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