How are wages for a particular job determined?

by the equilibrium between supply and demand for workers

What condition is necessary for a fiat money system to work?

the government must control the money supply

How does a natural monopoly function?

a single firm supplies all the output

A shift in the demand CURVE means which of the following?

a change in demand at every price

What is a basic principle of the law of demand?

The lower the price, the more people will buy

What effect does new technology usually have on an economy?

it makes the economy stronger and more efficient

The lack of which of the following represents scarcity?

not enough workers because a limited supply of workers

a percentage of earnings paid for a franchise

What does it mean when a person is underemployed?

they have a job but they are overqualified for it

What does it mean when demand for a product is inelastic?

a price increase does not significantly impact buying habits

What is the function of the economic system?

to produce and distribute goods and services

What happens when wages are set above equilibrium level by law?

firms employ fewer workers than they would at equilibrium

Why did communist governments use command economies for so many years?

to attempt to create a society in which everyone is equal

How would the economy of Canada be likely characterized?

Mixed, but on the side of free market

What is the largest source of income for banks?

the interest they receive from loans

What is a company's total revenue?

the amount a company receives for selling its goods

Why does the government require businesses to disclose so much information to the public?

to make buyers more knowledgeable and safer

What is a fringe benefit?

a payment other than wages or salaries

What are inferior goods?

goods for which the demand rises when income falls

On which kinds of goods do governments generally place price ceilings?

goods that are essential, but too expensive form some people

What best describes the role of government in a free enterprise system?

allow individuals to operate their own businesses

What is the definition of oligopoly?

2-4 firms producing 70 to 80% of the output

What is the purpose of competition?

to act as a regulating force in the market place

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Economics Final Review

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Economics Comprehensive Final Review

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Questions 54

Answers

1
What incentive do manufactures have to sell their products?
pleasing the customers
making profits on sales
putting others out of business
popularity of the product
2
What is the cost of money?
the bank's use of money creation
the interest rate
the economy's use of open market operations
the smoothing out of fluctuations in the market
3
Which of the following is an example of a good with an inelastic supply?
hats
beanbag chairs
apples
toothbrushes
4
When revenues exceed expenditures,
there is a budget deficit
the government is forced to issue money
there is a budget surplus
the government must create more money
5
How are wages for a particular job determined?
by advertisements online
by the Federal Wage and Hour Department
by the equilibrium between supply and demand for workers
by the amount of inflation in the economy
6
What condition is necessary for a fiat money system to work?
money owed must be paid on time
customers with checking accounts cannot earn interest
banks must hold sufficient amounts of gold
the government must control the money supply
7
How does a natural monopoly function?
imperfect competition makes it difficult to do business
the government supplies all buyers for the product
a single firm supplies all the output
a few firms are in perfect competition
8
An example of contractionary fiscal policy would be
cutting taxes
increasing production of consumer goods
expanding the government's role in regulating businesses
decreasing government spending
9
A shift in the demand CURVE means which of the following?
a decrease in both price and quantity demanded
a change in consumer income
a rise in prices
a change in demand at every price
10
What do taxes collected under the Federal Insurance Contribution Act (FICA) fund?
Social Security and Medicare
Social Security and Medicaid
Medicaid and Supplemental Security
Medicare and Medicaid
11
What is a basic principle of the law of demand?
everyone has a limited income that they will spend
The lower the price, the more people will buy
services are of interest the same way that goods are
the higher the price, the more people will buy
12
When buyers purchase exactly as much as sellers are willing to sell
price floor
excess demand
supply and demand
equilibrium
13
Any resources that are made by humans and used to create other goods and services are called
capital
Services
production
labor
14
What effect does new technology usually have on an economy?
it reduces dependence of the economy on business
It reduces available jobs
it slows an economy down
it makes the economy stronger and more efficient
15
The lack of which of the following represents scarcity?
grapefruit juice because very few people buy it
orange juice because the trucks carrying it are on strike
not enough workers because a limited supply of workers
not enough workers because the pay is too low
16
What is the effect of import restrictions on prices?
they often cause prices to rise steeply and then drop
they usually do not have any lasting effect on price
they will cause prices to rise
They cause prices to drop
17
What are the money and other valuables that belong to a corporation or partnership called?
assets
liens
liabilities
ownership
18
What are royalties?
fees paid to celebrities for using their products
a percentage of profits paid to the government
a percentage of earnings paid for a franchise
fees paid to law firms and accountants
19
Which of the following is NOT a form of non-price competition?
physical characteristics
discounts
advertising
location
20
What is a mortgage used to purchase?
car
real estate
business expensses
college tuition
21
What does it mean when a person is underemployed?
they are looking for work in a special field
they were working but are now laid off
they have a job but they are overqualified for it
they aren't making as much money as they need
22
What does it mean when demand for a product is inelastic?
a price increase does not significantly impact buying habits
people will not buy the product when the price goes up
customers are sensitive to the price of the product
there are a lot of substitutes for the product
23
What factor has the greatest influence on elasticity of supply?
profit
financing
labor
time
24
What is the function of the economic system?
to give all producers the same access to consumers
to produce and distribute goods and services
to make sure all people have equal access to goods
to make sure people are paid for their labor
25
What happens when wages are set above equilibrium level by law?
Firms hire more workers but give them less hours
firms employ fewer workers than they would at equilibrium
Firms employ more workers than they would at equilibrium
firms break the law and hire people at lower wages
26
Which of the following is a fixed cost for a store?
hourly workers
inventory
electricity
rent
27
Why did communist governments use command economies for so many years?
to attempt to create a society in which everyone is equal
to keep consumers from getting what they want
to avoid the expense and difficulties of a free market
to limit the cost of production
28
About what percent of businesses are sole proprietorships?
40%
75%
25%
60%
29
How many Federal Reserve Districts are there?
12
20
9
6
30
What is one of the most important advantages of a free market?
It is easy to regulate
It encourages growth
It protects the less fortunate
It can change rapidly
31
In what kind of economy does the government make all the decisions?
free market
Laissez Faire
free enterprise
Centrally planned
32
Which of the following industries have been deregulated in recent years?
electricity
pharmaceuticals
airlines
low-cost housing
33
How would the economy of Canada be likely characterized?
Centrally Planned
Mixed, but on the side of free market
Mixed, but on the side of centrally planned
Free Market
34
What is one kind of monopoly that the U.S. Government permits?
professional sports leagues
the cell phone industry
low-price gasoline
certain kinds of medications
35
What is the largest source of income for banks?
special accounts such as NOW accounts
money deposited in savings accounts
the interest they receive from loans
fees charged to customers for accounts
36
What is the term for the total value of all goods and services produced in an economy?
standard of living
gross domestic product
open market value
net worth
37
Which of the following is NOT an example of a public good?
municipal libraries
highways
shopping malls
national parks
38
What is a company's total revenue?
the amount of goods a company can expect to sell
the price of a company's goods
the amount of profit a company can expect to make
the amount a company receives for selling its goods
39
Why does the government require businesses to disclose so much information to the public?
to make it easy for businesses to have good information
to make buyers more knowledgeable and safer
to make it hard for businesses to make an excessive profit
to make it easier for consumers to save money
40
If a general partnership fails, who is responsible for the debts?
only the most senior general partner
no one
anyone who works for the partnership
all of the partners
41
When the economy is working properly, what is the unemployment rate?
4-6%
10-12%
8-10%
0-3%
42
A government decision between increasing military spending and subsidizing wheat farmers is
basic economic decision
global trade-off
guns or butter issue
decision at the margins
43
What is a fringe benefit?
an accounting term meaning profits
a business other than sales or marketing
a payment other than wages or salaries
a cash payment for casual work
44
What is the most effective way for consumers to make their desires known to businesses?
by hiring lobbyists and joining consumer groups
by protesting
through mail and phone surveys
by the purchases they make
45
When a consumer is able and willing to buy a good or service they create which of the following
consumption
allocation
demand
elasticity
46
The resources used to make all goods and services are the
capital
labor
production possibilities
factors of production
47
What are inferior goods?
goods that are not well produced
goods for which demand falls when income falls
goods that no one wants to buy
goods for which the demand rises when income falls
48
On which kinds of goods do governments generally place price ceilings?
goods that are cheap but could become more expensive
goods that are not necessary but have become customary
goods that are essential, but too expensive form some people
goods that are essential and cheap
49
What best describes the role of government in a free enterprise system?
control business activities
allow individuals to operate their own businesses
decide what companies will be formed
require companies to disclose information to consumers
50
What is the definition of oligopoly?
2-4 firms producing 70 to 80% of the output
8-10 firms producing 60-70% of the output
one firm producing 95% of the output
8-10 firms producing 90% of the output
51
What is the purpose of competition?
to put other businesses out of business
to act as a motivating force behind the free market
to make buyers careful about spending money
to act as a regulating force in the market place
52
What is the opportunity cost of a decision?
the series of alternative decisions that could have been mad
the different decision
the most desirable alternative given up for the decision
the best possible wat the decision could have been decided
53
What is monopolistic competition?
many companies selling similar but not identical products
a company selling identical product under different names
a very few companies selling identical products
a company selling different products under different names
54
Which of the following is an example of physical capital?
furniture made by hand
a server at a fast-food restaurant
a licensed practical nurse
an automatic teller machine

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