Which would most likely decrease the productivity of labor?

A decline in the amount of capital goods.

When commercial banks increase their loans to businesses and consumers, this usually results in

an increase in the nation's money supply.

A government budget surplus exists when

tax revenues are greater than government spending.

Unexpected inflation is most likely to benefit people

owing money on loans at fixed interest rates.

Gov't rather than private business provides a public good such as good control because

those who don't pay for public goods still receive benefits.

If congress provides financial assistance to banks to prevent them from failing, it will

encourage bank officials to make riskier loans.

One reason the federal government might reduce taxes is to

increase consumer spending and stimulate the economy.

Which would usually increase total spending in the economy?

An increase in business investment.

Why do medical doctors generally earn more than farmers?

Med. doctors are more scarce, given the demand for services.

A nation has an international trade surplus when

its exports are greater than its imports.

Gross domestic product (GDP) is a measure of

the market value of nation's output of final goods/services.

Which best describes the relationship between risk of a loan default and interest rate charged?

A lower rate is charged with less risk of default.

sustained increase in the general level of prices.

studbud

ECON REVIEW, PART 2, FORM B

22 termsStudBud Administration175 plays

Econ literacy test, part 2, form B

Flashcards22 cardsFPractice quizPHost liveL

Questions 22

Answers

1
Which would most likely decrease the productivity of labor?
A rise in the pay of workers.
A fall in the rate of interest.
A decline in the amount of capital goods.
A reduction in the tax rates on income.
2
When commercial banks increase their loans to businesses and consumers, this usually results in
an increase in the banks' excess reserves.
an increase in the nation's money supply.
an increase in gov't control over the economy.
a decrease in the spending power of consumers and businesses
3
The maximum output a nation could possible produce in any one year is limited by its
productive resources.
unemployment rate.
business investment.
consumer income.
4
In a market economy, high wages depend mostly on
high output per worker.
minimum wage laws.
responsible business leaders.
actions of government.
5
A decrease in real interest rates provides an incentive for people to save
more and borrow less.
less and borrow less.
more and borrow more.
less and borrow more.
6
A government budget surplus exists when
the national debt is increasing.
taxes are increased.
government spending is decreased.
tax revenues are greater than government spending.
7
A tax which increases as an individual moves into higher income brackets/ranges is called a
proportional income tax.
progressive income tax.
flat tax on income.
regressive income tax.
8
Unexpected inflation is most likely to benefit people
owing money on loans at fixed interest rates.
living on fixed incomes and pensions.
holding life insurance policies.
saving money in accounts at financial institutions.
9
During a recession in an economy, there will be an increase in
imports.
business spending.
unemployment.
economic growth.
10
Gov't rather than private business provides a public good such as good control because
when a person uses a public good, less is avail. for others.
private businesses don't like to produce services for gov't.
those who don't pay for public goods still receive benefits.
a public good does not benefit individuals.
11
If congress provides financial assistance to banks to prevent them from failing, it will
encourage bank officials to make riskier loans.
increase screening by banks of deposits from bank customers.
reduce the amount of deposits made by bank customers.
restrict bank investments in real estate.
12
One reason the federal government might reduce taxes is to
slow a rapid rise in interest rates.
decrease business spending on plant and equipment.
slow the rate of inflation.
increase consumer spending and stimulate the economy.
13
Which would usually increase total spending in the economy?
An increase in business investment.
An increase in the savings rate.
An increase in tax rates.
An increase in interest rate.
14
Economies that grow rapidly over time usually have a high rate of
capital investment.
tariffs.
unemployment.
growth in gold reserves.
15
Why do medical doctors generally earn more than farmers?
Med. doctors provide a service rather than make a product.
Medical doctors are more efficient than farmers.
There are fewer medical doctors than farmers in our economy.
Med. doctors are more scarce, given the demand for services.
16
A nation has an international trade surplus when
its tax revenues are greater than its gov't expenditures.
its gold reserves are greater than its trading partners.
its import are greater than its exports.
its exports are greater than its imports.
17
Gross domestic product (GDP) is a measure of
the market value of nation's output of final goods/services.
total spending by federal, state and local governments.
the price level of goods and services sold.
the quantity of goods and services produced by businesses.
18
Which best measures a nation's standard of living over time?
Rate of unemployment.
Real income per capita.
Money income per capita.
Rate of inflation.
19
Which best describes the relationship between risk of a loan default and interest rate charged?
A higher rate is charged with less risk of default.
Interest rates are the same regardless the risk.
A lower interest rate is charged with higher risk of default
A lower rate is charged with less risk of default.
20
People who take risks and gather resources to produce goods/services to make a profit are
entrepreneurs.
nonexistent.
business managers.
economists.
21
Inflation is a
sharp rise in the price of a major product.
rapid movement of the economy toward full employment.
sustained increase in the general level of prices.
substantial decline in the consumer price index.
22
Which monetary policy would the Fed. Reserve adopt to fight high inflation during low unemplmt?
Increase federal government spending.
Increase the supply of money.
Raise the federal funds rate.
Lower the reserve requirements for banks.

ECON REVIEW, PART 2, FORM B Flashcards | StudBud