The money supply (M1) includes currency...

checking accounts and traveler's checks

An externality exists when?

one person's actions affect another person

The two types of fiscal policy are?

expansionary and contractionary

If you are making decisions at the margin, you are?

comparing the extra benefit to the extra cost

Which of the following is an intermediate good?

steel purchased by General Motors

As the opportunity cost of a decision increases, a person will be?

less likely to make such a decision

In economics, demand means?

willingness and ability to buy a good

The government produces public goods because?

the private market will not produce them

A production possibilities frontier shows all the possible?

combinations of two goods an economy can produce

The law of supply says that

the Qs of a good rises when the price of a good rises

if there were a shortage of nurses, we would expect?

the wages of nurses to increase

expanded everyone's ability to sell to more people

When a society spends money on national defense, there is a trade-off...

since that money cannot be used for a school or bridge

Under a fractional reserve banking system, banks?

hold only a fraction of the money deposited with them

The opportunity cost of something is?

what you give up to get the item

The word supply refers to?

the willingness and ability to produce a good

Economists agree the role of government is to?

produce nonexcludable public goods and enforce contracts

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Utterback Final Exam Review

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Questions 45

Answers

1
The money supply (M1) includes currency...
checking accounts and traveler's checks
checking accounts, traveler's checks and credit cards
checking accounts, traveler's checks and gold
and checking accounts
2
An externality exists when?
businesses sell their products to foreign countries
the government is involved
one person's actions affect another person
the buyers and sellers meet
3
An example of an excise tax is a tax on?
shoes
fast food
grocery store items
gasoline
4
The circular flow diagram shows?
relationships in the economy
economic policies
the flow of world trade
how banks circulate money
5
During a recession, consumer spending?
rises
increases proportionate to the money supply
falls
drops proportionate to the money supply
6
Economists believe that people respond to?
incentives
unlimited wants
theories
politicians
7
One tool the Fed would use to decrease the money supply is?
an open market sale
lowering taxes
open market purchase
raising taxes
8
The two types of fiscal policy are?
demand-side and supply-side
short-term and long-term
expansionary and contractionary
reserve requirements and discount rates
9
If you are making decisions at the margin, you are?
All of the Above
selecting either all or nothing at all
comparing the extra benefit to the extra cost
confused about what to do
10
Which of the following is an intermediate good?
steel purchased by General Motors
a Coke purchased by a high school student
a tractor purchased by a farmer
milk purchased by your parents
11
Which of the following groups is faced with scarcity?
All of the Above
businesses
individuals
society
12
When people pay at a higher tax rate as their income levels rise, it is described as a?
progressive income tax
proportional income tax
regressive income tax
alternative minimum tax
13
As the opportunity cost of a decision increases, a person will be?
less likely to make such a decision
more likely to make such a decision
unaffected
cannot predict
14
In economics, demand means?
ability to buy a good
willingness and ability to buy a good
willingness and desire to buy a good
willingness to buy a good
15
A price floor results in?
a surplus
a shift of the curve
a shortage
equilibrium
16
The government produces public goods because?
it is the only entity that knows how to do so
it prohibits businesses from producing them
the private market will not produce them
All of the Above
17
When government expenditures (spending) exceed tax revenues, the difference is?
the international debt
the national debt
a budget surplus
a budget deficit
18
The Fed conducts open market operations?
All of the Above
to affect the economy
to change the money supply
with the purchase or sale of securities
19
A production possibilities frontier shows all the possible?
combinations of two goods an economy can produce
combinations of four goods an economy can produce
combinations of all the goods that an economy can produce
production of one particular good
20
Recurrent swings in an economy's real GDP are known as?
increases in purchasing power
shocks
recessions
the business cycle
21
A shift of the demand curve represents?
a change in the quantity demanded
a movement on the demand curve
a change in demand
All of the Above
22
The supply curve of one of Pablo Picasso's paintings would be shown as?
a vertical line
upward-sloping, left-to-right
a horizontal line
downward sloping, left-to-right
23
The purpose of the Federal Reserve is to?
hold bank reserves
control the money supply
All of the Above
supply the economy with paper money
24
A change in quantity demanded can be caused by?
income
preferences
price
price of a substitute
25
The law of supply says that
sellers prefer lower prices to high prices
the Qs of a good decreases when the price of the good rises
the seller must have both the willingness and ability
the Qs of a good rises when the price of a good rises
26
Labor refers to...
physical talents
foreign workers
goods that can be used as resources for production
physical and mental talents
27
How a society answers the three economic questions defines?
its economic system
whether it is a pure or mixed economy
its place in the global economy
its income distribution
28
To an economist, capital refers to?
resources found in nature
machinery and tools
money
new business opportunities
29
The amount of money that a business receives from the sale of its production is called?
average cost
profit
loss
total revenue
30
The functions of money do not include using it as a?
store of value
unit of account
medium of exchange
method of borrowing
31
Quantity supplied changes because of?
a change in resource prices
a change in price
advances in technology
changes in resource prices and advances in technology
32
if there were a shortage of nurses, we would expect?
a decreased demand for nurses
None of the Above
the wages of nurses to decrease
the wages of nurses to increase
33
Globalization has...
decreased people's ability to communicate
reduced the variety of products available in the world
expanded everyone's ability to sell to more people
raised prices for consumers
34
The total market value of final G&S produced within the borders of the U.S. in a year is?
Inflation
Unemployment
GDP
Per Capita GDP
35
When a society spends money on national defense, there is a trade-off...
since everyone benefits from national defense
since that money cannot be used for a school or bridge
since it is not a personal decision
during peacetime, but not during wartime
36
The largest source of tax revenue for the federal government comes from?
Social Security tax
corporate income tax
property tax
personal income tax
37
In a recession, real GDP falls and?
unemployment in unaffected
employers offer higher wages
the unemployment rate rises
the unemployment rate falls
38
Under a fractional reserve banking system, banks?
None of the Above
loan out a fraction of their deposits to the Fed
lend out only a small fraction of the money deposited
hold only a fraction of the money deposited with them
39
in a free enterprise market, who or what allocates resources?
producers
consumers
prices
the government
40
The opportunity cost of something is?
less than the dollar value of the item
more costly to the poor
the dollar value of the item
what you give up to get the item
41
The word supply refers to?
the ability to produce a good
the willingness and desire to produce a good
the willingness and ability to produce a good
the quantity produced of a particular good
42
An increase in the average level of prices is called?
expansion
deflation
contraction
inflation
43
Rationing exists because of...
a surplus of products
incentives
price
scarcity
44
Equilibrium can be expressed as?
Qd=Qs
Qd>Qs
Qd<Qs
Qs>Qd
45
Economists agree the role of government is to?
enforce contracts
produce an economic plan for production
produce nonexcludable public goods
produce nonexcludable public goods and enforce contracts

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