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Economics Final
Economics Final
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An Economics Quiz to help prepare for the final exam.
Flashcards
50 cards
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Questions
50
Answers
1
Which of the following is NOT one of the reasons why nations trade?
natural resources are scarce
availability of capital
all countries want to help each other
unequal resource distribution
2
Which of the following can lead to a change in supply?
The price of related substitutes
Changes in resource prices
Changes in population
Consumer tastes and advertising
3
What type of tax imposes a higher percentage of taxation on higher incomes?
progressive
regressive
proportional
excise
4
What is the situation that occurs when supply is greater than demand?
surplus
shortage
equilibrium
inflation
5
Which cause of inflation occurs when rising prices of inputs (energy) cause prices to increase?
wage-price spiral
excessive monetary growth
demand-pull inflation
cost-push inflation
6
Which economic theory argues that government should take action to influence the economy?
Classical Economics
Monetary Economics
Keynesian Economics
Fiscal Economics
7
How does fractional reserve banking allow banks to transfer money from savers to borrowers?
Banks can invest reserves in junk bonds
Banks can lend excess funds out for loans
Banks can loan out dividends from stocks
Banks can increase the money supply
8
What is the situation that occurs when demand is greater than supply?
equilibrium
shortage
surplus
inflation
9
Which of the following is NOT a disadvantage of owning a sole proprietorship?
Owners have limited control over business decisions
They often have limited life
They often have limited managerial experience
Owners have unlimited liability
10
How does inflation have an impact on economic decisions?
People are forced to rely on government assistance
Money loses value, which reduces your purchasing power
It can cause people to lose jobs and relocate their families
It can cause severe declines in the stock market
11
Selling a stock for more than the original price paid is called
inflation
a capital gain
a capital loss
a dividend
12
What is the fundamental problem that economics deals with?
inflation
unemployment
recession
scarcity
13
A market structure in which a few very large sellers dominate the industry is
a monopoly
an oligopoly
perfect competition
monopolistic competition
14
A diagram used to show the exchange of goods between households and firms in a market economy
supply and demand curve
Lorenz Curve
production possibilities curve
circular flow model
15
Expansion, peak, contraction, and trough are the four phases of
development
monetary policy
unemployment
the business cycle
16
A board of governors, 12 district banks, and 2,500 member banks and institutions are part of
the World Trade Organization
the International Monetary Fund
the Federal Reserve
the Federal Deposit Insurance Corporation
17
When a change in price causes a small change in the quantity produced, supply is
inelastic
unpredictable
unitary elastic
elastic
18
According to the law of supply, when the price of an item goes up
the supply will increase
the supply will decrease
the supply will not change
the supply will change unpredictably
19
The cost of borrowing money is called
the required reserve ratio
interest
principal
monetary policy
20
In a market economy, who decides what goods and services are produced?
local government
Congress
producers
consumers
21
When a change in price causes a large change in the quantity purchased, demand is
unitary elastic
elastic
inelastic
unpredictable
22
What is the most commonly used monetary policy tool?
the discount rate
the crowding-out effect
open market operations
the required reserve ratio
23
What is the situation where prices are stable, and supply is equal to demand?
surplus
shortage
expansion
equilibrium
24
What are the three factors of production?
land, labor, capital
traditional, market, centrally planned
resources, money, and trade
What to produce, how to produce, and for whom to produce.
25
According to the law of demand, an increase in price will cause
a decrease in demand
increased demand for complements
an increase in demand
reduced demand for substitutes
26
A form of business organization that combines elements of sole proprietorships and corporations
partnership
franchise
cooperative
non-profit
27
The branch of economics that deals with the economy as a whole
microeconomics
consumer economics
performance economics
macroeconomics
28
The idea that countries should specialize and trade is supported by
the law of comparative advantage
Classical economics
the law of increasing costs
the theory of absolute advantage
29
Which institution is the safest of all financial assets to invest in?
City/State governments (municipal bonds)
Junk Bonds
the Federal Government (bonds)
Corporations (corporate bonds)
30
Which of the following is NOT one of the three functions of money?
unit of account
medium of exchange
use as a commodity
store of value
31
A form of business organization that sells stock, recognized by law as a separate legal entity.
partnership
sole proprietorship
corporation
non-profit
32
The idea that an investor should put their money into many different assets to reduce risk
equity
portfolio diversification
deficit spending
fiscal policy
33
When consumers are forced to buy fewer goods as a result of a price increase in another product
demand effect
marginal effect
income effect
substitution effect
34
What is the term for the dollar value of all final goods produced in a country in a given year?
gross domestic product
marginal revenue
exchange rate
capital
35
Changing monetary policy to expand or contract the money supply will cause
government revenues to change
supply and demand to change
interest rates to change
the national debt to change
36
A market structure with only one seller of a product is
monopolistic competition
an oligopoly
perfect competition
a monopoly
37
What is term for the expense of the next best alternative use of time, money, or resources?
inflation
trade-off
opportunity cost
capital
38
What has been the recent trend in wages and the cost of benefits?
Both have decreased
Wages have increased more than the cost of benefits
The cost of benefits has increased more than wages.
Both have increased equally
39
The philosophy that a government should not interfere in economic activities is known as
laissez-faire
globalization
communism
elasticity
40
What type of economy has most factors of production owned by a government?
market
mixed
centrally planned
traditional
41
A major concern about the impact of globalization is that
countries could be too specialized and less efficient
a breakdown in one country could affect many others
international organizations could replace national gov'ts
countries with few resources will not develop
42
Profit maximization is reached when marginal cost is
double the marginal revenue
greater than marginal revenue
equal to marginal revenue
half of the marginal revenue
43
What are the three basic economic questions?
When, how, and with whom to trade?
How much, from whom, and when to borrow?
When, where, and why to produce?
What, how, and for whom to produce?
44
How can the national debt have an impact on consumers and businesses?
It can cause the crowding-out effect
It can cause unemployment to increase
It can lead to the substitution effect
It can cause the multiplier effect
45
What is the largest source of revenue for the federal government?
intergovernmental revenue
sales tax
individual income tax
corporate income tax
46
What type of unemployment increases and decreases with changes in the business cycle?
structural
seasonal
cyclical
frictional
47
The use of government spending and taxes to influence the economy is known as
fiscal policy
reserve policy
monetary policy
budgetary policy
48
When an economy is utilizing resources to their full potential, they are operating at their
production possibilities frontier
per capita GDP
peak of the business cycle
supply and demand equilibrium
49
What category of labor has the highest level of education, skills, and training?
professional
skilled
semi-skilled
unskilled
50
What is the term for a period where real GDP declines for 6-18 months in a row?
depression
recession
expansion
inflation
