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