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Economics Final Review
Economics Final Review
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Final Review
Flashcards
45 cards
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Practice quiz
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Questions
45
Answers
1
What could be studied in microeconomics?
A nation's total exports
The number of people unemployed
The total output
The revenue of car sales
2
What is an example of a goal of macroeconomic policies?
increasing employment
reducing prices
reducing the size of an economy
increasing the output of the car industry
3
What would mostly cause the demand for a product to be elastic?
It is habit-forming
It has close substitutes
It is cheap
It is a necessity
4
How would a decrease in quantity demanded be represented on a graph?
Movement up and to the left on a demand curve
Movement down and to the right on a demand curve
Leftward shift in the demand curve
Rightward shift in the demand curve
5
A government can't spend money on infrastructure because it spends on military. What concept does this best demonstrate?
Production Possibility Frontier (curve)
Finite Resources
Cost of production
Opportunity Cost
6
What is the main economic problem?
Infinite resources and unlimited wants
Finite Resources and limited wants
Finite resources and unlimited wants
Infinite resources and limited wants
7
If there is a shortage of an item, what can put the market back at equilibrium?
reducing the market price
reducing the supply
increasing the market price
increasing the demand
8
What causes cost-push inflation?
increase in bank lending
increase in price of raw materials
reduction of direct taxes
reduction in interest rates
9
Which factor of production is missing from the following list? Bananas. factory, goat, investors
Enterprise
Land
Capital
Labor
10
What is a regressive tax?
One that creates even distribution of wealth
One that takes a higher percentage of tax from lower levels of income
One that earns less tax revenue
One that all people must pay
11
Which is an example of monetary policy designed to reduce total demand?
Limits place on bank lending
Reducing interest rates
Raising income taxes
Switching the spending patterns of the government
12
In which circumstance can a trade union most likely increase wages of its members?
Labor costs in production are low
When it is easy to replace members with machinery
The profits of the firms are low
It is easy to replace union workers with non-union workers
13
What would cause a movement down and to the right on a demand curve?
Increased income
Changes in taste
A change in price
Successful advertising
14
What is an example of a change that occurs when an economy moves from planned to market?
Increased dependence on the price mechanism to allocate resources
More centralized government
Increased unemployment
Fewer price controls
15
What is a merit good?
Good with no external benefits
Good with more benefits than consumers realize
Good that imposes costs on people who may not use the good
Good that is excludable and non-rival
16
What is a common function between consumer banks and central banks?
Acting as a bank for other banks
Controlling monetary policy
Supervising the nation's banking system
Dealing with the exchange of foreign currency
17
Which of the following would increase scarcity?
a decrease in fish (stocks)
an increase in labor productivity
a reduction in waste
a discovery of a new oil field
18
A supply curve shows how the quantity supplied varies with...
Demand
Income
Taxes
Price
19
What is an example of a factor of production?
Profit received from selling chicken
Wages paid to restaurant workers
Rotisserie oven used to cook chicken
Chicken produced in a restaurant
20
What does consumer price index show?
how wages have changed in relation to costs of production
how the price of domestic goods has changed over time
how the price of a specific grouping of goods and services has changed
how wages have changed in relation to prices
21
Which of the following are substitutes?
Peanut butter and bread
Coke and Pepsi
Cake and icecream
Bacon and eggs
22
Which economic question does scarcity affect the least?
For whom to produce
What to produce
How to produce
When to produce
23
A mixed economy contains:
Public sector and private sector
Capital and consumer goods
Goods and services
Famrs and factories
24
Which of the following could stimulate the economy?
decreasing government investment
decreasing direct taxes
raising interest rates
increasing direct taxes
25
What can countries do to promote trade?
Create trade barriers
Restrict trade
All of the above
Form trade agreements
26
If a producer's machine breaks, what would happen to the point of production on a production possibilties frontier?
Point would move to the left of the curve
Point would move to the right of the curve
The point would remain unchanged
Point would shift along the curve
27
What does the price mechanism do?
Helps government provide goods and services
Makes profits for a business
Determines the allocation of resources
Measures the total national wealth
28
As gas prices incease, demand is constant. What does this suggest about the price elasticity of gas?
Supply is price-elastic
Demand is price-elastic
Demand is price-inelastic
Supply if price-inelastic
29
What kind of unemployment is caused by workers changing jobs?
structural
cyclical
seasonal
frictional
30
What would make the supply of a product to be elastic?
It is costly to produce
It requires scarce resources to produce
It can be stored
It takes a long time to produce
31
When the government invests money in such a way that it will be used in exchange more than once, what is demonstrated?
the crowding-out effect
supply-side economics
the multiplier effect
Propensity to save
32
Which of the following is a structure of a central bank?
Acts as a lender of last resort to the banking system
Provides loans directly to small businesses
Provides customers with checking accounts
Offers personal savings accounts
33
Which is an example of supply side policy?
increasing the money supply
improving education and training
reducing direct taxes
increasing interest rates
34
What is an advantage of a market economy?
Fully employment
Consumer freedoms
Firms having most of the market power
An absence of poverty
35
What encourages a firm to produce what consumers demand?
Chance to earn high profits
Desire to attract new firms to a market
Chance to experience high costs of production
Desire to keep revenue low
36
What is equilibrium quantity?
The quantity where the least profit occurs
The quantity produced each period
the quantity at which demand matches supply
The quantity at which maximum profit occurs
37
What is occuring of consumption is less than disposable income?
People are borrowing money
Income is being redistributed to the poor
People are saving money
Income levels are falling
38
What is a progressive tax?
When taxes increase at higher levels of income
When tax is placed only on income and not on goods and services
When tax is linked to the rate of inflation
When some goods are taxed higher than others
39
Which is a characteristic of money?
intrinsic value
durability
indivisibility
unlimited supply
40
What type of market failure would an oil leak be an example of?
Negative externalities
Tax distortions
Anti-competitive behavior of a monopoly
Under-provision of socially desirable items
41
How is economic growth measured?
an increase in wages
an increase in profits
an increase in output
an increase in aggregate demand
42
Which goods are complementary?
Shoes and Socks
Beef and lamb
Coffee and tea
Butter and margarine
43
Market demand curves show the relationship between the quantity demanded and...
the price of the product
a change in income
the supply of the product
consumer tastes
44
Which institution oversees monetary policy?
trade union
commercial bank
central bank
multinational company
45
What would happen if the government subsidized rotisserie chickens?
Raise the cost of supplying chicken
Raise in revenue for the government
Increase in market price of chicken
Increase in supply of chicken at every possible price
