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Honors Economics Study Guide
Which is an example of a non-tariff barrier?
Tariffs
Honors Economics Study Guide
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1
Tariffs
are also called import quotas
are per unit subsidies designed to promote exports
may be imposed to raise revenue or protection
are excise taxes on goods exported abroad
2
Which is an example of a non-tariff barrier?
an excise tax on the physical volume of imported goods
an excise tax on the dollar value of imported goods
an export subsidy
box-by-box inspection requirements for imported fruit
3
The purchasing power of the dollar
has been increasing in recent years due to economic growth
is the reciprocal of the price level
is inversely related to the level of aggregate demand
varies directly with the cost of living index
4
Which of the following is an example of a labor-intensive commodity?
beer
gasoline
aspirin tablets
cameras
5
Countries engage in international trade specialized in production based on
relative levels of GDP
relative exchange rates
comparative advantage
relative inflation rates
6
Mexican imports of US goods
create a supply of pesos
create a supply of dollars
reduce the demand for dollars
have no effect on the peso-dollar exchange rate
7
Fiat money is
money that can be redeemed for a valuable commodity
money because the government asserts that it is
composed only of checkable deposits
money that is in a commercial bank vault
8
The law of demand states that
consumers will buy more at high prices than low prices
price and quantity demanded are inversely related
more buyers equals lower price
price and quantity are directly related
9
Economics is primarily the study of
why resources are scarce
how to make profitable financial investments
how advertising shape consumer wants
how to use scarce resources efficiently
10
If you place part of your money from your job is a savings account, you are using $ as
an economic investment
a unit of account
store of value
medium of exchange
11
Economics may be best defined as the
empirical testing of value judgments thru the use of logic
use of policy to refute facts
interaction between macro and micro considerations
social science concerned with decision making
12
Marginal costs exists because
the decision to produce more of one thing causes sacrifice
wants are scarce relative to resources
households and businesses make rational decisions
most decisions do not involve sacrifices
13
Specialization in production is important primarily because it
allows society to have fewer capital goods
allows society to avoid coincidence of wants problems
allows society to trade by barter
results in greater total output
14
The law of supply states that, other things being constant, as price increases
quantity supplied decreases
quantity supplied increases
supply decreases
supply increases
15
A protective tariff will
increase the sales of foreign exporters
increase the welfare of domestic consumers
increase the price and sales of domestic producers
create an efficiency gain in the domestic economy
16
The three main tools of monetary policy are
government expenditures, the reserve ratio, discount rate
tax rate changes, the discount rate & open-market operations
tax rate changes, government expenditures, open market ops
the discount rate, the reserve ratio, and open market ops
17
Which of the following is an example of a capital-intensive commodity?
sunflower seeds
wool
clothing
chemicals
18
A nation's import demand curve for a specific product
lies above its export supply curve for the product
is upsloping
shows the amount of the product it will import
depends on the domestic demand for a product
19
The demand curve shows the relationship between
consumer tastes and quantity demanded
price and quantity demanded
money income and quantity demanded
price and production costs
20
If the price of a product is below the equilibrium price, the result will be
a surplus of the good
a decrease in the supply of the good
an increase in the demand for the good
a shortage of the good
21
Which of the following is a tool of monetary policy?
changes in banking laws
open market operations
changes in government spending
changes in tax rates
22
A demand curve
shows the relationship between income and spending
shows the relationship between price and quantity supplied
indicates the QD at each price in a series of prices
graphs an upsloping line
23
Money function as
a unit of account
a medium of exchange
all of the above
a store of value
24
The basic policy making body in the US banking system in the
Council of Economic Advisors
Board of Governors of the Federal Reserve
Federal Open Market Committee
Federal Monetary Authority
25
The four factors of production are
land, labor, capital ,and entrepreneurial ability
labor, capital, entrepreneurial ability, and money
land, labor, capital, and money
labor, capital, technology, and entrepreneurial ability
26
GDP
the value of all goods & services produced within a country
dollar value of output of all citizens
value of all economic resources
value of all goods and services, final and intermediate
27
Which of the following provides the basic rationale for international trade?
increasing opportunity costs
the law of supply
comparative advantage
consumer sovereignty
28
For economists, the word "utility" means
purposefulness
versatility and flexibility
rationality
pleasure and satisfaction
29
Which will decrease demand for a product?
a decrease in the price of a complementary good
a decrease in the number of buyers
an increase in the price of a substitute
a favorable change in consumer tastes
30
There is too little of a good thing when its marginal
benefit exceeds its marginal cost
cost equals marginal benefit
benefit is still positive
cost exceeds its marginal benefit
31
When price of a product increases, a consumer is able to buy less of it with a given $ income
the inflationary effect
the substitution effect
the income effect
the cost effect
32
The largest component of the money supply (M1) is
gold certificates
checkable deposits
paper money in circulation
coins
33
Which of the following is a labor resource?
a computer
a computer programmer
silicon (sand) used to make computer chips
a piece of software used by a firm
34
The interest rate at which the Fed will lend to commercial banks is called
prime rate
discount rate
short-term rate
Federal Funds rate
35
The purchase of government securities from the public by the Fed will cause
commercial bank reserves to decrease
the money supply to increase
demand deposits to decrease
the interest rate to increase
36
A well tested economic theory is often called
an anomaly
a hypotheses
a principle
a prototype
37
Which of the following is NOT a characteristic of the market system?
competition in product and resource markets
freedom of enterprise
private property
government ownership of the major industries
38
A decrease in the supply of a product would be most likely be caused by
a decrease in the price of complementary goods
a decrease in resource cost production
an increase in consumer incomes
an increase in business taxes
39
Which of the following is an example of a land-intensive commodity?
wool
watches
chemicals
autos
40
If two goods are substitutes for each other, an increase in the price of one will necessarily
decrease the demand for the other
increase the quantity demanded of the other
decrease the quantity demanded of the other
increase the demand of the other
41
Which of the following is a land resource?
a computer programmer
a piece of software used by a firm
a computer
silicon (sand) used to make computer chips
42
The division of labor means that
labor markets are geographically segmented
unskilled workers outnumber skilled workers
workers specialize in various productions tasks
each worker performs a large number of tasks
43
A nation's export supply curve for a specific product
is upsloping
lies below its import demand curve
shows the amount of the product it will export
depends on the domestic supply of the product
44
The group that sets the Fed's policy on buying & selling government securities is the
Federal Depository Insurance Corporation
Council of Economic Advisors
Federal Open Market Committee
Federal Bond Sale Authority
45
According to economists, economic self interest
is more characteristic of men than women
is usually self-defeating
has the same meaning as selfishness
is a reality that underlies economic behavior
46
When economists say that people act rationally in their self-interest, they mean that
individuals are unpredictable
individuals are mainly creatures of habit
individuals generally disregard the interests of others
individuals look for and pursue opportunities to ↑ utility
47
The fundamental problem of economics is
to achieve more equitable distribution of money income
the establishment of prices that reflect scarcity
to establish a democratic political framework
the scarcity of productive resources relative to wants
48
The money supply is backed
by government bonds
dollar for dollar with gold
dollar for dollar with gold and silver
by the government's ability to control the money supply
49
In the theory of comparative advantage, a good should be produced in that nation where
the production possibilities line is further right
its absolute money cost in production is least
its absolute cost in terms or real resources used is least
its cost is least in terms of alternative goods
50
The income and substitution effects account for
the "other things equal" assumption
movements along a given supply curve
the downward sloping demand curve
the upward sloping supply curve
51
Macroeconomics approaches the study of economics from the viewpoint of
the entire economy
individual firms
the operation of specific product and resource markets
governmental units
52
The physical import of cars to the US from Japan best illustrates a
financial flow
technology flow
resource flow
trade flow
53
The income of a consumer ↓ and consumer's demand for a particular good ↓. The good is
inferior
a substitute
a complement
normal
54
The pursuit of self-interest
is highly detrimental to the market system
means the same as 'selfishness"
gives direction to the market system
is reflected in the behavior of firms but not consumers
55
An excise tax on an imported good that is not produced that is not produced domestically
import quota
revenue tariff
voluntary export restrictions
protective tariff
56
The study of economics is primarily concerned with
keeping private businesses from losing $
demonstrating that capitalism is better than socialism
determining equitable distribution of output
choices made in seeking to use resources efficiently
57
Well defined property rights
discourage hard work
discourage investment and growth
impede exchange
encourage owners to maintain or improve their property
58
The gain from international trade is
increase employment in the domestic import sector
tariff revenue
increased employment in domestic export sector
more goods than would be attainable without specialization
59
If the quantity supplied of a product is greater than the quantity demanded for a product, then
there is a surplus of the product
there is a shortage of the product
the product is an inferior good
the product is a normal good
60
Broadly defined, competition involves
capital goods and division of labor
private property and freedom of expression
increasing opportunity costs and marginal utility
independently acting buyers and sellers
61
The scarcity problem
has been solved in all industrialized nations
persists because countries haven't achieved full empployment
has been eliminated in industrialized nations
persists because wants exceed available resources
62
The terms of trade reflect
fact that the gains from trade will be equally divided
cost conditions of a country's production
rate which gold exchanges internationally for any currency
rate at which nations will exchange two goods
63
Economics involves marginal analysis because
marginal costs always exceed marginal benefits
much economic behavior is irrational
marginal benefit always exceeds marginal costs
most decisions involve changes from present situations
64
The economizing problem is one of deciding how to make the best use of
unlimited resources to satisfy limited wants
virtually unlimited resources to satisfy unlimited wants
limited resources to satisfy unlimited wants
limited resources to satisfy limited wants
65
The production possibilities curve illustrates
consumer preferences
the distribution of income
market prices
scarcity
66
Microeconomics is concerned with
the aggregate levels of total income
a detailed examination of specific economic units
the establishing of an overall view of the economic system
positive economics, but not normative economics
67
A decrease in the reserve ratio increases the
number of government securities held by the Fed
ratio of coins to paper currency in the economy
amount of excess reserves in the banking system
amount of actual reserves in the banking system
68
Which of the following is a fundamental characteristic of the market system?
central planning by government
property rights
government set wages and prices
unselfish behavior
69
A decrease in supply and a decrease in demand will
↑ price and affect the quantity exchange indeterminantly
decrease price and increase the quantity exchanged
↓ price and affect quantity exchanged indeterminantly
increase price and decrease quantity exchanged
70
Rational behavior suggests that
resources availability exceeds economic wants
individual economic goals differ
individuals will make different choices based on preference
everyone will make identical choices
