NAEP Economics Grade 5

Question 1

A company is the only seller of a product and faces no competition. This market structure is called:

Accepted Answer

Monopoly

Answer

A monopoly exists when a single seller controls the entire market for a product, allowing it to set prices above competitive levels.

Question 2

GDP measures the total value of goods and services produced in a country. Which of the following would NOT be included in GDP?

Accepted Answer

A used car sold between two private citizens

Answer

GDP counts only newly produced goods and services; resale of existing items like used cars does not add new production to the economy.

Question 3

A tariff on imported steel would most likely benefit which group in the short run?

Accepted Answer

Domestic steel producers

Answer

A tariff raises the price of imported steel, making domestic steel more competitive and protecting domestic steel producers from foreign competition.

Question 4

Which economic indicator would signal that an economy is in a recession?

Accepted Answer

Two consecutive quarters of negative GDP growth

Answer

A recession is commonly defined as two consecutive quarters of negative real GDP growth, signaling contraction of economic output.

Question 5

If demand for a product increases while supply remains constant, what happens to the equilibrium price and quantity?

Accepted Answer

Both price and quantity rise

Answer

When demand increases with no change in supply, the demand curve shifts right, raising both the equilibrium price and quantity.

NAEP - National Assessment of Educational Progress Practice Test