Randomly Generated Economics Multiple-Choice Practice Exam
Grade: 12
Number of questions: 10

1. The government of Ethiopian can decrease inflationary pressure in the Ethiopian economy by
   increasing taxation.   
   depreciating the Ethiopian Bin   
   increasing government spending   
   financing budget deficit though money creation  

2. The difference between explicit and implicit costs is that:
   explicit costs are short run costs and implicit costs are long run costs.   
   implicit costs are opportunity cost explicit costs are not.   
   explicit costs are costs of resources hired by the firm and implicit costs are those of resources owned by the firm or provided by the firms owners.   
   explicit costs are associated with variable resources and implicit costs with fixed resources.   

3. The current cost of a basket of goods most frequently purchased in the market by consumers is birr 750 and the cost of the same basket of market goods in the base year was 500.
   The growth rate of consumer price is 250.   
   The GDP deflator is 150.   
   The consumer price index in the current period is 150.   
   The inflation rate is 150%.   

4. Which of the following is true regarding the health sector in Ethiopia?
   The impact of HIV/AIIDS on the economy is well documented.   
   The health personnel in Ethiopia is increasing from time to time due to lucrative payment system.   
   The health of EPRDF implements prevention oriented health strategy.   
   Much of ill health in Ethiopia is related to obesity.   

5. All other things remaining the same, quantity supplied and own price of a commodity are directly related because
   higher price induces firms to produce less of the commodity  
   higher price induces firms to produce more of the commodity   
   higher price induces consumer to purchase more of the commodity   
   lower price induces firms to produce more of the commodity   

6. The least -cost rule for a firm's choice of inputs is that it should _________________
   Produce output until unit costs of each input purchased is equalized.   
   Combine low-cost inputs of high marginal rate of substitution   
   Combine inputs that have high marginal rate if substitution   
   Buy inputs until the marginal product per unit price of each input is equalized.   

7. Which of the following is NOT true about the strategic directions of Ethiopia's national policy on the health sector?
   Assurance of equitable access.   
   Decentralization of the health care system!   
   More focus on treatment component of health care.   
   International and inter-sectoral cooperation.   

8. The revenue side of the Ethiopian government's annual budget is composed of __________
   ordinary revenue, external assistance and capital revenue   
   economic, social and general development   
   recurrent budget and capital budget   
   administrative and general services, economic and social services   

9. If the value of the Bin in other currencies rises, the________
   Spending on the Ethiopian exports in foreign currency will fall if demand for the Ethiopian exports is price elastic   
   demand for the Ethiopian exports will rise   
   Spending on the Ethiopian exports in foreign currency will rise if demand is price elastic   
   Spending on the Ethiopian exports in Birr must rise   

10. Which of the following statements is FALSE with regards to the role of investment in economic growth?
   With increase in investment, the capital-labor ratio in the production process is expected to decline.   
   Investment enhances the productive capacity of a country.   
   Investment enhances the accumulated capital.   
   Investment today raises the stream of output in the future.   

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