GACE Economics

The Economics assessment, offered as part of the Georgia Assessments for the Certification of Educators, is divided into two tests.

The first test consists of 80 selected-response questions. The content areas covered by the first test are fundamental economic concepts and microeconomics. The topics covered by the fundamental economic concepts subarea are: the concepts of scarcity, choice, and opportunity cost; how changes in marginal costs and marginal benefits affect decision making; and how specialization increases productivity and results in greater output of goods and services. The topics covered by the microeconomics subarea are: the law of supply and the law of demand; how prices guide the allocation of resources and the production and distribution of goods; how competitive markets eliminate surpluses and shortages; the relationship between total revenue and elasticity of demand; the role of profit as an incentive for entrepreneurs; the difference between explicit and implicit costs; and the concept of derived demand for a factor of production, such as labor.

The second test consists of 80 selected-response questions. The content areas covered by the second test are macroeconomics, international economics, and personal finance. The topics covered by the macroeconomics subarea are: the various means by which economic activity is measured; and the concepts related to fiscal policy and monetary policy. The topics covered by the international economics subarea are: the important concepts and debates related to international economics and trade. The topics covered by the personal finance subarea are: the basic principles and practices related to personal finance and employment.

The examination must be completed within four hours. Scores are based on the number of selected-response questions answered correctly and the scores assigned by judges to the constructed responses. Test-takers will also receive performance indices indicating their success in each subarea of the examination. Scores will be available approximately a month after the date of the examination; unofficial results are posted on the internet, and an official score report is mailed to the test-taker, the Professional Standards Commission, and the institution specified by the test-taker during registration.

GACE Economics Practice Questions

1. Which of the following is NOT a characteristic of members of the labor force?

A: They are over the age of 16.
B: They are willing and able to work.
C: They are actively searching for employment.
D: They are not serving in the armed forces.

2. What is the equation for real GDP?

A: Nominal GDP divided by exchange rate
B: Nominal GDP divided by GDP deflator
C: Nominal GDP divided by unemployment
D: GDP deflator divided by nominal GDP

3. How is asymmetric information a barrier to efficiency?

A: Individuals have varying degrees of knowledge about the market.
B: Individuals never know exactly what stocks they own.
C: The market tends to inefficiency.
D: The stock market is controlled by a few oligarchs.

4. Which of the following is NOT a tool of the Federal Reserve?

A: Open market operations
B: Investing in foreign markets
C: Changing the reserve requirement ratio
D: Changing the discount rate

5. What is measured by dividing % change in quantity supplied by % change in price?

A: price elasticity of demand
B: long-term demand
C: price elasticity of supply
D: long-term supply

Answer Key

1. C. Active searching for employment is a characteristic of unemployed individuals.
2. B. Real GDP is simply nominal GDP adjusted for inflation.
3. A. When information is asymmetric, individuals will not always make
4. B. The Federal Reserve does not practice foreign investment as part of its monetary policy.
5. C. Price elasticity of supply is the responsiveness of supply to a change in price.