Economics Test Questions
Tutorial 1 BME1014 Trimester 1 2013/2014
Q1
Briefly discuss each of the following economic ideas:
People are rational. People respond to incentive. Optimal decisions are made at the margin.
Q2
Indicate whether each of the following statements applies to microeconomics or macroeconomics issue.
a) Proton plans to spend RM800 million on a new automobile plant. b) The nation’s economy grew at an annual rate of 3.7 percent in the final quarter of the year. c) The trade deficit in the Malaysia was RM20 billion last month. d) The reasons that investment in East Asian countries grows faster than investment in Africa.
Q3
Below are six statements. Identify whether each is a positive or normative statement. a) The minimum wage would be increased so low-income workers can earn a living wage. b) The unemployment rate is too high and should be reduced through government actions. c) The rate of inflation was about 2 percent last year, an all-time low for the past decade. d) The government should take action to break up the monopoly power of Microsoft. e) Interest rates should be lower in the Malaysia so that people can afford to build a home. f) The Federal government suffered a budget deficit for the first time in thirty years.
Q4
A production possibilities table for two products, airplanes and grain, is found below. Grain is measured in millions of metric tons and airplanes are measured in units of 1,000.
Combination | Grain (millions metric tons) | Airplanes(1,000s) | A | 0 | 6 | B | 18 | 5 | C | 33 | 4 | D | 45 | 3 | E | 54 | 2 | F | 60 | 1 | G | 63 | 0 |
a) Draw a production possibilities frontier (PPF) of the two products. b) Describe how “law of increasing cost” exists in the PPF. c) Suppose a technological advancement occurs (in the aviation sector only) so that the production of airplanes doubles its original figures at each point. Show the effect on
Q1
Briefly discuss each of the following economic ideas:
People are rational. People respond to incentive. Optimal decisions are made at the margin.
Q2
Indicate whether each of the following statements applies to microeconomics or macroeconomics issue.
a) Proton plans to spend RM800 million on a new automobile plant. b) The nation’s economy grew at an annual rate of 3.7 percent in the final quarter of the year. c) The trade deficit in the Malaysia was RM20 billion last month. d) The reasons that investment in East Asian countries grows faster than investment in Africa.
Q3
Below are six statements. Identify whether each is a positive or normative statement. a) The minimum wage would be increased so low-income workers can earn a living wage. b) The unemployment rate is too high and should be reduced through government actions. c) The rate of inflation was about 2 percent last year, an all-time low for the past decade. d) The government should take action to break up the monopoly power of Microsoft. e) Interest rates should be lower in the Malaysia so that people can afford to build a home. f) The Federal government suffered a budget deficit for the first time in thirty years.
Q4
A production possibilities table for two products, airplanes and grain, is found below. Grain is measured in millions of metric tons and airplanes are measured in units of 1,000.
Combination | Grain (millions metric tons) | Airplanes(1,000s) | A | 0 | 6 | B | 18 | 5 | C | 33 | 4 | D | 45 | 3 | E | 54 | 2 | F | 60 | 1 | G | 63 | 0 |
a) Draw a production possibilities frontier (PPF) of the two products. b) Describe how “law of increasing cost” exists in the PPF. c) Suppose a technological advancement occurs (in the aviation sector only) so that the production of airplanes doubles its original figures at each point. Show the effect on