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Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 1. 
A market is in equilibrium when
a.
quantity demanded is less than quantity supplied.
b.
quantity demanded is greater than quantity supplied.
c.
quantity demanded is equal to quantity supplied.     
d.
None of the above.
 

 2. 
Economics is defined as the science of
a.
money and business.     
b.
choices.     
c.
scarcity.
d.
price.     
 

 3. 
The law of demand states that price and quantity demanded are
a.
directly related, ceteris paribus.     
b.
inversely related, ceteris paribus.
c.
independent.     
d.
positively related, ceteris paribus.
 

 4. 
Economists, like mathematicians, physicists, and biologists,
a.
make use of the scientific method.
b.
try to address their subject with a scientist’s objectivity.
c.
devise theories, collect data, and then analyze these data in an attempt to verify or refute their theories.
d.
All of the above are correct.
 

 5. 
The opportunity cost of an item is
a.
the number of hours that one must work in order to buy one unit of the item.
b.
what you give up to get that item.
c.
always less than the dollar value of the item.
d.
always greater than the cost of producing the item.
 

 6. 
Policies such as rent control and trade barriers persist
a.
because economists are about evenly divided as to the merits of those policies.
b.
because almost all economists agree that those policies have no discernible economic effects.
c.
because almost all economists agree that those policies are desirable.
d.
despite the fact that almost all economists agree that those policies are undesirable.
 

 7. 
In a market economy, who or what determines who produces each good and how much is produced?
a.
the government     
b.
lawyers     
c.
lotteries     
d.
prices
 

 8. 
Economists generally support
a.
trade restrictions.
b.
government management of trade.
c.
export subsidies.
d.
free international trade.
 

 9. 
Fiscal policy refers to
a.
efforts to balance a government's budget.
b.
changes in the money supply to achieve particular economic goals.
c.
changes in government expenditures and taxation to achieve particular economic goals.
d.
the change in private expenditures that occurs as a consequence of changes in government spending.
 

 10. 
Monetary policy refers to
a.
actions taken by banks and other financial institutions regarding their approaches to lending, account management, etc.
b.
changes in the money supply to achieve particular economic goals.
c.
changes in government expenditures and taxation to achieve particular economic goals.
d.
the change in private expenditures that occurs as a consequence of changes in the money supply.
 



 
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