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Economics Final Exam
Economics Final Exam
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Covers entire review guide for the Economics Final Exam
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Questions
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Answers
1
Why do businesses work to make an effective brand?
To have a good reputation
Customers trust & make good associations/well-known brand
So they can make a better brand
To create a monopoly
2
What are the two mechanisms (tools) that government can use in dealing with externalities?
Use the Federal Reserve to fix their stupid problems
Tax or ban
Tax or Regulate
Ban and regulate
3
Actions that the Federal Reserve takes to influence the amount of money & credit in US economy
Fiscal policy
Monetary policy
4
What is this an example of?
Shift of prices
Shift in supply and Demand
Shift in Supply
Shift in Demand
5
A government adjusts its spending levels & tax rates to monitor & influence a nation's economy
Monetary policy
Fiscal policy
6
Mutual funds that buy all the stocks in a given stock index
Commodities
Index Funds
Mutual Funds
S&P 500
7
The fed buys govt bonds from banks, which increases the amount of money in circulation
Market Transparency
Open Market Operations
Keynes theory
8
The Business practice of selling the same good at different prices to different customers is...
Income Price
Price Discrimination
Discrimination
Limited Goods
9
What is this a definition of?
How a market economy functions
Private information
Asymmetric information
Free Rider issue
10
What type of economy is this?
Mixed Economy
Traditional Economy
Democratic Economy
Market Economy
11
What is this an example of?
How information leads to gender bias
How business take advantage of minorities
An absence of or partial information lead to discrimination
How consumers work to maximize their utility
12
What is this an example of?
Prisoner's Dilemma
Creative Destruction
Maximizing Utility
Perverse Incentives
13
A debt investment where an investor loans money to an entity for a defined period of time.
Stocks
CDs
Bonds
Dividends
14
A proposed free trade agreement linking the United States and 11 other Pacific Rim economies.
PPT
TPP
NAFTA
GFTA
15
Which are types of bonds
Financial loans
Corporate- loans from a business or firm
Municipal- loans from the city
Federal government- loans from the federal government
16
"Maximizing Utility" is defined as...
In a democracy the people are in charge of the market
The government works to make itself best of
Producers work to meet the needs of consumers
People act to make themselves as well off as possible
17
How are risk and return correlated
Less risk = more return
More risk = more return, and vice versa
More risk = less return
18
What does it mean to raise capital?
How people accumulate the capital to make investments
When the economy experiences inflation
How firms gain wealth
How government raises taxes
19
What is this an example of?
Dealing with Asymmetric Information
Market Transparency
Public Information
Efficient Market Theory
20
What is Keynesian Fiscal Economy in times of crisis?
Increased government expenditures and lower taxes
Decreased government expenditures and higher taxes
21
A United States government corporation providing deposit insurance to depositors in US banks.
UDCI
FDIC
CDFI
FCDI
22
what is a dividend
A claim of the company
The debt the company owes the bank
A distribution of a portion of a company’s earnings
What the company owes the owner
23
The term used to describe how easy it is to convert assets into cash
Asset Conversion
Fixed cash fluency
Cash Flow
Liquidity
24
What is this an example of?
How asymmetric information is a problem in healthcare.
How free riders is a problem in healthcare.
How moral Hazard is a problem in healthcare.
How creative destruction is a problem in healthcare.
25
A principal creates an environment in which an agent's incentives don't align with its own.
Prisoners dilemma
Principal vs. Agent
Principal-Agent Problem
26
How is GDP calculated
GDP= I + G + C + (NX)
GDP= G + C + I + (NX)
GDP= C + I + G + (NX)
GDP= I + C + G + (NX)
27
Lack of incentive to guard against risk where one is protected from its consequences
Prisoners Dilemma
Moral hazard Problem
Creative Destruction
Free Rider Problem
28
What are these the 6 characteristics of?
Functions of Government
Functions of the economy
Functions of FDIC
Functions of the federal reserve
29
An index fund comprised of the 500 largest companies in America
Mutual Funds
S&P 500
Index Funds
Commodities
30
What does GDP not measure?
Retirement Income
Pollution and the Black Market
actual well-being and wealth equality
Part-time Jobs
31
Value stocks vs. Growth Stocks
A stock vs. a CD
A dividend vs. changes in the market price of the share
A CD vs. vs. changes in the market price of the share
A Dividend vs. the price of a stock
32
The increase of human capital, meaning greater amounts of education, skills, intelligence, etc.
The relationship between poverty and human capital
The Relationship between human capital and government wealth
33
How does politics corrupt the process of government intervening in the economy?
Politicians have an incentive to make reg-dec to plz voters.
Politicians have incentives to make policies please voters
34
A group of investments held in common by many individual investors
Commodities
Index Funds
S&P 500
Mutual Funds
35
What does the GINI Index measure?
Measure the wealth gap
Measures wealth distribution, used to measure inequality
Measures tax rate per capita
Measures Interest rates
36
Ppl who possess + human capital receive better jobs divide between skilled & unskilled workers.
This did not lead to increasing income gap in the US
This lead to increasing income gap in the US
37
Why is raising capital important to the economy?
Allows bank to make loans
allows the government to have cash reserves
Allows people to do things today that they couldn’t afford.
Allows firms to give CDs
38
The characteristics of a public good are
Require you to pay taxes
Free
Non-excludable and non-rivalrous
Unable to be provided by producers
39
Independent federal agency created by US Congress to supervise federal credit unions.
NCUA
ACUN
IFCU
UNCA
40
What concept does this explain?
Personal mandate
Market Transparency
Regulations
Taxes
41
In economics, a commodity is a marketable item produced to satisfy wants or needs
S&P 500
Index Funds
Commodities
Mutual Funds
42
Examples of price discrimination are...
Coupons
Loans based on Race
Airline Tickets
Gender-based discounts
43
What is a price floor?
A price maximum
A price Minimum
44
Goods or services that government supplies to its citizens to avoid the free rider problem
Government's way to deal with Free Riders
Public Services
Public Goods
Citizen's Taxes
45
What is this an Example of?
How the subprime mortgage crisis a Free Rider issue
subprime mortgage crisis an example of creative destruction
subprime mortgage crisis an example of perverse incentives
How the subprime mortgage crisis a moral hazard problem
46
Does a price floor cause...
A surplus
A shortage
47
Industrial mutation that revolutionizes the economy, destroying the old 1, creating the new 1.
Industrial Revolution
Production
Creative Destruction
Economic Revolution
48
GDP adjusted for population
Nominal GDP
Inflated GDP
Real GDP
GDP per capita
49
A person who receives the benefit of a good but avoids paying for it
Free rider
Tax evasion
Positive Externalities
50
Twin responsibilities of the Fed, to use monetary policy for price stability & full employment
Perverse Mandates
Double Mandate
Dual Mandate
51
What is a price ceiling?
Minimum Price
Maximum Price
52
A tax for which the percentage of income paid in taxes increases as income increases
Regressive Tax
Progressive Tax
Flat Tax
53
A type of monopoly that exists as a result of the startup costs of operating a business
Natural Monopoly
Technological Monopoly
Geographic Monopoly
Government Monopoly
54
What is this definition defined as?
Economic System
Homo Economics
Principal Agencies
Market Equlizers
55
Type of security that represents a claim on part of the corporation’s assets and earnings.
CDs
Bonds
Stocks
Dividends
56
What is a savings account?
Add, can't access until retirement
Add & withdraw money, interest rates continually fluctuate
A loan account
Can't withdraw, until set date
57
GDP adjusted for inflation
Artificial GDP
Nominal GDP
Per Capita GDP
Real GDP
58
Does a price ceiling cause...
A surplus
A shortage
59
What type of economy is this?
Command Economy
Mixed Economy
Communist Economy
Traditional Economy
60
What is this called?
The White House
FDIC
The Federal Reserve
Congress
61
Market Economies rely on...
Maximizing Utility
No government
Strict Laws
Producers
62
What is the debate on against minimum wage
Causes inflation
Willingness to hire
Lowers poverty
Raises unemployment
63
C= Consumption***I= Investment***G=Government Spending***NE=Net Exports
Incorrect
Correct
64
Calculated by multiplying principal amount by interest rate and the number of periods in a loan
Net Interest
Artificial interest
Simple interest
Compound interest
65
4 Fed tools: Discount Rate-Open Market Operations-Reserve Requirements-Interest on Reserves
Correct
Incorrect
66
What is Real return vs. Nominal Return?
Nominal rates are not adjusted for inflation, real rates are
Real rates are not adjusted for inflation, nominal rates are
67
Cost of best alternative use of money, time, resource when a choice is made rather than another
Maximizing Utility
Opportunity Cost
Net Gain/Loss
Price
68
The Study on how to allocate scarce resources in a society of unlimited wants: Is defined as…..
Economics
Market Economy
Economic system
Production Possibility Curve
69
A benefit or cost that affects someone who is not directly involved in a transaction
Externality
Positive Externality
Creative Destruction
Artificial Inflation
70
A Perverse Incentive is...
An incentive that has an unintended/opposite result
An incentive that creates negative effects
An incentive that has the expected outcome
An incentive that has both expected and unexpected effects
71
What two conditions create a principal-agent problem?
Caused by lack of empathy and knowledge
Caused by lack of experience and maximizing utility
Caused by perverse incentives and maximizing utility
Caused by differing interests and asymmetric information
72
Holds your money for a length of time. If you withdraw your money early, have to pay a penalty
CD
Savings Account
DC
Certificate of Deposit
73
Complete control of a product or business by one person or group
Monopoly
Required Monopoly
Natural Monopoly
Perfect competition
74
What is this called?
FDIS
GINI Index
Federal Reserve
CPI
75
What is this an example of?
Prisoner's Dilemma
Maximizing Utility
Free Rider
Moral Hazard Problem
76
What is a portfolio and what role does diversification play?
An investment with high returns, diversification raises risk
Stocks and bonds, diversity lowers income
A compilation of investments diversification lowers risk
77
Accrues on the principal amount and the accumulated interest of previous periods
Artificial Interest
Simple Interest
Compound Interest
Net Interest
78
A tax in which people pay an identical rate regardless of income
Flat Tax
Regressive Tax
Progressive Tax
79
A tax for which the percentage of income paid in taxes decreases as income increases
Regressive Tax
Progressive Tax
Flat Tax
