What is a price ceiling?

A legal maximum price at which a good can be sold

Business cycle refers to

Recurrent up and down swings in the economy

A change in demand will cause

The demand curve to shift left or right

A normal good is a good for which

Demand increases as income rises

Which of the following would cause firms to hire fewer workers?

Minimum wage is higher than equilibrium wage

Any place where buyers and sellers meet

An inferior good is a good for which

Demand decreases when income increases

A productions possibilities frontier (PPF) shows

All combinations on or inside the curve that can be produced

What is the Law of Demand?

As price increases, quantity demanded decreases

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Economics Final Review

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RHS Economics Final Review

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Questions 90

Answers

1
What will happen in the market for homes today if prices are expected to go down this summer?
Demand will increase
Demand will decrease
Supply will decrease
Demand will remain the same
2
In which type of market structure are sellers price takers?
Monopolistic Competitive
Oligopolistic
Monopolistic
Perfectly Competitive
3
What is a price ceiling?
A legal minimum price at which a good can be sold
The most desirable price a which a good should be sold
A fancy interior design option
A legal maximum price at which a good can be sold
4
GDP measured in terms of constant or base-year prices is
Real GDP
Nominal GDP
Base GDP
GNP
5
When supply is inelastic, the supply curve will be
down-ward sloping gradually from left to right
vertical or near vertical
horizontal or near horizontal
Up-ward sloping gradually from left to right
6
The price of labor is called the
Interest Rate
Wage
Equilibrium
Income
7
Adam Smith believed in free enterprise and thought the economy would be guided by
An invisible hand
Unions
Government decisions
Workers
8
The amount of exchange in an economy is reduced when __________ are introduced.
Monetary Policies
Price Controls
Fiscal Policies
Subsidies
9
Which of the following is NOT a determinant of supply?
Taxes/Subsidies/Quotas
Number of Buyers
Technology
Resource Prices
10
Karl Marx is known for writing what?
The Law of Demand
Hamlet
Das Kapital
The Wealth of Nations
11
When quantity demanded changes by the same percent as price, demand is
Unit-Elastic
Shifting
Inelastic
Elastic
12
An increase in average price levels as measured by the % change in CPI is
Revenue
Deflation
Deficit
Inflation
13
What you give up, the next best alternative or what you forgo is known as
Real Cost
Opportunity Cost
Lost Revenue
Missing Out
14
The movement toward a single world economy is known as
Capitalization
Internationalization
Culturalization
Globalization
15
When only a few producers dominate an industry, the market structure is
Monopolistically Competitive
Oligopolistic
Monopolistic
Perfectly competitve
16
Business cycle refers to
Changes in supply & demand
Recurrent up and down swings in the economy
The budget process
Exchange between sectors of the economy
17
The largest chunk of federal government spending goes to
Unemployment & Welfare
Education
National Defense
Social Security & Medicare
18
When there is a surplus in the market, what is likely to happen?
Prices will rise
Supply will increase
Demand will increase
Prices will fall
19
An increase in taxes on the production of cars will
Shift supply curve to the right
Shift demand curve to the left
Shift supply curve to the left
Shift demand curve to the right
20
Current Year CPI-Base Year CPI / Base Year CPI x 100 =
Real Income
Velocity
% Change in CPI
CPI
21
Price of related goods causes ___________ to shift.
Demand
Nothing
Supply
22
A change in demand will cause
The demand curve to shift left or right
Movement along the supply curve
The supply curve to shift left or right
Movement along the demand curve
23
When high unemployment and high inflation occur at the same time it is called
Stagflation
Deflation
Deficit
Recession
24
Sales taxes are considered ______ b/c the % of income paid is higher for people who make less
Regressive
Proportional
Unequal
Progressive
25
Average Total Cost (ATC) =
Total Cost / Quantity
Marginal Cost / Quantity
Total Revenue - Total Cost
Total Cost / Revenue
26
Multiplying total quantity by total price for an entire economy will tell you
CPI
Nothing
GDP
The Inflation Rate
27
The goal of expansionary fiscal policy is to
Decrease inflation
Increase the money supply
Decrease the money supply
Decrease unemployment
28
The gas tax is an example of
An excise tax
A progressive tax
An equal tax
A proportional tax
29
A normal good is a good for which
Demand decreases as income rises
Demand increases as income rises
Supply increases as income rises
Demand remains the same when income rises
30
Rationing exists because of
Incentives
Government
Supply & Demand
Scarcity
31
Profit is maximized when firms produce the quantity at which
MC = 0
MR > MC
MR = MC
MR < MC
32
In order to be considered part of supply, a seller must have both the ___ & ____ to produce
Willingness & Resources
Willingness & Ability
Desire & Permission
Desire & Accountability
33
The average number of times a dollar is spent for final goods in a year is
The function of money
The velocity of money
The exchange equation
The CPI
34
The system in which banks hold only a fraction of the money deposited in them as reserves is
Loanable Funds Market
Fractional Reserve Banking
Monopolistic Competition
Open Market Operations
35
Illegal sales and legal sales with no record are part of the
Nonmarket Economy
GDP
Underground Economy
Informal Economy
36
Increases in natural resources, human capital or technological advancements can cause
The PPF to shift inwards
Lower GDP
The PPF to shift outward
No change in the PPF
37
Contractionary monetary policy is intended to
Reduce unemployment
Increase money supply
Increase GDP
Reduce inflation
38
Where would you find the words "Federal Reserve Note"?
On a bank loan statement
On a federal bond certificate
At the top of a $20 bill
On a demand deposit
39
What determines whether a good is normal, inferior or neutral?
Individual Preference
Price
Sellers
Government
40
Which of the following would cause firms to hire fewer workers?
Minimum wage is higher than equilibrium wage
Revenue is up
Minimum wage is below equilibrium wage
Demand for their products is up
41
Which of the following is not one of the three basic economic questions?
What goods will be produced
For whom goods will be produced
Where goods will be produced
How goods will be produced
42
Which of the following is NOT a function of money?
Tool for Borrowing
Medium of Exchange
Store of Value
Unit of Account
43
What is a market
A physical location where people shop
Any place where buyers and sellers meet
A graphic model of supply and demand
44
Congress and the President are responsible for
Monetary Policy
Fiscal Policy
Money Supply
Interest Rates
45
An inferior good is a good for which
Demand increases when income increases
The price is lower
Demand decreases when income increases
A change in income does not impact demand
46
Marginal Cost is
Change in Q / Change in TC
TC/Q
Change in TC / Change in Q
Change in TR ?
47
If the price of a good increases, what will happen to the demand for its substitute?
No Way to Know
Decrease
Increase
Stay the Same
48
A productions possibilities frontier (PPF) shows
Everything a particular economy could produce
All combinations on or inside the curve that can be produced
The difference between marginal cost and marginal revenue
All available resources within an economy
49
If the smoking age is raised, what will happen in the market for cigarettes?
Supply will shift right
Supply will shift left
Demand will shift right
Demand will shift left
50
What is the Law of Demand?
People will always demand more than they can afford
As price increases, quantity demanded increases
As price increases, quantity demanded decreases
As Qd increases, the utility of an additional unit decreases
51
According to supply-side economists, higher tax revenue can be generated by
Cutting low tax rates
Cutting high tax rates
Lowering minimum wage
Lowering inflation
52
The four factors of production (resources) are
Land, Capital, Entrepreneurship
Land, Labor, Capital & Cash
Land, Labor, Capital & Entrepreneurship
Land, Labor, Cash, Entrepreneurship
53
According to the law of diminishing marginal returns
Each additional worker adds less productivity
The marginal cost of production is too high
Each additional worker brings the same amount of production
Producing more than the equilibrium quantity causes losses
54
Equilibrium occurs when
Qd > Qs
Qd < Qs
Qd = Qs
Qs > Qd
55
The physical & mental talents of individuals are considered
Unimportant
Entrepreneurship
Labor
Capital
56
If everyone pays 15% of their income in taxes, the tax structure is
Regressive
Proportional
Progressive
Representational
57
If the number of buyers decreases, what will happen to the market for any good?
Supply will decrease
Demand will decrease
Supply will increase
Demand will increase
58
This is the most basic economic problem
Supply
Resources
Demand
Scarcity
59
An increase in demand will shift the demand curve
To the left
To the right
60
What is the only thing that causes a change in quantity supplied or demanded?
Price
Future Speculation
Preference
There are many things that can cause this
61
In economic terms, something that encourages or motivates a person to take action is
a bribe
a bad idea
a reward
an incentive
62
Per capita is another way of saying what?
Per day
Average
Per person
Per unit
63
What happens to price when there is a shortage?
Depends on the market
Decreases
Stays the Same
Increases
64
Goods for which one person's consumption does not take away from another's are
Normal Goods
Shared Goods
Public Goods
Private Goods
65
What is the exchange equation?
New-Old/Old x100
M+V = P + Q
MxV = PxQ
CPI - Base Year x 100
66
In a progressive tax system
People with more income pay a higher percent in taxes
Everyone pays an equal percent in taxes
Taxes are higher on goods considered luxuries
People with less income pay a higher percent in taxes
67
Which of the following is NOT a determinant of demand (shifter)?
Price
Future Price Speculation
Income
Preferences
68
When one person's actions affect another person, it is called
an incentive
an externality
rude
a quota
69
The line that slopes down from left to right is the
Price Floor
Supply Curve
Demand Curve
Laffer Curve
70
Money supply is determined by
The Federal Reserve
Supply & Demand
Congress
Fiscal Policy
71
When the government spends more than it takes in, the difference is
A credit ratio
The National Debt
A budget deficit
A budget surplus
72
What is the law of supply?
As price increases, quantity supplied increases
As price increases, quantity suppled decreases
As price increases, demand decreases
As price increases, quantity supplied remains constant
73
If the price of e-books goes down, what will happen in the market for e-readers?
Demand will shift left
Demand will shift right
Supply will shift left
Supply will shift right
74
What are fixed costs?
Costs that change based on the number of units produced
Costs that are determined by cheating
Costs that do not change as quantity of production changes
Costs that are the same for every firm
75
Total Revenue - Total Cost =
Marginal Revenue
Profit/Loss
Average Total Cost
Income
76
This makes up the largest piece of federal government revenue
Social Security
Corporate Income Tax
Personal Income Tax
Property Tax
77
How do you calculate CPI?
Current Year Expenditures/Base Year Expenditures
Base Year Expenditures/Current Year Expenditures x 100
Current Year-Base Year/Base Year x 100
Current Year Expenditure/Base Yr Expenditures x100
78
To determine which year someone's real income was higher, you must compare
Changes in salary and benefits
% change in wages to % change in CPI
Inflation to deflation
% change in CPI to % change in ATC
79
When demand is elastic
% change in Qd = % change in P
% change in Qd > % change in P
% Change in Qd < % change in P
% change in P > % change in Qd
80
Variable costs
Are the cost of producing one more unit
Change based on the number of units produced
Always stay the same
Are always higher than fixed costs
81
In which of the following cases would the supply curve be vertical?
Demand is elastic
Price is above equilibrium
No additional units can be made
Supply is elastic
82
Which of the following is a determinant of both supply AND demand?
Resource Prices
Weather
Income
Future Price Speculation
83
If the price of an elastic good increases, what will happen to total revenue?
There is no way to know
It will stay the same
It will decrease
It will increase
84
GDP =
C+I+G+Ex-Im
C+I+G+EX+IM
C+I+G+Im-Ex
C+I+G+Ex
85
What are the two major economic systems?
Capitalism & Command
Free Enterprise & Socialism
Free Enterprise & Demand
Free Enterprise & Capitalism
86
What is scarcity?
Available resources exceed wants
Wants exceed available resources
Supply is greater than demand
Few people can fill the top jobs
87
What two pieces of information are listed in a demand schedule?
Cost & Quantity Supplied
Price & Quantity Supplied
Cost & Quantity Demanded
Price & Quantity Demanded
88
Which of the following is NOT one of the three types of business firms?
Partnership
Corporation
Collaboration
Sole Proprietorship
89
Change in total revenue divided by change in quantity sold equals
Marginal Profit
Marginal Cost
Average Total Cost
Marginal Revenue
90
What is inventory?
Stock on hand
Total Sales
Supply & Demand
Q x P

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