Which statement best explains why money was invented?

Money was invented to facilitate the exchange of goods and services.

Which of these statements is descriptive of a market economy?

Major economic decisions are made by individuals, not for them.

The Federal Deposit Insurance Corporation (FDIC) was created to ________.

provide modest bank insurance for depositors

How does inflation affect the minimum wage?

it decreases the buying power of the wage.

What is the basic purpose of the consumer price index (CPI)?

to track monthly changes in prices paid by urban consumers

What does a Lorenz curve of the U.S. economy show?

that distribution of income has become increasingly unequal over time

How do production costs affect aggregate supply?

Aggregate supply increases when production costs decrease.

What are the characteristics of demand?

the desire, ability, and willingness to buy a product

How is the principle of "There's No Such Thing As A Free Lunch" illustrated in a socialist economy?

Socialist economies offer extensive gov. service but have high tax rates

Why are intermediate products excluded from macroeconomic calculations of GDP?

becuase their value is included in that of the final product

Which of the following is included in the unemployment rate?

the jobless who made an effort to find a job during the past month

Which of these best describes the Federal Reserve System (the Fed)?

A mostly independent agency that supervises & manages the financial system

What happens at the "equilibrium price"?

the number supplied equals the number demanded

Which of the following is an advantage of sole proprietorship?

All of the above statements are true.

Why is the Law of Demand called a "law"?

because it has been demonstrated repeatedly

Which person would not be included in the civilian labor force?

an army general who works in Washington, D.C.

What are the Fed's three main tools for conducting monetary policy?

the reserve requirement, open market operations, and the discount rate

studbud

Economics Final Exam Review

66 termsStudBud Administration314 plays

Imported from external platform

Flashcards66 cardsFPractice quizPHost liveL

Questions 66

Answers

1
Which statement best explains why money was invented?
Money was invented to facilitate the exchange of goods and services.
Money was invented to strengthen government power and control.
Money was invented to lift people out of poverty.
Money was invented to support a barter economy.
2
Factors that can cause a change in supply include
increases in the number of sellers and market expectations.
all of the above.
increased or decreased government subsidies.
technology and government regulations.
3
A business's net income is defined as
total expenses before sales.
total dividends paid to investors.
total income after expenses.
total sales before expenses.
4
Which of the following is a factor in preventing economic growth?
frictional employment
civilian labor force
GDP
recession
5
Which of the following statements best describes trade between two nations?
It avoids specialization.
It is mutually beneficial.
It involves low cost for both nations.
It is legally required.
6
Economics is best defined as the study of how societies deal with
the division of labor.
the paradox of wealth.
the problem of scarcity.
the factors of production.
7
Which state of production is distinguished by negative marginal returns?
Negative marginal returns are a dynamic of the entire production process.
Stage I
Stage II
Stage III
8
The equilibrium price is determined by ___________.
the market
tax rates
the government
big corporations
9
In what kind of economy does the government own some of the factors of production?
communist
socialist
traditional
market
10
Which of these statements is descriptive of a market economy?
Major economic decisions are made by individuals, not for them.
The government determines what is produced and by whom.
Major economic decisions are made for individuals, not by them.
Most media is state-owned and operated.
11
The Federal Deposit Insurance Corporation (FDIC) was created to ________.
help people provide for their own retirement
prevent working people from being exploited by employers
provide modest bank insurance for depositors
regulate new companies that were soliciting funds from investors
12
Which term means something very similar to "government taxing and spending"?
multiplier
fiscal
aggregate
entitlement
13
Pure competition and monopoly _______
are almost the same.
should not be compared.
are opposites.
are the same.
14
How does inflation affect the minimum wage?
it creates a conversion of wage from current dollars to constant dollars.
it creates a conversion of wage from constant dollars to current dollars.
it decreases the buying power of the wage.
it increases the buying power of the wage.
15
A demand-sider is most likely to support what?
government spending
reduced taxes
deregulation
the Laffer curve
16
What is the basic purpose of the consumer price index (CPI)?
to predict future price increases for representative goods and services
to track consumer spending on thousands of goods & services
to track monthly changes in prices paid by urban consumers
to predict and avoid deflation, or a decline in the general level of prices
17
On a supply and demand graph, the demand curve generally does what?
slopes down
slopes up
slopes down and then up
slopes up and then down
18
Which of these names a non-economic factor that can block formation of effective economic policy?
monetarism
demand-side
supply-side
ideology
19
Under perfect competition, what sets the equilibrium price in the market?
nonprice competition
supply and demand
the government
a monopoly
20
In a competitive market economy, prices are considered
uncompromising.
neutral.
dictated.
favorable.
21
Which type of economy is most prevalent in the world today?
traditional
command
market
mixed
22
What does a Lorenz curve of the U.S. economy show?
that distribution of income has become more equal over time
that distribution of income has increased over time
that distribution of income has become increasingly unequal over time
that distribution of income has remained the same over time
23
Which of these is always true of an "underground economy" transaction?
It is taxed.
It is legal.
It is illegal.
It is unreported.
24
How do production costs affect aggregate supply?
Aggregate supply increases when production costs decrease.
Aggregate supply decreases when production costs decrease.
Aggregate supply increases when production costs increase.
Aggregate supply decreases when production costs remain the same.
25
Consumers in a free enterprise economy ultimately determine _____ to produce.
where
what
when
how
26
What level of government is most closely associated with zoning?
local
federal
interstate
state
27
What are the characteristics of demand?
the ability and willingness to buy a product
the willingness and desire to buy a product
the desire, ability, and willingness to buy a product
the desire and ability to buy a product
28
How is the principle of "There's No Such Thing As A Free Lunch" illustrated in a socialist economy?
Socialist economies tend to collapse when they become too large.
The marketplaces in a socialist economy are free for anyone to enter.
Socialist policies offer advantages to wealthy at expense of less well-off.
Socialist economies offer extensive gov. service but have high tax rates
29
When a business needs to decide whether a certain action is worth the cost, the most helpful analysis would be a(n)
needs assessment.
cost-benefit analysis.
production possibility comparison.
economic model.
30
A general rise in the level of prices over time is known as
a catalyst.
profit.
voluntary exchange.
inflation.
31
What do most economist believe is the most efficient way to allocate resources?
competitive markets
distorted incentives
rationing
government action
32
Why are intermediate products excluded from macroeconomic calculations of GDP?
becuase their value is included in that of the final product
because the GDP is a measure of market output on a local level
because the GDP is a measure of market output on a national level
because those products are goods, not services
33
What is the name of the fee paid for an insurance policy?
contribution
interest
premium
pension
34
Which of the following is included in the unemployment rate?
the jobless who made an effort to find a job during the past month
people who hold only part-time jobs
people who are too frustrated to look for work
all of the above
35
Which of these best describes the Federal Reserve System (the Fed)?
A mostly independent agency that supervises & manages the financial system
Agency through which executive branch supervises & manages financial system
Agency through which Congress supervises & manges the financial system
Agency through which judiciary supervises & manages the financial system
36
The four factors of production are land, labor, capital, and
inflation.
entrepreneurs.
the government.
franchises.
37
When two companies that produce the same kind of product merge, this is called a
conglomeration.
vertical merger.
horizontal merger.
multinational merger.
38
Which of the following groups does supply-side policy target through stimulation?
consumers
government
workers
producers
39
What happens at the "equilibrium price"?
the prices are all the same
the quantity of sellers is the same as the quantity of buyers
the number supplied equals the number demanded
the price stops changing
40
You can easily carry money in a pocket or purse. This reflects what characteristic of money?
limited supply
portability
durability
legal tender
41
In American free enterprise capitalism, the profit motive can be best though of as what?
an efficiency
a market
a regulation`
an incentive
42
Which of the following is an advantage of sole proprietorship?
There are almost no requirements to start up a sole proprietorship.
The owner makes all the decisions.
All of the above statements are true.
The owner keeps all the profits.
43
The National Banking System was created in ____ to standardize currency and banking practices in the US.
1933
1863
1861
1900
44
Which of the following terms describes a strong stock market?
bull market
spot market
futures market
bear market
45
When making a risky investment, investors usually demand a _______________.
higher selling price
lower purchasing price
higher compensation
lower compensation
46
What do prices help buyers and sellers make?
products
models
decisions
targets
47
Diminishing marginal utility results from lessened
income.
elasticity.
satisfaction.
demand.
48
Why is the Law of Demand called a "law"?
because it is an economic term
because it is legally required
because it has been demonstrated repeatedly
because there are no exceptions to it
49
Which person would not be included in the civilian labor force?
a sixteen-year-old customer service representative
a government employee who works in Indiana
an accountant who works on contract
an army general who works in Washington, D.C.
50
What are the Fed's three main tools for conducting monetary policy?
the reserve requirement, open market operations, and the discount rate
easy money policy, the discount rate, and the quantity theory of money
easy money policy, tight money policy, and the quantity theory of money
the reserve requirement, open market operations, and wage-price controls
51
Who appoints members of the Fed's Board of Governors?
House of Representatives
Chair of the Board of Governors
president
Senate
52
Corporations such as Ford Motor Company, Shell, and BP, which produce & sell products in different countries, are called
multinationals.
globals.
industries.
mega companies.
53
Which term denotes the change in total income when one additional unit of output is added?
marginal revenue
change in supply
supply schedule
total product
54
Bond prices are determined by ___________________.
supply and demand and the buyer's assessment of the bond's par value.
the maturity life of a bond and its coup0on rate.
the maturity life of a bond and its bond rating.
supply and demand and the buyer's assessment of the repayment risk.
55
Which of the following best identifies the incidence of the individual income tax?
workers
corporation
frequency
wages
56
In the model GDP = C + I + G + (X-M), "I" stands for _______.
input
investment sector
interest rate
imports
57
Which is an example of a public good?
a car
bread
a rock band
the army
58
Which of the following descriptions best explains the meaning of opportunity cost?
the cost of business failure
the initial cost of starting a new business
the risk associated with producing a new item
the cost of choosing one alternative over another
59
Which of these is a prominent feature of monetary policy?
adjusting discretionary spending to stimulate the economy
adjusting government expenditures to stimulate the economy
adjusting tax rates to stimulate the economy
adjusting interest rates to stimulate the economy
60
A document certifying ownership of part of a corporation is a
charter.
stock certificate.
bond.
dividend check.
61
How many Federal Reserve districts are there?
12
1
6
50
62
Who or what is behind an "automatic stabilizer"?
federal government
labor unions
large corporations
owners of stock
63
Which is a recognized problem with rationing?
expense
flexibility
efficiency
neutrality
64
Which statement is the best explanation of the market theory of wage determination?
Worker's value in labor market determined primarily by worker's seniority
A worker's pay rate set by supply of and demand for that worker's skills.
Management tends to pay a lower wage to workers who support unions.
Management more willing to pay high wage to worker with advanced education.
65
Country A can produce more coal than Country B. An economist would say that Country A has ____ over Country B.
an absolute advantage
a comparative advantage
an export advantage
a production possibility advantage
66
In the economic term oligopoly, the word part olig- probably means
"one."
"few."
"all."
"single."

Economics Final Exam Review Flashcards | StudBud