ECN 211 EXAM PRACTICE TEST 2024/2025 QUESTIONS AND ANSWERS 100% CORRECT
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ECN 211
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ECN 211
ECN 211 EXAM PRACTICE TEST 2024/2025 QUESTIONS AND ANSWERS 100% CORRECT
What is Productive Efficiency? - Answer- The least costly production techniques are used to produce wanted goods and services.
Which two elements are the keys to Adam Smith's conception of a market economy? - Answer- Prope...
ECN 211 EXAM PRACTICE TEST
2024/2025 QUESTIONS AND
ANSWERS 100% CORRECT
What is Productive Efficiency? - Answer- The least costly production techniques are
used to produce wanted goods and services.
Which two elements are the keys to Adam Smith's conception of a market economy? -
Answer- Property Rights
Free Markets
Consider the market for eyeglasses. What happens after the price of contact lenses, a
substitute for eyeglasses, increases? - Answer- Demand for eyeglasses shifts to the
right
Which of the following would shift the market demand for blueberries to the left? -
Answer- A reduction in average incomes for consumers
Consider the market for gold. What happens when new gold deposits are found and
excavated? - Answer- The market price of gold decreases; The market quantity of gold
increases.
Consider the market for oil. What happens when the price of solar energy, a substitute
for oil, decreases? - Answer- The market price of oil decreases; The market quantity of
oil decreases
Circa 1200 BCE, a decreasing supply of tin due to wars and the breakdown of trade led
to a drastic increase in the price of bronze in the Middle East and Greece (tin being
necessary for its production). It is around this time that blacksmiths developed iron- and
steel-making techniques (as substitutes for bronze). What does the increasing price of
bronze signal? - Answer- It tells people that bronze is getting harder to find and its
higher price will signal consumers to conserve it more or seek substitutes.
Why do you think iron and steel became more common around the same time as the
increase in price of bronze? - Answer- An increase in the price of bronze encourages
innovation to produce substitutes.
In response to trade restrictions imposed by the U.S. on South Korean refrigerators,
South Korea's government imposes trade restrictions on U.S.-made automobiles. Who
, benefits, and who is harmed, by these countervailing barriers? - Answer- Trade barriers
reverse the effects of opening up for trade. When we impose tariffs on imported goods:
Domestic consumers lose
Domestic producers gain
When another country imposes tariffs on our exports:
Domestic consumers gain
Domestic producers lose
Policy 1: The U.S. imposes trade restrictions on South Korean refrigerators.
U.S. refrigerator consumers lose
U.S. refrigerator producers gain
Korean refrigerator consumers gain
Korean refrigerator producers lose
Policy 2: South Korea imposes trade restrictions on U.S. automobiles.
Korean car consumers lose
Korean car producers gain
U.S. car consumers gain
U.S. car producers lose
A country has $300 billion in imports and $600 billion in exports. Net income on
investment is $20 billion, and net transfers are -$10 billion. What is the balance on the
Capital Account? - Answer- Current Account + Capital Account = 0
$600 billion - $300 billion = $300 billion
$300 billion + $20 billion - $10 billion = $310 billion
$310 billion + Capital Account = 0
To make that true, the Capital Account must be -$310 billion.
The exchange rate between Galleons and Pen is 1 Galleon for 12 Pen. One Pen will get
you 0.8 Republic Credits. What is the exchange rate between Galleons and Republic
Credits? - Answer- 1 Galleon buys you 12 Pen.
If 1 Pen gets you 0.8 Republic Credits, then 12 Pen would then get you 9.6 Republic
Credits (12 x 0.8).
When we convert our 9.6 Republic Credits back into Galleons, we should end up with
what we started with: 1 Galleon.
So, 1 Galleon = 9.6 Republic Credits. Or, dividing both numbers by 9.6, 1 Republic
Credit = 0.104 Galleons.
The U.S. is considering reducing tariffs placed on steel imported from China. What
would be the effects of this policy? - Answer- U.S. steel producers would lose; U.S.
steel consumers would gain.
Chinese steel producers would gain; Chinese steel consumers would lose.
The U.S. is considering reducing tariffs placed on steel imported from China. What
would be the effects of this policy? - Answer- U.S. consumer gains would outweigh U.S.
producer loses.
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