All Free Economics MCQs with Answers
Every Economics question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.
4,037 questions · page 48 of 202
- A. A decrease in the government budget deficit increase the real interest rate
- B. An increase in the government budget deficit shifts the supply of loanable funds to the right
- C. An increase in private saving shifts the supply of loanable funds to the left
- D. An increase in the government budget deficit shifts the supply of loanable funds to the left
Explanation: A government budget deficit reduces public saving, so national saving and the supply of loanable funds fall, shifting the supply curve…
Correct answer: An increase in the government budget deficit shifts the supply of loanable funds to the left- A. A decrease in a country's net capital outflow shifts the demand for loanable funds to the left
- B. An increase in domestic investment shifts the demand for loanable funds to the right
- C. An increase in a country's net capital outflow shifts the supply of loanable funds to the left
- D. An increase in a country's net capital outflow raises its real interest rate
Explanation: Net capital outflow is part of the demand for loanable funds because it represents funds invested abroad.
Correct answer: An increase in a country's net capital outflow shifts the supply of loanable funds to the left- A. Solow residual
- B. productivity paradox
- C. technological followership
- D. Stieglitz discrepancies
Explanation: The productivity paradox describes the observation that rapid investment in information and communications technology did not initially…
Correct answer: productivity paradox- A. Dale Jorgenson
- B. Joseph Stieglitz
- C. Robert Solow
- D. Theodore W. Schultz
Explanation: Robert Solow highlighted the productivity paradox with the observation that the computer age could be seen everywhere except in…
Correct answer: Robert Solow- A. productivity paradox
- B. absorptive capacity
- C. the residual
- D. uncertainly
Explanation: Education, training and infrastructure improve a developing economy’s ability to adopt, operate and benefit from new technology and…
Correct answer: absorptive capacity- A. maximum capital absorption
- B. factor price distortions
- C. engineering mentality
- D. intermediate technology
Explanation: An engineering mentality gives priority to technically advanced designs without adequately comparing their costs and profitability.
Correct answer: engineering mentality- A. G-7 countries
- B. countries with highest productivity growth in the world since 1960
- C. countries with decreasing TFP growth since 1990s
- D. countries with the lowest information technology equipment and software index prices
Explanation: The seven countries listed are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
Correct answer: G-7 countries- A. an industrial sector and a manufacturing sector
- B. a traditional agricultural sector and a modern industrial sector
- C. state owner ship of the means of production
- D. an industrial sector that concentrates on manufacturing and construction
Explanation: A dual economy combines a traditional, usually low-productivity agricultural sector with a modern industrial sector using more advanced…
Correct answer: a traditional agricultural sector and a modern industrial sector- A. with double capital and labor/
- B. with a modern manufacturing sector as well as traditional agriculture sector
- C. that specialize in labor intensive products more than capital intensive products
- D. with foreign owned and domestically owned capital
Explanation: Dual economies contain two contrasting sectors: a modern manufacturing or industrial sector and a traditional agricultural sector.
Correct answer: with a modern manufacturing sector as well as traditional agriculture sector- A. enough to supply only a small nonagricultural population
- B. of zero
- C. large enough of feed five other families
- D. large enough to feed 25 other families
Explanation: Low-income agricultural families usually produce only a modest surplus after meeting their own subsistence needs, so it can support only a…
Correct answer: enough to supply only a small nonagricultural population- A. $145
- B. $40,000
- C. $25
- D. $100
Explanation: Per-capita income rose from $120 ($120,000 ÷ 1,000) to about $145 ($160,000 ÷ 1,100), an increase of roughly $25.
Correct answer: $25- A. Germany
- B. United Kingdom
- C. Canada
- D. Mexico
Explanation: Germany, the United Kingdom and Canada are classified as high-income economies, whereas Mexico is generally classified as an…
Correct answer: Mexico- A. Uses no mechanical power
- B. May be enterprises with less than 10 workers
- C. Production is capital intensive
- D. Uses family workers
Explanation: Informal-sector enterprises generally use simple, labor-intensive methods, family workers and few employees, often fewer than 10.
Correct answer: Production is capital intensive- A. the modern sector increases its output share relative to the traditional sector
- B. agricultural sector uses modern equipment
- C. agricultural sector hires labor economically
- D. modern manufacturing sector is labor intensive
Explanation: In Lewis's dual-economy model, development depends on expansion of the modern sector, which absorbs surplus labor from the traditional…
Correct answer: the modern sector increases its output share relative to the traditional sector- A. less than 10% of the labor force is in agriculture
- B. the average agriculture family produces surplus large enough only to supply small non-agriculture population
- C. One-third of the labor force produce food
- D. share of labor force is about 30%
Explanation: Low-income countries commonly have a large agricultural population, but agricultural productivity is low, so each farm family produces…
Correct answer: the average agriculture family produces surplus large enough only to supply small non-agriculture population- A. dual family
- B. institutional family
- C. extended family
- D. two-tier family tree
Explanation: An extended family includes two or more related nuclear families, such as parents, children and other generations living together or…
Correct answer: extended family- A. government programs direct resources away from investment goods to consumer goods.
- B. tariffs and quotas prevent dollars from leaving the country
- C. the rate of growth of real GNP is greater than the rate of growth of population
- D. the level of consumption expenditures rises relative to the level of saving
Explanation: Real GNP per capita rises when total real GNP grows faster than the population, because output is increasing faster than the number of…
Correct answer: the rate of growth of real GNP is greater than the rate of growth of population- A. deficient infrastructures
- B. low life expectancies
- C. low savings
- D. a per capital GNP of more than $900
Explanation: Low-income economies are associated with weak infrastructure, low life expectancy and low saving rates, while their per-capita GNP is…
Correct answer: a per capital GNP of more than $900959. Industrialization?
- A. causes development
- B. is positively related to development
- C. id inversely related to development
- D. inhibits development
Explanation: Industrialization is strongly and positively associated with development because manufacturing expands productivity, employment, income…
Correct answer: is positively related to development- A. income earned through foreign exchange
- B. the number of dollars earned in industry
- C. income earned within a country's boundaries
- D. goods received from the nation's residents
Explanation: GDP measures the market value of final goods and services produced within a country's geographical boundaries, regardless of whether the…
Correct answer: income earned within a country's boundaries