?

A. Utilitarianism focuses on maximizing wealth, while the "Capability" approach focuses on individual freedoms.

B. Utilitarianism focuses on overall happiness, while the "Capability" approach focuses on individual capabilities.

C. Utilitarianism considers income equality, while the "Capability" approach considers income inequality.

D. Utilitarianism focuses on economic outputs, while the "Capability" approach focuses on social inputs.

3 / 20

Which of the following best describes "agency" in the context of Sen’s "Capability" approach?

A. The ability to act on behalf of others.

B. The capacity to pursue goals that one values and has reason to value.

C. The ability to accumulate wealth.

D. The function of governmental institutions in policy-making.

4 / 20

Which of the following best represents the idea of "capability" in Sen's approach?

A. The amount of money a person has.

B. The education level a person has achieved.

C. The set of valuable doings and beings a person can achieve.

D. The employment status of a person.

5 / 20

Which aspect does Sen’s "Capability" approach emphasize when assessing quality of life?

A. Availability of resources

B. Economic growth rates

C. Freedom to achieve various lifestyles

D. Technological advancement

6 / 20

What is the core idea of Amartya Sen’s "Capability" approach?

A. Measuring economic growth solely through GDP.

B. Assessing well-being based on individuals' income levels.

C. Evaluating well-being based on individuals' actual capabilities and freedoms.

D. Determining social progress through technological advancements.

7 / 20

In the "Capability" approach, why is access to education considered important?

A. It directly increases income levels.

B. It enhances individuals' capabilities and freedoms.

C. It is a measure of economic productivity.

D. It ensures political stability.

8 / 20

According to Sen’s "Capability" approach, what is a "capability"?

A. The total wealth a person possesses.

B. The various functions a person can achieve.

C. The skills a person has acquired through education.

D. The potential to earn a high income.

9 / 20

How does Sen's "Capability" approach address issues of inequality?

A. By focusing on income redistribution.

B. By measuring the overall happiness of a population.

C. By emphasizing the distribution of capabilities and opportunities.

D. By ensuring everyone has the same level of resources.

10 / 20

Sen's "Capability" approach emphasizes the importance of:

A. Only the availability of resources.

B. Only economic development.

C. The opportunities and freedoms people have to achieve well-being.

D. Only technological progress.

11 / 20

Which of the following is NOT a key component of the "Capability" approach?

A. Functionings

B. Capabilities

C. Resources

D. Utility

12 / 20

Which of the following is a limitation of focusing solely on resources according to Sen’s "Capability" approach?

A. Resources do not equate to actual freedoms and opportunities.

B. Resources are difficult to measure.

C. Resources are not related to economic growth.

D. Resources are not important for well-being.

13 / 20

Which of the following statements aligns with Sen’s "Capability" approach?

A. Economic growth is the sole indicator of a country's development.

B. Individual freedoms and opportunities are central to evaluating development.

C. The number of consumer goods owned determines well-being.

D. National security is the most important aspect of development.

14 / 20

According to Amartya Sen, which of the following is more important than income in assessing individual well-being?

A. Wealth

B. Capabilities

C. Social status

D. Political power

15 / 20

What role does public policy play in Sen’s "Capability" approach?

A. It should primarily aim to increase national income.

B. It should focus on reducing taxes to stimulate growth.

C. It should aim to expand individuals' capabilities and opportunities.

D. It should ensure political stability through law enforcement.

16 / 20

Why does Sen criticize traditional economic measures like GDP per capita?

A. They do not account for environmental degradation.

B. They do not consider inequalities within a society.

C. They do not reflect individuals' actual capabilities to lead the lives they value.

D. All of the above.

17 / 20

According to Sen, which of the following is an example of a basic capability?

A. Owning a house

B. Being able to read and write

C. Having a high-paying job

D. Traveling internationally

18 / 20

What does Sen mean by "functionings" in his "Capability" approach?

A. The income and wealth of an individual.

B. The states of being and activities that a person can undertake.

C. The educational qualifications of an individual.

D. The societal status of a person.

19 / 20

How does Sen’s "Capability" approach view poverty?

A. As a lack of monetary resources.

B. As a failure of government policies.

C. As a deprivation of basic capabilities.

D. As a natural outcome of economic processes.

20 / 20

Sen’s "Capability" approach is often contrasted with which traditional economic measure?

A. Gross Domestic Product (GDP)

B. Consumer Price Index (CPI)

C. Unemployment Rate

D. Interest Rates

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Micro Economics

Macro Economics

Rational expectations theory assumes that:

In which of the following fields is the rational expectations hypothesis most commonly applied?

According to rational expectations, forecast errors:

Which economist is most closely associated with the development of the rational expectations theory?

What is the central assumption of the rational expectations theory?

If individuals form rational expectations about inflation, what is the likely outcome of an announced increase in the money supply?

Which of the following is a key criticism of the rational expectations theory?

Rational expectations theory implies that government policy interventions:

Which of the following theories directly opposes the rational expectations hypothesis?

What is the primary assumption of the adaptive expectations theory?

According to adaptive expectations theory, how do individuals update their expectations?

In which of the following fields is adaptive expectations theory commonly applied?

Which of the following equations represents the essence of adaptive expectations?

The adaptive expectations hypothesis was prominently criticized because it:

Which theory challenges the assumption of adaptive expectations?

In the context of inflation, adaptive expectations imply that:

Adaptive expectations are most likely to fail in environments characterized by:

Statistics

Mathematical Economics

Econometrics

International Economics

Public Economics

Development Economics

Indian Economy