If unemployment rate ofa nation is slowly beginning to rise, and GDP is slowly beginningto fall

contraction/downturn phase of business cycle is beginning

What is the MOST important function of government patents in a market economy?

to allow entrepreneurs to earn profits

Which worker BEST illustrates the problem of cyclical unemployment?

sales rep laid off during an economic downturn

a price ceiling set lower than the equalibrium by the government would most likely result in a

shortage because buyers would be willing to buy more, shortage because suppliers wouldbe unwilling to produce more

Workers with a cost of living adjustment in their contracts . .

suffer less from inflation than other workers.

One negative consequence of a protectionist policy in regards to trade would be

increased prices on domestic (American made) goods

Which of the following is an example of government transfer payments?

medicare payments to the poor and elderly

a person who opposes free trade would most likely

call for supporting American jobs

Which of these choices is the most likely effect of a strong US dollar?

travel abroad becomes more affordable for Americans.

Which government decision represents possible effects of deregulation?

govt. lessens control of TV industry leading to more choices

Which of the following is an example of entrepreneurship?

person who starts a new online business

Which issue might a professor of microeconomics specialize in?

relationship of supply and demand in the housing market

In the past 20 years computers have increased the productivity of the American economy which

has caused an increase in the production of goods/services.

Which of the following statements about the disadvantages of credit cards is false?

Credit cards are not often useful in an emergency

to calculate potential savings in a budget, you must

subtract your monthly expenses from your net income

A company upgrading its capital equipment to increase its production rate is an investment that

causes its prices to drop and its production to increase

Which choice BEST describes an area that a macroeconomist might specialize in?

how US fiscal policy affects the US unemployment rate

Since the early 60s until recently, the US government has forbidden all imports from Cuba,

this is an example of an embargo

Which of the following might cause a supply curve to shift to the left?

bad weather leads to reduction in the blueberry crop

A shift to the left of the USA's aggregate demand curve might be caused by

high interest rates reducing consumer borrowing and spending

If 1 euro in 2006 = 1.25 US dollars, and in 2007 1 euro = 1.42 US dollars, then you could say

the euro appreciated in value in relation to the US dollar, the US dollar depreciated in value in relation to the euro

which situation might the Fed. Reserve sell government securities and raise the discount rate?

when the inflation rate is high

One major difference between banks and credit unions is that

banks are profit making firms, credit unions are non-profit

Salaries for workers trained in advanced technology are higher because

the demand for them is high, compared to the supply

Which of the following is true about a rational economic decision?

marginal benefits exceed marginal costs

If a nation's imports one year are worth $5.2 billion and exports worth $5.3 billion, it has

a trade surplus, or positive trade balance

Which sentence describes the most likely effect of a US tariff on imports?

more sales for some American firms and less sales for others

How is monetary policy different from fiscal policy?

Monetary = money supply, Fiscal = taxing/spending decisions

A disadvantage of choosing an insurance policy with a higher rather than lower deductible is

higher out-of-pocket costs for claims

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Questions 81

Answers

1
If unemployment rate ofa nation is slowly beginning to rise, and GDP is slowly beginningto fall
expansion phase or upturn of the business cycle is beginning
contraction/downturn phase of business cycle is beginning
the recession phase is business cycle is beginning
the depression phase of the business cycle is beginning.
2
What is the MOST important function of government patents in a market economy?
to protect sole proprietors from corporate takeovers
to protect consumers from being cheated
to allow 1 corporation to benefit from the ideas of another
to allow entrepreneurs to earn profits
3
Which worker BEST illustrates the problem of cyclical unemployment?
college grad who turns down job because she wants better one
factory worker whose skills are no longer marketable
a landscaper who can't find a job in the winter
sales rep laid off during an economic downturn
4
a price ceiling set lower than the equalibrium by the government would most likely result in a
shortage because buyers would be willing to buy more
shortage because suppliers would be willing to produce more
shortage because suppliers wouldbe unwilling to produce more
shortage because buyers would be willing to buy less
5
Another name for the equilibrium price is the
market function price
market shortage price
market clearing price
Market stable price
6
How are most public goods and services paid for in the United States?
by taxes
by charitable donations from individuals
by charitable donations from corporations
by user fees
7
Using labor in an assembly line in the manufacturing process is an example of worker
specialization
marginalization
diversification
inefficiency
8
A decrease in the average price of goods and services is known as
stagflation
inflation
interest
deflation
9
Which one of the following might benefit from spiraling rates of inflation?
someone who has lent out money
someone who has borrowed money
a saver
an investor
10
On a production possibilities curve, a point inside (to the left of) the curve represents
efficient use of resources.
impossible production unless more resources are obtained
inefficient use of resources
11
Workers with a cost of living adjustment in their contracts . .
suffer more from inflation than other workers.
suffer less from inflation than other workers.
can never be fired or laid off.
receive raises every month.
12
One negative consequence of a protectionist policy in regards to trade would be
American Factories would close down
lower wages for American workers
increased prices on domestic (American made) goods
13
When the US dollar is weak, or depreciates, US exports _________and prices of exports go _____.
increase, down
decrease, up
decrease, down
increase, up
14
Which of the following is an example of government transfer payments?
salary payments to government employees
interest payments on the national debt
medicare payments to the poor and elderly
payments to private industries for highway construction
15
a person who opposes free trade would most likely
call for an end to quotas
oppose protectionist policies
support a reduction in tariffs
call for supporting American jobs
16
Which of these choices is the most likely effect of a strong US dollar?
US imports become more expensive
the US trade deficit improves
US exports increase
travel abroad becomes more affordable for Americans.
17
fiscal policy designed to expand the economy, which action would Congress most likely take?
decrease government spending
buy government bonds
lower the discount rate
decrease income taxes
18
Which sentence describes market conditions at the equilibrium, or market clearing, price?
supply and demand are equal
price ceilings determine supply and demand
supply is greater than demand
demand is greater than supply
19
Which government decision represents possible effects of deregulation?
government forbids age discrimination in the workplace
antipollution laws that lead to cleaner air but higherprices
government controls prices charged by public utilities
govt. lessens control of TV industry leading to more choices
20
Which of the following is an example of entrepreneurship?
person who invests in computer stocks
person who starts a new online business
person who buys land and builds herself a new house
person who takes a job with a high-tech firm
21
If aggregate demand increases faster than aggregate supply, which is most likely to happen?
economic slowdown
business boom
demand-pull inflation
decline in GDP
22
Which issue might a professor of microeconomics specialize in?
causes of rising unemployment rates in the United States
effects of declining GDP in European nations
relationship of supply and demand in the housing market
evaluating effectiveness of monetary policy/fiscal policy
23
In year 1 market basket was $840, year 2 same basket was $875. CPI was approx what in year 2?
104
$875
10.5
$35
24
In the past 20 years computers have increased the productivity of the American economy which
has caused an increase in the production of goods/services.
has caused a decrease in the production of goods/services.
25
A limit on the number of a particular item that can be imported from a particular country is a
tariff
quota
embarg
standard
26
How are economic questions answered in a command economy?
by producers
by supply and demand
by consumers
by the government
27
compound interest on a 4 year loan of $1800 at 8.5% would be
$31.32
$69.22
$694.52
$313.20
28
Which of the following statements about the disadvantages of credit cards is false?
Credit cards are not often useful in an emergency
many credit cards charge annual fees
Credit card finance charges are compounded monthly
Credit cards often charge variable rates of interest
29
To obtain goods and services, people in a capitalist economy depend MOSTLY on
public goods and services
voluntary exchange
government regulation
communal ownership
30
to calculate potential savings in a budget, you must
subtract your monthly fixed expenses from your gross income
subtract your monthly expenses from your net income
subtract your monthly expenses from your gross income
subtract your monthly tax deductions from your net income
31
A company upgrading its capital equipment to increase its production rate is an investment that
causes its prices to rise and its production to increase
causes its prices to drop and its production to increase
causes its prices to drop and its production to decrease
causes its prices to rise and its production to decrease
32
Which choice BEST describes an area that a macroeconomist might specialize in?
how prices in steel industry are determined by labor costs
how medical costs are affected by demand for ER services.
how advertising affects the demand for automobiles
how US fiscal policy affects the US unemployment rate
33
Product differentiation/branding is a characteristic of firms in what kind of market structure?
perfect competition
monopolistic competition
oligopoly
monopoly
34
Since the early 60s until recently, the US government has forbidden all imports from Cuba,
This is an example of a quota
this is an example of a tariff
this is an example of an embargo
this is an example of a subsidy
35
Which of the following might cause a supply curve to shift to the left?
bad weather leads to reduction in the blueberry crop
the government increases subsidies to blueberry growers
good weather leads to increase in the blueberry crop
new scientific study shows blueberries are good for you
36
A shift to the left of the USA's aggregate demand curve might be caused by
decreasing workerproductivity ledto shortageof consumergoods
low interest rates increasing consumer borrowing/spending
increased worker productivity ledto surplus of consumergoods
high interest rates reducing consumer borrowing and spending
37
If 1 euro in 2006 = 1.25 US dollars, and in 2007 1 euro = 1.42 US dollars, then you could say
the US dollar appreciated in value
the euro appreciated in value in relation to the US dollar
the euro depreciated in value.
the US dollar depreciated in value in relation to the euro
38
simple interest on a 4 year loan of $1800 at 8.7% would come to
$62.64
$31.70
$626.40
$317.00
39
which situation might the Fed. Reserve sell government securities and raise the discount rate?
in a recession
when the inflation rate is high
in a depression
when aggregate supply is too high
40
Payments for the use of capital are called
rent
interest
profit
wages
41
One major difference between banks and credit unions is that
credit unions are profit making firms, banks are non profit
only banks offer savings accounts and loans
banks charge simple interest, credit unions charge compound
banks are profit making firms, credit unions are non-profit
42
Salaries for workers trained in advanced technology are higher because
the supply of them is high, compared to the demand
government price floors guarantee minimum salaries for them
gov't subsidies pay the salaries of most technology workers
the demand for them is high, compared to the supply
43
Which of the following is true about a rational economic decision?
marginal benefits exceed marginal costs
opportunity costs are balanced by total benefits
marginal costs exceed marginal benefits
opportunity costs are less than marginal benefits
44
American rules about the quality of goods imported into the US are known as
tariffs
subsidies
standards
quotas
45
If a nation's imports one year are worth $5.2 billion and exports worth $5.3 billion, it has
a negative balance of payments
a trade surplus, or positive trade balance
a trade deficit, or negative trade balance
a positive balance of payments
46
Which of the following is a likely effect of a weak dollar?
US exports increase
Europeans stop investing in American businesses
Travel abroad becomes more affordable for Americans
US imports rise dramatically and become more affordable
47
When the US gov't hires postal workers and FBI agents, it makes transactions in the
public market
factor market
product market
property market
48
Which sentence describes the most likely effect of a US tariff on imports?
positive US trade balance and positive balance of payments
more choices and lower prices for American consumers
reduced trade barriers for American exports abroad
more sales for some American firms and less sales for others
49
How is monetary policy different from fiscal policy?
Fiscal = money supply, Monetary = taxing/spending decisions
Fiscal policy is steps taken to carryout monetary policy
Monetary = money supply, Fiscal = taxing/spending decisions
they are the same
50
A disadvantage of choosing an insurance policy with a higher rather than lower deductible is
higher premiums
higher coverage limit on claims
lower coverage limit on claims
higher out-of-pocket costs for claims
51
business organization that has the advantage of limited liability but less control in decisions
corporation
perfect competition
sole proprietorship
partnership
52
the unemployment rate is calculated by
# of people in labor force divided by # working
# of people working divided by # not working
# of people in labor force divided by # unemployed
# of people looking for work divided by # in labor force
53
Which of the following represents an investment in human capital?
a company invests in new computers for on the job use
a company raises wages for all factory and office workers
a company hires 100 new employees in all of its branches
a company offers free job-related education to employees
54
Which basic economic problem does the US share with all other nations
lack of public services
scarcity of resources
too much government control
lack of technology
55
Which sentence BEST describes the organization of the Federal Reserve System?
it consists of one large bank in Washington DC and US Mint
it consists of all the banks and credit unions in the USA
it consists of the president, the cabinet, and the Congress
it consists of 12 regional banks and the FOMC
56
if USA produces 120 shirts and 160 tractors and China produces 100 shirts and 40 tractors
China has absolute advantage in production of tractors
USA has comparative advantage in production of shirts
USA has comparative advantage in the production of tractors
China has absolute advantage in production of shirts
57
On a production possibilities curve, a point on the curve represents
efficient use of resources.
impossible production unless more resources are obtained
inefficient use of resources
58
if $1 US dollar equals 10.70 Mexican pesos, $200 US dollars equal how many pesos?
1860
2140
186
214
59
a reduction in the demand for US exports will usually result in
an increase in the international value of the dollar
a decrease in the international value of the dollar
a decrease in the price of foreign imports in the USA
a decrease in the value of foreign currency in the USA
60
in which of the following situations are two nations MOST likely to trade?
each has an absolute advantage in producing 1 of 2 products
each has a comparative advantage in producing 1 of 2 product
neither has comparative advantge in producing either product
neither has absolute advantage in producing either product
61
A person who favors a protectionist policy would MOST likely
support a reduction in tariffs
call for an end to quotas
call for supporting American companies
support free trade
62
2 advantages of a market economy, as compared with a command economy are
more freedom and more efficiency
more security and more equity
more limits on profits and more public goods
more control over prices and wages
63
A sales tax is considered a regressive tax because
it decreases sales for small businesses more than for large
it has a more serious impact on the rich than the poor.
it decreases sales for all types of businesses
it has a more serious impact on the poor than the rich
64
a person who invests in mutual funds is choosing an investment that
has the highest risks and lowest returns
has the highest risks and highest returns
has the lowest risks and lowest returns
has balance of low risk/low return and high risk/high return
65
the BEST way to improve efficiency in a two man car washing business would be to have
the 2 people help each other wash and wax the car together
1 person wash the cars and 1 person wax the cars
each employee wash and wax a car from start to finish
the 2 people take turns washing and waxing for each car.
66
which group in the USA establishes the nation's monetary policy?
the Federal Reserve
the House of Representatives
the Senate
the President's Cabinet
67
If a bank charges 4% interest on loans, how much interest will it pay on savings?
4%
more than 4%
less than 4%
the discount rate
68
if the price of newcars decrease slightly, the demand of new cars is likely to increase greatly
this market situation is an example of supply elasticity
this market situation is an example of demand elasticity
this market situation is an example of demand inelasticity
this market situation is an example of supply inelasticity
69
Only final goods are included in the calculation of GDP
False
True
70
What is one result of the North American Free Trade Agreement (NAFTA)?
reduced quotas for Japanese imports into North America
reduced trade barriers among the USA, Canada, and Mexico
increased trade barriers among the USA, Canada, and Mexico
increased tariffs for European imports into North America
71
In the circular flow diagram, the flow of labor into the job market goes through the
Product Market
Factor (Resource) Market
72
What isthe relationship between the national debt andthe government's budget deficit this year?
this year's budget deficit adds to the national debt
the national debt guarantees a budget deficit this year
they are the same
there is no connection between them
73
if you put money into savings for college rather than buying a video game, the opportunity cost
will be the fun you will miss by not buying the video game
will be the better chance of going to college
will be the opportunity to make your parents happy
will be the interest you earn on savings
74
a tax rate that decreases as your income increases is called a
regressive
property
proportional
progressive
75
money serves as a standard of value because
we save it
we earn profits
we compare prices
we spend it
76
a government imposed maximum limit on the price of gas that is lower than the equilibrium price
is called a price floor and results in a shortage.
is called a price ceiling and results in a surplus
is called a price ceiling and results in a shortage
is called a price floor and results in a surplus
77
On a production possibilities curve, a point outside (to the right of) the curve represents
impossible production unless more resources are obtained
efficient use of resources.
inefficient use of resources
78
direct financial aid, often through tax credits/tax deductions to certain domestic industries
tariffs
quotas
subsidies
dividends
79
your creditworthiness, or ability to get a loan, depends on
only your income and your current debts
only your history of paying bills and repaying loans
only the assets you can use as collateral
your income, debt, assets, and credit history
80
the formula for calculating GDP is
C+I+G+Xn
C+P+I+Xn
C+I-G-X
C-G-I+G+X
81
If you deposit $650 in a savings account with simple interest rate of 3.2% per year, in 2 years
you would earn $4.16
you would earn $41.60
you would earn $20.80
you would earn $2.08

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