Federal Reserve has independent central banks, is divided into 12 districts, and...

chairman is appointed by the President

What are the four factors of production?

capital, entrepreneurs, labor, natural resources

Foreign companies develop new computers for export making choices in US greater. Consequence...

availability of substitutes will drive down the price

Which fiscal policy action is most effective at reducing inflation?

increasing taxes in order to decrease consumer spending

Candidate for governor promises to help economic growth with business friendly policies. How?

reduced government intervention

Since 1980 US imports > US exports. This means that...

US has experienced trade deficits since 1980

How is the standard of living affected when inflation occurs rapidly?

SOL declines because wages can't keep up with prices

Which would cause the equilibrium wage in an industry to increase?

new workers required to have a college degree

What fiscal policy action should the government take to reduce the unemployment rate?

increase government spending on building new roads & bridges

Which is a possible effect when corporations sell their stock to the public?

possible loss of control by owners

Which statement regarding the economy of a developing nation is most accurate?

it is often dependent on use of natural resources

The price of electronics like laptop & desktop computers have gone down over the years. Why?

increase competition encourage innovation & price reductions

What action would cause a government budget deficit?

if govt spending is greater than government tax revenues

What will happen if government prints money faster than GDP growth?

inflation will cause an increase in the general price level

What are two major responsibilities of the Federal Reserve?

keep inflation and unemployment rates low

What is a disadvantage of a sole proprietorship?

unlimited personal liability for a sole proprietor

One way companies distinguish themselves from competitors is by...

using advertising as a form of nonprice competition

How does an economist measure economic growth?

economic growth is a sustained increase in GDP

Which type of worker will earn the lowest equilibrium wage?

unskilled worker such as a janitor or dishwasher

How would increasing taxes help serve an economic policy goal?

slow price inflation by reducing demand

What is a function of the Federal Reserve?

regulates banking system as a lender of last resort

What is one characteristic of a free enterprise system?

prices are determined by the forces of demand and supply

What would federal reserve most likely do to stimulate growth & fight recession?

buying bonds to increase money supply

When the quantity demanded for a product is less than the quantity supplied, the market...

will be in a condition of surplus

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Economics Final Review

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Questions 36

Answers

1
Govt increase interest rates -> reduced consumer spending -> lower levels of spending. Benefit?
lowering inflation
lower taxes
decreased unemployment
decreased savings
2
What is the most desirable alternative given up as a result of a decision?
absolute advantage
multiplier effect
marginal benefit
opportunity cost
3
Federal Reserve has independent central banks, is divided into 12 districts, and...
chairman is appointed by the President
sets US exchange rates using the gold standard
collects federal income taxes
lets Congress set the federal funds rate
4
What is the basis for the theory of comparative advantage?
investment
specialization
capital
rationing
5
What are the four factors of production?
capital, entrepreneurs, labor, natural resources
interest, profit, demand, disposable income
specialization, trade, markets, consumerism
goods, services, wages, technology
6
Foreign companies develop new computers for export making choices in US greater. Consequence...
expansion of consumer choice will decrease computer supply
size of the market will slow the progress of innovation
availability of substitutes will drive down the price
growth of competition will lead to greater production costs
7
The natural rate of unemployment in the US is considered by most economists to be?
10-12%
0%
25%
5-6%
8
Which fiscal policy action is most effective at reducing inflation?
lower taxes to decrease consumer spending
increasing taxes in order to decrease consumer spending
lower taxes to increase consumer spending
increasing taxes to increase consumer spending
9
Candidate for governor promises to help economic growth with business friendly policies. How?
more state safety regulations
reduced government intervention
increase state taxes
fewer public services
10
Since 1980 US imports > US exports. This means that...
US citizen have been buying fewer products abroad since 1980
US has had declining GDP since 1980
US has consistently had a balance trade surplus since 1980
US has experienced trade deficits since 1980
11
How is the standard of living affected when inflation occurs rapidly?
SOL improves because rising returns on investments increase
SOL declines because rising deficit results in higher taxes
SOL declines because wages can't keep up with prices
SOL improves because the value of currency rapidly increases
12
Which would cause the equilibrium wage in an industry to increase?
government eases immigration policy allowing foreign workers
new workers required to have a college degree
demand for the industry's product decreases
decrease in the price of the industry's product
13
Which feature of a comand economy limits the range of economic choices available to consumers?
central planning
free enterprise
mercantilism
collective bargaining
14
What fiscal policy action should the government take to reduce the unemployment rate?
decrease Medicare payments to doctors
increase corporate income taxes
increase government spending on building new roads & bridges
increase personal income taxes
15
Which is a possible effect when corporations sell their stock to the public?
unlimited liability for shareholders
strict limits on fund-raising methods
increased payments due to large debt burdens
possible loss of control by owners
16
Which statement regarding the economy of a developing nation is most accurate?
it is dependent primarily on service workers
it's GDP per capita exceeds $50,000 a year
it is often dependent on use of natural resources
it relies on the need on highly skilled workers
17
The price of electronics like laptop & desktop computers have gone down over the years. Why?
innovations in production contribute to reduced demand
government contracts promote higher levels of production
increase competition encourage innovation & price reductions
implementation of technology enabled more safety regulations
18
What action would cause a government budget deficit?
if tax revenues exceed government expenditures
if govt spending is greater than government tax revenues
if mandatory spending is less than discretionary spending
if personal income tax revenues are higher than corp tax
19
What will happen if government prints money faster than GDP growth?
deflation will cause an increase in business investment
lower government debt will cause a decrease in taxes
inflation will cause an increase in the general price level
higher interest rates will cause an increase in imports
20
Since 1950 rates of union membership in the US has been declining. Why?
industries have relocated from New England to Midwest
decrease in outsourcing and offshoring
decrease in blue-collar jobs
decrease in government related job protection laws
21
What are two major responsibilities of the Federal Reserve?
keep inflation and unemployment rates low
keep business profits low and costs high
keep prices and unemployment high
keep CPI high and GDP low
22
What is a disadvantage of a sole proprietorship?
unlimited personal liability for a sole proprietor
more investor control over production decisions
proprietor is the sole receiver of profit
it is easier to establish than a corporation
23
One way companies distinguish themselves from competitors is by...
increasing production capabilities
improving safety standards for workers
using advertising as a form of nonprice competition
supporting anti-trust legislation
24
What is a result of increased govt spending on policies designed to achieve full employment?
stabilization of interest rates
contraction of money supply
decrease in job-training programs
increase in inflation rates
25
How does an economist measure economic growth?
economic growth is a decline in the labor force part. rate
economic growth is an increase in the overall price level
economic growth is a sustained increase in GDP
economic growth is a reduction in business production
26
Which type of worker will earn the lowest equilibrium wage?
skilled laborer such as a plumber or firefighter
unskilled worker such as a janitor or dishwasher
professional worker, such as an engineer or docter
semi-skilled worker such as a lifeguard or roofer
27
How would increasing taxes help serve an economic policy goal?
promote employment by encouraging investment
slow price inflation by reducing demand
increase productivity by reducing inefficiency
reduce price levels by encouraging competition
28
What is a function of the Federal Reserve?
regulates banking system as a lender of last resort
collect tariffs from foreign countries
collect income taxes for US government
creates the budget for the president of the US
29
What is one characteristic of a free enterprise system?
the government owns the means of production
there are few incentives for innovation
there are few options for consumers
prices are determined by the forces of demand and supply
30
The Bureau of Labor Statistics uses CPI to measue what indicator of economic stability?
inflation
unemployment rate
income distribution
GDP
31
Why would US government want to limit the development of monopolies?
to guarantee low prices
to increase production levels
to improve hiring practices
to encourage competition
32
What would federal reserve most likely do to stimulate growth & fight recession?
restricting loans to decrease the money supply
raising discount rate to decrease the money supply
buying bonds to increase money supply
raise reserve requirement to decrease money supply
33
When the quantity demanded for a product is less than the quantity supplied, the market...
will be in a condition of surplus
is in equilibrium
will be in a condition of shortage
price is too low
34
The exchange between currencies like the US Dollar and EU Euro are determined by...
business leaders
the United Nations
market forces
elected officials
35
If it cost $1.40 to buy 1 British pound, how much would it cost for 10 British pounds?
$0.14
$140.00
$1.40
$14.00
36
Billy Bob got laid off from his job because of the recession. What kind of unemployment is it?
cyclically unemployed
fully employed
frictionally unemployed
structurally unemployed

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