First Quarterly Examination

Applied Economics
st
1 Semester, S.Y. 2019-2020

Directions: Read and analyze each item. Choose the best answer from the choices provided.

1. Why is Economics considered a science?

a. It studies material object only.
b. It’s a discipline under the Social Sciences.
c. It applies and uses scientific methodology.
d. There is a Nobel Prize in Economics.

2. What do you call the benefit you give up in choosing one action over the other?
a. Opportunity Cost c. Comparative Advantage
b. Absolute Advantage d. Applied Economics

3. What is a market?
a. a place where people buy and sell
b. a group of buyers and sellers
c. a mechanism by which exchanges takes place
d. a selling process

4. Economics deals with the utilization of resources. How do we describe these resources?
a. Abundant c. Human
b. Natural d. Scarce

5. What does the maxim “There is no such thing as free lunch” mean?
a. You have to pay every time you have lunch.
b. All goods and services have a price.
c. Nobody can have a free lunch anywhere.
d. Every action and decision has a price that we need to pay.

6. Supposed while walking, you found a 500. If you choose to use the 500 to watch a movie, what is your
opportunity cost for watching the movie?
a. Nothing, you just found the money anyway.
b. 500, because you could have used the 500 to buy other things.
c. 500 plus the value of the time you spent watching the movie.
d. Nothing if you really like the movie you watched.

7. What is the foremost effect of scarcity on how people live?

a. It makes people very prudent in their spending.
b. Greed and Selfishness are values that some people adhere to.
c. People face tradeoffs in everything they do and decide.
d. Environment protection had become one of the leading issues today.

8. What is referred to as having the ability to produce more output compared to another entity?
a. Opportunity Cost c. Comparative Advantage
b. Absolute Advantage d. Applied Economics

9. Economics came from the Greek word Oikonomia. What does Oikonomia means?
a. Consumption of goods c. Distribution of limited resources
b. Management of the household d. No such thing as free lunch

10. What is referred to as any kind of works, either mental or manual in nature which has the sole purpose of
receiving awards?
a. Land c. Capital
 b. Labor d. Entrepreneurship

11. Which of the following examines the functioning of individual industries and the behavior of individual decision-
making units?
a. Applied Economics c. Macroeconomics
b. Economics d. Microeconomics

For item 12, refer to the table below.

QUANTITY MARGINAL UTILITY

1 120
2 100
3 60
4 10
5 0

12. Which of the following can be concluded from the data?

a. For every additional consumption of goods, the level of satisfaction decreases.
b. For every additional consumption of goods, total utility decreases.
c. For every additional consumption of goods, the level of satisfaction increases.
d. For every additional consumption of goods, total utility increases.

13. All of the following belong to Microeconomics. Which is an exemption?

a. Jollibee’s revenue in 2017
b. Unemployment rate in the Philippines.
c. Household monthly budget.
d. Supply of fish products in Don Domingo wet market.

14. What measures the likelihood of a borrower to fail to pay back the loan?
a. Default risk c. Guarantee
b. Interest rate d. Collateral

15. In order to have a security on loans, financial institutions usually ask for collateral and guarantee. Which of the
following would likely to happen in not securing such?
a. Loans will have lower interest rate.
b. Loans will have higher interest rate.
c. Loans will have no effect on interest rate.
d. Loans will have different interest rate.

16. Hyundai is a multinational company which has operations in the Philippines. All its outputs in the Philippines are
included in what macroeconomic indicator?
a. Gross National Product c. Gross National Income
b. Gross Domestic Product d. Consumer Price Index

17. Which is referred to as stock of goods made by the people to help them in the production of goods and services?
a. Land c. Capital
b. Labor d. Entrepreneurship

18. What do you call the case wherein price rises at an extraordinary high rate?
a. Inflation c. Deflation
b. Hyperinflation d. Disinflation

19. All of the following influence interest rate on loans. Which one is not?
a. Type of financial institution c. Secured
b. Purpose d. Return on investment
20. Which of the following collaborates all factors of production to produce goods and services thereby gaining
profit?
a. Labor c. Enterprise
b. Human capital d. Household

21. Which of the following composes of the “market basket” which customer price index is based?
a. Imported products
b. Raw materials purchased by firms
c. Any product available in the market
d. Products commonly purchased by typical consumers

22. What is the likely reason why the Philippine GNP is always bigger than its GDP?
a. Foreigners are producing more in the Philippines than Filipino OFWs are producing abroad
b. Filipino OFW are producing more abroad than foreigners are producing in the Philippines
c. Salaries of workers abroad are bigger than in the Philippines
d. The government is not doing enough to achieved growth in the country

23. What is referred to as the period of general economic decline typically defined as a decline in GDP for two
consecutive quarters?
a. Depression c. Deflation
b. Recession d. Stagnation

24. A business cycle is characterized by the short-term ups and downs in the economy. During expansion, what may
possibly happen in the economy?
a. Low unemployment, increase production, increase consumer spending
b. High unemployment, decrease production, decrease consumer spending
c. Low employment, increase production, increase consumer spending
d. High employment, decrease production, decrease consumer spending

25. What will best describe centralized economy?

1. Planning agency 3. Central government
2. Private ownership 4. Communism
a. 1, 3, 4 c. 1, 2, 3
b. 2,3, 4 d. 1, 2, 4

26. What will best describe free market economy?

1. Laissez faire 3. Command economy
2. Private ownership 4. Planning agency
a. 1, 2 c. 1, 3
b. 3, 4 d. 2, 3
27. Which is referred to as the absence of prolonged inflation and deflation?
a. Recession c. Contraction
b. Depression d. Price stability

28. What happens during recession?

1. High employment 3. Increase unemployment
2. Decrease consumer spending 4. High Production
a. 1, 2 c. 2, 3
b. 3, 4 d. 1, 4

29. Rebellion is one of the socioeconomic challenges that the Philippines is facing. How can it affect the economy as
a whole?
a. It will result to fatalities and injuries.
b. It will bring chaos to the society as a whole.
c. It will threaten the country’s security, peace, and order.
 d. It will push the country into recession and even depression.

30. Which is characterized by a regulated market economy wherein the government plays a vital role in the
economy while allowing market mechanism to govern the economy?
a. Traditional economy c. Command economy
b. Free market economy d. Mixed economy

31. What does the assumption “ceteris paribus” mean?

a. All other variables are kept constant except the one being measured.
b. Some variables are not included in the study.
c. We assume a perfectly competitive market.
d. Few variables are constant.

32. What is demand?

a. It is a market expression of the cumulative willingness of all household to buy different amount of goods and
services at different prices.
b. It is the market expression of the cumulative ability of all household to buy different amount of goods and
services at different prices.
c. It is the market expression of the cumulative willingness and ability of all household to buy different amount
of goods and services at different prices.
d. It is the market expression of the cumulative willingness and ability of all household to buy different amount
of goods and services at different prices on a given point in time.

33. Which of the following statement is TRUE?

a. Price is variable while quantity demanded and quantity supplied are constant.
b. Price is constant while quantity demanded and quantity supplied are variables.
c. Price is dependent variable while quantity demanded and quantity supplied are independent variables.
d. Price is an independent variable while quantity demanded and quantity supplied are dependent variables.

34. What best describe the demand curve?

a. Downward sloping indicating a positive relationship between price and quantity demand.
b. Downward sloping indicating a negative relationship between price and quantity demand.
c. Upward sloping indicating a positive relationship between price and quantity demand.
d. Upward sloping indicating a negative relationship between price and quantity demand.

35. What does change in quantity demanded implies?

a. There is a shift in the demand curve.
b. There is a change in the slope of the demand curve.
c. There is a movement along the existing demand curve.
d. There will be an upward sloping demand curve.

36. Which of the following are complementary goods?

a. Coffee and tea
b. Cellphone and sim card
c. Pencil and ballpen
d. Jeepneys and buses

37. A new tax on imported milk was imposed by the government which resulted in the decrease of the supply of
this product. What factor of supply is described in this situation?
a. Cost of production
b. Expectation of future price
c. Seasonality
d. Price of related products

38. Which of the following factor would cause an increase in supply?

a. Improve technology
 b. Lower labor productivity
c. Increased price of substitutes
d. Cost of production

39. Because of the “substitution effect” on demand, when the price of coffee increases, what would consumers do?
a. People will use less cream and sugar.
b. People will be able to afford less coffee because their buying power has decreased.
c. People will drink tea instead.
d. People will use less costly beans and other ingredients.

40. If the government succumbs to the pressure of militants groups to lower the price of oil by setting a ceiling price,
what likely happen?
a. There will be a surplus of oil in the country.
b. There will be a shortage of oil in the country and people will have to fall in line to buy.
c. The people will benefit more from the lowering of oil price.
d. There will be no effect in the market or oil as the price of oil in inelastic.

41. What would likely happen if the minimum wage is increased without any corresponding rise in the level of
productivity?
a. It will increase the welfare of the worker as they will have more money to take home to their family.
b. It will increase unemployment as many companies will resort to lay-offs or even shut their operations.
c. The government will have to increase also the wage of government employees.
d. Many OFW will return to the country to work.

42. What is the likely effect of the government’s policy on illegal drugs to jail the pusher and save the user?
a. The supply of drugs will decrease as the pushers (suppliers) are in jail.
b. The demand for drugs will decrease as the shortage of illegal drug will make it very expensive.
c. The policeman will have a hard time identifying whether someone is only a user or a pusher.
d. The demand for illegal drugs will remain the same as it is price inelastic and will likely increase drug
related crime like robbery, theft, and others.

43. What happens when the government spends more than it earns from revenue generating activities?
a. There is a budget cut.
b. There is a budget deficit.
c. There is a budget surplus.
d. There is no effect on budget.

44. What does the principle of equity in taxation provide?

a. Taxpayers should be taxed according to their professions of status in life.
b. Taxpayers regardless of income should pay the same amount of tax.
c. Taxpayers that are similarly situated in life should be taxed similarly.
d. Taxpayers who do not have permanent should buy less tax.

45. Some congressmen want to reduce cigarette smoking by increasing the so-called “sin tax”. Why do you think the
demand for cigarettes remain the same despite price increase brought about by increase in sin-tax?
a. Demand for cigarette is inelastic.
b. Demand for cigarette is elastic.
c. Supply for cigarette is inelastic.
d. Supply for cigarette is elastic.

46. Which of the following ways help the government in protecting local firms from the threat of foreign
companies?
1. Subsidy 3. Price ceiling
2. Import quota 4. Tariff
a. 1,2 c. 2,4
b. 2,3 d. 3,4
 47. Which of the following correctly states the law of demand?
a. When price increases, quantity demanded increases and vice versa.
b. When price increases, quantity demanded decreases and vice sera.
c. When the price decreases, quantity demanded remains constant.
d. When the price increases, quantity demanded remains constant.

48. Which of the following is correctly paired?

a. Easy money policy: decrease in the supply of money
b. Easy money policy: increase in the supply of money
c. Tight money policy: increase in the supply of money
d. Tight money policy: no effect in the supply of money

49. Which of the following is correctly paired?

a. Expansionary fiscal policy: decrease tax, increase government spending
b. Expansionary fiscal policy: increase tax, decrease government spending
c. Contractionary fiscal policy: decrease tax, increase government spending
d. Contractionary fiscal policy: increase tax, increase government spending

50. Which of the following is a logical order of steps in sole-proprietorship business registration in the Philippines?
1. Barangay 4. SSS
2. DTI 5. Municipality
3. BIR
a. 1,5,2,3,4 c. 2,1,5,4,3
b. 1,5,3,2,4 d. 2,1,5,3,4

For items 51-60, refer to the choices in the box below.

a. Only the first statement is true. c. Both statements are false.

b. Only the second statement is true. d. Both statements are true.

51.52. Which of the following choice in the box evaluates the statements about economics?
First Statement: People have unlimited needs and wants which drive consumption.
Second Statement: Economic resources are greater than needs and wants.
a. Only the first statement is true.

53.54. Which of the following choices in the box evaluate the statements about basic economic problems?
First Statement: The availability of resources influences the decision on how to produce.
Second Statement: Because economic resources are limited, the country cannot afford to address all economic
issues.
b. Only the second statement is true.

55.56. Which of the following choices in the box evaluate the statements about basic economic problems?
First Statement: What to produce focuses on the actual production of goods and services.
Second Statement: For whom to produce focuses on the distribution and consumption of goods and services.
b. Only the second statement is true.

57.58. Which of the following choices in the box evaluate the statements about basic economic problems?
First Statement: Economic goods do not cover services.
Second Statement: Government Policies are geared toward addressing economic problems on a local level.
c. Both statements are false.

59.60. Which of the following choices in the box evaluate the statement about factors of production?
First Statement: The return on labor is wage.
Second Statement: The return on entrepreneurship is profit.
 d. Both statements are true.

For items 61-70, choose the letter of the correct answer from the words in the box.

a. DTI i. Monopsony q. Monetary policy

b. Depression j. Oligopoly r. Partnership
c. DILG k. Perfect competition s. Cooperative
d. VAT l. Medium of exchange t. Contractionary fiscal policy
e. Recession m. Fiscal policy
f. DOLE n. Corporation
g. Excise Tax o. Store of value
h. Tariff p. Unit of account

61. It is a uniform tax imposed on sale of goods or services as they pass along production and distribution chain.
62. It is characterized by prolonged and deep recession.
63. It is the manipulation of government spending and imposition of taxes.
64. It is the manipulation of savings and investment of the financial sector.
65. It is characterized by few big sellers colluding with each other.
66. There is only one buyer for a particular product.
67. Money is used as a standard to measure the value of goods or services.
68. Money is a legal tender.
69. The owners and the business have a distinct and separate legal existence from each other.
70. It is responsible in the set up and regular review of minimum wage in the Philippines.

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“I think therefore I am”-Rene Descartes
God Bless You!

Prepared by:

Gy Anne Lucena Tumbali

Subject Teacher