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Econ Final Exam
Econ Final Exam
75 terms
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Units 1-8, 1-80
Flashcards
75 cards
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Practice quiz
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Questions
75
Answers
1
What two investments are at opposite ends of the risk spectrum?
money market accounts and CDs
CDs and mutual funds
stocks and US Treasury Bills/Bonds
stocks and mutual funds
2
collusion
secret agreement of competing producers to fix prices
illegal group of eliminating competition
monopoly
group of suppliers with high prices; no competition
3
The economic system of the United States is considered a
free market capitalist economy
socialist economy
traditional economy
command economy
4
Evaluating costs and benefits of each choice to decide which meets your criteria is called
priorities.
resource frontiers.
opportunities.
trade-offs.
5
oligopoly
opposite of pure competition
many selling similar products
few sellers in nonprice competition
pure competition
6
Which of the following is an advantage of a corporation?
Unlimited life.
All of the above statements are true
Risk is limited to the amount invested.
Limited liability to shareholders.
7
Which of these is a part of discretionary fiscal policy?
Social Security
deregulation
Medicaid
tax cuts
8
Which of the following terms describes a strong stock market?
bear market
spot market
bull market
futures market
9
After intergovernmental revenue, the largest source of revenue for local governments is
federal grants
income tax
state spending
property tax
10
Which term is associated with the cost of shipping for a producer?
total cost
variable cost
fixed cost
marginal cost
11
Exchange rates among the currencies of the world change _____.
constantly
rarely
annually
slowly
12
Which is a likely complement to a tablet computer?
pencils
movie tickets
apps
DVDs
13
The Sherman Act, Clayton Act, and the Federal Trade Commission Act were all designed to
promote trusts
create public goods
ensure competition
extend mortgages
14
In American free enterprise capitalism, the profit motive can be best thought of as what?
a market
an incentive
an efficiency
a regulation
15
Which of these is the most likely to create a shortage of an item?
a market price
a price ceiling
a price floor
a fixed price
16
The equilibrium price is determined by ____.
supply and demand
demand
producers
supply
17
Which activity is illegal in a state with a right-to-work law?
denying any qualified worker a job
requiring union membership as a condition of employment
joining a union
requiring a higher hourly rate for overtime hours
18
macroeconomics
government regulation, goods, services
individual, household, business/industry level.
refers to the whole economy.
the study of how societies deal with scarcity.
19
Which product most likely has a demand that is inelastic?
a vital medicine
a meal at a restaurant
green beans
a vacation
20
Which of these is always true of an “underground economy” transaction?
it is illegal
it is legal
it is unreported, untaxed
it is taxed
21
Which of these is an example of a nonmarket transaction?
paying a consultant for ideas on how to imporve a product
having a newspaper route
baby sitting as a favor to a friend
owning a lawncare business
22
What are the Fed’s three main tools for conducting monetary policy?
easy money policy, the discount rate, and money supply
reserve requirement, openmarket operations, wage controls
reserve requirement, monitoring money supply, discount rate
easy and tight money policy, and the money supply
23
Which of the following would not be considered part of a nation’s GDP?
all of these
a steering wheel in a new car
a new set of tires for an old car
a new house
24
Which of the following descriptions best explains the meaning of opportunity cost?
the cost of business failure
the cost of choosing one alternative over another
the initial cost of starting a new business
the risk associated with producing a new item
25
Economic development is important in countries because it
usually means a country produces more than it consumes.
reduces the GNP and population growth.
reduces poverty, increases social and political stability.
usually a zero population growth policy is established.
26
Which of these statements most clearly indicates a way out of poverty?
a program in which welfare recipients work for benefits.
Taxes on high incomes are reduced more than lower incomes.
college graduate earns twice that of a high school dropout.
increased technology in service jobs require fewer skills.
27
How does inflation affect the minimum wage?
creates conversion of wages of constant to current dollars.
creates conversion of wages of current to constant dollars.
It increases the buying power of the wage.
It decreases the buying power of the wage.
28
What do Fed member banks do with customer deposits?
use a portion for interest rates and legal reserves.
use them to conduct monetary policy.
have a reserve requirement and loan a portion with interest.
use them to enforce wage-price controls.
29
A business’s net income is defined as
total expenses before sales.
total sales before expenses.
total income after expenses.
total dividends paid to investors.
30
The Federal Reserve is the nation’s _____ bank.
central
oldest
first
only
31
mixed market economy
some government regulation, and owns some property
relies on customs or history
pure competition
no private ownership, no profit, no competition
32
Which type of economy is most prevalent in the world today?
mixed
market
command
traditional
33
When a union negotiates pay and other job-related matters, this is called
accessing resources
going to strike
cooperative bargaining
collective bargaining
34
Consumers in a free enterprise economy ultimately determine ________ to produce
where
how
when
what
35
Which factor of production involves risk and combining resources to produce goods/services?
land
labor
entrepreneurs
capital
36
A money market investment is based on _____.
which market the money is invested in
high interest rate and amount of money loaned
the risk of the investment
higher balance and less withdrawals
37
Elementary schools, police departments, and electrical service are typically paid for by
state governments
local governments
the federal government
local and state governments
38
Which of the following would a supporter of free trade most likely favor?
the infant industries argument
NAFTA
a revenue tariff
an embargo
39
Which of the following can cost you money in large interest payments?
a checking account
a debit card
a credit card
a savings account
40
Why are intermediate products excluded from the GDP?
because the GDP market output is on a national level
because those products are goods, not services
because the GDP imarket output is on a local level
because their value is included in that of the final product
41
What are the characteristics of demand?
the desire, ability, and willingness to buy a product
the ability and willingness to buy a product
the desire and ability to buy a product
the willingness and desire to buy a product
42
Two obstacles to a nation’s economic development are:
population growth and corruption.
high literacy and external debt.
war and foreign investment.
disease and zero population growth.
43
Keynesian economic policies are designed to lower unemployment by _____.
stimulating aggregate supply
reducing aggregate demand
creating government jobs
stimulating aggregate demand
44
Which of the following is the single largest mandatory federal expenditure
social security
national defense
Medicare
interest
45
As a young person, your credit score tends to be
low
impossible to improve
high
is the same as your parents' score
46
What is the main cause of a change in quantity demanded?
the income effect
change in price
change in revenue
substituion
47
Equilibrium is reached when what occurs?
price increases
quantity supplied equals quantity demanded
there is no change in the quantity supplied
prices are inelastic
48
Which of the following factors contribute to market failure?
opportunities
better resources
inadequate competition
adequate competition
49
Which of these best describes the influence of high prices on the behavior of producers?
They are an incentive for producers to buy less.
They have no significant overall effect on producer.
They are an incentive for producers to produce more.
They encourage producers to modify their supply schedules.
50
____________ protect consumers against harm from products on the market.
franchises
private property rigths
government regulations
profit motive
51
Which of the following is an advantage of a 401(k) plan?
contributions are invested in high-return funds
Most employers match your contributions to a certain amount.
You never pay taxes on your contributions.
You may withdraw funds at any time without penalty.
52
Who issues tax exempt municipal bonds?
federal and state governments
local credit unions
state and local governments
local commerical banks
53
Which of the following is a form of instability that reverses economic growth?
deflation
creeping inflation
recession
an increase in demand
54
Which of these would most likely negatively impact a country’s overall level of income?
a decrease in demand for new automobiles
increased tourist activity during the summer months
a decrease in demand for used automobiles
increased commercial activity during the holiday season
55
Which is an example of a public good?
bread
a car
the army
a rock band
56
When two companies that produce the same kind of product merge, this is called a
conglomeration.
multinational merger.
horizontal merger.
vertical merger.
57
Which of the following is true about inflation?
it has a tendency to make people change spending habits.
increase in the level of prices for goods/services
it is a decrease in the prices of goods and services.
Economists have agreed on the cause of inflation.
58
Societies are faced with which three basic questions about production of goods?
what, where, and when
when, where, and for whom
what, how, and for whom
what, how, and why
59
revenue
profit
total amount earned from sale of products
cost added by producing one additional unit
includes fixed and variable costs
60
law of demand
prices fall, demand increases-prices rise, demand falls
prices rise, prices fall
supply rises, demand rises
supply falls, demand rises
61
Which are associated with globalization?
multinationals only in industrial nations.
leads to interdependence only among industrial nations.
specialization and division of labor
multinationals only in free trade zones.
62
Three ways people can save money with little risk include _____.
insurance policy, stock and contributing to a pension fund
insurance policy, contributing to a finance company, CDs
savings account, CDs, money market account
savings account, buying stock and CDs
63
The Federal Deposit Insurance Corporation (FDIC) was created to ____.
prevent working people from being exploited by employers
regulate companies that were soliciting funds from investors
help people provide for their own retirement
provide bank insurance for depositors
64
What will your “creditworthiness” be based on?
all of the above
capital
credit history
capacity
65
diversification
combining a variety of assets to reduce risk
another term for stocks.
investment which loans money
a group of financial assets
66
What is the main advantage of a mutual fund for an investor?
its price doesn't change much
it has a maturity date
it can be sold at a profit
it offers diversity in investments
67
Economics is best defined as the study of how societies deal with
the paradox of wealth
the division of labor
the factors of production
the problem of scarcity
68
Which of the following statements best explains why workers began to form unions?
immigrant labor was more likely to raise standards.
united workers were more likely to make changes
well-organized workers was more likely to maximize profits.
unions were more likely to have training with newer ideas.
69
For which of these would a consumer be the least likely to find a substitute?
fruit drinks
DVD players
electricity
postal delivery
70
Which of these do economists use to illustrate combinations of output?
a factor of production
a division of labor
a production possibilities curve
a cost-benefit analysis
71
The struggle among sellers with the best products and the lowest prices is known as
voluntary exchange.
profit motive.
property rights.
competition.
72
Which of these economic systems have the least in common?
command economy and capitalism
free-enterprise economy and market economy
market economy and capitalism
command economy and socialism
73
Which of these statements describes a disadvantage of a traditional economy?
Everyone knows his or her role.
New ways of doing things are discouraged.
Difficult economic decisions are made by the state.
New ways of doing things are encouraged.
74
Which of the following is included in the unemployment rate?
people who hold only a part-time job
the jobless who made an effort to look for a job
underemployment
all of the above
75
Which is a feature of a socialist economy that distinguishes it from a command economy?
All economic decisions are based on custom and habit.
Some degree of private ownership and activity is allowed.
All production is managed by the government.
All economic decisions are made by the free market.
