GED Social Studies Practice Test: Economics
- Economics: Markets, Money and Government Policy
- 10 questions
- 13 minutes
Economics questions on the GED Social Studies test ask you to apply basic ideas to real situations. These 10 questions cover supply and demand, opportunity cost, inflation, GDP, government policy, trade and interest. For supply and demand questions, first decide which side of the market the event changes.
Tap an option to mark your answer. You can change your mind, or tap the same option again to leave the question blank. The correct answers and explanations appear when you finish the test.Tap an option to answer; tap it again to leave the question blank.
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Question 1
A long drought sharply reduces the wheat harvest in a major farming region, while demand for wheat stays the same.
What will most likely happen to the price of wheat?
Correct answer: A
Less wheat is available while buyers want the same amount, so the price goes up. The drought changes supply, not demand, so the choice about rising demand names the wrong cause.
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Question 2
A widely reported health study finds that eating blueberries has major health benefits. Nothing changes for blueberry growers.
What is the most likely short-term effect on the blueberry market?
Correct answer: C
The study makes consumers want more blueberries at every price, which increases demand and pushes the price up. The growers' situation has not changed, so supply has not shifted.
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Question 3
Tom can spend Saturday either working an extra shift that pays $90 or attending a free job-training workshop. He chooses the workshop.
What is Tom's opportunity cost?
Correct answer: B
Opportunity cost is the value of the best choice you give up. Even though the workshop is free, Tom gives up $90 in pay to attend it.
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Question 4
A price index that measures the cost of a typical basket of goods rose from 250 to 260 over one year.
What was the rate of inflation for that year?
Correct answer: C
The inflation rate is the change divided by the starting value: (260 − 250) ÷ 250 = 0.04, or 4%. The choice 3.8% divides by the ending value of 260 instead of the starting value.
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Question 5
When the Federal Reserve raises interest rates, what is the usual goal?
Correct answer: A
Higher interest rates make loans more expensive, so people and businesses borrow and spend less, which slows price increases. Making loans cheaper is the effect of lowering rates, the opposite policy.
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Question 6
Which of the following is an example of fiscal policy?
Correct answer: D
Fiscal policy is the government's use of taxes and spending, decided by Congress and the President. Changing interest rates is monetary policy, which is set by the Federal Reserve.
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Question 7
Which statement best defines gross domestic product (GDP)?
Correct answer: C
GDP measures the value of final goods and services produced within a country in a given year. Sales to other countries are exports, which are only one part of GDP.
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Question 8
A city passes a law that sets the maximum rent for apartments well below the price at which supply and demand would balance.
What is the most likely result?
Correct answer: B
A price ceiling below the equilibrium price makes more people want apartments at the low rent while owners offer fewer, so demand is greater than supply: a shortage. A surplus happens when a price is set above equilibrium.
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Question 9
The table shows what one worker can produce in a day in two countries.
Country Cars Tons of grain Country A 4 20 Country B 2 16 Based on comparative advantage, which plan makes the most sense?
Correct answer: D
For Country A, one car costs 5 tons of grain (20 ÷ 4); for Country B, one car costs 8 tons (16 ÷ 2). Country A gives up less grain for each car, so it has the comparative advantage in cars, and Country B has it in grain. Country A is better at both, but specializing by comparative advantage lets both countries gain from trade.
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Question 10
Ana borrows $2,000 at a simple interest rate of 6% per year. She repays the loan after 3 years.
How much interest does she pay?
Correct answer: B
Simple interest is principal × rate × time: 2,000 × 0.06 × 3 = $360. The choice $382.03 is compound interest, and $2,360 is the total repaid, not the interest.
Questions you leave blank are not counted as wrong.
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