One advantage of a corporation is…

Lifespan not linked to a specific owner

Rust-belt cities of the industrial age have been forced to:

Reinvent themselves and transition to an information and service economy

This cycle of individuals and businesses interacting is called

the circular flow of economic activity

Is an industry dominated by a small number of firms

As a science, economists have defined Economics as the…

study of how people satisfy seemingly unlimited wants with scarce resources

Crazy Eight was able to open this new business because…

The government says he can own property and ideas

Adam Smith is closely associated with...

The benefits of free and unregulated exchange in markets

The circular flow of money, resources, and products illustrates all of the following except:

Consumers produce goods and services at home

The most significant legacy of the New Deal was…

Increase in federal programs and government size

You have to decide between partying and studying for a test. What must you consider?

All decisions have consequences or trade offs.

One key strength of a command economy is its...

ability to adapt quickly to differing economic needs in society

At any given price, a surplus of oranges will occur when…

Quantity supplied > quantity demanded

What is true about the multiplier effect?

Consuming less income = increasing marginal propensity to save

What is one of the purposes of the Federal Reserve?

Regulate money supply to create a stable economy

Which statement describes the critical role played by profits in a market economy?

Profits encourage businesses to efficiently produce the things people want.

When a market economy operates without restriction, it...

Eliminates shortages and surpluses

New technology for manufacturing computer chips is developed. The new technology will…

Contribute to cheaper production

The development of better technology (increasing production and eliminating jobs) is an example of...

Achieving economic growth, but not full employment

The Environmental Protection Agency (EPA) impacts the economy by…

Developing/enforcing regulations to protect human health and environment

What might shift baseballs’ demand leftward?

Complementary good prices increase

In the business cycle, a trough is…

Measured when economic growth changes from decreasing to increasing

GDP is calculated by…

Adding the expenditures of the 4 sectors of the economy

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1
A monopoly is dominated by a small number of firms who have to keep a close eye on each other.
True
False
2
One advantage of a corporation is…
Ease of obtaining a charter
Lifespan not linked to a specific owner
Cannot enter into any legal contracts
Unlimited liability
3
John never received his order. The agency responsible for investigating this fraud is…
The Federal Trade Commission
The Consumer Product Safety Commission
The Food and Drug Administration
The Environmental Protection Agency
4
Rust-belt cities of the industrial age have been forced to:
Lower prices to keep up with lower manufacturing costs
Reinvent themselves and transition to an information and service economy
Downsize to lower costs and ask for concessions from labor unions
Work harder, not smarter
5
The US went from agrarian to industrial to ____ economy
Global
Opportunity
Service and information
National
6
3 Rs of the New Deal
Relief, recession, reform
Rebuild, renew, reform
Reform, relief, recovery
Reconstruct, relief, recreate
7
You receive a coupon for a free meal. The next time you visit, the price has been raised. This illustrates the concept …
Scarcity
Utility
No such thing as free lunch
Opportunity cost
8
Economic regulations help fulfill Adam Smith’s idea of a laissez-faire economy.
False
True
9
Bill Gates is an example of an entrepreneur because he developed a company and started a business.
True
False
10
This cycle of individuals and businesses interacting is called
an economic process
the flow of factor markets
scarcity
the circular flow of economic activity
11
An oligopoly…
Only occurs when buyers and sellers are fully informed
Requires a partnership
Is an industry dominated by a small number of firms
Is established when perfect competition exists
12
As a science, economists have defined Economics as the…
limited description of economic activities
scientific study of interactions in production
study of how people satisfy seemingly unlimited wants with scarce resources
problems and decisions of everyday consumers
13
Crazy Eight was able to open this new business because…
He is a good businessman
The government says he can own property and ideas
He is leasing the building from the government and manufacturing for it
He can bypass government regulations
14
Monetary policy alone is a more effective economic policy than fiscal policy.
False
True
15
In a recession, fiscal policy calls for the government to decrease taxes and increase spending
True
False
16
Adam Smith is closely associated with...
The benefits of free and unregulated exchange in markets
Government regulation
Socialism
The Communist Manifesto
17
If there is a shortage of a good, its price will…
Stay the same
Decrease
Increase
18
During the Cold War, the United States government spent large amounts of money…
To outspend the USSR and end the Cold War
On the space program
On defense
All of the above
19
The circular flow of money, resources, and products illustrates all of the following except:
Businesses participate in the market for products
People earn money by exchanging their labor wages and salaries
Consumers produce goods and services at home
Households participate in the market for resources
20
The most significant legacy of the New Deal was…
Increase in federal programs and government size
None
Separation of church and state
Decrease in federal programs and government size
21
Entry level economists typically must have a…
PHD
High school diploma
Bachelor’s degree
GED
22
The opportunity cost of taking an unpaid vacation from work is the amount of money you would have made
False
True
23
More money becomes available for economic growth when…
High unemployment
Interest rates are high
People save
Pension funds decrease
24
You have to decide between partying and studying for a test. What must you consider?
You can pull an all-nighter and do both!
Parties are fun, and you can recover your grade with future tests
You have to study and go to sleep early
All decisions have consequences or trade offs.
25
Identify who owns the factors of production and makes economic decisions in a market economy.
Government
Individuals
Communities
Economists
26
A partnership is a business that is owned by more than one individual, allowing owners the ability to specialize
False
True
27
One key strength of a command economy is its...
ability to use the invisible hand to its advantage
ability to adapt quickly to differing economic needs in society
ability to provide for the needs for all while still maintaining efficiency
ability to foster economic growth
28
A businessman purchases flowers for his spouse on the way home from work. This is in a product market.
False
True
29
At any given price, a surplus of oranges will occur when…
Quantity supplied > quantity demanded
Quantity demanded > quantity supplied
Quantity supplied < quantity demanded
Quantity demanded = quantity supplied
30
Scarcity is a problem only for economies that use money as a medium of exchange.
True
False
31
Distinguish which of the following best describes Adam Smith’s “invisible hand”?
Self-interest
Avoidance of the law and violation of other people’s property rights
Tariffs
Government regulations
32
Placing money in a checking account is an example of using money as
A store of value
A medium of exchange
Barter
A measure of value
33
Almost all economic systems today are...
Traditional economies
Market economies
Command economies
Mixed economies
34
Education is valuable because of its
Scarcity and efficiency
Supply and demand
Scarcity and utility
Value and efficiency
35
What is true about the multiplier effect?
Consuming less income = increasing marginal propensity to save
Low multipliers = increase in spending
A change in spending = a smaller change in aggregate spending/demand
Increase in defense spending = less hiring by defense contractors
36
What is one of the purposes of the Federal Reserve?
Control all US business exchanges
Accept deposits and lend money
Insure all money deposited in banks
Regulate money supply to create a stable economy
37
Monopolies face disadvantages that focus around…
Cost
Prices
Production
Inefficiency
38
Which statement describes the critical role played by profits in a market economy?
Profits tell government planners how much consumers are spending.
Profits encourage businesses to efficiently produce the things people want.
Profits cause inflation
Governments discourage profits due to inequality of income
39
What is the effect on the quantity of orange juice demanded if the price of apple juice increases?
Stays the same
Increases
Decreases
40
A decrease in consumer income shifts the demand curve leftward.
False
True
41
When a market economy operates without restriction, it...
Eliminates shortages and surpluses
Creates shortages
Raises prices
Creates surpluses
42
New technology for manufacturing computer chips is developed. The new technology will…
Not affect the supply
Contribute to decreased supply
Contribute to cheaper production
43
The development of better technology (increasing production and eliminating jobs) is an example of...
Achieving economic growth, but not full employment
Achieving stability, but not full employment
Achieving full employment, but not economic growth
Achieving equity, but not full employment
44
The airline industry in America is an example of __________, because a few firms dominate the industry.
Perfect competition
Monopoly
Monopolistic competition
Oligopoly
45
The Environmental Protection Agency (EPA) impacts the economy by…
Creating/enforcing advertising truth
Providing banking insurance
Providing protection and a sense of security
Developing/enforcing regulations to protect human health and environment
46
One of the main reasons for increasing economic regulations in the United States is the increasing population
False
True
47
What might shift baseballs’ demand leftward?
Complementary good prices decrease
Cheaper production
Substitute prices increase
Complementary good prices increase
48
The Social Security Act sought to help…
All of the above
The elderly
The unemployable
The unemployed
49
In the business cycle, a trough is…
Peak of economic growth
Measured when economic growth changes from decreasing to increasing
Major downturn in economic growth
Measured when economic growth is decreasing
50
GDP is calculated by…
Subtracting total imports from exports
It’s impossible— we can’t measure all production data
Adding the expenditures of the 4 sectors of the economy
Multiplying production by consumption
51
All money in the United States today is…
Fiat money
Representative money
Commodity money
Barter
52
The Department of Defense is an important part of the economy because…
It protects human health and the environment
It develops military strategies
It provides people with protection and a sense of security
It provides banking endurance
53
Adam wants to open a restaurant and make profit. He is...
An entrepreneur in a traditional economy
An entrepreneur in a command economy
An entrepreneur in a capitalist economy
Going to fail because opening a new restaurant is difficult
54
In order to control inflation, governments may…
All of the above
Sell government securities
Increase taxes
Decrease government spending
55
Classify what all economic systems do:
distribute products through majority rule
produce the same goods
have the same resources
must answer the same three basic questions.
56
One of the most important economic results of World War I for the United States was…
US became a debtor nation
US became a creditor nation
The Great Depression
A Recession
57
What is the difference between real and nominal GDP?
Real = exact, Nominal = estimated
No difference
Real = adjusted for inflation, Nominal = not
Real = estimated, Nominal = exact
58
Which of the following is the main function of private and commercial banks?
Determining money value
Lending money
Acting as a medium of exchange
Regulating money supply
59
A labor union is an organization that…
All of the above
Seeks better treatment for workers
Takes part in collective bargaining
May strike to get demands met
60
The law of demand states that as price increases, quantity demanded…
Decreases
Increases
Stays the same
61
According to Karl Marx, eventually the “have-nots” will...
move up in society and become “haves”
rebel against the capitalist system and instigate socialism
overpower the socialist rulers and begin capitalism
always be working to keep up with those who are more powerful in society
62
The main advantage that partnerships have over sole proprietorships is…
More likely to succeed
Ability to specialize
Unlimited liability
Easier to obtain a charter
63
There is no such thing as a free lunch
True
False
64
The need to make choices arises because
people need to share their resources
shortages are a constant situation
some things are not limited
everything that exists is limited
65
The power of the consumer in the market is called
Opportunity cost
Supply and demand
Trade-offs
Consumer sovereignty
66
In a communist or command economic system, who answers the three basic economic questions?
Government
Marketplace (supply & demand)
Individual citizens
Government and marketplace
67
The opportunity cost of buying a slice of pizza for two dollars rather than a burrito for two dollars is…
The pizza
The $2
The burrito
None
68
Which of the following was a cause of the recession of the 1980s?
Increasing employment
Government deficits and consumer spending
Insufficient production
Overproduction
69
The economic goals of the American free-enterprise system include…
freedom, equity, and growth.
socialism that evolves into pure communism.
choice, central planning, and security.
profit, traditions, and government control.
70
A baker purchases flour so he can make goods and sell them in his bakery. This is a product market purchase.
False
True
71
If two products are complementary goods, how will a decrease in the price of one affect the other?
Price increases
Demand decreases
Price decreases
Demand increases
72
The government sets a price ceiling on cheeseburgers that is below the equilibrium price of cheeseburgers. This causes..
Surplus
Shortage
No shortage
N/A
73
What is the inflation rate from 2 to 3?
11%
13%
12%
10%
74
What are the four main functions of banks today?
storing money, transferring money, lending money, and financial services
storing money, producing money, multiplying money, and financial services
extracting money, transferring money, lending money, and monetary aid
storing money, producing money, lending money, and monetary aid
75
The law of supply states that as the price of a good rises, the quantity supplied decreases
False
True
76
George got fired, and is looking for another job. His unemployment insurance is an example of…
Taxation
Monetary policy
Automatic stabilizer
Discretionary fiscal policy
77
Distinguish which form of business would best suit two best friends intending to open a hot dog stand.
Corporation
Partnership
Sole Proprietorship
Limited Liability Company
78
It costs $3 to produce a ball and $300 to produce 100 balls. Each is sold for $10. What is the marginal cost?
$10
$1
$300
$3
79
It's easier to start a business in a...
Command economy
Controlled economy
Traditional economy
Free enterprise system
80
All economic choices involve…
Trade-offs
Destruction of resources
Tax dollars
Shortages
81
An example of a(n) ___________________ is an electrical company regulated by the government
Natural monopoly
Monopolistic competition
Oligopoly
Pure monopoly
82
Equilibrium is defined as . . .
Method of adjusting price and quantity
Lack of national debt
Optimum level of production in business
Where supply meets demand
83
The time periods between when an economic policy is decided to when it actually takes effect are called…
Lags
Automatic stabilizers
Certification breaks
Waiting periods
84
In a market economy, which of the following provides the primary incentive to produce goods and services?
Government purchases of goods and services
The profit motive
A desire for security
Charity
85
Gruel is an inferior good. Hence, an increase in consumer income
Decreases demand
Increases demand
Increases supply
Decreases supply
86
During the Great Depression, the major reason for farmers receiving low prices for their crops was…
Poor farming methods
Corruption
Underproduction
Overproduction
87
It is difficult for societies to achieve all of the economic goals because...
Consumers and business owners cannot agree on economic decisions
Scarcity exists in all societies
The pursuit of one often leads to the impossibility of achieving another
There are only so many resources to go around
88
The economy must have a(n) _______ system, a network of savers, investors and financial institutions.
Transfer
Saving
Investment
Financial
89
The purpose of economic regulations in the United States is to…
Promote economic growth, stability, and equity
Undermine the free market economy
Limit individual freedom
Control population growth and birth rates
90
The purpose of the Montgomery GI Bill was to…
Expand the military during the Cold War
Help families recover after WWII
Provide economic assistance/education/housing to veterans
Help disabled veterans receive medical care
91
The invisible hand is...
Adam Smith's metaphor to encourage self-interest in the economy
Adam Smith's metaphor to explain the distribution of income equally to all
Societies' ability to reach full employment, using every available resource
The ability to make products without having to hire labor
92
One weakness of the sole proprietorship is that the…
Owner has no control
Business is in constant danger of bankruptcy
Owner has too many partners
Business depends entirely on the owner
93
Why did the first national bank fail?
Miscalculated fiscal policy, national debt
Too much power, didn’t renew charter
Standardized currency = unsustainable equilibrium price
Not enough power
94
The economic prosperity of the 1990s was due to…
All of the above
Dot-com businesses in the 1990s
Development of the computer industry
Economy created by the Internet
95
What economic concept do the Fourth and Fifth Amendments to the Constitution identify?
Organization of the Federal Reserve
Regulation of monopolies
Competition among businesses
Private ownership of property
96
Economists are not hired by private businesses to…
Develop advertising campaigns
Manage companies
Analyze and predict market conditions
Solve complex problems
97
In order to demand a good, a consumer must be both willing and able to buy it.
False
True
98
All goods and services have the same value for every person in the economy.
False
True
99
The Agriculture Adjustment Act brought much criticism because…
It paid farmers to destroy crops
It decreased farmer employment
It lowered food prices
It increased the number of farms
100
What is the effect on the quantity of video games demanded if overall consumer income increases?
It increases
It stays the same
It decreases

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