ECS1500 – Exam Pack (Revision / Q & A) VERIFIED ANS.

ECS1500 – Exam Pack (Revision / Q & A) Multiple Choice Questions (Section A): (A) 1. A normal good is one for which the income elasticity is greater than one. a. True b. False 2. The demand for a good, perceived by the consumer to be a necessity, will tend to be elastic. a. True b. False 3. Macroeconomics is concerned with the study of how households and firms make decisions and how they interact in specific markets a. True b. False 4. Price and quantity demanded for most goods are positively related a. True b. False 5. If three variables are related, one of them must be held constant when plotting the other two in the by-coordinate system a. True b. False 6. A 50% increase in price, which results in a 90% decrease in the quantity demanded, indicates that demand is elastic in this price range a. True b. False 7. Absolute advantage is a comparison based on productivity a. True b. False 2 lOMoARcPSD| ECS1500 – Exam Pack (Revision / Q & A) 8. A decrease m the price of soft drinks will increase their demand (will shrift the curve to the right). a. True b. False 9. If pizza and hamburgers are substitutes, a decrease in the price of pizza would increase the demand for hamburgers. a. True b. False 10. Voluntary unemployment occurs when individuals choose not to be employed because they are not willing to work for the current wage rate. a. True b. False 11. Cyclical unemployment is the result of a downturn in economic activity. a. True b. False 12. An increase in the price level is the same as a decrease in the value of money. a. True b. False 13. If the nominal interest rate is 7% and the inflation rate is 5%, the real interest rate is 12%. a. True b. False 14. A changes in prices of a good indicate that the market for that good is in equilibrium. a. True b. False 15. The impact lag is shorter for monetary policy than for fiscal policy. a. Tr