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WGU Global Economics for Managers (C211, UZC2) Sample Questions:

1. Which effect does increased government spending have on aggregate demand if the multiplier effect is greater than the crowding-out effect?

A) Aggregate demand decreases by less than the increase in government spending.
B) Aggregate demand increases by more than the increase in government spending.
C) Aggregate demand increases by less than the increase in government spending.
D) Aggregate demand decreases by more than the increase in government spending.

2. What is deadweight cost?

A) A government payment to a domestic firm
B) A net loss that occurs in an economy as a result of tariffs
C) A tariff levied on imports that are selling below cost in order to unfairly drive domestic firms out of business
D) The lost potential from pursuing one activity at the expense of another, given the alternatives

3. A country has seen an increase in inflation. What is the effect on the country's currency exchange rate?

A) It remains the same.
B) It decreases.
C) It changes, but in an unknown direction.
D) It increases.

4. Who are the primary and largest participants in the foreign exchange market?

A) Individual currency traders
B) Multinational manufacturing firms
C) Central banks
D) Large international banks

5. When is it best for a firm to increase production?

A) When marginal cost exceeds marginal revenue
B) When average cost is minimized
C) When marginal revenue is greater than marginal cost
D) When total revenue is maximized

Solutions: