Statistics for Economics

Test your knowledge of how statistics are used in economics!

1. Which of the following is NOT a function of a central bank?

a) Setting interest rates b) Regulating commercial banks c) Printing money d)

Determining tax policy (Tax policy is typically set by the government)

2. In an economic model with perfect competition, firms can:

a) Control the price of their goods or services b) Influence the overall market price c)
Freely set any price they desire d) Must accept the market-determined price (They are
price takers)

3. Which of the following statements about externalities is most accurate?

a) Externalities only occur in imperfectly competitive markets.

b) Positive externalities always benefit society as a whole. c) Negative externalities can
be addressed through government intervention. CORRECT d) Externalities have no
impact on economic efficiency.

4. When a government sets a minimum wage above the equilibrium price in a labor market,
it can lead to:

a) Increased employment opportunities b) A decrease in unemployment

c) A labor shortage CORRECT d) More efficient allocation of labor resources

5. The concept of comparative advantage suggests that a country should specialize in

producing goods and services:

a) That it can produce at a lower absolute cost

b) That it has the highest quality for
c) That its consumers demand the most
d) For which it has a relative advantage CORRECT (Even if another country can
produce everything cheaper, specialization based on relative advantage benefits both)

6. Which of the following best describes the business cycle?

a) Long-term economic growth trends b) Short-term fluctuations in economic activity

CORRECT c) Government policies to regulate the economy d) The distribution of
income within a society

7. The Lorenz Curve is a graphical representation of:

 a) Economic growth over time b) Inflationary trends in different sectors c) Income
inequality within a population CORRECT d) The relationship between unemployment
and inflation

8. Which of the following is an example of a lagging economic indicator?

a) Stock market prices

b) Initial unemployment claims c) Consumer confidence index d) Real GDP growth rate
CORRECT (Real GDP reflects past economic activity)

9. When a government borrows money to finance its spending, it is creating a:

a) Budget surplus
b) Balanced budget c) Budget deficit CORRECT d) Trade surplus

10. Behavioral economics suggests that consumers:

a) Always make perfectly rational decisions b) Can be influenced by emotions and biases
CORRECT c) Have perfect knowledge of all available options d) Only consider
economic factors when making choices