Sample Preliminary Eco Multiple Choice Questions (with answers) (1 Viewer)

[mreditor16]

Hi All,

Here are some sample multiple choice questions, some I made myself and some I found from various resources. Hope they help! Note: The next post has the questions with the answers.

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1. Which group would be most burdened by an indirect tax placed on a good that is relatively inelastic?

(A) The consumers of the good
(B) The importers of the good
(C) The producers of the good
(D) The Government

2. Which of the following is a reason for the decline in union membership in Australia over the last 20 years?

(A) The increase in public sector employment
(B) The increase in casual, part-time and temporary employment
(C) The move towards a more centralised system of setting wages and conditions
(D) The increase in women in full-time employment

3. What is the main significance of the stock exchange to the economy?

(A) As a market for equity securities
(B) As a market for new capital raisings
(C) As a market which records changes in asset prices
(D) As a market for debt financing

4. Which of the following is a non-rival good?

(A) A library
(B) The water supply
(C) A gymnasium
(D) Street lights

5. Cory has a bank account that he uses to save money for a car. What is Cory’s motive for holding money in this account?

(A) Liquidity Motive
(B) Speculative Motive
(C) Transactionary Motive
(D) Precautionary Motive

6. Which of the following is an example of a negative externality?

(A) The cost of producing goods and services
(B) Pollution emitted by electricity generators
(C) The need for more doctors in rural areas
(D) The use of public swimming pools by local residents

7. What term is used to describe when government business enterprises are sold and no longer operate as public trading enterprises?

(A) Corporatisation
(B) Privatisation
(C) Deregulation
(D) Commercialisation

8. Which of the following transactions would occur in a primary financial market?

(A) The purchase of shares from another trader in the stock market
(B) The payment of money into a superannuation account
(C) The purchase of newly issued shares
(D) The purchase of foreign currencies

9. What is a benefit of a more equitable distribution of income?

(A) An increase in government spending on welfare
(B) A reduction in the level of poverty in society
(C) An increase in the award wage
(D) An increase in the level of employment

10. Aside from M3, which of the following is included in the definition of broad money?

(A) Deposits with the RBA
(B) Deposits held by Australian companies in foreign banks
(C) Currency including notes and coins
(D) Borrowing by all financial intermediaries from the private sector

11. In economics, when has investment occurred?

(A) Firms purchases new capital goods
(B) Consumers increase their deposits in the banking system
(C) Firms buy more government bonds
(D) Consumers buy gold in anticipation of a rise in its price

12. Which market structure is characterised by non-price competition and high barriers to entry?

(A) Monopolistic competition
(B) Monopoly
(C) Oligopoly
(D) Perfect competition

13. Goods produced to satisfy immediate wants are defined as:

(A) Public goods
(B) Capital goods
(C) Consumer goods
(D) Producer goods

14. Education and police services are best described as:

(A) basic needs
(B) collective wants
(C) individual wants
(D) complementary wants

15. The Australian economy is best described as a:

(A) newly industrialising economy
(B) mixed market economy
(C) socialist economy
(D) planned economy

16. An economy’s business cycle illustrates:

(A) how goods are produced
(B) what goods are in demand
(C) economic growth over time
(D) the average profit level for businesses

17. Welfare payments redistribute income from:

(A) businesses to individuals
(B) businesses to government
(C) government to individuals
(D) taxpayers to individuals

18. Which of the following decisions does not help contribute to environmental sustainability?

(A) Recycling of non-renewable resources
(B) Use of alternative technologies and energy sources
(C) Use of natural resources for only future generations
(D) Adopting production methods which reduce carbon emissions

19. Cory has a weekly income of $1000 and consumes $600 per week. After getting a pay raise, he receives a new income of $1500 and his new spending is $900. His APC and MPS at this new level of income respectively are:

(A) 600 and 900
(B) 0.6 and 0.6
(C) 1.6 and 2.5
(D) 0.6 and 0.4

20. The two most important influences on the pattern of consumer savings are:

(A) culture and income
(B) price of goods and age
(C) personality and income
(D) income and age

21. The following is data for a hypothetical, open economy – I = 20, T = 50, X = 30, G = 40, M = 20, S = 10. This economy will tend to:

(A) contract because injections exceed leakages
(B) contract because leakages exceed injections
(C) expand because injections exceed leakages
(D) expand because leakages exceed injections

22. The directors of Cronulla Football Club decide to lower the price of admission tickets to attract more fans to their games. Which goal of the firm takes priority in this situation?

(A) Increasing market share takes priority over maximising growth
(B) Maximising profit takes priority over maximising growth
(C) Maximising profit takes priority over increasing market share
(D) Increasing market share takes priority over maximising profit

23. Which of the following is not a benefit of technological change?

(A) New products and industries are created
(B) Many new jobs have been created
(C) The assisting in the emergence of a global market economy
(D) Jobs have been made redundant

 

[mreditor16]

Questions (with Answers)

1. Which group would be most burdened by an indirect tax placed on a good that is relatively inelastic?

(A) The consumers of the good
(B) The importers of the good
(C) The producers of the good
(D) The Government

Correct Answer = A

2. Which of the following is a reason for the decline in union membership in Australia over the last 20 years?

(A) The increase in public sector employment
(B) The increase in casual, part-time and temporary employment
(C) The move towards a more centralised system of setting wages and conditions
(D) The increase in women in full-time employment

Correct Answer = B

3. What is the main significance of the stock exchange to the economy?

(A) As a market for equity securities
(B) As a market for new capital raisings
(C) As a market which records changes in asset prices
(D) As a market for debt financing

Correct Answer = A

4. Which of the following is a non-rival good?

(A) A library
(B) The water supply
(C) A gymnasium
(D) Street lights

Correct Answer = D

5. Cory has a bank account that he uses to save money for a car. What is Cory’s motive for holding money in this account?

(A) Liquidity Motive
(B) Speculative Motive
(C) Transactionary Motive
(D) Precautionary Motive

Correct Answer = C

6. Which of the following is an example of a negative externality?

(A) The cost of producing goods and services
(B) Pollution emitted by electricity generators
(C) The need for more doctors in rural areas
(D) The use of public swimming pools by local residents

Correct Answer = B

7. What term is used to describe when government business enterprises are sold and no longer operate as public trading enterprises?

(A) Corporatisation
(B) Privatisation
(C) Deregulation
(D) Commercialisation

Correct Answer = B

8. Which of the following transactions would occur in a primary financial market?

(A) The purchase of shares from another trader in the stock market
(B) The payment of money into a superannuation account
(C) The purchase of newly issued shares
(D) The purchase of foreign currencies

Correct Answer = C

9. What is a benefit of a more equitable distribution of income?

(A) An increase in government spending on welfare
(B) A reduction in the level of poverty in society
(C) An increase in the award wage
(D) An increase in the level of employment

Correct Answer = B

10. Aside from M3, which of the following is included in the definition of broad money?

(A) Deposits with the RBA
(B) Deposits held by Australian companies in foreign banks
(C) Currency including notes and coins
(D) Borrowing by all financial intermediaries from the private sector

Correct Answer = D

11. In economics, when has investment occurred?

(A) Firms purchases new capital goods
(B) Consumers increase their deposits in the banking system
(C) Firms buy more government bonds
(D) Consumers buy gold in anticipation of a rise in its price

Correct Answer = A

12. Which market structure is characterised by non-price competition and high barriers to entry?

(A) Monopolistic competition
(B) Monopoly
(C) Oligopoly
(D) Perfect competition

Correct Answer = C

13. Goods produced to satisfy immediate wants are defined as:

(A) Public goods
(B) Capital goods
(C) Consumer goods
(D) Producer goods

Correct Answer = C

14. Education and police services are best described as:

(A) basic needs
(B) collective wants
(C) individual wants
(D) complementary wants

Correct Answer = B

15. The Australian economy is best described as a:

(A) newly industrialising economy
(B) mixed market economy
(C) socialist economy
(D) planned economy

Correct Answer = B

16. An economy’s business cycle illustrates:

(A) how goods are produced
(B) what goods are in demand
(C) economic growth over time
(D) the average profit level for businesses

Correct Answer = C

17. Welfare payments redistribute income from:

(A) businesses to individuals
(B) businesses to government
(C) government to individuals
(D) taxpayers to individuals

Correct Answer = D

18. Which of the following decisions does not help contribute to environmental sustainability?

(A) Recycling of non-renewable resources
(B) Use of alternative technologies and energy sources
(C) Use of natural resources for only future generations
(D) Adopting production methods which reduce carbon emissions

Correct Answer = C

19. Cory has a weekly income of $1000 and consumes $600 per week. After getting a pay raise, he receives a new income of $1500 and his new spending is $900. His APC and MPS at this new level of income respectively are:

(A) 600 and 900
(B) 0.6 and 0.6
(C) 1.6 and 2.5
(D) 0.6 and 0.4

Correct Answer = D

20. The two most important influences on the pattern of consumer savings are:

(A) culture and income
(B) price of goods and age
(C) personality and income
(D) income and age

Correct Answer = D

21. The following is data for a hypothetical, open economy – I = 20, T = 50, X = 30, G = 40, M = 20, S = 10. This economy will tend to:

(A) contract because injections exceed leakages
(B) contract because leakages exceed injections
(C) expand because injections exceed leakages
(D) expand because leakages exceed injections

Correct Answer = C

22. The directors of Cronulla Football Club decide to lower the price of admission tickets to attract more fans to their games. Which goal of the firm takes priority in this situation?

(A) Increasing market share takes priority over maximising growth
(B) Maximising profit takes priority over maximising growth
(C) Maximising profit takes priority over increasing market share
(D) Increasing market share takes priority over maximising profit

Correct Answer = D

23. Which of the following is not a benefit of technological change?

(A) New products and industries are created
(B) Many new jobs have been created
(C) The assisting in the emergence of a global market economy
(D) Jobs have been made redundant

Correct Answer = D

 

[Simorgh]

Omg thanks so muchhh!

 

[si2136]

Thank you

 

[mreditor16]

Nws guys!

 

[Memphis Depay]

Thanks man, appreciate the effort you put in to help economic students.

 

[mreditor16]

Thanks man, appreciate the effort you put in to help economic students.

My pleasure

 

[mreditor16]

bump

 

[2B or not 2B]

Ty for questions! Can someone explain Q4
(A) A library
(B) The water supply
(C) A gymnasium
(D) Street lights
Answer is (D) but I don't understand how the other options are not non-rival??

 

[si2136]

Ty for questions! Can someone explain Q4
(A) A library
(B) The water supply
(C) A gymnasium
(D) Street lights
Answer is (D) but I don't understand how the other options are not non-rival??

For full access to the library, you need a card.
For full access to the gym, you need a card.
For full access to the water supply, you need to be certified.

 

[elkedag]

For full access to the library, you need a card.
For full access to the gym, you need a card.
For full access to the water supply, you need to be certified.

For a good to be non-rivalrous, it must be able to be consumed by an entity without detracting from the utility of consumption of another entity (hence social demand will be a vertical summation of individual demands).
A library has a limited number of books / resources which cannot be consumed simultaneously.
There is a limited supply of water which cannot be consumed simultaneously.
A gymnasium has a limited amount of space / equipment which restricts the utility of other users.

 

[2B or not 2B]

by this logic, would a park be rival too as it technically has a "limited amount of space which restricts the utility of other users"?

sorry i find this concept somewhat confusing lol.

also, isn't si1236's explanation more to do with excludability rather than rivalry? (which is not what the multiple choice Q is asking)

 

[elkedag]

by this logic, would a park be rival too as it technically has a "limited amount of space which restricts the utility of other users"?

Yes, a park can be thought of as rival in that way. Some textbooks (Rosen and Gayer) talk about there being 'degrees of rivalry' with some goods being 'more rival' or 'less rival' than others. Those that are 'almost non-rivalrous' may be considered 'impure public goods', and public good analysis might still be most suitable for those goods.