Which of the following is NOT a function of most banks?

to set the prime rate for lending

Less money will be available to the private sector which could cause a slowdown in activity.

This is most likely to occur if taxes are increased.

What do consumer tastes, consumer incomes, and the price of substitutes have in common

They are all determinants causing demand to change.

The Gross Domestic Product or GDP is a way to measure the nation's

output in terms of dollar value

Market capitalism is intended to function with

little to no government involvement.

If a community chooses to increase its education and to decrease its fire protection, then they

have traded off protection in order to have more education.

Which describes the national debt?

It is a result of deficit spending.

What is the difference between a shortage and scarcity?

A shortage can be temporary, but scarcity always exists.

Globalization means having

standardized products that are sold throughout the world.

The Consumer Price Index is a way of the government tracking

changes in overall purchasing power.

How are APR and finance charge related?

They are both the fee to borrow but in different forms.

Stocks and bonds are different because only stocks

represent ownership of the company.

Economic development is important in countries because it

contributes to an increased standard of living.

Trade agreements that reduce trade barriers between the US and other nations have the effect of

increasing the amount of exports from that country to the United States.

Which of the following descriptions best explains the meaning of opportunity cost?

the cost of choosing one alternative over another

The government does not try to eliminate all monopolies. Why?

Public utilities are allowed to operate as monopolies.

As a business grows and gains strength, they are more likely to incorporate because

of the ability to gain funds by the sale of stocks and bonds

A regressive tax can be described as

a tax that effectively decreases as incomes go up.

Non-price competition is a characteristic of both

monopolistic competition and an oligopoly.

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Econ Final Exam Review

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Econ final exam review

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Questions 40

Answers

1
A business makes a profit when its costs of production are less than its
variable costs.
fixed costs.
revenues.
overhead.
2
When two companies that produce the same kind of product merge, this is called a
multinational merger.
vertical merger.
conglomeration.
horizontal merger.
3
Which of the following is an example of a proportional tax?
sales tax
federal income tax
categorical tax
flat rate tax
4
Which of the following is NOT a function of most banks?
to lend money
to set the prime rate for lending
to transfer money among businesses and individuals
to accept checking and savings deposits
5
Less money will be available to the private sector which could cause a slowdown in activity.
This is most likely to occur if we move to a flat tax rate.
This is most likely to occur if tax rates do not change.
This is most likely to occur if taxes are decreased.
This is most likely to occur if taxes are increased.
6
What do consumer tastes, consumer incomes, and the price of substitutes have in common
They all cause the supply side of the market to decrease.
They are things that cause the price to decrease.
They are things that influence the supply of products.
They are all determinants causing demand to change.
7
If substitutes are readily available for a product, it has
inelastic demand.
elastic demand.
a price effect.
an income effect.
8
The Gross Domestic Product or GDP is a way to measure the nation's
purchasing value of the dollar
export and import balance
number of goods and service produced
output in terms of dollar value
9
When a nation exports more than it imports, that nation has a trade
deficit.
appreciation.
balance.
surplus.
10
As more units of a product are consumed, the satisfaction from consuming each additional unit
changes slightly.
stays the same.
increases.
decreases.
11
Market capitalism is intended to function with
government ownership of private property.
little regard to supply and demand.
little to no government involvement.
much government involvement.
12
Consider the term marginal utility. Which word is the best synonym for marginal?
satisfactory
borderline
useful
additional
13
What type of business are you most likely to use if you want complete control and all profits?
sole proprietorship
limited partnership
general partnership
corporation
14
Which of these is an example of a fixed expense?
a Friday night pizza party
an annual vacation
a weekly trip to the movies
a monthly mortgage payment
15
Which of the following statements best describes trade between two nations?
It involves low cost for both nations.
It is legally required.
It is mutually beneficial.
It avoids specialization.
16
If a community chooses to increase its education and to decrease its fire protection, then they
have traded off protection in order to have more education.
have made a very good choice in its use of capital.
have traded off some education for fire protection.
must have had poor quality education in the past.
17
Which describes the national debt?
It earns the gov't millions of dollars interest payments.
It has steadily decreased over the past 20 years.
It was less than $75 million in 1994.
It is a result of deficit spending.
18
If you make a careful plan to make your expenses equal your income, you are preparing
a credit card debt.
a budget.
a balanced bank statement.
a resume.
19
What is the difference between a shortage and scarcity?
A shortage is a lack of all things; scarcity of one item.
Shortage is from rising prices; scarcity from falling prices
A shortage can be temporary, but scarcity always exists.
There is no difference between a shortage and a scarcity.
20
What is the primary responsibility of the Fed today?
regulating the income tax rate
setting rates for car loans
regulating the money supply
setting the federal budget
21
Which of the following is an advantage of investing in a mutual fund?
guaranteed higher returns over individual stocks
security from government regulations
diversification
a very low, but steady rate of return
22
Globalization means having
standardized products that are sold throughout the world.
multinationals opening facilities only in free trade zones.
multinationals opening places only in industrial nations.
standardized products sold only in industrial nations.
23
What type of business can hire workers and own property as if it were an individual?
sole proprietorship
general partnership
limited partnership
corporation
24
The Consumer Price Index is a way of the government tracking
changes in overall purchasing power.
changes in patterns of consumer demand.
changes in patterns of producer supply.
changes in business activity.
25
How are APR and finance charge related?
They are both interest paid on a loan but in different words
They are both expenses of having a debit card
They are both the fee to borrow but in different forms.
They are both the cash paid but in different terms.
26
Stocks and bonds are different because only stocks
represent debt by the company.
represent ownership of the company.
pay interest even when the business loses money.
pay a fixed rate of interest.
27
Economic development is important in countries because it
contributes to an increased standard of living.
reduces the GNP and population growth.
usually means a ZPG policy is established.
usually means a country produces more than it consumes.
28
Trade agreements that reduce trade barriers between the US and other nations have the effect of
increasing the amount of exports from that country to the United States.
increasing the price of that countries' exports to the United States.
neither helping nor hurting exports and imports among nations.
decreasing the amount of goods the United States imports from thatcountry.
29
Which of the following descriptions best explains the meaning of opportunity cost?
the cost of choosing one alternative over another
the cost of business failure
the initial cost of starting a new business
the risk associated with producing a new item
30
The government does not try to eliminate all monopolies. Why?
There aren't any monopolies anymore.
The government itself is a monopoly.
It would be impossible.
Public utilities are allowed to operate as monopolies.
31
As a business grows and gains strength, they are more likely to incorporate because
of the assurance of added profits due to their efficiency
of their ability to eliminate their risk of bankruptcy.
of the ease with which they can attract customers.
of the ability to gain funds by the sale of stocks and bonds
32
Which of these corporate financial instruments indicates that the company is in debt?
a corporate bond
preferred stock
common stock
a profit-sharing plan
33
An item is considered to be money if it serves as all of these EXCEPT
medium of exchange
store of value
unit of accounting
interest bearing instrument
34
Which of the following is a form of instability that reverses economic growth?
rising GDP
gradual inflation
recession
frictional unemployment
35
A regressive tax can be described as
a tax that effectively decreases as incomes go up.
a tax that effectively increases as incomes go up.
a tax that remains the same on all levels of income.
a tax that will eventually go down to 0%.
36
Some credit card companies lure people into signing up by
offering debit cards.
linking up with commercial banks.
engaging in heavy advertising.
offering low initial APRs.
37
Almost all economies today are actually
mixed.
market.
command.
traditional.
38
If price of a resource for production decreases, supply will
decrease.
stabilize.
increase.
fluctuate.
39
Non-price competition is a characteristic of both
perfect competition and a pure monopoly.
an oligopoly and perfect competition.
monopolistic competition and a pure monopoly.
monopolistic competition and an oligopoly.
40
Which of the following terms refers to the real goods and services that a dollar can buy?
marginal power
income effect
substitution effect
purchasing power

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