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ECONOMICS GMAS Full Test
Land, labor, capital, and entrepreneurship payments
Structural unemployment...
ECONOMICS GMAS Full Test
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1
Structural unemployment...
out of work due to the business cycle
out of work due to mismatch in skill or need
between jobs or entering the workforce
out of work due to seasonal downturn in business
2
Land, labor, capital, and entrepreneurship payments
wages, rent, profit and interest
profits, wages, interest, and rent
rent, wages, interest, and profit
rent, profit, wages, and interest
3
Prices act as signals in the market because
prices indicate to sellers what to offer to sale
high prices signal a healthy economy
entrepreneurs become motivated as prices rise
prices can determine dividends for businesses
4
The Fed conducts business with
product and factor markets
stock markets and bond markets
individuals and firms
the government and banks
5
When the value of money was based on silver, new discoveries of silver were followed by
recovery
recessions
inflation
shortage
6
What is the primary purpose of the North American Free Trade Agreement?
to establish trade policy between them and the world
to decrease quotas but increase tariffs
to reduce trade barriers among the US, Canada, and Mexico
to compete with the European Union
7
Any point on the PPF
impossible
underutilization
efficiency
unattainable
8
The equilibrium price is $3 for milk. At what price would the government set a price ceiling?
$3.50
$4.00
$3.00
$2.50
9
Brandon had $5,000 in his saving account when his bank declared bankruptcy.
All of Brandon's savings will be lost.
Brandon's savings will be transferred to an IRA.
Some of Brandon's savings will be returned to him.
Brandon's savings are protected by the FDIC
10
Which of the following will MOST likely lead to inflation?
increase in aggregate supply
increase in input costs
reduced prices for goods and services
application of price ceilings
11
Which of the following is an investment in human capital?
building a new highway
building a new factory
going to college
building a new school
12
Economic system based off of producers making goods that consumers demand.
traditional
command
market
socialism
13
What basic economic problem do all nations have in common?
lack of capital goods
scarcity of resources
too many unskilled laborers
too much government
14
Who's job is it to control the money supply?
U.S. Treasury
Comptroller of the Currency
Federal Reserve System
Federal Deposit Insurance Corporation
15
The minimum wage is a type of
price ceiling
comparable worth
price floor
marginal price
16
If the FED buys bonds on the open market
money supply will decrease, aggregate demand will increase
money supply will increase, aggregate demand will decrease
money supply will increase, aggregate demand will increase
money supply will decrease, aggregate demand will decrease
17
Which of the following is MOST likely to cause wages to increase for US workers?
increase in worker productivity
increase in retirement rate
increase in interest rates
appreciation of the dollar
18
A type of union org where only workers with the same or similar skills eligible to be members.
industrial union
craft union
agency shop
closed shop
19
Higher demand for US exports will typically result in
an increase in price of foreign-produced goods in US markets
an increase in the international value of the dollar
an increase in the international value of foreign currencies
an increase in the trade deficit of the US
20
Which BEST describes the concept of regional specialization?
cattle ranching in Connecticut
grape vineyards in California
pineapple plantations in Idaho
evergreen nurseries in Florida
21
Which of the following is an attempt by a firm to increase the demand for its product?
an advertising strategy designed to change consumer tastes
a marketing strategy to make the good more expensive
a production strategy to flood the market
the imposition of a price ceiling on the product
22
Which form of business is easiest to organize but cannot benefit from specialization?
partnership
sole proprietorship
corporation
limited partnership
23
Which groups is LEAST hurt by unanticipated inflation?
banks that have long-term fixed mortgage loans
consumers who buys goods and services at changing prices
savers who have a fixed interest rate
workers who have a cost-of-living adjustment
24
Which of the following is MOST important for economic growth?
a large labor force
ample tax revenues
availability of resources
efficient use of resources
25
An economy with increasing GDP, low unemployment and low inflation.
Fed should expand money supply
gov't needs to address unemployment
expansion phase of business cycle
economic slowdown
26
Which of the following would be the BEST example for the law of increasing opportunity costs?
switching production from Honda to Acura
shifting production from iPads to iPhones
switching production from cakes to muffins
switching production from planes to TVs
27
When aggregate demand exceeds aggregate supply in an economy, you will have
unemployment
deflation
inflation
budgetary surplus
28
How are public goods paid for in the U.S.?
Government collects tax revenues from individuals and firms
Corporations make profits from selling goods and services
Non-profit organizations collect charitable donations
Private firms collect fees from their employees
29
On Yap Island, large stones are used for money. How is this an example of a medium of exchange?
accepted as payment
prized in foreign transactions
highly divisible
very portable
30
The government owns the means of production.
command
mixed
traditional
market
31
The MOST important factor affecting consumer spending is
level of current consumer income
amount of assets held by consumers
level of current consumer debt
future expectations of consumers
32
Raising the minimum wage will cause
employers will have an incentive to use more labor
the quantity of labor supplied will decrease
the quantity of labor demanded by firms will increase
an increase in unemployment
33
If a nation encourages small businesses, which of the following will likely occur?
fewer inventions
development of many new products and product methods
a decline in the number of new businesses started
little change in overall production of goods and services
34
The BEST example of a progressive tax in the United States is
the federal excise tax on gasoline
state sales taxes
the federal personal income tax
the Social Security tax
35
What would cause the Yen to depreciate against the Euro?
Japanese consumers increased the demand for European goods
Japanese investments in securities increased in Europe
Japanese firms increase their exports to Europe
The inflation rate in Europe increased more than Japan's.
36
What is a disadvantage of a sole-proprietorship?
no separation between ownership and control
double taxation
unlimited liability
ease of organizing the firm
37
What advantage does a market economy have over a traditional economy?
limited profit of large corporations
control of prices and wages
fixed income of consumers
adjusts to consumer demands over time
38
The U.S. has the AA in wheat and rice and China has the CA in rice. Who should produce what?
China should produce wheat and rice
US should produce wheat and China should produce rice.
US should produce rice and China should produce wheat.
US should produce wheat and rice
39
A new mechanical device with a patent has only one producer.
technological monopoly
natural monopoly
government monopoly
geographic monopoly
40
If a country invests in research and development, it can expect all of the following EXCEPT
future economic growth
future increases in labor productivity
creation of advanced capital goods
creation of labor-intensive industries
41
If the US Govt purchases a submarine from a company, the govt has made a transaction in the
public market
product market
factor market
foreign exchange market
42
Kim works on an assembly line. This is an example of
division of labor
team decision making
autonomous work groups
quality circles
43
When government spending is less than government revenue
trade surplus
negative balance of payments
federal budget deficit
a federal budget surplus
44
What is the unit of study in microeconomics?
inflation and recession
imports and exports
national consumption and expenditures
individuals businesses and households
45
A tariff can BEST be described as which of the following?
a limit on the amount of imports
a tax on an imported good
a quota on goods imported
subsidies to domestic producers to help them compete
46
What would cause the supply curve for wheat to shift to the right?
New fertilizers increase wheat crop yields
Government reduces subsidies to wheat farmers
Firms exit the wheat industry
Drought reduces industry output by 25%
47
Which of the following would be a capital investment?
purchasing carpet cleaning equipment
marketing the business
renting commercial office space
hiring ten employees
48
Goods and services
Sold to households
Created in the factor market
are purchased in the product market.
Sold by firms
49
How did Bill Gates become rich?
concern for the environment
entrepreneurial skills
human relations experience
inheritance
50
Country X and Y will not trade shoes and wheat if which of the following is true?
Country Y can produce enough shoes and wheat to satisfy all
Opportunity costs are the same
Opportunity cost of producing shoes is greater in Country X
Country X can produce more shoes and wheat than Country Y
51
Loans extended for longer periods of time often involve higher interest rates in order to
encourage savings
encourage you to keep buying durable goods
compensate the buyer for using savings to make a purchase
compensate the lender for greater risk
52
Armand is a skilled carpenter from Minnesota. Why can't he work during the winter months?
extreme weather conditions
economic slowdown from Dec to March
cost of building materials
shortage of labor
53
Interdependence and price leadership are characteristics of firms in this market structure.
monopoly
monopolistic competition
oligopoly
perfect competition
54
Entrepreneurship and labor interact in which of the following ways?
Entrepreneurship makes decisions about the use of labor.
Both entrepreneurship and labor are rent payments
Labor makes decision about the use of entrepreneurship.
Both entrepreneurship and labor receive interest payments
55
If the exchange rate is 1 US Dollar for 1.5095 Canadian, then $100 US dollars is equal to
100 Canadian dollars
33 Canadian dollars
66 Canadian dollars
150 Canadian dollars
56
In the American economy, the goal of economic equity is MOST connected with
giving participants a fair chance to succeed
creating limits on corporate profits
restoring laissez-faire capitalism
subsidizing businesses that would otherwise fall
57
When economists refer to "demand", they mean which of the following?
how much consumers will purchase at different prices
how much people want the product if it is free
how much sellers will supply at a particular price
how much satisfaction buyers receive from a purchase
58
You receive a bonus of $2000 and put it in a one-year CD with a rate of 5%. Interest earned?
$50
$100
$10
$20
59
Which of the following is the MOST regressive?
a sales tax on food
a luxury tax
the federal income tax
the corporate income tax
60
You decide to see a movie instead of going out to eat a meal. What is the opportunity cost?
the satisfaction missed by not eating the meal
the time spent watching the movie
the satisfaction received from watching the movie
the money spent on the movie
