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