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Economics Quiz

Economics Quiz - Set 15 (Advanced)

Play this economics quiz and check your economics knowledge. The next quiz will be updated tomorrow.

✍ ₳uthored By - GP Sir

GP Sir on July 31, 2025

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Economics Quiz - Set 15 (Advanced)

1. Which concept explains why inflation and unemployment can have a short-run tradeoff?

Phillips Curve Laffer Curve Solow Growth Model Ricardian Equivalence

2. What does the “Ricardian Equivalence” suggest about government borrowing?

It does not affect overall demand because people save to pay future taxes It always increases inflation It leads to crowding out investment It lowers interest rates

3. In the Solow model, what is the effect of a permanent increase in the savings rate?

Raises steady-state capital and output but not growth rate Causes inflation Leads to permanent higher growth rate Decreases unemployment

4. What is the main function of the World Bank?

Provide long-term development loans to poorer countries Regulate global currency markets Manage international trade agreements Control inflation globally

5. What does the “Natural Rate Hypothesis” propose?

Economy tends toward a natural rate of unemployment regardless of inflation Unemployment can be zero Inflation permanently reduces unemployment Fiscal policy has no effect

6. Which monetary policy tool influences short-term interest rates?

Open market operations Reserve requirements Quantitative easing Discount rate changes

7. What does “Purchasing Power Parity” (PPP) theory imply?

Exchange rates adjust to equalize price levels between countries Governments fix exchange rates Trade barriers affect currency values Interest rates determine exchange rates

8. What is the key assumption of “Rational Expectations”?

Economic agents use all available information optimally Agents always make mistakes Government policies are always effective Markets are inefficient

9. Numerical: Calculate GDP using expenditure approach if Consumption = 9000, Investment = 4000, Government Spending = 2800, Exports = 2000, and Imports = 1800.

12000 12500 12700 12200

10. Numerical: A product’s price rises from 300 to 360 and demand falls from 800 to 720 units. Calculate price elasticity of demand using midpoint method (rounded to 2 decimals).

0.50 0.57 0.45 0.62

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GP Sir

GP Sir is a Development Economist and a Banking Professional. He holds M.A. degrees in Economics, Political Science, Rural Development, a B.Ed., and is an MPhil scholar in Economics. He writes to connect economics with people’s lives.

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Economics Quiz - Set 15 (Advanced)

1. Which concept explains why inflation and unemployment can have a short-run tradeoff?

2. What does the “Ricardian Equivalence” suggest about government borrowing?

3. In the Solow model, what is the effect of a permanent increase in the savings rate?

4. What is the main function of the World Bank?

5. What does the “Natural Rate Hypothesis” propose?

6. Which monetary policy tool influences short-term interest rates?

7. What does “Purchasing Power Parity” (PPP) theory imply?

8. What is the key assumption of “Rational Expectations”?

9. Numerical: Calculate GDP using expenditure approach if Consumption = 9000, Investment = 4000, Government Spending = 2800, Exports = 2000, and Imports = 1800.

10. Numerical: A product’s price rises from 300 to 360 and demand falls from 800 to 720 units. Calculate price elasticity of demand using midpoint method (rounded to 2 decimals).

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