GED Test (Mathematical Reasoning, Science, Social Studies, Reasoning Through Language Arts)
Economics: practice questions
Our GED bank has 18 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.
Question 1
A store sold 200 umbrellas at $10 each. When it raised the price to $15, it sold 120. By how much did total sales revenue change?
- Fell by $800
- Fell by $200
- Did not change
- Rose by $200
Show the answer
B. Fell by $200 — Before: 200 × $10 = $2,000. After: 120 × $15 = $1,800. Revenue fell by $200.
Question 2
To slow high inflation, the Federal Reserve would most likely:
- Raise interest rates
- Lower interest rates
- Cut federal income taxes
- Print more currency
Show the answer
A. Raise interest rates — Higher interest rates make borrowing more expensive, reducing spending and easing price pressure. Tax cuts are fiscal policy, decided by Congress.
Question 3
A general rise in prices across the economy over time is called:
- Depreciation
- Deflation
- Inflation
- Recession
Show the answer
C. Inflation — Inflation is a sustained increase in the general price level; deflation is a general decrease.
Question 4
Country A can produce cloth at a lower opportunity cost than Country B, and Country B can produce wine at a lower opportunity cost than Country A. Both will gain most if:
- Each country makes both goods for itself and stops buying from the other
- They stop trading with each other
- A makes both goods and B makes neither
- A specializes in cloth, B in wine, and they trade
Show the answer
D. A specializes in cloth, B in wine, and they trade — This is comparative advantage: specializing in the good with the lower opportunity cost and trading raises total output.
Question 5
A market with only one seller and no close substitutes is called a:
- Monopoly
- Cooperative
- Oligopoly
- Perfect competition
Show the answer
A. Monopoly — A monopoly has a single seller. An oligopoly has a few large sellers; perfect competition has many.