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MGW - Contents_2019-2020
Economics
Points Possible: 30

1. Which of the following statements is true?

A. The Keynesian view is that the government must sometimes work against the business cycle
B. Governments don't invest, they only regulate and redistribute
C. Companies with much capital goods are less susceptible to the business cycle
D. In an economic boom the output gap is growing
E. During an economic recession consumers will buy more cars

2. "Liberty and free markets are important to us". This is an example of:
A. a value
B. a norm
C. an institution
D. legislation
E. none of the above

3. Economics is the study of...

A. markets
B. supply and demand
C. money
D. governments
E. prosperity and scarcity

4. Economics often uses the term 'scarcity'. Scarcity:

A. Can be attributed to inadequate economic measures
B. Shows the inability of economists to predict the future
C. Means that people cannot fulfil their basic needs
D. Is a consequence of infinite needs but finite means
E. None of the above

5. Harry's Shoe Shop, a small shop in Groningen, decides to invest in width. So what could this shop
do?
A. open a Shoe Vending Machine
B. open a second shop
C. buy lots of shoes, with the plan to sell those next year
D. take over the manufacturer of shoes
E. improve labor productivity

6. If unemployed people give up hope and no longer actively look for a job, how does this influence the
participation rate?
A. The participation rate goes up
B. The participation rate goes down
C. The participation rate may go up or down, depending on the business cycle
D. The participation rate may go up or down, depending on labor productivity
E. None of these answers
 7. In the graphs you see demand curve 1 (in the left panel) and demand curve 2 (in the right panel).

Which of these demand curves is a price inelastic demand?

A. demand curve 1 is inelastic
B. demand curve 2 is inelastic
C. both curves are inelastic
D. demand curve 1 is for luxury goods
E. none of the curves is inelastic

8. Investment depends on:

1. The interest rate

2. Sales expectations
3. Profits
4. The utilisation rate

Which of these variables have a positive effect on investment?

A. 2, 3 and 4
B. 1
C. 3
D. 2 and 4
E. 1 and 4

9. Labour costs will contribute to inflation if:

A. the labour costs per unit have increased
B. wages have increased
C. labour productivity has decreased
D. labour productivity increases more rapidly than wages
E. wages have decreased

10. Over a certain period, the GDP grows by 2%. The growth of labour productivity is –1%. Labour
demand will have risen by:
A. 3%
B. 0%
C. 1%
D. –1%
E. –3%
11. Sales of durable consumer goods are vulnerable to cyclical trends because:
A. purchase of these goods cannot be postponed
B. the income elasticity of this type of goods is high
C. the purchase of this type of goods is not vulnerable to changes in consumer confidence
D. the price elasticity of this type of goods is low
E. due to a high marginal consumption ratio

12. Samsung is a huge company with very different activities, ranging from telephones to hotels, mining
companies, steel factories, chemistry and insurance. Samsung is best described as:
A. a forwardly integrated company
B. a backwardly integrated company
C. a cartel
D. a diversification
E. a conglomerate

13. Say the bread price in Egypt was €0.50. Now the Egyptian government sets a maximum bread price,
in order to protect poor citizens. This maximum price is set at € 0.40.
What is the best description of the likely result of this maximum price?
A. More bread will be sold
B. Less bread will be sold
C. There will be surpluses of bread
D. There will be shortages of bread
E. There will be a deficit of bread

14. Some products have a global market. A global market can only come into being if:
A. prices are the same for all clients
B. the goods in question can be traded all over the world
C. a company has a global monopoly
D. the products can be classified into different product groups
E. when there are no entry barriers

15. The competitive position of internationally operating companies in a certain country will be enhanced
if:
A. customer demand is compelling, forcing domestic producers to provide a high quality product
B. customers tolerate a low level of product differentiation, thereby diminishing the intensity of
competition
C. customers belong to networks of producers and consumers that are in competition with other
networks
D. customer demand is relatively small, leaving sufficient over to be exported
E. None of these answers

16. The economic order is the sum of its values, norms and institutions. Economic values can be
described as:
A. guidelines for human behaviour in concrete situations
B. laws and regulations and the institutions that draw them up and enforce them
C. intangible things that people strive for
D. human conduct expressed in terms of money
E. the redistributive duty of the government

17. The government serves a number of economic process functions . If a government builds a bridge,
this can be regarded as:
A. a government regulatory duty
B. a government redistributive duty
C. a joint tax and social security contribution burden
D. a government allocative duty
E. a government duty for infrastructure
18. The increase in the number of companies during the growth phase can be attributed to:
A. increased possibilities for economies of scale
B. the increase in profitability, which bring about cost control
C. the increase in the size of the market and profitability
D. the decline in R&D
E. the decrease of demand

19. The marginal consumption ratio is:

A. lowest for wage incomes
B. highest for wage incomes
C. highest for social security incomes
D. highest for all other incomes
E. lowest for social security incomes

20. The market power of an industry in relation to its clients will be smaller:
A. the greater the concentration within the industry
B. the smaller the client industries
C. the higher the proportion of consumer expenditure
D. the fewer the client industries
E. the more the client industries

21. The restaurant market (from fast food to specialty restaurants) in Groningen is best described as:
A. Monopolistic competition
B. Perfect competition
C. Homogeneous oligopoly
D. Oligopoly in general
E. Heterogeneous oligopoly

22. The sum of added values in an economy is called:

A. Gross Domestic Product
B. Trade surplus
C. Investments
D. Purchase power
E. Human Development Index

23. The term 'business environment' refers to:

A. Those factors external to the business that affect business results
B. The company's purchases, sales and personnel policy, and how the company is affected by
competition and market changes
C. The position of the company on the international market
D. The general economic situation in a country
E. Factors which the business can exert influence

24. What is an example of cost-push inflation?

A. The government raising the Value Added Tax
B. The government printing money
C. Houses getting expensive because of speculation
D. A monopolist charging lower prices
E. Setting up new markets

25. What is not an effect of protectionism?

A. higher prices
B. less innovation in the protected industry
C. lowered consumption
D. lower production and employment in non-protected industries
E. inflation on the local market
26. When an economic crisis is coming, investors prefer to put their money in:
A. cyclical stocks
B. defensive stocks

C. construction industry
D. luxury brands
E. car industries

27. When certain countries have a trade agreement with free movement of productions facors; this is
considered a:
A. free trade market
B. economic union
C. customs union
D. economic market
E. common market

28. Which indicator 'sees' a change in the economy first?

A. employment
B. taxes
C. consumer confidence
D. investors
E. producer confidence

29. Which market has usually the most elastic demand?

A. Monopolistic competition
B. Perfect competition
C. Homogeneous oligopoly
D. Oligopoly in general
E. Heterogeneous oligopoly

30. Which of the following has not contributed to the process of globalization?
A. Reduction in trade restrictions between countries
B. Deregulation of capital flow between countries
C. Improvement in transport technology
D. Liberalisation
E. World-wide reduction in taxes