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

A mostly independent agency that supervises & manages the financial system

Which of these statements is descriptive of a market economy?

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

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

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

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

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

that distribution of income has become increasingly unequal over time

Which of the following is an advantage of sole proprietorship?

All of the above statements are true.

Which statement is the best explanation of the market theory of wage determination?

A worker's pay rate set by supply of and demand for that worker's skills.

What are the characteristics of demand?

the desire, ability, and willingness to buy a product

Which statement best explains why money was invented?

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

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

the cost of choosing one alternative over another

Which of these is a prominent feature of monetary policy?

adjusting interest rates to stimulate the economy

Which of the following is included in the unemployment rate?

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

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

because it has been demonstrated repeatedly

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

provide modest bank insurance for depositors

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

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

What happens at the "equilibrium price"?

the number supplied equals the number demanded

Bond prices are determined by ___________________.

supply and demand and the buyer's assessment of the repayment risk.

How does inflation affect the minimum wage?

it decreases the buying power of the wage.

How do production costs affect aggregate supply?

Aggregate supply increases when production costs decrease.

studbud

Economics Final Exam Review

66 termsStudBud Administration314 plays

Imported from external platform

Flashcards66 cardsFPractice quizPHost liveL

Questions 66

Answers

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

Economics Final Exam Review Flashcards | StudBud