HAT Subject (Economics) FLP 3 Free Quiz

1. What is utility?

A. Price B. Cost C. Utility D. Value

2. What is marginal utility?

A. Total utility B. Marginal utility C. Average utility D. Zero

3. What does the law of diminishing marginal utility state?

A. Decreases B. Increases C. Constant D. Zero

4. What shows the combinations of goods a consumer can afford?

A. Indifference curve B. Demand curve C. Budget constraint D. Supply curve

5. What is the substitution effect?

A. Income effect B. Price effect C. Quantity effect D. Substitution effect

6. What type of good has a positive income effect?

A. Inferior B. Normal C. Giffen D. Veblen

7. What curve shows the relationship between income and quantity demanded?

A. Engel curve B. Demand curve C. Supply curve D. Cost curve

8. What does a perfectly inelastic demand curve look like?

A. Horizontal B. Upward sloping C. Downward sloping D. Vertical

9. How is price elasticity of demand calculated?

A. %ΔP/%ΔQ B. %ΔQ/%ΔP C. %ΔQ × %ΔP D. %ΔQ - %ΔP

10. What is consumer surplus?

A. Consumer surplus B. Producer surplus C. Total surplus D. Deadweight loss

11. What theory uses observed choices to infer preferences?

A. Stated preference B. Contingent valuation C. Hedonic pricing D. Revealed preference

12. What does a monotonic utility function mean?

A. More is preferred to less B. Less is preferred C. Neutral D. Satiated

13. What does a convex preference set indicate?

A. Concave B. Linear C. Convex D. Vertical

14. What is absolute poverty?

A. Absolute poverty B. Relative poverty C. Severe poverty D. Moderate poverty

15. What is relative poverty?

A. Absolute B. Severe C. Relative D. Moderate

16. What measures income inequality?

A. Poverty B. Unemployment C. Inflation D. Gini coefficient

17. What consists of economic activities not regulated or taxed?

A. Formal sector B. Public sector C. Private sector D. Informal sector

18. What meets present needs without compromising future generations?

A. Economic growth B. Sustainable development C. Industrialization D. Modernization

19. What investment is critical for economic development?

A. Education B. Health C. Agriculture D. Infrastructure

20. What is a key factor in economic development?

A. Infrastructure B. Education C. Health D. Agriculture

21. What is crucial for economic development?

A. Geography B. Culture C. Resources D. Institutions

22. What theory suggests large-scale investment is needed to break the cycle of poverty?

A. Gradual development B. Big push C. Trickle-down D. Balanced growth

23. What includes small-scale, unregulated enterprises and self-employment?

A. Formal B. Public C. Informal D. Private

24. What is econometrics?

A. Application of statistical methods to economic data B. Macroeconomics C. Microeconomics D. Development economics

25. What is a fundamental tool in econometrics?

A. Correlation B. Causation C. Linear regression D. Variance

26. What is the dependent variable in a regression?

A. Independent B. Dependent C. Explanatory D. Control

27. What does a higher R-squared indicate?

A. Lower B. Zero C. Negative D. Higher

28. What tests the significance of regression coefficients?

A. R-squared B. P-value C. F-statistic D. Standard error

29. What occurs when independent variables are highly correlated?

A. Heteroskedasticity B. Multicollinearity C. Autocorrelation D. Endogeneity

30. What occurs when the variance of errors is not constant?

A. Heteroskedasticity B. Multicollinearity C. Autocorrelation D. Endogeneity

31. What type of data is collected at a single point in time?

A. Time series B. Panel C. Pooled D. Cross-sectional

32. What type of data combines cross-sectional and time series dimensions?

A. Cross-sectional B. Panel C. Time series D. Pooled

33. What is a property where mean and variance are constant over time?

A. Non-stationarity B. Seasonality C. Stationarity D. Trend

34. What is a property of non-stationary time series that move together in the long run?

A. Correlation B. Causation C. Stationarity D. Cointegration

35. What captures the unexplained variation in the dependent variable?

A. Explained B. Error term C. Residual D. Coefficient

36. What test detects autocorrelation?

A. Autocorrelation B. Heteroskedasticity C. Multicollinearity D. Endogeneity

37. What is a quota?

A. Tariff B. Subsidy C. Quota D. Regulation

38. What is the balance of trade?

A. Balance of payments B. Balance of trade C. Current account D. Capital account

39. When does a trade surplus occur?

A. Exports exceed imports B. Imports exceed exports C. Balance D. Zero

40. What is the balance of payments?

A. Balance of trade B. Current account C. Capital account D. Balance of payments

41. What is a floating exchange rate?

A. Floating B. Fixed C. Pegged D. Managed

42. What is a fixed exchange rate?

A. Floating B. Flexible C. Fixed D. Free

43. What theory suggests countries export goods using abundant factors?

A. Comparative advantage B. Absolute advantage C. Strategic trade D. Heckscher-Ohlin theory

44. What institution provides loans for development projects?

A. IMF B. WTO C. World Bank D. UN

45. What condition states that currency depreciation improves the trade balance?

A. Sum of elasticities > 1 B. Sum of elasticities = 1 C. Sum of elasticities < 1 D. Sum of elasticities = 0

46. What is the increasing integration of economies?

A. Isolation B. Globalization C. Protectionism D. Regionalism

47. What is a free trade area?

A. Customs union B. Free trade area C. Common market D. Economic union

48. What does macroeconomics study?

A. Economy as a whole B. Individual firms C. Market behavior D. Consumer choice

49. What is GDP?

A. GNP B. NNP C. GDP D. NDP

50. What is GNP?

A. GDP B. NNP C. NDP D. GNP

51. What is deflation?

A. Deflation B. Inflation C. Disinflation D. Stagflation

52. What is the interest rate?

A. Inflation B. Deflation C. GDP D. Interest rate

53. How many phases are in the business cycle?

A. Two phases B. Four phases C. Three phases D. Five phases

54. What is a recession?

A. Recession B. Expansion C. Recovery D. Boom

55. What is aggregate supply?

A. Aggregate supply B. Aggregate demand C. Total income D. Total expenditure

56. What does the Consumer Price Index (CPI) measure?

A. GDP B. GNP C. Unemployment D. CPI

57. What market structure has many buyers and sellers, identical products, and free entry?

A. Monopoly B. Oligopoly C. Perfect competition D. Monopolistic competition

58. What are firms in perfect competition?

A. Price makers B. Monopolists C. Oligopolists D. Price takers

59. What characteristic do firms in oligopoly have?

A. Independent B. Price takers C. Monopolists D. Interdependent

60. What is a natural monopoly?

A. Legal monopoly B. Technological monopoly C. Natural monopoly D. Resource monopoly

61. What is price discrimination?

A. Price taking B. Uniform pricing C. Cost pricing D. Price discrimination

62. What type of price discrimination charges each consumer the maximum they are willing to pay?

A. Second-degree B. First-degree C. Third-degree D. Uniform

63. What is a cartel?

A. Competitive B. Monopolistic C. Cartel D. Price-taking

64. What is deadweight loss?

A. Consumer surplus B. Producer surplus C. Deadweight loss D. Total surplus

65. Which market structure creates deadweight loss?

A. Perfect competition B. Oligopoly C. Monopolistic competition D. Monopoly

66. What are sunk costs?

A. Fixed costs B. Sunk costs C. Variable costs D. Marginal costs

67. What does the law of diminishing marginal utility state?

A. Increases B. Decreases C. Remains constant D. Unpredictable

68. What is the rate at which a consumer is willing to trade goods?

A. Price ratio B. Income ratio C. Quantity ratio D. Marginal rate of substitution

69. What is total revenue?

A. Profit B. Total revenue C. Cost D. Marginal revenue

70. What is marginal revenue?

A. Marginal revenue B. Average revenue C. Total revenue D. Profit

71. What is profit?

A. Revenue B. Cost C. Profit D. Investment

72. What are the functions of money?

A. Medium of exchange only B. Store of value only C. Medium of exchange, store of value, unit of account D. Unit of account only

73. What institution controls the money supply?

A. Commercial bank B. Central bank C. Investment bank D. Development bank

74. What is the quantity theory of money?

A. MV = PY B. MV = PY C. MV = PY D. MV = PY

75. What monetary policy decreases the money supply?

A. Expansionary B. Neutral C. Contractionary D. Loose

76. What guideline sets interest rates based on inflation and output gaps?

A. Friedman rule B. McCallum rule C. Bernanke rule D. Taylor rule

77. What states nominal interest rates equal real rates plus expected inflation?

A. Phillips effect B. Laffer effect C. Fisher effect D. Okun effect

78. What does a steep yield curve indicate?

A. Steep B. Flat C. Inverted D. Humped

79. What does an inverted yield curve often signal?

A. Expansion B. Growth C. Recession D. Recovery

80. What does producer theory explain?

A. How firms maximize profit B. Consumer behavior C. Market structure D. Welfare analysis

81. What is a firm?

A. Market B. Consumer C. Firm D. Government

82. What is the marginal product of an input?

A. Average product B. Total product C. Marginal product D. Fixed product

83. What does the law of diminishing marginal returns state?

A. Increases B. Constant C. Zero D. Decreases

84. What does constant returns to scale mean?

A. Less B. More C. Equal D. Zero

85. Where is profit maximized in perfect competition?

A. MC > MR B. MC = MR C. MC < MR D. MC = 0

86. How does a monopoly maximize profit?

A. MC = MR, P > MC B. P = MC C. P < MC D. P = ATC

87. What does accounting profit include?

A. Economic profit B. Normal profit C. Gross profit D. Accounting profit

88. What is the shutdown point in the short run?

A. ATC B. AVC C. AFC D. MC

89. What do firms in perfect competition earn in the long run?

A. Zero economic profit B. Positive C. Negative D. Normal

90. What does public finance study?

A. Government revenue, expenditure, and debt B. Private finance C. Corporate finance D. International finance

91. What is a direct tax?

A. Indirect B. Direct C. Regressive D. Progressive

92. What are transfer payments?

A. Subsidies B. Grants C. Loans D. Transfer payments

93. When does a budget deficit occur?

A. Surplus B. Deficit C. Balanced D. Zero

94. What is public debt?

A. Deficit B. Surplus C. Public debt D. Expenditure

95. What fiscal policy involves increasing spending or decreasing taxes?

A. Contractionary B. Expansionary C. Neutral D. Tight

96. What fiscal policy involves decreasing spending or increasing taxes?

A. Contractionary B. Expansionary C. Neutral D. Loose

97. What does the Laffer curve say about very high tax rates?

A. Increases B. Constant C. Reduces D. Zero

98. What is a sin tax?

A. Income tax B. Property tax C. Sin tax D. Sales tax

99. What field studies how resource allocation affects social welfare?

A. Public finance B. Macroeconomics C. Microeconomics D. Welfare economics

100. What is Pareto efficiency?

A. Optimal B. Pareto efficiency C. Equitable D. Efficient

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