economy

Question 1

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory that is closer to real-world people and social contexts.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclass

Answer 1

a) Social economics

Question 2

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory that acknowledges that economic behaviour is guided by group-level rationality.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 2

b) Institutional economics

Question 3

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory, which uses the Engel curve to explain how consumers divide their income between consumption and saving.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian econom
d) Neoclassical economics

Answer 3

c) Post Keynesian econom

Question 4

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory emphasizing the important role of advertisement in consumer choice.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian econom
d) Neoclassical economics

Answer 4

a) Social economics

Question 5

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory, which states that “We often are not maximizers of our goals but are simply satisficing them”.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian econom
d) Neoclassical economics

Answer 5

b) Institutional economics

Question 6

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory that assumes that preferences are neatly ordered and fixed per individual and over time.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian econom
d) Neoclassical economics

Answer 6

d) Neoclassical economics

Question 7

Why is scarcity a relative concept and not an absolute concept?
a) Because scarcity is about the relationship between cost and benefit
b) Because access to resources can be controlled and manipulated by economic agents
c) Because scarcity cannot be measured
d) Because it depends on your income if you can afford a good or not

Answer 7

b) Because access to resources can be controlled and manipulated by economic agents

Question 8

What is economic pluralism?
a) Diversity in supply and demand
b) The view that everybody should learn economics, whatever their background
c) The view that among a variety of theories only one can be the best
d) The view that a plurality of viewpoints is valuable and contributes to the advancement of economics

Answer 8

d) The view that a plurality of viewpoints is valuable and contributes to the advancement of economics

Question 9

Why is the Neoclassical Economic definition of rationality also referred to as “what’s in it for me?”
a) Because it is self-referential and has a closed information base
b) Because it is self-referential and has an open information base
c) Because it is group-referential and has a closed information base
d) Because it is group-referential and has an open information base.

Answer 9

a) Because it is self-referential and has a closed information base

Question 10

What is the difference between risk and uncertainty?
a) Risk is a type of uncertainty
b) Risk can be calculated with probabilities, uncertainty not
c) Uncertainty can be calculated with probabilities, risk not
d) Risk is at the individual level, uncertainty for the economy as a whole

Answer 10

b) Risk can be calculated with probabilities, uncertainty not

Question 11

Using the third-person criterion, which of the activities listed below counts not a leisure but as unpaid work?
a) Doing a course in sculpturing
b) Cycling to work
c) Changing diapers of your baby
d) Studying for an exam

Answer 11

c) Changing diapers of your baby

Question 12

If the propensity to save 0.34, how much is the propensity to consume?
a) 0.0
b) 0.34
c) 0.66
d) 1.0

Answer 12

c) 0.66

Question 13

If Juan’s wage is 100 pesos per hour and Maria’s wage is 80 peso per hour, and Juan works 8 hours per day and Maria works 4 hours per day. How much is the daily value of market goods that they can buy together?
a) 180 peso
b) 400 peso
c) 800 peso
d) 1120 peso

Answer 13

d) 1120 peso

Question 14

If a jeans cost 80 dollar and your budget allows you to buy 1.5 jeans. What should the price be for you to be able to buy exactly 2 jeans with your budget?
a) 40 euro
b) 50 euro
c) 60 euro
d) 80 euro

Answer 14

c) 60 euro

Question 15

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which presents the standard growth equation as ΔΥ = Ι/Κ.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 15

c) Post Keynesian economics

Question 16

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory which analyses markets as fully competitive.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 16

d) Neoclassical economics

Question 17

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory with the assumption that all economic agents act entirely independently, thinking about their own self-interest and relying on individual, probabilistic risk of gain and loss for each individual decision they make.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 17

d) Neoclassical economics

Question 18

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory that puts emphasis on the role of uncertainty and instability, recognizing that markets do not automatically lead to the highest well-being but have built-in shortcomings.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian econom
d) Neoclassical economics

Answer 18

c) Post Keynesian econom

Question 19

If the demand for chocolate increases by 20% in response to a price discount of 30%. How much is the price elasticity of demand for chocolate?
a) -30% or -.30 rice
b) 30% or 0.30
c) -2/3 or -0.67
d) 2/3 or 0.67

Answer 19

c) -2/3 or -0.67

Question 20

In the point of utility maximization, the slope of the indifference curve is equal to the slope of:
a) The demand function
b) The x-axis
c) The budget constraint
d) The price

Answer 20

c) The budget constraint

Question 21

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory in which the bureaucratic system of worker motivation plays an important role in the performance of workers.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 21

b) Institutional economics

Question 22

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory that focuses on the long run in their analysis of firm inputs and costs.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 22

c) Post Keynesian economics

Question 23

We can distinguish four economic theories, the social -, institutional -, post Keynesian - and neoclassical economic theory. There is one theory in which the management approach seeks to balance stakeholder interests.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 23

a) Social economics

Question 24

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which argues for a role of the state as a developmental state.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 24

c) Post Keynesian economics

Question 25

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory emphasizing imperfect information as the major market failure.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 25

d) Neoclassical economics

Question 26

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which understands the state and society as closely intertwined.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 26

a) Social economics

Question 27

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory that emphasises the problem of government capture.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassi

Answer 27

b) Institutional economics

Question 28

Furniture firm “The Baobab Tree” sells dinner tables at 250 African Francs each. Last month, it sold 20 tables (Q). The total cost of production is 4000 African Francs (TC). And the value of the capital stock, consisting of the workshop and the tools, is 30,000 African Francs (K).

How much is the profit rate of this firm (r)?
a) 1000 African Francs
b) 0.03 or 3.3%
c) 0.2 or 20%
d) 0.8 or 80%

Answer 28

b) 0.03 or 3.3%

Question 29

Restaurant “Under the Baobab Tree” has an annual growth rate of 5% (g). It receives no credit or other outside funding (x), so all funding is internal. The ratio of retained earnings from gross profit is what the owner uses as personal income, and this ratio is 50% (sc).

How much is the profit rate (r) given the annual growth rate of this restaurant, according to Post Keynesian economics?
a) 1 or 100%
b) 0.5 or 50%
c) 0.1 or 10%
d) 0.25 or 25%

Answer 29

c) 0.1 or 10%

Question 30

Furniture firm “The Baobab Tree” operates in rural Africa in a market of monopolistic competition. It can therefore set the price of dinner tables above the competitive price as can be found in urban areas. Its unit production costs are 200 African Francs. The sales price is 250 African Francs.

How much is the mark-up (k’) that this firm uses, according to Post Keynesian economics?
a) 1.25
b) 1
c) 0.75
d) 0.80

Answer 30

a) 1.25

Question 31

Restaurant “Under the Baobab Tree” operates in a competitive market. A standard meal costs 30 African Francs. With more guests, marginal costs first go down but when all tables are occupied, they go up.

At what level of marginal costs will this restaurant maximize its profits according to Neoclassical Economics?
a) When MC = 29 Fr.
b) When MC = 30 Fr.
c) When MC = 31 Fr.
d) When MC = 0

Answer 31

b) When MC = 30 Fr.

Question 32

The country Tax Paradise Republic has a tax revenue of 2 million peso. The Minister of Finance wants to increase the revenue by increasing the tax rate from 10% to 15%. Most people are against this increase.

Do you think that the new tax revenue will be higher than 3 million peso or lower than 3 million peso?
a) Higher
b) No change
c) Lower
d) There exists no economic theory about this, so it is not possible to do any estimation at all

Answer 32

c) Lower

Question 33

In which type of market do we see a kinked demand function and what explains this?
a) Monopoly; market segmentation
b) Perfect Competition; there are only two buyers
c) Monopsony; there is a high-end and a low-end market
d) Oligopoly; firms are interdependent in obtaining their market share

Answer 33

d) Oligopoly; firms are interdependent in obtaining their market share

Question 34

Which equation demonstrates that a firm’s income is distributed over two classes?
a) Y = K + R
b) Y = P x Q
c) Y = W + R
d) R = Y - TC

Answer 34

c) Y = W + R

Question 35

What is the key factor of government failure in social economics?
a) Corruption
b) Low tax revenue
c) Central Planning
d) Rent-seeking

Answer 35

b) Low tax revenue

Question 36

What is the difference between a share and a bond?
a) The value of a share is determined on the stock exchange and earns variable dividend; the value of a bond is fixed and earns a fixed interest rate
b) The value of a share is fixed and earns variable dividend; the value of a bond is not fixed and earns a fixed interest rate
c) The value of a share is determined on the stock exchange and earns fixed interest rate; the value of a bond is fixed and earns a variable dividend
d) The value of a share is fixed and earns fixed dividend; the value of a bond is variable and earns a variable interest rate

Answer 36

a) The value of a share is determined on the stock exchange and earns variable dividend; the value of a bond is fixed and earns a fixed interest rate

Question 37

A common pool resource is a type of public good. How does it score on excludability and rivalry?
a) High excludability and high rivalry
b) Low excludability and low rivalry
c) High excludability and low rivalry
d) Low excludability and high rivalry

Answer 37

d) Low excludability and high rivalry

Question 38

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which claims that unemployment is involuntary and refers to aggregate demand in the economy as a whole.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 38

c) Post Keynesian economics

Question 39

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which acknowledges the combination of segmentation, market power by banks, financialisation and increased income inequality as the causal mechanisms behind the 2007-2008 financial crisis

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 39

a) Social economics

Question 40

We can distinguish four economic theories, social -, institutional -, post Keynesian - and the neoclassical economics. There is one theory in which the analysis of financial markets is based for decades on the Efficient Market Hypothesis.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 40

d) Neoclassical economics

Question 41

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory in which labour supply is not free but constrained by both formal and informal institutions.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 41

b) Institutional economics

Question 42

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which sees the economy as an open system arguing that there is a fallacy of composition at the macro level.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 42

c) Post Keynesian economics

Question 43

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory in which the macroeconomic flow includes not only flows of G and T but also additional arrows between the government on the one hand and households and firms on the other hand.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 43

b) Institutional economics

Question 44

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which recognises money as a matter of trust.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 44

a) Social economics

Question 45

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which claims inflation as simply the result of excessive money supply.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 45

d) Neoclassical economics

Question 46

Neoclassical Economics uses the concept of the value of the marginal product of labour.

How is it defined?
a) VMPL = VMP x W
b) VMPL = MPL x W
c) VMPL = MPL x P
d) VMPL = VMP x P

Answer 46

c) VMPL = MPL x P

Question 47

How does the discouraged worker effect impact upon the unemployment statistics of a country?
a) It increases the unemployment rate
b) It decreases the unemployment rate
c) It has no impact on the unemployment rate
d) It increases welfare benefits

Answer 47

b) It decreases the unemployment rate

Question 48

In Post Keynesian economics, the labour supply curve is not a straight upward sloping line.

Explain why the bottom part of the labour supply curve is so flat, compared to the middle part.
a) Because at low wages people have to work many hours to make a living
b) Because people do not like to work many hours when the wages are very low
c) Because people like to enjoy leisure time rag
d) Because of a minimum wage

Answer 48

a) Because at low wages people have to work many hours to make a living

Question 49

The Brexit Bank has a balance total of 400 billion pound. The value of the shares held by all shareholders is 12 billion pound as listed on the London Stock Exchange.

How much is the equity ratio, also called leverage ratio, of this bank?
a) 12%
b) 1%
c) 2%
d) 3%

Answer 49

d) 3%

Question 50

In Post Keynesian economics, the monetary economy is distinguished from the real economy.

Through which two flows are they related?
a) Credit and equity
b) Credit and money
c) Money and debt
d) Credit and debt

Answer 50

d) Credit and debt

Question 51

In Social Economics statistical discrimination is a key concept. It is also applied to financial markets.

Which of the options below shows statistical discrimination in mortgages?
a) Lower middle class households in neighbourhoods with low unemployment pay the market rate of interest
b) Lower middle class households in neighbourhoods with low unemployment pay less than the market rate of interest
c) Lower middle class households in neighbourhoods with high unemployment pay more than the market rate of interest
d) Lower middle class households in neighbourhoods with high unemployment pay the market rate of interest

Answer 51

c) Lower middle class households in neighbourhoods with high unemployment pay more than the market rate of interest

Question 52

The Minister of Finance of the Republic of Keynes has decided to increase net government expenditures by 3 billion euro. The country’s propensity to consume is, on average, 0.7.

How big is the multiplier effect of this injection?
a) 21 billion euro
b) 10 billion euro
c) 3 billion euro
d) 0.7 billion euro

Answer 52

b) 10 billion euro

Question 53

Which price generates an equilibrium between S and I according to Neoclassical Economic theory?
a) The interest rate
b) The inflation rate
c) The wage rate
d) The general price level

Answer 53

a) The interest rate

Question 54

In the Republic of Keynes, the Consumer Price Index (CPI) was 100 in January 2016 and 122 in January 2016. It stands at 138 in January 2017.

How much was the inflation in, respectively, 2016 and 2017?
a) 0% in 2016 and 22% in 2017
b) 0% in 2016 and 38% in 2017
c) 22% in 2016 and 16% in 2017
d) 22% in 2016 and 38% in 2017

Answer 54

c) 22% in 2016 and 16% in 2017

Question 55

Calculate inflation from a Post Keynesian perspective. The oil price increase in a country is 8.5% and production cost reductions have increased industrial productivity by 4.5%. The money supply has increased by 3%.

How much is the inflation?
a) 1.5%
b) 1.5%
c) 5.5%
d) 4%

Answer 55

d) 4%

Question 56

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory in which the dominant measure of growth, GDP, is regarded as inadequate.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 56

a) Social economics

Question 57

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one trade theory, which analyses the world as a single market where goods and services are exchanged relatively freely.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 57

d) Neoclassical economics

Question 58

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory that analyses both the costs and gains from trade giving particular emphasis on asymmetric patterns between trading partners.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 58

b) Institutional economics

Question 59

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which studies environmental economics with the purpose to understand the relationship between the economy and the natural environment in terms of inadequate pricing.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 59

d) Neoclassical economics

Question 60

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which uses the IPAT-model integrated into a stock-flow model in order to analyse the environmental impact of the economy.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 60

c) Post Keynesian economics

Question 61

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which goes beyond the analysis of inequality and poverty to regard wellbeing as multidimensional?

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 61

a) Social economics

Question 62

We can distinguish four economic theories, social -, institutional -, post Keynesian - and neoclassical economics. There is one theory, which uses the variables of status and fairness to analyze inequality and poverty.

Which theory is referred to here?
a) Social economics
b) Institutional economics
c) Post Keynesian economics
d) Neoclassical economics

Answer 62

b) Institutional economics

Question 63

Social Economic growth theory emphasizes inclusive growth.

How could such inclusion be measured?
a) Head count ratio of poverty
b) Inequality in the distribution of resources
c) Employment rate
d) Human capital

Answer 63

b) Inequality in the distribution of resources

Question 64

What is the infant industry argument of the Institutional Economics of growth?
a) It argues that new sectors in an economy need to be protected by high trade tariffs from international competition until they are ready to compete
b) It argues that countries can only develop when they set-up a wide variety of industrial sectors, from heavy industry to electronics and garments
c) It argues that economic development is constrained by multinationals
d) It argues that imports are always bad for local producers and therefore should be discouraged with high import tariffs

Answer 64

a) It argues that new sectors in an economy need to be protected by high trade tariffs from international competition until they are ready to compete

Question 65

In Post Keynesian Economics, growth is seen as endogenous. This means that two variables in the growth equation are determined at the same time.

Which two variables are these?
a) I and K
b) R and Y
c) s and r
d) g and r

Answer 65

d) g and r

Question 66

The consumer surplus after trade can be visualized in a supply and demand diagram.

Which function shifts (D or S) and in which direction (left or right) with trade?
a) S shifts to the left
b) S shifts to the right
c) D shifts to the left
d) D shifts to the right

Answer 66

b) S shifts to the right

Question 67

Calculate the leakage effect of trade as compared to autarky.

The propensity to consume is 0.8 and the propensity to import is 0.3.

Tip: first calculate the multiplier without trade and then the multiplier with trade.
a) 5
b) 3
c) 2
d) 1

Answer 67

b) 3

Question 68

Neoclassical Economics explains trade with the help of the concept of comparative advantage.

What is comparative advantage?
a) When country X produces both trading goods more efficiently than country Y does
b) When country X produces one good more efficiently than country Y does
c) When country X produces both trading goods less efficiently than country Y does, but is relatively more efficient in producing one of these goods
d) When the goods that country X produces are of better quality than the goods that country Y produces

Answer 68

c) When country X produces both trading goods less efficiently than country Y does, but is relatively more efficient in producing one of these goods

Question 69

In ecological economics, an important indicator is a country’s ecological footprint.

How is this measured?
a) Availability of national-level resources minus use of resources globally
b) Availability of global-level of resources minus national-level use of resources
c) Resource production minus resource consumption
d) Resource depletion minus renewable resources

Answer 69

a) Availability of national-level resources minus use of resources globally

Question 70

If population growth is 1.2%, and the increase in affluence is 3.2%,

How much should the green technology impact of our consumer goods be in order to have radical green growth (a decline in environmental impact)?
a) Decline of more than 4.4%
b) Decline of more than 1.2%
c) Decline of exactly 4.4%
d) Decline of exactly 3.2%

Answer 70

a) Decline of more than 4.4%

Question 71

Why is income inequality increasing when the profit rate is higher than the economic growth rate?
a) When r > g the interest rate is higher than the inflation
b) When r > g the savings rate is higher than the profit rate
c) When r > g the income of owners of capital grows faster than labour income
d) When r > g the income of firms grows faster than the income of public servants

Answer 71

c) When r > g the income of owners of capital grows faster than labour income

Question 72

What is the difference between vertical inequality and horizontal inequality?
a) Vertical inequality ranks people according to educational level; horizontal inequality compares income or class
b) Vertical inequality ranks people according to income or class; horizontal inequality compares households in the same village
c) Vertical inequality ranks people according to educational level; horizontal inequality compares households in the same village
d) Vertical inequality ranks people according to income or class; horizontal inequality compares social groups along segmentations of gender, age, or ethnicity

Answer 72

d) Vertical inequality ranks people according to income or class; horizontal inequality compares social groups along segmentations of gender, age, or ethnicity