Practice Quiz

CLEP Economics Exam Prep - Question List

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16. Willie loves ice-cream cones. He has found a store that sells ice-cream cones at a bargain price of $0.50 each. He has just eaten two of these cones but has decided not to buy a third one. Which of the following statements best explains the zconomic principle at work in Willie's decision not to buy a third cone?
  1. Consumers weigh the additional costs and benefits before buying
    more goods.
  2. Consumers spend freely to increase business activity so that the price of goods will drop.
  3. Consumers save more by buying larger quantities.
  4. Consumers buy more at lower prices.
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17. Which of the following has been most important in reducing poverty over time?
  1. Taxes
  2. Economic growth
  3. International trade
  4. Government regulations
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18. Which of the following fiscal policy combinations would a government most likely follow to stimulate economic activity when the economy is in a severe recession?
  1. Increasing both taxes and spending
  2. Increasing taxes and decreasing spending
  3. Decreasing taxes and increasing spending
  4. Decreasing both taxes and spending
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19. Jennifer receives a 2 percent increase in wages this year. The inflation rate is 4 percent. Which of the following is most likely to happen to Jennifer's financial situation?
  1. She will have more income to spend and greater purchasing power.
  2. She will have more income to spend and less purchasing power.
  3. Her cost of living and her purchasing power will decrease.
  4. Her cost of living and her purchasing power will increase.
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20. The most basic measure of the money supply in the United States consists of which of the following?
  1. Gold certificates, silver certificates, and precious metals
  2. Treasury bills, Treasury notes, and Treasury bonds
  3. Credit card accounts, charge accounts, and savings accounts
  4. Checking account deposits, paper currency, and coins
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