Why might the government let a monopoly exist?

SOMETIMES ONE LARGER FIRM CAN BE MORE EFFICIENT THAN MANY SMALLER ONES

How can you find the "Future Value"?

TAKE THE PRESENT VALUE AND ADD VALUE BASED ON THE INTEREST RATES

Which of the following people would be considered "Unemployed"?

A STAY-AT-HOME MOM LOOKING FOR A PART-TIME JOB

What are "Intrinsic Incentives"?

INCENTIVES THAT DO NOT NECESSARILY HAVE A PAYOFF WITH A DOLLAR VALUE

What is a "Resource Allocation"?

THE RESULT OF ALL THE DIFFERENT DECISIONS MADE THROUGHOUT AN ECONOMY

Why do externalities exist?

BECAUSE NOT ALL COSTS AND BENEFITS ARE FELT BY PEOPLE MAKING THE CHOICE

What is the Real Interest Rate?

THE NOMINAL INTEREST RATE AFTER INFLATION

Market Equilibrium is...

THE PRICE RANGE WHERE THE QUANTITY SUPPLIED EQUALS THE QUANTITY DEMANDED

Why don't economists use nominal GDP?

A DOLLAR TODAY IS NOT WORTH THE SAME AS A DOLLAR LAST YEAR

What is "Consumer Surplus"?

THE "PROFIT" A BUYER GETS - THE DIFFERENCE BETWEEN WHAT THEY HAD TO PAY AND

What do you need to start a Sole Proprietorship?

NOTHING, ANYONE CAN START ONE ANY TIME

Why did margin trading cause so many problems?

WHEN STOCKS USED AS COLLATERAL STARTED TO LOSE VALUE, BROKERS FORCED BORROW

What is one potential strength of Communism?

A PLANNER CAN TRY TO DISTRIBUTE RESOURCES TO THE BENEFIT OF EVERYONE

What is the tradeoff businesses face for long-term growth?

INVESTING MORE IN MARKETING OR RESEARCH

Why is the marginal benefit and cost important to government programs?

TO SEE WHICH PROGRAMS COMPARATIVELY OVER- OR UNDER-SPEND BASED ON RESULTS

What is Cyclical Unemployment?

UNEMPLOYMENT CAUSED BY THE BUSINESS CYCLE

What are the two main factors that contribute to the time value of money?

OPPORTUNITY COST AND INTEREST RATES

What is one way to gain a comparative advantage?

BY GETTING EXTRA TRAINING AND PRACTICE TO MAKE YOU BETTER AT WHAT YOU DO

What is the purpose of "Taxes and Transfers"?

CHANGE THE DISTRIBUTION OF WEALTH

Why do we want to maximize the Total Surplus?

THIS GENERATES THE BIGGEST BENEFIT TO SHARE BETWEEN BUYERS AND SELLERS

Why do the rich tend to invest more than the poor?

SPENDING ON CONSUMPTION IS LESS BENEFICIAL THE MORE YOU HAVE, SO IT GETS MO

How much debt is "too much"?

IF THE GOVERNMENT IS LESS ABLE TO REPAY ITS DEBT, IT IS TAKING ON TOO MUCH

Can a country use the Leapfrog Effect to surpass the technology of the country they buy from?

NO, LEAPFROGGING CAN ONLY BRING A COUNTRY UP TO THE LEVEL OF ANOTHER

Why does the Quantity Supplied increase with Price?

HIGHER PRICES MEAN HIGHER PROFITS, SO COMPANIES WANT TO PRODUCE MORE

Why is speculative trading dangerous?

PRICES BECOME BASED ON HYPE INSTEAD OF VALUE OF THE COMPANY, AND SO

Why do opportunity costs change over time?

THE TOTAL AMOUNT OF RESOURCES CHANGE

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Questions 97

Answers

1
What investment is similar to the first Paper Money?
STOCKS
MONEY MARKET FUNDS
CERTIFICATES OF DEPOSIT
BONDS
2
Why might the government let a monopoly exist?
ALMOST ALWAYS BECAUSE OF BRIBERY
SOMETIMES ONE LARGER FIRM CAN BE MORE EFFICIENT THAN MANY SMALLER ONES
BECAUSE IT INCREASES INNOVATION AND GROWTH
THEY DON'T, ANTI-TRUST LAWS ALWAYS BREAK UP MONOPOLIES
3
If you want to compare two different country's economies in the same year, which would be the most useful measurement?
REAL GDP
NET EXPORTS
Per Capita GDP
NOMINAL GDP
4
How can you find the "Future Value"?
TAKE THE PRESENT VALUE AND ADD VALUE BASED ON THE INTEREST RATES
TAKE THE PRESENT VALUE AND SUBTRACT INFLATION
TAKE THE PRESENT VALUE AND ADD APPRECIATION
TAKE THE PRESENT VALUE AND ADD INFLATION
5
Which of the following people would be considered "Unemployed"?
A PERSON WHO WORKS 3 HOURS PER WEEK WHILE LOOKING FOR A FULL TIME JOB
A STAY-AT-HOME MOM LOOKING FOR A PART-TIME JOB
A PERSON WITHOUT A JOB WHO HAS NOT LOOKED FOR NEW JOBS IN THE LAST MONTH
A STUDENT LOOKING FOR A SUMMER JOB
6
What are "Intrinsic Incentives"?
INCENTIVES THAT BALANCE OUR WANTS AND NEEDS EQUALLY
INCENTIVES THAT ONLY APPLY TO ONE PERSON
INCENTIVES THAT DO NOT NECESSARILY HAVE A PAYOFF WITH A DOLLAR VALUE
INCENTIVES MARKETERS TRY TO EXPLOIT THE MOST TO GET US TO SWITCH PRODUCTS
7
What is a "Resource Allocation"?
HOW MUCH TIME IS BEING USED TO PRODUCE DIFFERENT THINGS
THE RESULT OF ALL THE DIFFERENT DECISIONS MADE THROUGHOUT AN ECONOMY
HOW MUCH MONEY IS BEING SPENT, AND ON WHAT
THE PERCENTAGE OF TOTAL WEALTH HELD BY THE RICH
8
Which of the following can make price change?
A CHANGE IN SUPPLY
ALL OF THE ABOVE
A CHANGE IN THE QUANTITY DEMANDED
A CHANGE IN GOVERNMENT POLICIES
9
What is an impact of higher wages?
EMPLOYEES WORK MORE
BOTH A AND C
EMPLOYEES WORK LESS
EMPLOYERS HIRE MORE
10
Which of the following does NOT contribute to economic growth?
RESEARCH AND DEVELOPMENT
CULTURAL SHIFTS WITH INCENTIVES
HIGHER RATES OF INVESTMENT
EXISTING TECHNOLOGY
11
Why do externalities exist?
BECAUSE NOT ALL COSTS AND BENEFITS ARE FELT BY PEOPLE MAKING THE CHOICE
BECAUSE OF BRIBERY
BECAUSE LAWS ARE TOO LAX
BECAUSE THE ENVIRONMENT CAN ABSORB A SMALL AMOUNT OF POLLUTION
12
Which of the following would likely make your wage go up?
MORE PEOPLE WITH UNIVERSITY DEGREES
MORE COMPETITION
MORE SKILLS
MORE DISCRIMINATION
13
What happens when people expect higher inflation?
INTEREST RATES GO UP
INTEREST RATES GO DOWN
INFLATION FOLLOWS EXPECTATIONS AND GOES UP
INFLATION DEFIES EXPECTATIONS AND GOES DOWN
14
What is the Real Interest Rate?
THE NOMINAL INTEREST RATE BEFORE INFLATION
THE INTEREST RATE PLUS FEES
THE INTEREST RATE YOU ARE ACTUALLY CHARGED
THE NOMINAL INTEREST RATE AFTER INFLATION
15
Market Equilibrium is...
WHERE THE MOST TRADES ARE MADE
THE QUANTITY WHERE NO MORE BUYERS WANT TO BUY STOCK
WHAT HAPPENS WHEN THERE ARE THE SAME NUMBER OF BUYERS AND SELLERS
THE PRICE RANGE WHERE THE QUANTITY SUPPLIED EQUALS THE QUANTITY DEMANDED
16
Why don't economists use nominal GDP?
BECAUSE REAL GDP IS A MORE ACCURATE MEASUREMENT, NOMINAL IS JUST AN ESTIMAT
GDP IS DIRECTLY DEPENDENT ON INTEREST RATES
INFLATION IS A STRONG INDICATOR OF GROWTH
A DOLLAR TODAY IS NOT WORTH THE SAME AS A DOLLAR LAST YEAR
17
What is "Consumer Surplus"?
A VERY CURVY BUYER
THE NUMBER OF EXTRA SHARES THAT ARE AVAILABLE FOR PURCHASE, BUT WENT UNSOLD
THE "PROFIT" A SELLER GETS - THE DIFFERENCE BETWEEN WHAT THE PRICE THEY GOT
THE "PROFIT" A BUYER GETS - THE DIFFERENCE BETWEEN WHAT THEY HAD TO PAY AND
18
What do you need to start a Sole Proprietorship?
FILE PAPERWORK WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC)
NOTHING, ANYONE CAN START ONE ANY TIME
AT LEAST ONE PARTNER TO LIMIT YOUR LIABILITY
TRADEMARK A BUSINESS NAME
19
If a country or person wants to increase its level of investment, what does it need to give up?
LABOR PRODUCTIVITY
SCHOOLING
RESEARCH AND DEVELOPMENT
CONSUMPTION
20
Why do some countries have higher growth rates than others?
ALL of the above
DIFFERENT LEVELS OF TECHNOLOGY
DIFFERENT RATES OF INVESTMENT
DIFFERENT CULTURAL INCENTIVES
21
Why did margin trading cause so many problems?
BORROWING ANY MONEY FOR INVESTMENTS IS ALWAYS VERY RISKY
ONLY INEXPERIENCED INVESTORS WERE USING MARGIN, SO THEY WERE DOOMED TO FAIL
ONE OF THE BANKS IS MOSTLY FOR GOLD STORAGE AND IS LESS IMPORTANT
WHEN STOCKS USED AS COLLATERAL STARTED TO LOSE VALUE, BROKERS FORCED BORROW
22
What is one potential strength of Communism?
IT IS EASIER TO PUT YOUR SAVINGS TO WORK THROUGH INVESTMENT
IT IS MUCH EASIER TO GET A CAREER YOU ENJOY
A PLANNER CAN TRY TO DISTRIBUTE RESOURCES TO THE BENEFIT OF EVERYONE
THERE IS LESS INCENTIVE FOR "BLACK MARKETS" TO FORM TRADING ILLEGAL GOODS
23
What is the tradeoff businesses face for long-term growth?
TRYING TO CHOOSE PROGRAMS THAT HAVE SHORT-TERM BENEFITS TO THOSE WHO NEED
INVESTING MORE IN MARKETING OR RESEARCH
WORKING MORE OR FEWER HOURS, AND USING EXTRA TIME TO STUDY
MAXIMIZING PROFITS
24
If the government wants to make sure resources are efficiently allocated, they will most likely rely on…
A MARKET SURPLUS
A PRICE CEILING
A PRICE FLOOR
A MARKET EQUILIBRIUM
25
Which of the following would be the Opportunity Cost of buying Apple stock?
YOU CAN'T BUY A SANDWICH WITH THAT MONEY
ALL OF THE ABOVE
YOU CAN'T BUY A MUTUAL FUND WITH THAT MONEY
YOU CAN'T BUY GOOGLE WITH THAT MONEY
26
Why is the marginal benefit and cost important to government programs?
BECAUSE IT HELPS REDUCE TOTAL WASTE
TO SAVE TAX DOLLARS FOR THE CITIZENS
TO SEE WHICH PROGRAMS COMPARATIVELY OVER- OR UNDER-SPEND BASED ON RESULTS
BECAUSE HIGH-COST PROGRAMS SHOULD ALWAYS BE REPLACED
27
What is Cyclical Unemployment?
UNEMPLOYMENT CAUSED BY JOBS THAT CYCLE EVERY YEAR, LIKE RETAIL ASSOCIATES
UNEMPLOYMENT CAUSED BY PEOPLE LEAVING THEIR JOBS AND LOOKING FOR NEW ONES E
UNEMPLOYMENT CAUSED BY THE LIFECYCLE OF SKILLS, LIKE TYPEWRITING AND HORSE
UNEMPLOYMENT CAUSED BY THE BUSINESS CYCLE
28
What is the biggest incentive for large companies?
PAY LARGE DIVIDENDS TO STOCKHOLDERS
MAKE THE BEST PRODUCTS
EARN MORE PROFITS
DRIVE COMPETITORS OUT OF BUSINESS
29
What is the overall impact on a society for a good that has negative externalities?
THERE IS A SOCIETAL SHORTAGE
TAXES NEED TO BE INCREASED
TAXES NEED TO BE DECREASED
THERE IS A SOCIETAL SURPLUS
30
What are the two main factors that contribute to the time value of money?
NONE OF THE ABOVE
RATES OF RETURN AND OPPORTUNITY COST
INTEREST RATES AND RATES OF RETURN
OPPORTUNITY COST AND INTEREST RATES
31
What is the currency in the United States backed by?
SILVER
DEBT
BOTH A AND B
GOLD
32
What would the impact on wages be if a necessary input at a company goes up?
WAGES GO DOWN
WAGES STAY THE SAME
UNCERTAIN
WAGES GO UP
33
What do high interest rates encourage?
SAVING
SPENDING
BORROWING
INVESTING
34
What is one way to gain a comparative advantage?
BY SUCCESSFUL SALARY NEGOTIATIONS WHEN STARTING YOUR NEXT JOB
BY GETTING A PROMOTION THAT PAYS MORE, SO YOUR WORK IS MORE VALUABLE
BY GETTING EXTRA TRAINING AND PRACTICE TO MAKE YOU BETTER AT WHAT YOU DO
BY GAINING BASIC KNOWLEDGE OF MANY INDUSTRIES SO YOU CAN SWITCH JOBS TO FIN
35
What do producers use when choosing inputs?
MARGINAL COSTS
NEITHER
MARGINAL BENEFITS
BOTH
36
If a person has a higher time value of money than the current prime interest rate, they are more likely to…
SAVE LESS NOW, AND MORE LATER
SAVE MORE
SAVE MORE NOW, AND LESS LATER
SAVE LESS
37
What is the purpose of "Taxes and Transfers"?
THE MECHANISM THAT POLITICIANS USE TO GET WEALTHY
CHANGE THE DISTRIBUTION OF WEALTH
TAXING BANKS ON TRANSACTION FEES
PUNISH THE WEALTHY FOR GREED
38
Which of the following groups have the highest unemployment rate in the last 10 years?
HIGH SCHOOL DROP-OUTS
YOUNG PEOPLE
WOMEN
AFRICAN AMERICANS
39
What can make the wages of unskilled workers go down?
GROWTH IN HIGH-TECH SALARIES
STRONGER LABOR UNIONS
MORE TECHNOLOGY
MORE COMPETITION FROM SKILLED WORKERS FOR THE SAME JOBS
40
If the Supply Line shifts right, you have…
A DECREASE IN THE QUANTITY SUPPLIED ONLY
AN INCREASE IN SUPPLY
A DECREASE IN SUPPLY
AN INCREASE IN THE QUANTITY SUPPLIED ONLY
41
Why do we want to maximize the Total Surplus?
THIS GIVES BUYERS THE LOWEST PRICES
THIS GENERATES THE BIGGEST BENEFIT TO SHARE BETWEEN BUYERS AND SELLERS
IF WE USE ANOTHER SYSTEM, ALL THE SELLERS WILL PROBABLY CHEAT
THIS GIVES ALL THE SELLERS THE MOST PROFIT
42
Which of the following increases competition?
ABUNDANT INFORMATION
BARRIERS TO ENTRY
FEWER POTENTIAL BUYERS
VERY FEW SUBSTITUTES
43
Which of the following would likely lower your interest rate for a loan?
OWNING LOTS OF BONDS
HAVING NO PREVIOUS CREDIT HISTORY
HAVING A FRIEND VOUCH FOR YOU AT THE BANK
PAYING ALL YOUR BILLS ON TIME
44
Why do the rich tend to invest more than the poor?
IT TAKES A LOT OF MONEY TO MAKE YOUR FIRST INVESTMENTS
THE POOR DO NOT KNOW THE BENEFITS OF INVESTING
THE RICH HAVE MORE LEISURE TIME TO USE TO INVESTIGATE INVESTMENTS
SPENDING ON CONSUMPTION IS LESS BENEFICIAL THE MORE YOU HAVE, SO IT GETS MO
45
How much debt is "too much"?
IF THE DEBT-TO-GDP RATIO IS OVER 2
TOTAL DEBT IS IRRELEVANT - THE GOVERNMENT CAN JUST PRINT MONEY TO PAY OFF
ANY DEBT - THE GOVERNMENT SHOULD WORK TOWARDS PAYING OFF ANY DEBT AS SOON
IF THE GOVERNMENT IS LESS ABLE TO REPAY ITS DEBT, IT IS TAKING ON TOO MUCH
46
Can a country use the Leapfrog Effect to surpass the technology of the country they buy from?
NO, LEAPFROGGING CAN ONLY BRING A COUNTRY UP TO THE LEVEL OF ANOTHER
NO, THE HUGE COST OF LEAPFROGGING MEANS A COUNTRY WILL ALWAYS HAVE A HARD
YES, LEAPFROGGING INCREASES GROWTH RATES, AND WILL CAUSE TECHNOLOGY TO QUIC
NO, LEAPFROGGING IS JUST THEORETICAL, IT HAS NEVER BEEN PUT INTO PRACTICE
47
Why does the Quantity Supplied increase with Price?
AS PRODUCERS INCREASE THEIR SUPPLY, IT ATTRACTS MORE CONSUMERS, DRIVING PRI
SUPPLY TENDS TO INCREASE WHEN INPUT PRICES INCREASE, DRIVING UP PRICES
HIGHER PRICES MEAN HIGHER PROFITS, SO COMPANIES WANT TO PRODUCE MORE
tHE SUPPLY INCREASES ONLY AFTER THE QUANTITY DEMANDED INCREASES
48
An increase in Quantity Supplied can come from…
BOTH A AND B
AN INCREASE IN DEMAND
AN INCREASE IN SUPPLY
A DECREASE IN DEMAND
49
Why is speculative trading dangerous?
PRICES BECOME BASED ON HYPE INSTEAD OF VALUE OF THE COMPANY, AND SO
SPECULATION ONLY REALLY HAPPENS AROUND STOCKS BASED ON SOME SORT OF SCAM
TOO MUCH ATTENTION ON SOME SPECULATIVE STOCKS MEANS OTHER GOOD INVESTMENTS
ALL STOCKS EVENTUALLY LOSE MUCH OF THEIR VALUE
50
Why do opportunity costs change over time?
THE TOTAL AMOUNT OF RESOURCES CHANGE
BECAUSE OF INTEREST RATES
BECAUSE OF INFLATION
OPPORTUNITY COSTS DO NOT CHANGE OVER TIME
51
Why are there two Federal Reserve Banks in Missouri?
ONE OF THE BANKS IS MOSTLY FOR GOLD STORAGE AND IS LESS IMPORTANT
TO BALANCE THE BANKS ON THE EAST COAST AND WEST COAST
POLITICS
WHEN BANKS NEED TO SHIP CURRENCIES TO EACH OTHER ACROSS THE COUNTRY,
52
How do researchers calculate the Consumer Price Index?
THEY USE A SURVEY OF THOUSANDS OF PEOPLE TO ASK HOW THEIR SPENDING HABITS
IT IS CALCULATED BASED ON THE INTEREST RATES AT BANKSv
THEY WATCH THE PRICES OF A LARGE GROUP OF CONSUMER GOODS AROUND THE COUNTRY
THEY WATCH HOW MUCH COAL, IRON, AND OTHER RAW MATERIALS, COST
53
How do businesses that fail help the economy?
ALL OF THE ABOVE
GIVING EMPLOYEES WORK EXPERIENCE THEY CAN USE LATER
GIVES THE ENTREPRENEUR EXPERIENCE THEY CAN USE ON THEIR NEXT PROJECT
DEVELOPMENT OF NEW TECHNOLOGIES LATER ADOPTED BY OTHERS
54
Why is the division of labor important?
BECAUSE IT ALLOWS WORKERS TO BEST USE THEIR COMPARATIVE ADVANTAGES
BECAUSE IT IS AN IMPORTANT MANAGEMENT TECHNIQUE PERFECTED WITH THE ASSEMBLY
BECAUSE IT PREVENTS WORKERS FROM GETTING BORED, INCREASING PRODUCTIVITY
BECAUSE IT MAKES SURE WORKERS ALWAYS HAVE THE JOBS THEY LIKE THE MOST
55
Fiscal policy includes…
BOTH B AND C
SETTING TAXES AND SPENDING
SETTING INTEREST RATES AND SPENDING
SETTING TAXES AND INTEREST RATES
56
What is one unintended impact of anti-trust laws?
LOWER PRICES
MORE COMPETITION
MORE INNOVATION
MORE LAWSUITS
57
What are incentives used for?
MOSTLY FOR POLITICIANS TRYING TO GET VOTES
TO DECIDE HOW TO USE LIMITED RESOURCES
ONLY FOR BUSINESSES TO DRIVE PROFIT
ONLY FOR INDIVIDUALS PLAYING GAMES
58
If the government wants to protect consumers, they will most likely use…
A PRICE CEILING
A MARKET EQUILIBRIUM
A PRICE FLOOR
A MARKET SURPLUS
59
Which of the following would cause interest rates to go down?
MORE PEOPLE WOULD LIKE TO CONSUME MORE, INCREASING THEIR TIME VALUE OF MONE
MORE PEOPLE WOULD LIKE TO CONSUME MORE, DECREASING THEIR TIME VALUE OF MONE
RATES OF RETURN IN THE STOCK MARKET GO DOWN
RATES OF RETURN IN THE STOCK MARKET GO UP
60
Why does scarcity exist?
WE HAVE INFINITE WANTS
WE DON'T HAVE INFINITE RESOURCES
WE NEED TO CHOOSE HOW WE DIVIDE OUR TIME BETWEEN PRODUCTION AND RECREATION
ALL OF THE ABOVE
61
Which of the following is NOT a Barrier to Entry?
HIGH TAXES
LITTLE CAPITAL AVAILABLE TO START A COMPETITOR
LOW MARKET DEMAND
HIGH LICENSING FEES
62
What has happened to Cottage Artisans since the advent of the internet?
THEY HAVE BEEN FINALLY BEEN FULLY REPLACED BY E-COMMERCE
ARTISANS HAVE BEEN LARGELY UNAFFECTED BY THE INTERNET SINCE THEY FOCUS ON
IT REMAINS DELEGATED TO CUSTOM GOODS LIKE TAILORED SUITS
MORE ARTISANS HAVE OPENED SHOPS THANKS TO PLACES LIKE ETSY
63
What is the difference between a "Market" economy and a "Command" economy?
MARKET ECONOMIES ALWAYS GROW FASTER
COMMAND ECONOMIES ARE ALL MUCH OLDER
WHETHER OR NOT THERE IS A "CENTRAL PLANNER"
MARKET ECONOMIES RELY LESS ON FARMING
64
If a country produces a product which is then consumed in some other country, how does it impact GDP?
EXPORT - SUBTRACTED FROM GDP
EXPORT - ADDED TO GDP
IMPORT - SUBTRACTED FROM GDP
IMPORT - ADDED TO GDP
65
What is a Comparative Advantage?
ALL OF THE ABOVE
A NATURAL ADVANTAGE A COUNTRY MIGHT HAVE IN THEIR RESOURCES THAT allows
A BENEFIT OF SILICON VALLEY IN PRODUCING SOFTWARE BECAUSE OF THE HIGH CONCE
ONE WORKER BEING SLIGHTLY BETTER AT BUILDING ENGINES THAN ANOTHER
66
Which is the most appropriate place for an Auction?
WHEN THERE ARE MANY SELLERS BUT FEW BUYERS
WHEN THERE ARE MANY BUYERS AND SELLERS
WHEN THERE ARE FEW SELLERS BUT MANY BUYERS
BOTH B AND C
67
In our example, what would be the Quantity demanded at a market price of $20?
5
7
9
3
68
What role did Cottage Industry artisans play in the Industrial Revolution?
IT WAS REPLACED OVERNIGHT BY FACTORIES
THEY WORKED TOGETHER WITH FACTORIES TO PRODUCE DIFFERENT STAGES OF THE SAME
IT WAS LARGELY UNAFFECTED, SINCE INDUSTRIAL PRODUCTION FOCUSED ON DIFFERENT
COTTAGE ARTISANS UNIVERSALLY RESISTED FACTORIES
69
What happens if banks do not have enough cash to satisfy their reserve requirements at the end of the day?
THEY MUST PAY HEAVY FINES
NOTHING, UNLESS IT DOES IT MANY TIMES IN A ROW
THEY MUST BORROW FROM THE FEDERAL RESERVE OR ANOTHER BANK
THEY GO OUT OF BUSINESS
70
Why do Reserve Requirements exist?
TO PREVENT THE MONEY SUPPLY FROM GROWING TOO QUICKLY
BECAUSE HIGHER RESERVE REQUIREMENTS ALWAYS LEADS TO MORE STABLE BANKS
TO HELP LOWER OVERALL INTEREST RATES
TO MAKE SURE BANKS HAVE ENOUGH CASH TO SERVE CUSTOMERS WHO WANT TO WITHDRAW
71
Which of the following would cause inflation to fall?
EXPANSION
RECESSION
DECREASE IN POTENTIAL GDP
INCREASE IN POTENTIAL GDP
72
What does it mean when payroll employment and unemployment both increase?
THESE TWO STATISTICS ARE NOT DIRECTLY LINKED
jOBS WERE LOST AND PEOPLE LEFT THE LABOR FORCE
MORE PEOPLE ENTERED THE LABOR FORCE THAN JOBS WERE CREATED
MORE JOBS WERE CREATED THAN PEOPLE ENTERED THE LABOR FORCE
73
Who is most likely to become an entrepreneur?
SOMEONE WHO WANTS TO WORK ON THEIR OWN
SOMEONE WHO WANTS TO WORK FROM HOME TO AVOID THE COMMUTE
SOMEONE WHO WANTS TO MAKE QUICK PROFITS
SOMEONE WHO HAS A HUGE APPETITE FOR RISK
74
What is the core problem studied in economics?
HOW TO DRIVE MORE GLOBAL GROWTH
HOW TO MEASURE ALL THE COSTS AND BENEFITS WHEN MAKING DECISIONS
WHAT IS THE BEST ALLOCATION SYStem
HOW TO LOWER UNEMPLOYMENT
75
What is the main job of the Federal Reserve?
MAKING SURE BANKS ARE PROFITABLE
CONTROLLING INFLATION
INCREASING EMPLOYMENT
BOTH A AND B
76
If the government wants to protect producers, they will most likely use…
A PRICE CEILING
A MARKET SURPLUS
A MARKET EQUILIBRIUM
A PRICE FLOOR
77
Which of the following will most likely raise people out of poverty?
HIGHER CORPORATE PROFITS
INCREASE TO LABOR PRODUCTIVITY
HIGHER EXPORTS
HIGHER IMPORTS
78
What GDP?
THE TOTAL OUTPUT OF ALL INDUSTRY IN A COUNTRY
THE TOTAL VALUE OF ALL FINISHED GOODS AND SERVICES PRODUCED BY A COUNTRY
THE TOTAL INCOME FROM ALL PEOPLE AND COMPANIES IN A COUNTRY
THE DIFFERENCE BETWEEN PURCHASING POWER IN DIFFERENT COUNTRIES
79
Under which of the following conditions will the total National Debt decrease?
WHEN THE GOVERNMENT RUNS A DEFICIT
WHEN THE GOVERNMENT HAS A BALANCED BUDGET
WHEN THE GOVERNMENT RUNS A SURPLUS
BOTH B AND C
80
Which branch of math can be used to calculate marginal cost from an equation?
ALGEBRA
CALCULUS
GEOMETRY
TRIGONOMETRY
81
Which group has the lowest unemployment rate?
YOUNG PEOPLE EAGER FOR WORK
PEOPLE WITH A HIGH SCHOOL EDUCATION
AFRICAN AMERICANS
PEOPLE WITH A UNIVERSITY DEGREE
82
What is Limited Liability?
THE TYPE OF COMPANY STARTED AS A FULL PARTNERSHIP
SIMILAR TO A TRADEMARK, IT IS PAPERWORK FILED TO START A CORPORATION
A TYPE OF INSURANCE WITH PARTIAL COVERAGE
A PERSON WITH LIMITED LIABILITY CAN ONLY LOSE UP TO THEIR OWNERSHIP IN THE
83
What is one major advantage of Cottage Industry production?
IT ALLOWS A WORKFORCE TO EASILY SWITCH BETWEEN FARMING AND INDUSTRY
THE INDEPENDENT CRAFTSMAN ALWAYS MAKE BETTER FINISHED PRODUCTS
IT IS A MORE EFFICIENT METHOD OF PRODUCTION IN LARGER CITIES
IT ENSURES THAT LARGE QUANTITIES OF ITEMS ARE PRODUCED TO THE SAME STANDARD
84
What happens when there is less competition in a market?
ALL OF THE ABOVE
LESS PRODUCTION
LESS INNOVATION
HIGHER PRICES
85
Which of these is NOT one of the causes of the stock crash?
NEW INVESTORS TRADING ON SPECULATION RATHER THAN VALUE
NEW TECHNOLOGIES MADE MANY OLD COMPANIES to fail
FALLING WHEAT PRICES
TOO MUCH MARGIN TRADING
86
Which of the following is used to calculate the Potential Level of GDP?
THE TOTAL SIZE OF THE CURRENT GLOBAL ECONOMY
THE TOTAL AMOUNT OF SAVINGS FROM INDIVIDUALS
THE TOTAL SIZE OF THE LABOR FORCE
ALL INTERMEDIATE GOODS AND SERVICES
87
Which of the following encourages the most investment?
HIGH INTEREST RATES
NEW CONSUMER GOODS
LOW INTEREST RATES
LOW LABOR PRODUCTIVITY
88
Why would a person want to form a Corporation?
BECAUSE THEY ARE NOT SURE IF THE BUSINESS WILL SUCCEED, SO THEY WANT LIMIT
CORPORATIONS ONLY RISE OUT OF PREVIOUS PARTNERSHIPS WHEN THERE ARE A LOT OF
TO RETAIN ALL THE PROFITS IF THE BUSINESS IS SUCCESSFUL
TO RAISE A LOT OF CAPITAL QUICKLY FOR BIG INVESTMENTS AND ECONOMIES OF SCAL
89
Why do governments promote entrepreneurship?
ALL OF THE ABOVE
HELP CREATING JOBS
BECAUSE THEY DISRUPT ESTABLISHED INDUSTRIES
THEY PROFIT OFF THE HIGH FAILURE RATE
90
Which of the following would most likely be a symptom of a recession?
UNEMPLOYMENT INCREASES BY 2%
CONSUMER SPENDING DROPS BY 8%
CONSUMER SAVING DROPS BY 10%
BUSINESS INVESTMENT INCREASES BY 4%
91
How can the economy be ahead of its Potential Level?
EXCESSIVE SPENDING
HIGH RATES OF SMART INVESTMENTS
MANY NEW BUSINESSES BEING CREATED
EXCESSIVE BORROWING
92
Why do politically-powerful groups get bigger positive impacts of externalities?
GOVERNMENT CORRECTION FAVORS THEM
BECAUSE THE POSITIVE IMPACTS ALWAYS OUTWEIGH THE NEGATIVE TO EVERYONE ELSE
BECAUSE OF CORRUPTION AND BRIBERY
MORE POWERFUL GROUPS BECAME POWERFUL BECAUSE OF THESE EXTERNAlities
93
What is a "Social Dividend"?
PROFITS THAT ARE DISTRIBUTED TO EVERYONE IN AN ECONOMY (OR JUST THE
THE GOOD FEELING YOU GET FROM HELPING YOU GET FROM HELPING YOUR FELLOW CITI
THE SHARE OF REVENUE THAT IS DISTRIBUTED TO COMPANY SHAREHOLDERS
A REVERSE TAX THAT THE GOVERNMENT PAYS TO ALL CITIZENS
94
Why is unemployment one of the most important economic indicators?
NONE OF THE ABOVE
BECAUSE IT SHOWS HOW MANY PEOPLE IN THE ECONOMY ARE STRUGGLING
BECAUSE IT SHOWS HOW PRODUCTIVELY THE ENTIRE WORKFORCE IS BEING USED
BOTH A AND B
95
Which type of unemployment still exists even when the economy is at "Full Employment"?
CYCLICAL UNEMPLOYMENT
SEASONAL UNEMPLOYMENT
FRICTIONAL UNEMPLOYMENT
STRUCTURAL UNEMPLOYMENT
96
Why does the quantity supplied of stock go up when prices go up?
COMPANIES WANT TO ISSUE MORE STOCK WHEN PRICES ARE HIGH
MORE EXPENSIVE STOCKS MAKE BETTER INVESTMENTS
More current owners are willing to sell their shares at a high price
SO SUPPLY WILL MATCH DEMAND
97
What is the most finite resource that everyone has?
MONEY
TIME
MACHINES
LAND

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