The Environmental Protection Agency (EPA) impacts the economy by…

Developing/enforcing regulations to protect human health and environment

Adam wants to open a restaurant and make profit. He is...

An entrepreneur in a capitalist economy

Is an industry dominated by a small number of firms

New technology for manufacturing computer chips is developed. The new technology will…

Contribute to cheaper production

Why did the first national bank fail?

Too much power, didn’t renew charter

The purpose of economic regulations in the United States is to…

Promote economic growth, stability, and equity

Rust-belt cities of the industrial age have been forced to:

Reinvent themselves and transition to an information and service economy

One weakness of the sole proprietorship is that the…

Business depends entirely on the owner

When a market economy operates without restriction, it...

Eliminates shortages and surpluses

GDP is calculated by…

Adding the expenditures of the 4 sectors of the economy

Which statement describes the critical role played by profits in a market economy?

Profits encourage businesses to efficiently produce the things people want.

One key strength of a command economy is its...

ability to adapt quickly to differing economic needs in society

What are the four main functions of banks today?

storing money, transferring money, lending money, and financial services

Adam Smith is closely associated with...

The benefits of free and unregulated exchange in markets

The purpose of the Montgomery GI Bill was to…

Provide economic assistance/education/housing to veterans

What is the difference between real and nominal GDP?

Real = adjusted for inflation, Nominal = not

Which of the following was a cause of the recession of the 1980s?

Government deficits and consumer spending

What is one of the purposes of the Federal Reserve?

Regulate money supply to create a stable economy

Classify what all economic systems do:

must answer the same three basic questions.

The circular flow of money, resources, and products illustrates all of the following except:

Consumers produce goods and services at home

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Economics

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Answers

1
Scarcity is a problem only for economies that use money as a medium of exchange.
True
False
2
The Environmental Protection Agency (EPA) impacts the economy by…
Providing protection and a sense of security
Developing/enforcing regulations to protect human health and environment
Providing banking insurance
Creating/enforcing advertising truth
3
The US went from agrarian to industrial to ____ economy
Opportunity
National
Global
Service and information
4
All economic choices involve…
Destruction of resources
Trade-offs
Shortages
Tax dollars
5
Economists are not hired by private businesses to…
Manage companies
Develop advertising campaigns
Analyze and predict market conditions
Solve complex problems
6
Adam wants to open a restaurant and make profit. He is...
An entrepreneur in a traditional economy
An entrepreneur in a capitalist economy
An entrepreneur in a command economy
Going to fail because opening a new restaurant is difficult
7
One of the most important economic results of World War I for the United States was…
US became a debtor nation
A Recession
US became a creditor nation
The Great Depression
8
The time periods between when an economic policy is decided to when it actually takes effect are called…
Certification breaks
Waiting periods
Automatic stabilizers
Lags
9
An oligopoly…
Is established when perfect competition exists
Only occurs when buyers and sellers are fully informed
Requires a partnership
Is an industry dominated by a small number of firms
10
New technology for manufacturing computer chips is developed. The new technology will…
Contribute to cheaper production
Contribute to decreased supply
Not affect the supply
11
Why did the first national bank fail?
Not enough power
Too much power, didn’t renew charter
Miscalculated fiscal policy, national debt
Standardized currency = unsustainable equilibrium price
12
The law of demand states that as price increases, quantity demanded…
Increases
Decreases
Stays the same
13
A businessman purchases flowers for his spouse on the way home from work. This is in a product market.
False
True
14
The purpose of economic regulations in the United States is to…
Limit individual freedom
Control population growth and birth rates
Undermine the free market economy
Promote economic growth, stability, and equity
15
During the Cold War, the United States government spent large amounts of money…
To outspend the USSR and end the Cold War
All of the above
On defense
On the space program
16
Gruel is an inferior good. Hence, an increase in consumer income
Decreases supply
Decreases demand
Increases demand
Increases supply
17
Rust-belt cities of the industrial age have been forced to:
Reinvent themselves and transition to an information and service economy
Lower prices to keep up with lower manufacturing costs
Downsize to lower costs and ask for concessions from labor unions
Work harder, not smarter
18
One weakness of the sole proprietorship is that the…
Business is in constant danger of bankruptcy
Business depends entirely on the owner
Owner has too many partners
Owner has no control
19
Almost all economic systems today are...
Market economies
Traditional economies
Command economies
Mixed economies
20
Monopolies face disadvantages that focus around…
Production
Cost
Prices
Inefficiency
21
A monopoly is dominated by a small number of firms who have to keep a close eye on each other.
True
False
22
The law of supply states that as the price of a good rises, the quantity supplied decreases
False
True
23
When a market economy operates without restriction, it...
Eliminates shortages and surpluses
Raises prices
Creates surpluses
Creates shortages
24
Placing money in a checking account is an example of using money as
A store of value
Barter
A medium of exchange
A measure of value
25
A partnership is a business that is owned by more than one individual, allowing owners the ability to specialize
False
True
26
GDP is calculated by…
Multiplying production by consumption
It’s impossible— we can’t measure all production data
Adding the expenditures of the 4 sectors of the economy
Subtracting total imports from exports
27
Which statement describes the critical role played by profits in a market economy?
Profits encourage businesses to efficiently produce the things people want.
Governments discourage profits due to inequality of income
Profits cause inflation
Profits tell government planners how much consumers are spending.
28
Which of the following is the main function of private and commercial banks?
Determining money value
Lending money
Regulating money supply
Acting as a medium of exchange
29
Education is valuable because of its
Supply and demand
Scarcity and utility
Value and efficiency
Scarcity and efficiency
30
A decrease in consumer income shifts the demand curve leftward.
False
True
31
The economic prosperity of the 1990s was due to…
Dot-com businesses in the 1990s
Economy created by the Internet
All of the above
Development of the computer industry
32
The economy must have a(n) _______ system, a network of savers, investors and financial institutions.
Transfer
Saving
Investment
Financial
33
Entry level economists typically must have a…
GED
High school diploma
PHD
Bachelor’s degree
34
One key strength of a command economy is its...
ability to adapt quickly to differing economic needs in society
ability to provide for the needs for all while still maintaining efficiency
ability to foster economic growth
ability to use the invisible hand to its advantage
35
Economic regulations help fulfill Adam Smith’s idea of a laissez-faire economy.
False
True
36
If two products are complementary goods, how will a decrease in the price of one affect the other?
Demand decreases
Price decreases
Demand increases
Price increases
37
What are the four main functions of banks today?
extracting money, transferring money, lending money, and monetary aid
storing money, transferring money, lending money, and financial services
storing money, producing money, multiplying money, and financial services
storing money, producing money, lending money, and monetary aid
38
There is no such thing as a free lunch
False
True
39
Adam Smith is closely associated with...
The benefits of free and unregulated exchange in markets
The Communist Manifesto
Socialism
Government regulation
40
The purpose of the Montgomery GI Bill was to…
Provide economic assistance/education/housing to veterans
Help families recover after WWII
Help disabled veterans receive medical care
Expand the military during the Cold War
41
What is the difference between real and nominal GDP?
Real = adjusted for inflation, Nominal = not
No difference
Real = exact, Nominal = estimated
Real = estimated, Nominal = exact
42
Which of the following was a cause of the recession of the 1980s?
Overproduction
Insufficient production
Increasing employment
Government deficits and consumer spending
43
In order to control inflation, governments may…
All of the above
Decrease government spending
Increase taxes
Sell government securities
44
The Social Security Act sought to help…
The unemployable
The elderly
All of the above
The unemployed
45
The economic goals of the American free-enterprise system include…
profit, traditions, and government control.
freedom, equity, and growth.
socialism that evolves into pure communism.
choice, central planning, and security.
46
What is the effect on the quantity of orange juice demanded if the price of apple juice increases?
Decreases
Increases
Stays the same
47
What is one of the purposes of the Federal Reserve?
Control all US business exchanges
Regulate money supply to create a stable economy
Insure all money deposited in banks
Accept deposits and lend money
48
A labor union is an organization that…
Takes part in collective bargaining
All of the above
May strike to get demands met
Seeks better treatment for workers
49
Classify what all economic systems do:
have the same resources
distribute products through majority rule
produce the same goods
must answer the same three basic questions.
50
John never received his order. The agency responsible for investigating this fraud is…
The Environmental Protection Agency
The Food and Drug Administration
The Consumer Product Safety Commission
The Federal Trade Commission
51
The circular flow of money, resources, and products illustrates all of the following except:
Businesses participate in the market for products
Consumers produce goods and services at home
People earn money by exchanging their labor wages and salaries
Households participate in the market for resources
52
In order to demand a good, a consumer must be both willing and able to buy it.
True
False
53
What is the effect on the quantity of video games demanded if overall consumer income increases?
It decreases
It increases
It stays the same
54
In a recession, fiscal policy calls for the government to decrease taxes and increase spending
False
True
55
The invisible hand is...
Adam Smith's metaphor to explain the distribution of income equally to all
Societies' ability to reach full employment, using every available resource
The ability to make products without having to hire labor
Adam Smith's metaphor to encourage self-interest in the economy
56
3 Rs of the New Deal
Reform, relief, recovery
Reconstruct, relief, recreate
Rebuild, renew, reform
Relief, recession, reform
57
More money becomes available for economic growth when…
High unemployment
Interest rates are high
Pension funds decrease
People save
58
All goods and services have the same value for every person in the economy.
True
False
59
It is difficult for societies to achieve all of the economic goals because...
The pursuit of one often leads to the impossibility of achieving another
There are only so many resources to go around
Consumers and business owners cannot agree on economic decisions
Scarcity exists in all societies
60
Identify who owns the factors of production and makes economic decisions in a market economy.
Government
Communities
Individuals
Economists
61
As a science, economists have defined Economics as the…
scientific study of interactions in production
problems and decisions of everyday consumers
limited description of economic activities
study of how people satisfy seemingly unlimited wants with scarce resources
62
What is the inflation rate from 2 to 3?
12%
13%
11%
10%
63
If there is a shortage of a good, its price will…
Decrease
Stay the same
Increase
64
What economic concept do the Fourth and Fifth Amendments to the Constitution identify?
Competition among businesses
Regulation of monopolies
Organization of the Federal Reserve
Private ownership of property
65
You receive a coupon for a free meal. The next time you visit, the price has been raised. This illustrates the concept …
No such thing as free lunch
Scarcity
Opportunity cost
Utility
66
Distinguish which form of business would best suit two best friends intending to open a hot dog stand.
Limited Liability Company
Partnership
Sole Proprietorship
Corporation
67
The power of the consumer in the market is called
Supply and demand
Consumer sovereignty
Trade-offs
Opportunity cost
68
This cycle of individuals and businesses interacting is called
the circular flow of economic activity
an economic process
the flow of factor markets
scarcity
69
The government sets a price ceiling on cheeseburgers that is below the equilibrium price of cheeseburgers. This causes..
Surplus
No shortage
N/A
Shortage
70
One of the main reasons for increasing economic regulations in the United States is the increasing population
False
True
71
What might shift baseballs’ demand leftward?
Complementary good prices decrease
Cheaper production
Substitute prices increase
Complementary good prices increase
72
An example of a(n) ___________________ is an electrical company regulated by the government
Monopolistic competition
Oligopoly
Natural monopoly
Pure monopoly
73
The main advantage that partnerships have over sole proprietorships is…
Unlimited liability
More likely to succeed
Easier to obtain a charter
Ability to specialize
74
One advantage of a corporation is…
Lifespan not linked to a specific owner
Cannot enter into any legal contracts
Ease of obtaining a charter
Unlimited liability
75
The opportunity cost of taking an unpaid vacation from work is the amount of money you would have made
False
True
76
The need to make choices arises because
people need to share their resources
everything that exists is limited
shortages are a constant situation
some things are not limited
77
In a communist or command economic system, who answers the three basic economic questions?
Government
Individual citizens
Marketplace (supply & demand)
Government and marketplace
78
At any given price, a surplus of oranges will occur when…
Quantity demanded = quantity supplied
Quantity supplied > quantity demanded
Quantity demanded > quantity supplied
Quantity supplied < quantity demanded
79
It's easier to start a business in a...
Controlled economy
Free enterprise system
Command economy
Traditional economy
80
The Department of Defense is an important part of the economy because…
It protects human health and the environment
It develops military strategies
It provides banking endurance
It provides people with protection and a sense of security
81
Equilibrium is defined as . . .
Optimum level of production in business
Where supply meets demand
Lack of national debt
Method of adjusting price and quantity
82
Crazy Eight was able to open this new business because…
He can bypass government regulations
He is leasing the building from the government and manufacturing for it
He is a good businessman
The government says he can own property and ideas
83
The development of better technology (increasing production and eliminating jobs) is an example of...
Achieving economic growth, but not full employment
Achieving equity, but not full employment
Achieving stability, but not full employment
Achieving full employment, but not economic growth
84
It costs $3 to produce a ball and $300 to produce 100 balls. Each is sold for $10. What is the marginal cost?
$10
$300
$3
$1
85
What is true about the multiplier effect?
Consuming less income = increasing marginal propensity to save
A change in spending = a smaller change in aggregate spending/demand
Increase in defense spending = less hiring by defense contractors
Low multipliers = increase in spending
86
According to Karl Marx, eventually the “have-nots” will...
rebel against the capitalist system and instigate socialism
overpower the socialist rulers and begin capitalism
move up in society and become “haves”
always be working to keep up with those who are more powerful in society
87
Distinguish which of the following best describes Adam Smith’s “invisible hand”?
Self-interest
Tariffs
Avoidance of the law and violation of other people’s property rights
Government regulations
88
The most significant legacy of the New Deal was…
None
Decrease in federal programs and government size
Increase in federal programs and government size
Separation of church and state
89
Monetary policy alone is a more effective economic policy than fiscal policy.
False
True
90
In a market economy, which of the following provides the primary incentive to produce goods and services?
A desire for security
The profit motive
Government purchases of goods and services
Charity
91
A baker purchases flour so he can make goods and sell them in his bakery. This is a product market purchase.
True
False
92
The airline industry in America is an example of __________, because a few firms dominate the industry.
Oligopoly
Monopoly
Perfect competition
Monopolistic competition
93
George got fired, and is looking for another job. His unemployment insurance is an example of…
Automatic stabilizer
Monetary policy
Taxation
Discretionary fiscal policy
94
All money in the United States today is…
Representative money
Barter
Commodity money
Fiat money
95
In the business cycle, a trough is…
Peak of economic growth
Measured when economic growth is decreasing
Major downturn in economic growth
Measured when economic growth changes from decreasing to increasing
96
During the Great Depression, the major reason for farmers receiving low prices for their crops was…
Poor farming methods
Corruption
Overproduction
Underproduction
97
The opportunity cost of buying a slice of pizza for two dollars rather than a burrito for two dollars is…
The burrito
The pizza
None
The $2
98
The Agriculture Adjustment Act brought much criticism because…
It paid farmers to destroy crops
It decreased farmer employment
It increased the number of farms
It lowered food prices
99
Bill Gates is an example of an entrepreneur because he developed a company and started a business.
True
False
100
You have to decide between partying and studying for a test. What must you consider?
All decisions have consequences or trade offs.
Parties are fun, and you can recover your grade with future tests
You have to study and go to sleep early
You can pull an all-nighter and do both!

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