NAEP Economics Grade 3

Question 1

If the unemployment rate falls below the natural rate of unemployment, economists typically expect:

Accepted Answer

Inflation due to upward wage pressure

Answer

When unemployment falls below the natural rate, labor markets tighten, giving workers bargaining power to demand higher wages, which can fuel inflation.

Question 2

A musician spends $500 recording an album and sells 100 copies at $8 each. What is the musician's profit?

Accepted Answer

$300

Answer

Profit = total revenue minus total cost: (100 × $8) − $500 = $800 − $500 = $300.

Question 3

The Federal Reserve raises interest rates. Which of the following is the most likely direct effect?

Accepted Answer

Borrowing becomes more expensive, slowing spending

Answer

Higher interest rates increase the cost of borrowing, which discourages consumer and business spending and slows economic activity.

Question 4

Which factor of production refers to the natural resources used in producing goods?

Accepted Answer

Land

Answer

Land as a factor of production includes all natural resources — minerals, water, forests, and agricultural soil.

Question 5

A store sells its last unit of a product for $15 more than it cost to produce. This $15 represents the store's:

Accepted Answer

Marginal profit

Answer

Marginal profit is the additional profit earned from selling one more unit, calculated as marginal revenue minus marginal cost.

NAEP - National Assessment of Educational Progress Practice Test

NAEP - National Assessment of Educational Progress Practice Test

NAEP Economics Grade 3