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

new workers required to have a college degree

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

possible loss of control by owners

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

inflation will cause an increase in the general price level

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

increase competition encourage innovation & price reductions

What is one characteristic of a free enterprise system?

prices are determined by the forces of demand and supply

Which type of worker will earn the lowest equilibrium wage?

unskilled worker such as a janitor or dishwasher

Which fiscal policy action is most effective at reducing inflation?

increasing taxes in order to decrease consumer spending

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

US has experienced trade deficits since 1980

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

buying bonds to increase money supply

What is a disadvantage of a sole proprietorship?

unlimited personal liability for a sole proprietor

What are two major responsibilities of the Federal Reserve?

keep inflation and unemployment rates low

What is a function of the Federal Reserve?

regulates banking system as a lender of last resort

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

availability of substitutes will drive down the price

How does an economist measure economic growth?

economic growth is a sustained increase in GDP

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

SOL declines because wages can't keep up with prices

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

increase government spending on building new roads & bridges

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

using advertising as a form of nonprice competition

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

reduced government intervention

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

will be in a condition of surplus

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

it is often dependent on use of natural resources

How would increasing taxes help serve an economic policy goal?

slow price inflation by reducing demand

What action would cause a government budget deficit?

if govt spending is greater than government tax revenues

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

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Economics Final Review

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Questions 36

Answers

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

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