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Economics Final Exam Review
FDIC
3 questions economists must answer are:
Economics Final Exam Review
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1
3 questions economists must answer are:
what to produce, how to produce, and for whom
what to produce and why to produce it
what to produce, when to produce, and where to produce
2
FDIC
insures against inflation
insure customer deposits if a bank fails
allows customers to make deposits at federal banks
3
What does a trough indicate
GDP has stopped declining and started to rise
No GDP
GDP is stagnant
There is a GDP gap
4
The dollar value of allfinal goods and services and measure a country’s total product output is
GDP
standard of living
cost-benefit analysis
financial capital
5
What determines actions of people with varying desires and abilities to pay
government
consumers
prices
producers
6
the main function of an entrepreneur
purchase capital
innovate
make price decisions
create demand
7
What economic problem do both higher-income nations and lower-income nations have in common?
Scarcity of Resources
Too many unskilled workers
too much government
lack of capital goods
8
Which of the following is an example of an investment in human capital
country builds new schools
states puts in a highway
person goes to college
company builds a factory
9
A person pays $8 to see a movie and not an $8 meal. What's the opportunity cost of the movie?
the money paid to see the movie
the satisfaction of not eating the meal
satisfaction of going to the movie
time spent watching the movie
10
An example of a market economy is
North Korea
US
Soviet Union
11
What is the basic purpose of the CPI
track monthly changes in prices paid by urban consumers
predict future price increases
avoid deflation
12
Carrying money in a pocket or purse illustrates what characteristic of money
value
limited supply
stability
portability
13
Division of labor makes a company more productive by
allows each employee to produce a complete unit
allowing each employee to perform a task
14
When the general level of prices rises, the economy is experiencing
Inflation
Stagflation
Construction
Deflation
15
If there is a shortage in the market
there is downward pressure on price
there is an upward pressure on price
16
What gives an investor an overall picture of the value of the market
spot market
options market
Dow Jones Industrial Average
17
which of the following is most important for economic growth?
available resources
ample tax revenues
efficient use of resources
large labor force
18
The payments for land, labor, capital, and entrepreneur are
wages, profit, interest
rent, wages, interest, profit
rent, profit, wages, interest
19
Which type of unemployment is natural in a free market economy?
Frictional unemployment
Cyclical unemployment
Technological unemployment
Structural unemployment
20
The money used to buy the tools and equipment needed for production is known as
Capital Goods
Wealth
Financial Capital
Factors of Production
21
How did business cycles change after WWII
more recessions
nothing changes
Short Recessions and longer expansion
22
by 2050 there will be a decline in demand for
elementary schools
medical facilities
infrastructure
retirement facilities
23
What is the opposite of a regressive tax
progressive tax
alternative tax
flat tax
24
A popular model used to illustrate the concept of opportunity cost is
supply/demand
factors of production
paradox of value
production possibilities frontier
25
If a nation encourages entrepreneurship, then which of the following is likely to occur
fewer applications for patents
new process methods and products developed
a decline in businesses started
26
Actions in one part of the world have an eco. impact on what happens elsewhere are examples of
Specialization
trade offs
Economic Interdependence
Opportunity costs
27
Entrepreneurship and labor interact in which of the following ways?
both receive payments in form of rent
Entrepreneurship makes decisions on use of labor
entrepreneurship and labor both receive forms of interest
Development of many new products and methods
28
a pencil is an example of
Land
Capital
Labor
29
The 16th amendment
authorized Congress to coin money
Allowed the collection of income tax by the IRS
allowed Federal reserve to control money supply
30
horizontal merger is:
partnerships
corporations
two companies combining that sale the same product
31
An economy at its production possibilities frontier is operating
a free enterprise
slow economic growth
at its full potential
with no division of labor
32
A partnership
involves another company's model
the least numerous form of business
A business run by an individual
33
Law of Demand
Demand moves faster than supply
Demand moves in same direction as price
Demand moves in opposite direction of price
34
Law of supply
Supply moves slower than demand
Supply moves at same rate as demand
Supply moves in same direction as price
35
The purpose of command government
make economic decisions
promote economic freedom
encourage entrepreneurs
36
Macroeconomics is the study of
supply and demand
individual firms
scarcity
entire economy
