What is monetary policy?

actions the Fed uses to influence inflation & real GDP

What is the required reserve ratio?

the reserves that the Fed requires banks to keep

Price elasticity of demand measures the responsiveness of the change in:

quantity demanded to a change in price

What is the difference between a savings account and investment in the stock market?

money in the bank is safe because it is insured by the gov't

A price ceiling will have NO effect if:

it is set above the equilibrium price

What is the purpose of a personal budget?

to help plan your finances and manage spending

Why is diversification of financial investments beneficial?

if one investment fails your other investments are safe

How is analyzing a person's credit rating a measure of their financial responsibility?

the higher the rating the more likely they will repay a loan

What is an important financial consideration when renting an apartment?

your income level & personal budget

Which is the best way to avoid high interest rates on credit cards?

pay balance in full every month

If the quantity supplied is greater than the quantity demanded, the existing price:

is above the market equilibrium price

What is the purpose of import quotas?

to create a self-imposed limitation on imports

If the price of mozzarella declines due to a technological breakthrough, there would be:

an increase in the supply of pizza

What is the federal funds rate?

a special rate member banks of the Fed get for their ops

A monopoly is a market characterized by a:

product with no close substitutes

When a nation's currency appreciates, which is the most likely result?

its exports will decrease & its imports will increase

Nations specialize when they

produce certain goods & services more efficiently

Perfect competition is characterized by:

the inability of any one firm to influence price

What is the relationship between risk and reward with regards to investing?

the higher the risk the higher the potential reward

The interest rate on a mortgage provides what key information?

cost of borrowing money to buy the house

Oligopoly is a market structure characterized by:

a small number of interdependent firms

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Economics Final Review #4

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Questions 34

Answers

1
What is monetary policy?
actions the Fed uses to influence inflation & real GDP
the amount of $ the Federal reserve prints
the decision to have federal or state banks
the amount of $ the federal government spends
2
A minimum price set above the equilibrium price is a:
price ceiling
supply price
demand price
price floor
3
Which of the following is a barrier to entry?
patents and copyrights
control of scarce resources
all answer choices are correct
large economies of scale
4
The government imposes a price ceiling below the equilibrium price. What is the result?
quantity supplied increases
a shortage of the good
quantity demanded decreases
an increase in the quality of the good
5
What is the required reserve ratio?
the money kept by the federal government
the amount of $ the Fed does not let banks borrow
the reserves that the Fed requires banks to keep
the interest rate banks charge each other
6
Human capital is the improvement in ___ created by ____.
physical capital; technology
labor; physical capital
none of these are correct?
labor, education and knowledge
7
Price elasticity of demand measures the responsiveness of the change in:
slope of the demand curve to a change in quantity demanded
price to a change in quantity demanded
quantity demanded to a change in price
slope of the demand curve to a change in price
8
What is the difference between a savings account and investment in the stock market?
keeping money in the bank provides a better rate of return
stocks are safe b/c companies always make good decisions
money in the bank is safe because it is insured by the gov't
stocks will always provide a better rate of return
9
A price ceiling will have NO effect if:
the equilibrium price is above the price ceiling
it is set above the equilibrium price
it creates a shortage
set below the equilibrium price
10
What is the purpose of a personal budget?
to help decide what stocks & bonds to purchase
to help plan your finances and manage spending
to help plan your day efficiently
to help you decide which bank you should open an account
11
This financial institution pools the savings of many to buy stock & provides diversification:
a mutual fund
an insurance company
a finance company
a bank
12
Why is diversification of financial investments beneficial?
allows you to invest all your $ in one stock
provides a higher return on investment
if one investment fails your other investments are safe
if one investments succeeds you must sell all the rest
13
How is analyzing a person's credit rating a measure of their financial responsibility?
the higher the rating the more likely they will repay a loan
the higher the rating the better car they can buy
the higher the rating the better the job they have
the higher the rating the more money they have
14
What is an important financial consideration when renting an apartment?
lease states that landlord return security deposit
landlord promises to fix what is broken
swimming pool & laundry room
your income level & personal budget
15
A country that imports more than it exports has a
trade deficit
export quota
trade surplus
balance of trade
16
What is a mortgage company?
helps you buy a home
helps you save money
helps you buy stocks or bonds
17
Which is the best way to avoid high interest rates on credit cards?
paying one credit card off with another credit card
pay balance in full every month
paying monthly minimum & buy want you want
paying the monthly minimum
18
What is the Fed's most important monetary policy tool?
changing reserve requirements
changing the federal funds rate
open market operations
19
If the quantity supplied is greater than the quantity demanded, the existing price:
is below the market equilibrium
will rise to clear the market
is above the market equilibrium price
will rise or remain unchanged
20
Market equilibrium occurs when:
the market clears
quantity demanded equals quantity supplied
all answers are correct
the is no incentive for prices to change
21
What is the purpose of import quotas?
to lower trade barriers
to create a self-imposed limitation on imports
to decrease the amount of certain imported goods
to increase the amount of certain imported goods
22
If the price of mozzarella declines due to a technological breakthrough, there would be:
no change in the supply of pizza
an increase in the supply of pizza
a decrease in the supply of pizza
an increase of quantity supplied of pizza
23
What is the federal funds rate?
the rate banks charge to one another
a special rate member banks of the Fed get for their ops
the amount a bank has to subtract for its reserves
the rate customers of savings banks get for borrowing $
24
A monopoly is a market characterized by a:
large number of small firms
single buyer and several sellers
small number of large firms
product with no close substitutes
25
When a nation's currency appreciates, which is the most likely result?
its exports and imports will decrease
its exports will decrease & its imports will increase
its exports and imports will increase
its exports will increase & imports will decrease
26
In monopolistic competition:
there is free entry and exit in the long run
all of these are correct
each firm produces a differentiated product
there are a large number of producers
27
Compared to perfect competition a monopoly:
may have profits in the long run, but perfect comp does not
produces less at higher a higher price
has one seller & perfect competition has many
all answer choices are correct
28
Nations specialize when they
produce certain goods & services more efficiently
have few natural resources
import more than they export
export more than they import
29
Perfect competition is characterized by:
fierce quality competition
rivalry in advertising
widely recognized brands
the inability of any one firm to influence price
30
What is the relationship between risk and reward with regards to investing?
the lower the risk you more chance you could lose $
the higher the risk the safer your $
the higher the risk the higher the potential reward
the lower the risk the higher the potential reward
31
One characteristic of a perfectly competitive market is that there are ___ sellers of the good.
a few
usually less than 10
1 or 2
many
32
A tariff is a tax on
imported goods
exported goods
any form of international trade
raw materials
33
The interest rate on a mortgage provides what key information?
the resale value of the house
the amount of time before foreclosure
the total move-in cost
cost of borrowing money to buy the house
34
Oligopoly is a market structure characterized by:
relatively easy entry and exit
a small number of interdependent firms
a horizontal demand curve
independence in decision making

Economics Final Review #4 Flashcards | StudBud