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Economics - Unit 2 - Test Review Flashcards | StudBud
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Economics - Unit 2 - Test Review
Economics - Unit 2 - Test Review
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Review of GDP, monetary policy, and fiscal policy for on level Economics in high school
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1
An example of an automatic stabilizer is:
interest rates.
inflation.
taxes.
US savings bonds.
2
What is one possible short-term effect of an easy money policy?
increased investment spending
higher interest rates
a contracting money supply
decreasing inflation
3
As you move from left to right, the aggregate demand curve
is horizontal.
slopes downward.
slopes upward.
may slope upward or downward.
4
Which of the following is a disadvantage of a sole proprietorship?
high taxes
lack of permanence
legal constraints
difficult to start up
5
When revenues exceed expenditures,
the government is forced to issue more bonds to raise money.
there is a budget deficit.
the government must create more money.
there is a budget surplus.
6
The main economic variables that affect business cycles include all of the following EXCEPT:
interest rates.
personal savings levels.
external events.
business investment levels.
7
“Market basket” used by Bureau of Labor Statistics to calculate prices is made of:
food & necessary services for any family.
typical goods & services for urban household.
nonfood items only.
food items only.
8
Which of the following instruments is NOT used by the Federal Reserve to change money supply?
the discount rate
open market operations
the required reserve ratio
the federal tax code
9
What are royalties?
fees paid to celebrities for using their names
fees paid to law firms and accountants
percentage of a franchise’s earnings paid to parent company
a percentage of profits paid to the government
10
What do Social Security taxes pay for?
benefits to those who are unemployed
benefits to federal workers & military personnel
benefits to older people/surviving family/some disabilities
transportation & living expenses for low income people
11
In a typical business cycle, what stage immediately follows a peak?
contraction (recession)
expansion (recovery)
growth
trough
12
Which of the following is one way the Federal Reserve Bank serves the government?
selling government securities
making loans to the government
financing state government projects
minting coins for the government
13
The Office of Management and Budget is
office w/power approve/disapprove of Cong budget proposal
responsible for deciding how much $ each agency gets.
part of the legislative branch of government.
private agency responsible for overseeing prep of budget.
14
The purpose of expansionary fiscal policy is to
increase separation between government and private industry.
increase output.
prevent hyperinflation.
slow the growth of the GDP.
15
If a firm enjoys economies of scale,
its marginal revenue will increase as production increases.
its total costs will decrease as production increases.
its average total cost will decrease as production increases
average total cost will increase as production increases.
16
What is one example of an automatic stabilizer?
the national debt
a balanced budget amendment
a new highway project
food stamps
17
When you buy a United States Savings Bond, you
loan money to the government.
donate money for special government projects.
borrow money from a savings and loan association.
pay for your child’s college education.
18
When the price level falls, consumers & firms buy more goods & services.This is:
aggregate demand curve.
business cycle.
equilibrium GDP.
aggregate supply curve.
19
What is the cost of money?
the price of the interest rate
the bank’s use of money creation
the smoothing out of fluctuations in the market
the economy’s use of open market operations
20
The main source of funding for your school probably comes from:
federal income taxes.
local property taxes.
payroll taxes.
state sales taxes.
21
Bob loses his job at GM plant because manufacturing is slow due to downturn in economy, he is
frictionally unemployed.
seasonally unemployed.
structurally unemployed.
cyclically unemployed.
22
An example of contractionary fiscal policy would be
cutting taxes.
expanding government's role in regulating private industry.
decreasing government spending.
increasing production of consumer goods.
23
If a general partnership fails, who is responsible for the debts?
no one
only the most senior general partner
all of the partners
anyone who works for the partnership
24
What is an example of a positive external shock to aggregate supply?
Popular new diet encourages consumers to buy more cornflakes
Good weather leads to unusually productive harvest.
China announces it will import 50% more from USA.
Demand for new suburban houses increases farmland value.
25
Which of these tools in an example of monetary policy?
reducing income taxes
changing reserve requirements
increasing government spending
borrowing money through deficit spending
26
The federal government’s Fiscal Year 2007 began on
December 31, 2006.
October 1, 2006.
January 1, 2007.
January 1, 2006.
27
The most-used instrument for controlling week-to-week changes in the money supply is
open market operations.
the money multiplier.
the required reserve ratio.
the discount rate.
28
What are organizations in business of benefiting society who operate like a business called?
producer cooperatives
nonprofit organizations
trade associations
limited partnerships
29
Your receipt says you paid 5% sales tax on sports equipment. This sales tax is example of a
regressive tax.
income tax.
proportional tax.
progressive tax.
30
Products that would be used in calculating an increase or decrease in GDP include:
cotton cloth made in India & sold to French clothes makers.
cars made in TN by a Japanese auto company.
toys made in China at a U.S. factory.
plastic made in KY & sold to toy makers around the world.
31
What is the difference between a recession & a depression?
Recession is more severe than depression & lasts longer
Depression is deep recession w/high unemployment.
Recession is period of growth; depression is contraction
Unlike recession, depression includes high inflation.
32
GDP expressed in constant, or unchanging, prices is called:
real GDP.
price level.
net national product.
nominal GDP.
33
When you drive away from the gas pump, you have just paid a(n):
corporate income tax.
import fee.
excise tax.
estate tax.
34
As commercial banks keep more excess reserves, money creation
increases.
decreases.
remains the same.
could either increase or decrease.
35
Which of the following is an advantage of a sole proprietorship?
No one is responsible if it fails.
It is an easy way to make a lot of money.
It is easy to get financing to start one.
It is the least-regulated form of business organization.
