NCEA Level 2 Economics Practice Test

These questions are part of the practice quiz. Start practicing

• Which current account balance records trade in goods?
• In the equation MV = PQ, P represents the price level. Which statement best describes the price level?
• Depression/Trough describes?
• What does Aggregate Supply represent?
• Which phase is characterized by GDP on the rise and unemployment falling?
• A Samsung Galaxy S8 is imported into New Zealand. This is an example of which international transaction?
• Which statement best defines monetary policy in this context?
• Which statement best defines fiscal policy?
• Which policy involves artificial restrictions to the exchange of goods and services between countries e.g. tariffs or quotas?
• When the world price is higher than the New Zealand price, what happens to the New Zealand price and market?
• Depreciation of the NZD tends to increase net exports because exports become more price competitive and imports become relatively more expensive. True or false?
• If the CPI increases from 100 to 103, what is the percentage change in the price level?
• What does WTO stand for?
• Buying clothing online from Iconic, an Australian company, is an example of which international transaction?
• Which term refers to a regional group comprising several European nations with trade facilitation?
• If a drought reduces Marlborough wine production, what happens to exports in the short run?
• Aggregate demand is defined as
• Depreciation of the NZD impact on AD is described as:
• What is the equation used for QTOM?
• Net exports represent which of the following?
• Demand-Pull Inflation effects on price level and output?
• Real wages are defined as?
• Which of the following is an example of a one-off event that can affect headline inflation but not underlying inflation?
• An export is defined as which of the following?
• Which factor can shift the AS curve?
• The price set on international goods and services markets is called
• Hyperinflation is described as a very rapid rise in the price level.
• What does M stand for in M x V = P x Q?
• When the price of a country's currency is determined by market forces, the exchange rate is
• In the quantity theory, if M increases while V and Q constant, what happens to P?
• When will AS increase, according to the notes?
• In MV = PQ, what does V stand for?
• What is fiscal drag?
• Which factor would most likely increase the volume of Marlborough Sauvignon Blanc exported?
• Which balance is included as part of the current account?
• Nominal income is defined as:
• EU stands for which entity?
• A government subsidy to wine exporters is most likely to do what?
• A payment to exporters for each unit of produce exported to increase international competitiveness is known as
• The year is divided into what units when measuring inflation?
• Which statement best describes inflationary pressure during a recession?
• In the two-country model, which factors will cause supply to change in either country?
• Nominal wages refer to wages measured as?
• What is the primary purpose of Marlborough Sauvignon Blanc in international trade?
• What is an exchange rate?
• If foreigners purchase NZ exports, what happens to the demand for NZD?
• If nominal income grows by 5% while prices rise by 8%, what happens to real income?
• Which policy tool is primarily used to influence the money supply and interest rates?
• What term describes payments made to overseas producers for the purchase of goods and services?
• How does inflation typically impact real income?
• What is a Trade Weighted Index?
• Bilateral means what?
• Which definition best describes nominal GDP?
• In the two-country model, what effect does an increase in demand have on the trade price?
• The activity on the Rotorua luge by European travellers is an example of which international transaction?
• A New Zealand business buys insurance from an Australian company. This is an example of which international transaction?
• Money supply includes which components?
• Which factor contributes to Marlborough Sauvignon Blanc being widely exported?
• Real income describes:
• What characterizes a floating exchange rate?
• During a boom, which condition is most likely to occur?
• If NZers increase imports, what happens to the supply of NZD?
• If the government imposes an export tax on wine, what is the likely effect on exports?
• What is a free trade agreement?
• Which of the following best describes real output?
• How many member countries does the OECD have?
• Which statement about aggregate demand is true?
• Disinflation is best described as prices rising but at a slower rate than before.
• According to the notes, when the NZD depreciates, what is said about NZ exports?
• If nominal GDP rises by 6% and prices rise by 6%, real GDP will?
• Depreciation of the NZD occurs when
• Which macroeconomic concept refers to the total demand for goods and services in an economy?
• Which of the following lists the four parties involved in the P4 agreement?
• Which measure is adjusted to remove inflation to compare across years?
• WTO stands for World Trade Organisation (previously GATT) - an organisation dedicated to the promotion of free trade.
• Which statement correctly defines comparative advantage in wine production?
• How does inflation affect the government's operating balance?
• Multilateral means what?
• Real values are defined as:
• Underlying inflation
• In the quantity theory of money identity, which variable represents the velocity of circulation?
• Which measure of inflation includes all the goods that the average consumer buys?
• CPI stands for:
• Why is New Zealand considered a price taker in world markets?
• What term describes revenue earned from the sale of goods and services to overseas buyers?
• Which term is defined as a weighted index of NZ's major trading partners that indicates the value of the NZ dollar?
• If the general price level falls, what is this called?
• Which agreement is a Free Trade Agreement with Malaysia?
• Which statement best describes deflation?
• Recession is defined as?
• Disinflation best described as?
• Who gains from an appreciation of the New Zealand dollar?
• What is the Wealth effect?
• Which of the following is an export?
• A complete ban on trade with another country is called an
• What defines depreciation of the NZD?
• Headline inflation
• The price of one currency expressed in terms of another is called
• CER stands for Closer Economic Relations, a bilateral free trade agreement between NZ and Australia (ANZCERTA).
• OECD stands for what?
• Balance of Payments is defined as which?
• What is Cost-Push Inflation?
• Which term describes goods and services provided by overseas producers?
• What is a typical impact of inflation on firms?
• Exports as a share of GDP is commonly referred to as which measure?
• In MV = PQ, what does P stand for and what does it represent?
• Which statement about a small economy’s influence on world prices is true?
• What is one reason for a country to export high-value agricultural products like Sauvignon Blanc?
• Which term describes a government payment to exporters to boost international competitiveness?
• Which term is defined as a decrease in the general price level?
• NZ-Korea FTA is an agreement with which country?
• What happens to exports when the world price is higher than the New Zealand price?
• What defines appreciation of the NZD?
• At a higher established trade price, which group in the importing country is better off?
• How is the change in the price level calculated?
• Which term describes a many-country trade agreement?
• A payment made by a government to exporters to boost their competitiveness is called an
• Which term describes a situation where the exchange of goods and services between countries is not restricted in any way?
• Appreciation of the NZD occurs when
• How many member countries does the World Trade Organization have?
• How does appreciation of the New Zealand dollar affect net exports?
• The price level is defined as the average price of goods and services in the economy.
• In a recession, if there are spare resources and the money supply increases, what happens to the price level?
• If the money supply doubles and velocity and real output stay the same, the price level will what?
• APEC membership has how many member countries?
• When the New Zealand dollar strengthens, what happens to Marlborough Sauvignon Blanc exports?
• A Korean student comes to study at a New Zealand high school. This is an example of which international transaction?
• Export receipts are defined as which of the following?
• Which three countries, besides New Zealand, are part of the P4 agreement?
• In the basic two-country model, what does 'same currency' mean?
• Which sequence describes the inflation wage spiral?
• With an established trade price, how is the importing country affected?
• Which measure excludes volatile items such as food and energy to show underlying price trends?
• A government policy that uses tariffs or quotas to restrict imports is known as
• Core Inflation is the underlying increases in the price level after one-off price increases and volatile food and energy prices are removed.
• What is a nominal value?
• In the two-country model, which factors will cause demand to change in either country?
• If world demand for Marlborough Sauvignon Blanc increases, what typically happens to its export price and quantity?
• A ban on all trade is called an
• Balance on Current Account includes which components?
• A New Zealand dairy company sells milk powder to a Chinese grocery company. This is an example of which international transaction?
• Which policy action would increase Aggregate Demand?
• Which term represents the general rise in prices in an economy?
• Which term corresponds to Total Value of Production?
• In the two-country model, what effect does an increase in supply have on the trade price?
• Which set of components makes up the current account?
• Net exports are defined as
• What term describes payments made to overseas producers for the purchase of goods and services?
• What is the definition of specialization?
• Which equation represents the components of Aggregate Demand?
• Which of the following best describes economic conditions during a boom?
• Deflation occurs when there is a sustained decrease in the general price level. Which option best matches this definition?
• Which currency-related factor most directly affects the international competitiveness of Marlborough Sauvignon Blanc?
• Which agreement is between New Zealand and Hong Kong, China?
• If wages stay the same in nominal terms but prices double, real wages will?
• What are the three steps to answer an AD exam question?
• The ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) is an agreement with which group?
• A tax on imported goods is called a
• Demand-Pull Inflation refers to inflation driven by an increase in Aggregate Demand and a rightward shift of the AD curve, leading to what outcomes?
• What is the recommended sequence for answering AS exam questions?
• Which current account component records transfers such as remittances between residents of different countries?
• To convert an overseas price into NZD, which operation is used?
• Which term describes a rise in the price of one country's currency in terms of another under a floating exchange rate?
• Which of the following factors can influence AS?
• In the equation M x V = P x Q, what does P represent?
• Which of the following would increase the demand for NZD?
• In MV = PQ, what does Q stand for?
• With an established trade price, how is the exporting country affected?
• Which term describes a fall in the price of one currency in terms of another under a floating exchange rate?
• Real GDP is best described as which?
• Boom/Peak describes which?
• Which equation represents the Quantity Theory of Money?
• If imports exceed exports, (X - M) is negative. What is the effect on Aggregate Demand?
• The NZ-Australia Closer Economic Relations (CER) is an agreement with which country?
• In global trade terms, export revenue is best described as?
• To convert NZD to an overseas price, which operation is used?
• In the two-country model, what is assumed about transport and insurance costs?
• What does Q stand for in M x V = P x Q?
• The current account measures
• Which component of Aggregate Demand includes spending by households on domestically produced goods and services?
• What are the two types of inflation?
• What is a potential outcome of the inflation wage spiral?
• What measure is commonly used to track inflation?
• APEC has how many member countries?
• In the quantity theory of money identity, M stands for?
• Depreciation of the NZD, relative to imports, is described as:
• Expansion Phase describes which?
• Which term describes revenue from the sale of goods and services to overseas buyers?
• What does the QTOM equation imply about real output during a boom?
• Which is a bilateral free trade agreement between NZ and Australia?
• Which statement best describes the effect on aggregate demand when the NZD appreciates and net exports worsen?
• What is the price level?
• APEC is an organization designed to increase multilateral economic cooperation among nations bordering which region?
• What are the assumptions of the basic two-country model?
• Resource endowment refers to a situation where countries can produce goods at a lower cost or more efficiently, leading to what?
• In the AD equation, what does (X - M) represent?
• In MV = PQ, what does M represent and what does it include?
• Which term describes goods and services produced domestically but sold to overseas buyers?
• Which policy tool could help stabilize export earnings against currency fluctuations?
• A restriction on the quantity of imports is known as a
• Who loses from an appreciation of the New Zealand dollar?
• Which term describes the highest point in the business cycle?
• What does the Official Cash Rate (OCR) do?
• What does the QTOM equation imply about real output and the price level during a recession if the money supply increases?
• Which description best differentiates real income from nominal income?
• Which statement best describes unemployment during a boom?
• Which of the following best describes economic conditions during a recession?
• Inflation definition
• A country that is too small by value or volume to influence world price is known as a
• What is the first step suggested for analyzing AS questions?
• Which term refers to NZ's major trading partners weighted index that indicates the value of the NZ dollar?
• At a higher established trade price, which group in the exporting country is better off?
• Which of the following is a benefit of trade that directly affects competition and prices?
• Aggregate supply is defined as
• Which of the following would increase the supply of NZD?
• Cost-Push Inflation effects on output?
• Which equation represents aggregate demand in a simple open economy?
• If prices rise while growth is slow and unemployment is high, what phenomenon is this?
• Net Exports (X - M) is positive when exports exceed imports; which statement is true?
• An appreciation of the NZD is associated with what change in inflationary pressure?
• Which term describes a restriction on the quantity of imports?
• Stagflation is best described as a period of slow growth and high unemployment with rising prices.
• Inflation tends to have which effect on households?
• Inflation's impact on households is most negative for which group?
• In the context of a two-country model, a change in income and tastes and preferences would cause what change in the market?