The PRAXIS II Economics Exam (5911) is 110 multiple choice questions and you will have 2 hours to complete it. The test is for secondary school Economics instructors. This exam will assess your knowledge of theories, principals and concepts of economics and macroeconomics and, microeconomics. Under the macroeconomics section your knowledge of economic growth, international investments and banking, fiscal polices, inflation, unemployment, national income accounting, the business cycle and the circular flow model will be assessed. Under the microeconomics section your knowledge of income distribution, factor markets, production markets, product markets, production cost, market failures, market efficiency, trade, supply and demand, comparative advantage, scarcity, choice and opportunity costs; and economic systems will be assessed.
Microeconomics: This section of the exam will assess your knowledge of efficiency markets, taxes and subsides, public policy, market failures, and the role of government regarding the economy. The elasticity section of the exam will cover tax incidence, income and price elasticity and revenue. Your knowledge of the law of supply and demand, trade and comparative advantage, scarcity choice, opportunity; and economic systems will also be assessed.
Macroeconomics: This section of the exam will assess your knowledge of the consumer price index (CPI), inflation, unemployment and its impact on the economy overall, the National Income Accounting gross domestic product (GDP), alternative measurements of income; and the gross national product (GNP).
PRAXIS II Economics Practice Questions
1. International business ethics include:
A. accepted universal values
B. recognition of cultural business traditions
C. understanding of religious perspectives
D. All of the above
2. Which of the following is not part of macroeconomics?
A. How consumption determines availability
B. Value of goods and services
C. Total personal and business income
D. Why prices change
3. Which of the following is not an economic system?
4. Customer relationship management includes:
A. Analysis of information about customers
B. Identification of a company’s best customers
C. Helping companies understand customers’ needs
D. All of the above
5. Which of the following organizations are not exempt from paying sales taxes?
B. Charitable groups
D. Nonprofit organizations
Answer Key For Economics
1. Answer: D
The American Heritage College Dictionary defines ethics as “a set of principles of right conduct; a theory or system of moral values.” Business ethics apply this definition to an organization’s or a country’s approach to conducting affairs in the commercial arena
Early on, business people did whatever was expedient to sell their goods and services and make a profit. However, a variety of factors in the last few years have forced the international business community to take a look at some of its practices and find alternate ways of conducting commerce. This has resulted in new laws in many countries. The tricky issue is how to reconcile core values that may be very different in individual cultures. Issues under study include:
A search for accepted universal values
Comparison of business traditions in different countries and cultures
How religious perspectives affect commerce
Globalization and cultural imperialism
Varying standards, i.e., child labor, living wages, etc.
Multinational groups outsourcing to take advantage of varying standards
Conducting business with rogue governments
2. Answer: A
ECONOMICS is the social science that studies the production, allocation, and use of goods and services. Economists research issues and analyze data to determine the most effective ways to use scarce resources to meet the needs of the greatest number of people. Because the world of the twenty-first century is connected in many ways, the economies of every nation play a role in the production, distribution, and consumption of every known resource and commodity. It is important to take a global view in order to truly understand how economics works.
MACROECONOMICS is the study of an entire national economy. It includes the value of goods and services produced, the total personal and business income earned, how many employable people are working at any one time, and how and why prices change.
MICROECONOMICS is the study of the components of the national economy including individual companies, households, and consumers. It considers how everyone is a producer and consumer and analyzes how production and consumption determines availability and prices. This helps define the market for a particular commodity.
3. Answer: B
CAPITALISM is a free-market economy. In this free-enterprise system, people own businesses and property and buy goods and services. Because of the establishment of monetary systems and legal rules, mercantilism provided the foundation for the formation of capitalism.
MERCANTILISM relied on government regulation to control the flow of goods and services between rivals. The worth of the economy and the power of the government were based on how much gold and silver was in the treasury. This led to trade treaties designed to increase the possession of precious metals.
SOCIALISM is considered a transitional state between communism and capitalism. The government owns most large industries and provides education, as well as health and welfare benefits. The citizens are given some choices. The Soviet Union is an example of centralized socialism. Denmark and Sweden are examples of noncommunist socialism.
COMMUNISM is a system where the community owns all assets, and resources are divided according to need. In practice, the government owns all property and industries and controls production allocation based on strict class divisions and status.
4. Answer: D
Customer relationship management (CRM) is a multilayered method of capturing, storing, and analyzing information about current customers. It identifies a company’s best customers. It helps marketers understand those customers’ specific needs, so they can plan and execute more effective marketing strategies. CRM helps management and sales teams develop relationships with the decision makers who will ultimately bring them more sales. It is a well-known fact that people buy from people, not from companies. By providing sales teams and marketers with information about the twenty percent of customers who buy eighty percent of the goods and services offered by a company, sales and profits increase, and customer satisfaction improves.
Practitioners of CRM study customer behavior: how they buy, what they buy, when they buy, and why they buy. To understand and be effective using customer relationship management, marketers must be familiar with psychology, sociology, anthropology, and micro- and macroeconomics. CRM is a powerful tool when used correctly and applied judiciously.
5. Answer: C
Sales tax is a levy placed on the retail price of merchandise and, in some states, services. The state legislature determines what merchandise is levied, which services pay sales tax, and the percentage of the sale price each business must collect. Cities and counties may also have sales tax requirements. Elected city and county officials set the percentage. Depending upon the amount of money collected, sales tax is paid monthly, quarterly, or annually. The business collecting sales tax must apply for and receive a sales tax permit prior to charging and collecting sales tax.
Every sales tax jurisdiction exempts certain organizations from paying sales tax; i.e., churches, charitable groups, and nonprofit organizations. Qualifying groups must apply for a sales tax exemption certificate. The exemption requirements vary. Sometimes this exemption is only on certain goods and services; other times it covers anything purchased by the exempt group. A buyer must provide a copy of the sales tax exemption certificate at the time of payment. Most taxing authorities require a copy of the exemption certificate be filed with the tax payment.