NAEP Economics Grade 2

Question 1

A bakery sells cupcakes for $3 each. When the price drops to $2, customers buy more cupcakes. This illustrates the law of:

Accepted Answer

Demand

Answer

The law of demand states that as price decreases, the quantity demanded increases, all else being equal.

Question 2

A country can produce either 100 cars or 200 tons of wheat using all its resources. If it currently produces 50 cars and 100 tons of wheat, what does this represent?

Accepted Answer

A point inside its production possibilities frontier

Answer

A point inside the production possibilities frontier indicates resources are not being fully or efficiently used.

Question 3

Which government action is an example of a fiscal policy tool?

Accepted Answer

Increasing government spending on infrastructure

Answer

Fiscal policy involves government spending and taxation decisions, while monetary policy involves the money supply and interest rates.

Question 4

A factory dumps waste into a river, harming nearby communities. This is an example of:

Accepted Answer

A negative externality

Answer

A negative externality occurs when the production or consumption of a good imposes costs on third parties not involved in the transaction.

Question 5

When a country imports more goods than it exports, it has a:

Accepted Answer

Trade deficit

Answer

A trade deficit occurs when a country's imports exceed its exports in value.

NAEP - National Assessment of Educational Progress Practice Test

NAEP - National Assessment of Educational Progress Practice Test

NAEP Economics Grade 2