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ECO 202 Exam – Questions & Accurate Answers
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ECO 202 Exam – Questions & Accurate Answers
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ECO 202 Exam – Questions & Accurate AnswersHow do you calculate GDP Growth? Right Ans - New - Old/ Old
Which of the following leads to higher GDP?
1. Wealth transfers from the rich to the poor, which lead to lower income
equality.
2. Reduction in government expenditure on education
3. Building a new manufacturing factory, which requires the clearing of
forests. Right Ans - Builiding a new manufacturing factory, which
requirews the clearing of forests
Which of the following economic institutions play an important role in
capitalism as an economic system?
1. Families
2. Government
3. Private Property
4. Markets Right Ans - 1. Private Property
2. Markets
Which of the following are examples of capital goods?
1. Raw Materials
2. Buildings
3. Patents
4. Machines Right Ans - All of the above
Capitalism as an economic system can be efficent because:
1. It allows firms to gain market power and thus eliminate their competitors
2. Profits are claimed by the capitalists
3. It allows failing firms to go bankrupt
4. It favors capital owners over workers Right Ans - 1. Profits are claimed
by the capitalists
2. It allows failing firms to go bankrupt
,Capitalism as an economic system can be inefficent because:
1. It allows firms to gain market power and thus eliminate their competitors
2. Profits are claimed by capitalists
3. It allows failing firms to go bankrupt
4. It favors capital owners over workers Right Ans - 1. It allows firms to
gain market power and thus eliminate their competitors
2. It favors capital owners over workers
What does UK GDP per capita measure?
1. The total output of London's economy
2. The average disposable income of a UK resident
3. The total output of the UK residents, divided by the number of the residents
4. The total output of the UK's economy, divided by the country's population
Right Ans - 1. The total output of the UK's economy, divided by the country's
population
If you are paid a fixed salary independent of your output, then you may be
tempted to put in less effort.. This is an example of economic incentive
1. True
2. False Right Ans - 1. True
You are thirsty for drinks. Given that both drinks are affordable, to you the
main factor that affects your choice is the absolute price.
1. True
2. False Right Ans - 2. False
Economic rents provide strong incentive for innovation even in a country with
weak property laws.
1. True
2. False Right Ans - 2. False
Markets provide a competitive environment where those unable to copy
others' innovations would fail.
, 1. True
2. False Right Ans - 1. True
Which of the following are the causes of diminishing average product of labor?
1. More labour is devoted to a fixed quanitity of land.
2. The new land brought into cultivation is of inferior quality.
3. Coordination problems due to a larger labour force.
4. Environmental effects of over cultivation. Right Ans - 1. More labour is
devoted to a fixed quantity of land.
2. The new land brought into cultivation is of inferior quality
Innovation rents are:
1. the increased land rent that landlords can charge when agricultural
productivity increases.
2. The profits made by being among the first to adopt a cost reducing
technology.
3. Subsidies paid to inventors and other innovators by the government to
overocm the externality associated with innovation Right Ans - 1. The
profits made by being among the first to adopt a cost reducing technology.
The process of creative destruction address innovation externalities such as
job loss, skill obsolesense, and market concentration.
1. True
2. False Right Ans - 1. True
You are given the following information for a country: Participation rate =
75% , Unemployment rate = 10%, employment rate = 67.5%, and the number
of employed = 27 million. Which of the following is correct?
1. The working age population is 30 million
2. The size of the labour force is 40 million.
3. The number of unemploymed is 3 million.
4. The unemployment rate is 12% Right Ans -
working age population Right Ans - # of employees / employment rate
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