does not have to pay a separate business tax

If a competitive market is at equilibrium, and if there is a sudden increase in demand, then:

a temporary shortage will occur and price will rise

A "tight money" (also called contractionary) policy:

restricts the growth of the money supply

Banks became subject to strict government regulation because of:

bank failures of the Great Depression

The FDIC was established to:

protect the savings of the American people

One weakness of the sole proprietorship is that the:

business depends solely on the owner

According to the graph above, the minimum wage:

doesn't really show us if our purchasing power has increased

Economics may best be defined as:

study of efforts to satisfy wants with resources

An advantage of a merger between 2 companies is:

improved production and efficiency

If the price of a product decreases and consumers buy more of the product:

a change in quantity demanded has taken place

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Economics Review

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Econ

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Questions 75

Answers

1
All of the following describe our current US money EXCEPT:
it is backed by gold
it is legal tender
it is fiat money
it is a Federal Reserve note
2
The sales tax on a new car is an example of a ____ tax.
progressive
proportional
regressive
ability to pay
3
In what year would inflation most likely occur?
5
9
11
1
4
Low interest rates:
increase automobile sales
increase consumer borrowing
all of these
encourage home building
5
Answer the following question...
relative
monopolistic
comparative
absolute
6
If consumers' incomes go up, for most products we can expect:
a substitution effect
marginal utility to decline
an increase in quantity demanded
an increase in demand
7
It's cheaper to live in some places than others, this is called...
labor theory of value
labor mobility
inflation
cost of living
8
Index which tracks changes in prices for common consumer items:
CPI
FICA
GDP
GNP
9
Which of the following factors is the most important in economics?
technology
production possibility curve
circular flow model
scarcity
10
A new firm finds it the most difficult to enter into an industry dominated by:
a monopoly
monopolistic competition
an oligopoly
pure competition
11
A sole proprietor:
must rely on government subsidies
has partners in his business
is exempt from paying tax
does not have to pay a separate business tax
12
If a competitive market is at equilibrium, and if there is a sudden increase in demand, then:
a temporary surplus will occur and the price will fall
a temporary surplus will occur and the price will rise
a temporary shortage will occur and the price will fall
a temporary shortage will occur and price will rise
13
A "tight money" (also called contractionary) policy:
causes interest rates to decline
increases bank loans
encourages economic growth
restricts the growth of the money supply
14
A labor meeting with management to negotiate a contract is called:
collective bargaining
injunction
strike
mediation
15
The US answers the basic economic questions by using a _____ system...
mixed economy
traditional
laissez-faire
command
16
Which of the following would be found in the product market?
an acre of land to grow crops
a manager's salary
a new car
an employee's wages
17
Banks became subject to strict government regulation because of:
inflation of the 1980's
request for bank regulation
power of the Treasury Department
bank failures of the Great Depression
18
In comparing stocks and bonds, bonds are:
higher risk, lower return
higher risk, higher return
lower risk, lower return
lower risk, higher return
19
An increase in taxes has the same effect on a change in supply as an increase in:
productivity
demand
diminishing returns
cost of inputs
20
Mergers and acquisitions might result in:
more competition
increases in consumer demand
smaller companies
inadequate competition
21
Which of the following could be a positive effect of raising the minimum wage?
higher prices for products
management cutting back on employee hours
higher pay for individuals
management cutting back on employees
22
The diagram is referred to as the...
Production Possibility Frontier (Curve)
Supply and Demand Curve
Circular Flow Model
Business Cycle
23
A risk-taker in search of profits is a(n):
socialist
entrepreneur
laissez-faire
economist
24
When firms involved in different phases of production merge, the result is a:
vertical merger
multinational merger
conglomeration
horizontal merger
25
The FDIC was established to:
protect the savings of the American people
federalize the banking system
create a government money supply
help finance WWII
26
One weakness of the sole proprietorship is that the:
owner has too many partners
owner has no control
business will keep going after the owner dies
business depends solely on the owner
27
Third world countries such as Kenya and Ethiopia are examples of ______ economic systems.
market
capitalistic
command
traditional
28
The theory of a classless society with no private ownership of business was developed by:
Adam Smith
Karl Marx
John Maynard Keynes
Adolf Hitler
29
Answer the following question...
supply should increase
supply should decrease
supply should stay the same
30
____ would favor import tariffs and quotas.
Free-traders
Protectionists
The Federal Reserve
OPEC
31
According to the graph above, the minimum wage:
increases every year
doesn't really show us if our purchasing power has increased
shows that $5.15 buys a lot more than $.25 did in 1939
32
Money backed by government decree is called _____ money.
fiat
near
greenback
commodity
33
If the price of a product falls, producers will generally:
hold a clearance sale
increase inputs
offer more for sale
offer less for sale
34
At which point on the graph would be equilibrium or market price?
A
C
B
35
The most common form of business organization in the US is the:
corporation
partnership
sole proprietorship
non-profit organization
36
Answer the following question...
regressive
proportional
benefits-received
progressive
37
At which point would there be a surplus?
C
A
B
38
Answer the following question...
paradox of value
trade off
consumer good
opportunity cost
39
Answer the following question...
Karl Marx
John Maynard Keynes
Adam Smith
John Kenneth Galbraith
40
Economics may best be defined as:
study of banking and Federal reserve
study of efforts to satisfy wants with resources
scientific study of supply and demand
describing economic activities
41
Answer the following question...
point B to point D
point A to point D
point C to point B
point B to point A
42
The event that led to the Great Depression was:
World War II
the Stock Market Crash of 1929
World War I
FDR's New Deal
43
An advantage of a merger between 2 companies is:
establishing a voluntary transaction
establishing a legal monopoly
improved production and efficiency
increasing costs
44
Which shows what would happen to the supply of wheat if the gov't gave subsidies to farmers?
B
C
D
A
45
If the price of milk doubles and your salary remains the same, you would probably...
buy more milk
buy more complementary goods
buy less milk
buy the same amount of milk
46
In what year has recession or depression occurred?
11
9
5
1
47
Value of all final goods, services, and structures produced in a country's borders in one year
CPI
per capita income
national debt
GDP
48
Which of the following is not a factor of production?
cost
capital
land
labor
49
If the price of a product decreases and consumers buy more of the product:
a change in demand has taken place
a change in quantity demanded has taken place
the product is a complementary good
there has been an increase in demand
50
All of the following are tools of the Federal Reserve System EXCEPT for:
reserve requirements
open market operations
discount rate
deficit spending
51
Tools, equipment, and factories used in production are called:
utilities
products
goods
capital
52
A labor union may use all of the following EXCEPT:
lockout
boycott
strike
picket
53
The Clayton Antitrust Act was a victory for labor unions because unions were:
protected by the President
declared unconstitutional
declared not to be monopolies
allowed to elect representatives to Congress
54
The statement, "the demand for a product varies inversely with its price" is a definition of:
Law of Competition
laissez-faire
Law of Supply
Law of Demand
55
The price paid to use another person's money is called:
bond
interest
principal
dividends
56
A business agreement between 2 or more people that does not sell stock is a:
partnership
sole proprietorship
corporation
cooperative
57
The elasticity of demand for an item is determined, in part, by the question:
Can the purchase be made with a credit card?
Should production be cut?
Is there enough of the product available?
Could something else take its place?
58
Answer the following question...
elastic demand
supply
opportunity costs
trade-offs
59
A country in which the government controls economic decisions is a _____ economy.
command
traditional
market
free enterprise
60
Government subsidies have the effect of:
raising costs
reducing supply
lowering the cost of production
forcing producers to leave the market
61
The 3 basic economic questions that must be answered are:
Why? What? How?
What? Where? When?
What? How? When?
What? How? For Whom?
62
Labor unions have had which impact on wages in the US?
decreased wages
no impact
increased wages
63
The federal government's 2 largest expenditures are:
Social Security and welfare
national defense and subsidies to farmers
Medicare and Social Security
Social Security and interest on national debt
64
The Federal Reserve System is made up of ____ district banks.
12
10
8
14
65
Alternative choices made by consumers in the marketplace (like buying jeans instead of food)...
trade off
opportunity cost
conspicuous consumption
scarcity
66
Public utilities are examples of:
oligopolies
monopolistic competition
perfect competition
natural monopolies
67
According to the traditional theory of wages, wages are determined mainly by...
the Fair Labor Standards Act
regional differences
supply and demand
labor-management negotiations
68
The factor that would cause the supply curve to shift to the left is:
higher taxes
an increase in the number of sellers/producers
increase in government subsidies
technological advances
69
A tax is regressive when it:
taxes incomes only above $100,000
is based on the ability to pay
imposes a higher percentage rate on lower incomes
gives rebates to low income families
70
Which of the following statements is true about GDP and the unemployment rate?
GDP and the unemployment rate are not related
as GDP goes up, unemployment goes up
it takes years for the GDP to affect the unemployment rate
as GDP goes up, unemployment goes down
71
The philosophy of Adam Smith that government should not interfere with trade is called...
conspicuous consumption
entrepreneurship
invisible hand
laissez-faire
72
Which shows the demand for hybrid (get better mileage) cars when the price of gas increases?
A
C
B
D
73
At which point would there be a shortage?
C
A
B
74
Answer the following question...
excessive monetary growth
cost-push
wage-price spiral
demand-pull
75
When a major car company lowers its prices, the other car makers will probably:
go out of business
maintain existing prices
raise their prices
also lower their prices

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