The elasticity of demand for an item is determined, in part, by the question:

Could something else take its place?

According to the graph above, the minimum wage:

doesn't really show us if our purchasing power has increased

One weakness of the sole proprietorship is that the:

business depends solely on the owner

does not have to pay a separate business tax

The FDIC was established to:

protect the savings of the American people

If a competitive market is at equilibrium, and if there is a sudden increase in demand, then:

a temporary shortage will occur and price will rise

Which of the following statements is true about GDP and the unemployment rate?

as GDP goes up, unemployment goes down

A tax is regressive when it:

imposes a higher percentage rate on lower incomes

An advantage of a merger between 2 companies is:

improved production and efficiency

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Economics Review

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Econ

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Questions 75

Answers

1
When firms involved in different phases of production merge, the result is a:
vertical merger
horizontal merger
conglomeration
multinational merger
2
A labor union may use all of the following EXCEPT:
strike
picket
lockout
boycott
3
The elasticity of demand for an item is determined, in part, by the question:
Could something else take its place?
Should production be cut?
Is there enough of the product available?
Can the purchase be made with a credit card?
4
Answer the following question...
comparative
monopolistic
relative
absolute
5
When a major car company lowers its prices, the other car makers will probably:
also lower their prices
raise their prices
maintain existing prices
go out of business
6
Answer the following question...
Adam Smith
John Maynard Keynes
John Kenneth Galbraith
Karl Marx
7
Answer the following question...
wage-price spiral
cost-push
excessive monetary growth
demand-pull
8
Labor unions have had which impact on wages in the US?
increased wages
decreased wages
no impact
9
A new firm finds it the most difficult to enter into an industry dominated by:
monopolistic competition
a monopoly
pure competition
an oligopoly
10
A labor meeting with management to negotiate a contract is called:
injunction
mediation
strike
collective bargaining
11
It's cheaper to live in some places than others, this is called...
labor mobility
inflation
labor theory of value
cost of living
12
A country in which the government controls economic decisions is a _____ economy.
free enterprise
traditional
market
command
13
The price paid to use another person's money is called:
interest
dividends
principal
bond
14
Answer the following question...
trade-offs
elastic demand
supply
opportunity costs
15
According to the graph above, the minimum wage:
increases every year
doesn't really show us if our purchasing power has increased
shows that $5.15 buys a lot more than $.25 did in 1939
16
____ would favor import tariffs and quotas.
Free-traders
Protectionists
OPEC
The Federal Reserve
17
Which of the following would be found in the product market?
a manager's salary
an employee's wages
an acre of land to grow crops
a new car
18
If the price of a product falls, producers will generally:
offer less for sale
offer more for sale
increase inputs
hold a clearance sale
19
Which shows what would happen to the supply of wheat if the gov't gave subsidies to farmers?
B
A
D
C
20
One weakness of the sole proprietorship is that the:
business depends solely on the owner
business will keep going after the owner dies
owner has no control
owner has too many partners
21
Money backed by government decree is called _____ money.
fiat
commodity
greenback
near
22
An increase in taxes has the same effect on a change in supply as an increase in:
demand
productivity
cost of inputs
diminishing returns
23
At which point on the graph would be equilibrium or market price?
B
C
A
24
The factor that would cause the supply curve to shift to the left is:
an increase in the number of sellers/producers
technological advances
increase in government subsidies
higher taxes
25
A sole proprietor:
is exempt from paying tax
has partners in his business
must rely on government subsidies
does not have to pay a separate business tax
26
The event that led to the Great Depression was:
FDR's New Deal
World War I
World War II
the Stock Market Crash of 1929
27
Answer the following question...
supply should increase
supply should stay the same
supply should decrease
28
Which of the following is not a factor of production?
labor
capital
cost
land
29
Which shows the demand for hybrid (get better mileage) cars when the price of gas increases?
B
D
A
C
30
Value of all final goods, services, and structures produced in a country's borders in one year
national debt
CPI
per capita income
GDP
31
Tools, equipment, and factories used in production are called:
products
capital
goods
utilities
32
The FDIC was established to:
protect the savings of the American people
federalize the banking system
help finance WWII
create a government money supply
33
The statement, "the demand for a product varies inversely with its price" is a definition of:
Law of Supply
Law of Competition
Law of Demand
laissez-faire
34
All of the following describe our current US money EXCEPT:
it is legal tender
it is backed by gold
it is a Federal Reserve note
it is fiat money
35
The sales tax on a new car is an example of a ____ tax.
regressive
ability to pay
proportional
progressive
36
If a competitive market is at equilibrium, and if there is a sudden increase in demand, then:
a temporary shortage will occur and the price will fall
a temporary surplus will occur and the price will fall
a temporary surplus will occur and the price will rise
a temporary shortage will occur and price will rise
37
Answer the following question...
benefits-received
progressive
regressive
proportional
38
Public utilities are examples of:
oligopolies
natural monopolies
perfect competition
monopolistic competition
39
The 3 basic economic questions that must be answered are:
What? How? For Whom?
What? How? When?
What? Where? When?
Why? What? How?
40
Alternative choices made by consumers in the marketplace (like buying jeans instead of food)...
trade off
opportunity cost
scarcity
conspicuous consumption
41
At which point would there be a surplus?
C
A
B
42
Which of the following statements is true about GDP and the unemployment rate?
it takes years for the GDP to affect the unemployment rate
as GDP goes up, unemployment goes down
as GDP goes up, unemployment goes up
GDP and the unemployment rate are not related
43
A tax is regressive when it:
is based on the ability to pay
imposes a higher percentage rate on lower incomes
gives rebates to low income families
taxes incomes only above $100,000
44
An advantage of a merger between 2 companies is:
establishing a legal monopoly
improved production and efficiency
establishing a voluntary transaction
increasing costs
45
The philosophy of Adam Smith that government should not interfere with trade is called...
conspicuous consumption
laissez-faire
entrepreneurship
invisible hand
46
Answer the following question...
paradox of value
opportunity cost
consumer good
trade off
47
Index which tracks changes in prices for common consumer items:
GDP
FICA
CPI
GNP
48
The Federal Reserve System is made up of ____ district banks.
8
10
14
12
49
The most common form of business organization in the US is the:
partnership
corporation
sole proprietorship
non-profit organization
50
Which of the following could be a positive effect of raising the minimum wage?
management cutting back on employees
higher pay for individuals
management cutting back on employee hours
higher prices for products
51
At which point would there be a shortage?
A
B
C
52
The federal government's 2 largest expenditures are:
Medicare and Social Security
Social Security and welfare
Social Security and interest on national debt
national defense and subsidies to farmers
53
All of the following are tools of the Federal Reserve System EXCEPT for:
reserve requirements
deficit spending
open market operations
discount rate
54
Economics may best be defined as:
study of banking and Federal reserve
describing economic activities
study of efforts to satisfy wants with resources
scientific study of supply and demand
55
If consumers' incomes go up, for most products we can expect:
an increase in quantity demanded
marginal utility to decline
an increase in demand
a substitution effect
56
Banks became subject to strict government regulation because of:
inflation of the 1980's
request for bank regulation
power of the Treasury Department
bank failures of the Great Depression
57
The US answers the basic economic questions by using a _____ system...
laissez-faire
traditional
mixed economy
command
58
According to the traditional theory of wages, wages are determined mainly by...
the Fair Labor Standards Act
supply and demand
regional differences
labor-management negotiations
59
Third world countries such as Kenya and Ethiopia are examples of ______ economic systems.
command
capitalistic
traditional
market
60
Mergers and acquisitions might result in:
smaller companies
increases in consumer demand
more competition
inadequate competition
61
In comparing stocks and bonds, bonds are:
higher risk, higher return
higher risk, lower return
lower risk, lower return
lower risk, higher return
62
A "tight money" (also called contractionary) policy:
encourages economic growth
restricts the growth of the money supply
increases bank loans
causes interest rates to decline
63
The diagram is referred to as the...
Production Possibility Frontier (Curve)
Business Cycle
Circular Flow Model
Supply and Demand Curve
64
The theory of a classless society with no private ownership of business was developed by:
Adam Smith
Karl Marx
John Maynard Keynes
Adolf Hitler
65
In what year would inflation most likely occur?
11
5
9
1
66
Which of the following factors is the most important in economics?
technology
circular flow model
scarcity
production possibility curve
67
In what year has recession or depression occurred?
11
1
9
5
68
A business agreement between 2 or more people that does not sell stock is a:
sole proprietorship
corporation
cooperative
partnership
69
Government subsidies have the effect of:
raising costs
forcing producers to leave the market
lowering the cost of production
reducing supply
70
Low interest rates:
increase consumer borrowing
encourage home building
increase automobile sales
all of these
71
Answer the following question...
point C to point B
point B to point D
point A to point D
point B to point A
72
A risk-taker in search of profits is a(n):
entrepreneur
economist
laissez-faire
socialist
73
If the price of a product decreases and consumers buy more of the product:
there has been an increase in demand
a change in quantity demanded has taken place
the product is a complementary good
a change in demand has taken place
74
If the price of milk doubles and your salary remains the same, you would probably...
buy more milk
buy less milk
buy the same amount of milk
buy more complementary goods
75
The Clayton Antitrust Act was a victory for labor unions because unions were:
declared not to be monopolies
allowed to elect representatives to Congress
protected by the President
declared unconstitutional

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