econ chapters 5-6
Which best describes a sole proprietorship? A. a business owned by two partners B. a business owned by an individual C. a business owned by a corporation D. a business owned by the government
B
"How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case." -Robert G. Allen, financial writer This quotation reflects what principle of investing? A. Higher risk usually offers higher potential return. B. Higher risk usually offers lower potential return. C. Greater liquidity usually offers higher potential return. D. Greater liquidity usually offers lower potential return.
A
"I believe that banking establishments are more dangerous than standing armies." -Thomas Jefferson Why did Thomas Jefferson and other Antifederalists hold the view described here? A. They feared the wealthy would gain control of the bank and use it to increase power. B. They feared a national bank would do a poor job of protecting deposits. C. They wanted to promote industry and trade. D. They didn't believe a national bank would be strong enough.
A
4. What is an advantage of being a franchisee? A. brand recognition B. control over products sold to customers C. franchising fees D. royalty payments
A
A mutual fund A. pools the savings of many individuals and invests it in a variety of financial assets. B. collects premiums from the people who buy insurance and lends out a portion to investors. C. uses risky strategies that often make huge profits for wealthy investors. D. invests employee retirement money in stocks, bonds, and other financial assets.
A
How can you be MOST certain that a stock you own will allow you to vote at stockholder meetings and also earn dividends? A. It must be both a common stock and an income stock. B. It must be both a common stock and a growth stock. C. It must be both a preferred stock and an income stock. D. It must be both a preferred stock and a growth stock.
A
How might employers benefit from workplace safety laws? A. Employers can offer lower wages because more employees will want to work in a safer environment. B. Employers can pay for safety improvements in the workplace. C. Employers can hire fewer workers because the workplace is safer. D. Employers can raise wages because the workplace is safer.
A
In the early days of our nation, a strong centralized bank was favored by A. The Federalists B. The Antifederalists C. Thomas Jefferson D. The entire nation
A
Name one advantage of bonds for their issuers. A. Bondholders can't share in the profits of a company. B. Issuers must make fixed interest payments, even when it doesn't make a profit. C. Issuers can't change interest payments even when rates have dropped. D. Bonds have the potential to be downgraded.
A
Replacing human capital with physical capital is a way for A. employers to cut costs B. employers to raise wage rates C. workers to avoid layoffs. D. workers to increase their wages
A
What body issues paper money in the United States? A. Federal Reserve Banks B. the Federal Open Market Committee C. the United States Mint D. the United States Treasury
A
What is one advantage of a vertical merger? A. It can allowa firm to operate more efficiently. B. It can allow a firm to have a monopoly. C. It can allow a firm to avoid government regulations. D. It can allow a firm to purchase unrelated businesses.
A
What is one difference between the New York Stock Exchange (NYSE) and the Nasdaq Stock Market? A. Nasdaq focuses on new-technology stocks. B. Nasdag's trading floor is in Chicago. C. The NYSE serves the over-the-counter market. D. The NYSE is newer and smaller.
A
What is one effect of a nation being on the gold standard? A. The nation's money supply is limited. B. Only the U.S. government can issue currency. C. State governments and banks can issue currency if they have gold. D. The U.S. Treasury can issue money to support a growing economy.
A
What is the KEY difference between cooperatives and nonprofits? A. Cooperatives benefit their members; nonprofits mainly benefit the public. B. Cooperatives benefit the public; nonprofits mainly benefit their members. C. Nonprofits use profits to expand; cooperatives use profits for maintenance. D. Nonprofits provide mainly goods; cooperatives focus largely on services.
A
What kinds of financial assets are sold on secondary markets? A. Stocks B. Small certificates of deposit C. Savings bonds D. Capital markets
A
What risk do limited partners face that general partners do not? A. complete dependence on business abilities of others B. necessity of meeting rigid operational standards C. need to report earnings from business as income D. possibility of having personal assets used to meet business obligations
A
What service is available through home banking on the Internet? A. Checking account balances. B. Withdrawing cash. C. Lending money to a friend. D. Selling gold.
A
What service to its members might a trade association offer? A. keeping members up-to-date on industry trends B. supporting members by answering consumer complaints C. lobbying Congress to increase members' wages D. negotiating to obtain better fringe benefits for members
A
Which advantage of a sole proprietorship could also be a disadvantage? A. A sole proprietor has full control. B. A sole proprietor can easily start a business. C. A sole proprietor is the sole receiver of profit. D. A sole proprietor has to follow relatively few regulations
A
Which of these is an advantage that general partners alone enjoy in a limited partnership? A control of business operations B. limited liability C. share of investment D. share of profits
A
Which type of cooperative organization would attract people who wanted to pay a lower price for organic food? A. consumer cooperative B. service cooperative C. producer cooperative D. labor cooperative
A
Why did Congress decide to act to create a central bank the early twentieth century? A. alarm over a financial panic B. desire to legislate reserve requirements C. electoral victory of the Federalist party D. lack of business expansion
A
Why do some people invest in bonds with a low interest rate? A. The investor may want a low-risk investment. B. The investor may want to make a high yield. C. The investor may want an investment with a low credit rating. D. The investor may want a bond that matures in 20 years.
A
Why is it easy to start a sole proprietorship? A. Sole proprietors do not need to file a lot of paperwork to start a business. B. Sole proprietors are not subject to zoning laws. C. Sole proprietors do not have any legal obligations. D. Sole proprietors do not need to follow any government regulations.
A
Which of the following is an example of commodity money put to use? A. A cow used to purchase land B. Mowing a lawn for a friend who, in turn, gives you a haircut C. Giving a store clerk a five dollar bill for a $4 purchase D. Writing an I.O.U. to a friend in exchange for a loan
A. A cow used to purchase land
The ultimate source of the region's wealth is Washington's unparalleled human capital. The population is the best educated of any large metro's in the United States; about half the region's adults hold bachelor's degrees, and nearly a quarter have graduate degrees. -Richard Florida, "The Boom Towns and Ghost Towns of the New Economy," The Atlantic, October 2013 Which statement can be inferred from the excerpt? A. Having college or graduate degrees has contributed to the wealth of many adults in Washington, D.C. B. Washington, D.C., has the best colleges and universities in the nation. C. In order to become wealthy, an individual must have a graduate degree. D. To get a government job, a person must have an abundance of human capital.
A. Having college or graduate degrees has contributed to the wealth of many adults in Washington, D.C.
When would two sides in a labor dispute bring in a mediator? A. If a strike continues for a long time and neither side can reach an agreement. B. If the two sides disagree with an arbitrator's ruling C. If they are close to reaching an agreement D. If public opinion supports the union's position
A. If a strike continues for a long time and neither side can reach an agreement.
Why do you think a business owner would want to move jobs to a country where labor is not unionized and cheap? A. It would increase profits. B. It would diversify the workforce. C. It would lead to a more skilled workforce. D. It would increase wages.
A. It would increase profits.
Julia plans to become a sole proprietor who upholsters furniture in her home. Which statement about Julia's plan is true? A. Julia will have to obtain a business license if required by law to do so. B. Julia will have to obtain a site permit for her business. C. Julia will not have to pay income tax, because she is the sole receiver of profit. D. Julia will have limited liability for any losses she incurs because she is working from home.
A. Julia will have to obtain a business license if required by law to do so
How do right-to-work laws diminish union power? A. Unions with fewer members have less influence over management. B. Unions with more members have less influence over management. C. Workers who don't belong to unions have greater influence over management. D. Management prefers negotiating with unions with more members.
A. Unions with fewer members have less influence over management.
Which of the following BEST defines the learning effect theory? A. With increased education comes an increased efficiency of production, resulting in higher wages. B. With increased education comes increased intelligence and an increased tendency to be hard- working C. With increased education comes increased aptitude for memorizing, recalling, and test-taking. D. With increased education comes increased importance in an employee's role in a given company.
A. With increased education comes an increased efficiency of production, resulting in higher wages.
Which of the following is a negative aspect of bartering rather than using currency? A. Bartering requires you to find someone who wants what you have. B. Bartering does not require you to have any cash. C. Bartering usually takes less time than using currency. D. Bartering makes it easy to determine the relative value of items.
A. bartering requires you to find someone who wants what you have
Why does fiat money have value? A. because it is backed by a government in which people have confidence B. because it is always more portable and divisible than commodity money C. because it has all of the characteristics of representative money D. because it is the only form of currency that meets the six characteristics of money use of currency
A. because it is backed by a government in which people have confidence
What does a partner in a limited liability partnership have that a limited partner in a limited partnership does not have? A. business involvement B. investment in the partnership C. limited liability D. share of profits
A. business involvement
Replacing human capital with physical capital is a way for A. employers to cut costs. B. employers to raise wage rates. C. workers to avoid layoffs. D. workers to increase their wages.
A. employers to cut costs
If an advertising business buys new computers for its employees, how might its productivity of labor be affected? A. It would increase. B. It would decrease. C. It would double. D. It would stay the same.
A. it would increase
What is a KEY reason that an entrepreneur might choose to establish a corporation rather than a partnership or a sole proprietorship? A. no personal liability B. limited start-up costs C. equal sharing of profits D. ability to pass the business on to children
A. no personal liability
How are nonprofit organizations different from corporations? A. Nonprofits are exempt from income taxes. B. Nonprofits function like business organizations. C. Nonprofits are not subject to government regulation. D. Nonprofits do not make any profits.
A. nonprofits are exempt from income taxes
Corporate shares were offered for sale to the public for the first time yesterday. According to the company's founders, they hope to use the funds raised in this initial public offering to invest in building several new factories. Based on the excerpt from a news story, which statement is true? A. The corporation is raising money by selling bonds. B. The corporation is raising money by selling stocks. C. The corporation is raising money by building new factories. D. The corporation is raising money by becoming a closely-held corporation.
A. the corporation is raising money by selling stocks
A prospectus tells you if you have a liquid investment. B. how well your investment is performing. C. whether or not you need a financial intermediary. D. if you need a hedge fund.
B
A publicly held corporation has A. no legal identity beyond that of its owners. B. many shareholders who can buy or sell its stock. C. a few stockholders who are often family members. D. stockholders who rarely trade their shares of stock.
B
How does the president of the Federal Reserve Bank of New York differ from the other Federal Reserve Bank presidents? A. serves for life B. has permanent seat on FOMC C. serves as chair of the Fed D. serves on the Board of Governors
B
How does the tax-exempt status of municipal bonds benefit consumers throughout the U.S. free enterprises system? A. It makes people more likely to buy corporate bonds. B. It makes people more likely to buy municipal bonds. C. It increases the costs of projects like roads and bridges. D. It raises the amount of taxes that the federal government collects.
B
Interest helps allocate savings to its most productive use by A. limiting risk. B. directing households to save or invest. C. transferring money from borrowers to savers. D. providing money for business improvements.
B
Multinationals benefit consumers and workers by providing jobs and products around the world. Often the jobs they provide help people in poorer nations enjoy better living standards. Which of the following counterarguments to the statement above is true? A. Multinationals don't benefit poorer nations because multinationals don't have to pay taxes in the countries in which they operate. B. Multinationals often provide jobs with low wages and poor working conditions in the countries in which they operate. C. Multinationals don't sell their products in the same countries in which they hire workers. D. Multinationals typically use old-fashioned technology in poorer nations.
B
One benefit of our free enterprise system is that it A. allows the government to decide what goods and services will be produced. B. provides people with opportunities to invest their savings for their most productive use. C. restricts individual wealth. D. benefits businesses and not individuals.
B
Shania and Nick own a convenience store together. They share equal responsibility and liability for their business, and each person receives 50 percent of the profits. What kind of business organization is it? A. sole proprietorship B. partnership C. cooperative D. nonprofit
B
Some businesses are not organized to maximize profits. Instead their are to work for the good of all their members or to work for the good of society in general. What types of businesses is this passage describing? A. franchises and multinationals B. cooperatives and nonprofits C. general and limited partnerships D. horizontal and vertical mergers
B
The Federal Reserve System was created as a result of the need for financial stability shown by what event? A. The collapse of the First Bank of the United States B. The Panic of 1907 C. The Great Depression D. World War II
B
The owner of a factory that manufactures clothing buys several clothing stores to sell the clothing the factory produces. This is an example of A. a horizontal merger. B. a vertical merger. C. a conglomerate. D. a multinational corporation.
B
What did Congress do in 1816 to eliminate the financial chaos of the early nineteenth century? A. Chartered the First Bank of the United States B. Chartered the Second Bank of the United States C. Authorized the president to enter into WWI D. Voted to veto President Andrew Jackson
B
What did speculation and buying on margin have in common? A. Both made investors rich during the Great Crash. B. Both involved buying stock with borrowed money. C. Both represented mistakes in monetary policy. D. Both were keys to ending the Great Depression.
B
What is a family most likely to do if they want to purchase a home? A. use a credit card B. get a mortgage C. open a checking account D. purchase a certificate of deposit
B
What is an advantage that the general partners who own a partnership have that the owner of a proprietorship may not have? A. no need to follow government regulations B. better access to capital C. ease of start-up D. no need to hire employees
B
What kinds of money are included in M1? A. Money market funds B. Currency C. Savings deposits D. Small-time deposits
B
What might cause Federal Reserve examiners to take action against a bank? A. following truth-in-lending rules B. issuing risky loans C. making loans D. reporting reserves
B
Which is a reason why savers work through financial institutions to lend money to investors? A. Savers are guaranteed a better return on their investment if they use a financial institution. B. Financial institutions provide savers with good information about possible investments. C. Investors face less risk when their money comes from institutions. D. Putting money in an institution is more risky, but can bring a better return than investing directly with a business or other borrower.
B
Which is an example of a sole proprietor having personal liability? A. a veterinarian requiring that customers pay for an office visit on the day of the visit B. a store owner having to pay back a business loan after going out of business C. a bicycle mechanic purchasing some new tools D. a caterer taking time off for a vacation
B
Which is not example of a stored-value card? A. Gift card B. Credit card C. Phone card D. Subway smart card
B
Which of the following characteristics do corporations share with many nonprofits? A. They are driven by a quest for profits. B. They may use lobbyists to influence lawmakers. C. They pay income taxes. D. They invest all profits in the organization.
B
Which of the following financial institutions offer checking accounts? A. savings and loan associations B. commercial banks C. savings banks D. credit unions
B
Which of the following is a potential disadvantage of multinational corporations? A. They sell stocks and bonds in other countries. B. They have an undesired influence on politics and culture in other countries. C. They provide jobs in other countries. D. They spread new technologies to other countries.
B
Which of the following situations would encourage people to invest rather than keep it in cash? A. Falling interest rates B. Rising interest rates C. Rising demand for money D. Rising prices their money in a savings account
B
Which statement about sole proprietorships is true? A. Sole proprietorships can be owned by more than one person. B. Sole proprietorships are the most common form of business organization C. Sole proprietorships generate about 40 percent of all sales in the United D. Sole proprietorships do not have to pay employment taxes.
B
Which type of bond might have been used to fund the construction of your school? A. Treasury bond B. municipal bond C.junk bond D. corporate bond
B
Which type of cooperative organization would attract people who needed help preparing their income tax returns? A. consumer cooperative B. service cooperative C. producer cooperative D. labor cooperative
B
Which would somebody use to withdraw money from a checking account? A. stored-value card B. debit card C. credit card D. gift card
B
Why might a limited partnership have a greater ability to raise capital than a general partnership? A. increased access to corporate funds B. increased limits on liability C. increased probability of corporate acquisition D. increased share if profits with more investors
B
You bought a stock on January 1. At the end of the vear, why might you analyze published data from the S&P 500? A. To see whether the stock has just split. B. To find out how the stock performed that year. C. To decide whether to switch to the Dow next year. D. To determine whether bonds are earning more than stocks.
B
Which term describes a perceived barrier that may prevent qualified women from receiving promotions to top-level jobs? A. "women's work" B. "the glass ceiling" C. "human capital" D. "women's career paths"
B. "the glass ceiling"
Why did union membership rise in the 1930s? A. The economy was doing well. B. Congress passed laws benefiting unions. C. More yellow-dog contracts were signed. D. Samuel Gompers founded the American Federation of Labor.
B. Congress passed laws benefiting unions.
Which of the following is a reason for employers to hire more temporary workers instead of permanent workers? A. Employers know that statistics show that most people prefer temporary employment. B. Employers can cut costs because temporary workers typically receive fewer benefits. C. Employers don't have to pay Social Security and Medicare taxes for temporary workers. D. Employers can pay temporary workers less than the federal minimum wage.
B. Employers can cut costs because temporary workers typically receive fewer benefits.
How does automation affect wages? A. It increases the demand for labor, which decreases wages. B. It decreases the demand for labor in some jobs, which decreases wages. C. It increases the demand for labor, which increases wages. D. It decreases the demand for labor, which increases wages.
B. It decreases the demand for labor in some jobs, which decreases wages.
The fact that coins can last a long time in circulation shows which characteristic of money? A. Money is portable. B. Money is durable. C. Money is divisible. D. Money is uniform.
B. Money is durable.
Suppose data show an increase in offshoring by U.S. companies. Which of the following describes a possible effect on the unemployment rate? A. The unemployment rate would remain steady, because offshoring has no effect on jobs in the United States. B. The unemployment rate would increase, because jobs formerly taken by U.S. employees are now located in other countries. C. The unemployment rate would decrease, because offshoring creates new jobs in other countries. D. The unemployment rate would decrease because U.S. workers can easily find other jobs in other industries.
B. The unemployment rate would increase, because jobs formerly taken by U.S. employees are now located in other countries.
Which term does the Bureau of Labor Statistics use to describe people who once sought work but have given up looking for a job? A. part-time workers B. discouraged workers C. unemployed workers D. under-employed workers
B. discouraged workers
What generally happens to the equilibrium wage when demand for workers is low and supply is high? A. It gets higher. B. It gets lower. C. It does not change. D. It moves below demand.
B. it gets lower
What disadvantage of franchising do all franchisees face? A. absence of brand identity B. lack of autonomy C. inexperience of franchisee D. lack of resources
B. lack of autonomy
Over the past two decades, the U.S. economy has shifted from a manufacturing economy toward a(n) _____________ economy. A. industrial-based B. service-producing C. high-tech D. agricultural-based
B. service-producing
What determines the equilibrium wage of labor? A. the demand for workers in a labor market is less than the supply B. the supply of workers in a labor market meets the demand for for workers C. the supply of workers in a labor market exceeds the demand for workers D. the demand for workers in a labor market exceeds the supply
B. the supply of workers in a labor market meets the demand for for workers
The fact that every five-dollar bill buys five dollars worth of goods is an example of money's A. durability B. uniformity C. portability D. divisibility
B. uniformity
In the 1800s, why was there a greater need for labor unions than there is now? A. Factories were safe. B. Workers worked longer hours. C. Strong child-labor laws had been passed. D. Wages were reasonable.
B. workers worked longer hours
Do multinationals have more or fewer regulations than corporations that are in just one country? A. fewer, because they pay less taxes than regular corporations B. the same, because they only have to obey the laws and pay the taxes of the country they are headquartered in C. more, because they have to obey laws and pay taxes in more than one country D. more, because they are not allowed to have vertical or horizontal mergers
C
How did the abandonment of the gold standard help the economy during the Depression? A. It allowed the President to take over failed banks that held gold. B. It allowed the Federal Reserve to base the value of the dollar on gold. C. It allowed the Federal Reserve to increase the money supply. D. It allowed the government to insure deposits.
C
If you wanted to purchase shares of a company, whom would you contact? A. the New York Stock Exchange B. a commodities broker C. a stockbroker D. a day trader
C
If you were buying a bond, which of the following characteristics would you most likely be looking for? A. low credit rating B. long term of maturity C. high coupon rate D. low par value
C
If you were raising catfish on a farm in Mississippi, which type of cooperative might you join for marketing help? A. a purchasing cooperative B. a service cooperative C. a producer cooperative D. a consumer cooperative
C
In the early 2000s, the number of home foreclosures increased because A. many people paid off their mortgages early. B. housing prices rose. C. many borrowers could not repay their mortgages. D. the government had to bail out large financial institutions.
C
In which situation would a family apply for a mortgage? A. They want to buy a car. B. They want to go on vacation. C. They want to buy a house. D. They want to send their daughter to college.
C
Suppose a business is owned by two partners. What skill does each partner need that a sole proprietor would not necessarily need? A. decision-making ability B. management expertise C. ability to collaborate with an equal D. advertising expertise
C
Suppose you own 100 shares of stock in a company, and each share is worth $120. A 2-for-1 stock split would leave you with A. 100 shares worth $120 each B. 100 shares worth $240 each. C. 200 shares worth $60 each. D. 50 shares worth $240 each.
C
The period between 1837 and 1863 is known as the "Free Banking Era" because A. banks charged no fees during these years. B. the strong Federal Bank meant banking was free of fraud or deceit. C. after the fall of the Second Bank, state-chartered banks flourished. D. bank runs were virtually unheard of during these years.
C
To raise money, a company is selling shares of "dividend growth" stock. What does the company MOST LIKELY do with its earnings? A. Pays it all out to stockholders, four times a year. B. Reinvests it quarterly in order to expand the company. C. Pays out some to stockholders and reinvests the rest in its business. D. Invests it in company stock, which it then sells at a discount to stockholders.
C
What advantages do financial intermediaries offer an investor? A. They offer liquidity, low interest rates, and risk-free investment. B. They offer securities, interest-free loans, and diversification. C. They share risks, provide information, and provide liquidity. D. They share securities, provide liquidity, and assume risk.
C
What disadvantage do partners and franchisees share? A. domination by national corporation B. limited access to national advertising C. limits on control of the business D. payment of fees and royalties
C
What happens to the stockholders when a corporation files for bankruptcy? A. The stockholders must also file for bankruptcy. B. The owners can force the board of directors to pay the debt. C. The owners can lose only the money they have invested. D. The owners can avoid paying the debt by forming a limited liability corporation.
C
What is one advantage of a money market mutual fund as compared with a savings account? A. It has more risk. B. It has lower interest. C. It has higher interest. D. It's insured by the FDIC.
C
What is the function of a municipal bond? A. to provide money for a firm to expand its business B. to provide money for the federal government to pay its debts C. to provide money for local government to finance public projects D. to provide money for individuals who are willing to take high risks
C
When you evaluate an investment, you must balance A. the interest you will earn with the prospectus you will gain. B. the liquidity involved with the risk you take. C. the risks involved with the rewards you expect to gain. D. the diversification you are making with the type of financial intermediary.
C
Which could be an advantage of opening a franchise for a franchisee who has limited access to resources? A. complete freedom to make business decisions B. receiving royalties from the parent company C. receiving training from the parent company D. paying fees to the parent company
C
Which of the following activities is most closely associated with nonprofit professional organizations? A. resolving consumer complaints B. persuading legislators to make laws that about products or services favor a particular industry C. improving its members' wages, benefits, and working conditions D. providing information and training related to specific occupations
C
Which of the following businesses would most likely be subject to laws that regulate the disposal of dangerous chemicals? A. a greeting card company B. a shoe store C. an auto repair shop D. a dog-walking business
C
Which of the following did the Federalists support? A. an economy based on agriculture B. state-regulated banks C. a national bank D. a decentralized banking system
C
Which of the following is a positive aspect of using a credit card? A. The interest charged on credit cards is lower than interest on all other types of loans. B. With a credit card, money is automatically deducted from the user's bank account. C. Using a credit card allows consumers to buy goods even if they don't have cash. D. Credit cards bills can quickly add up if the consumer only pays the minimum.
C
Which of the following is the WISEST strategy for a pew investor in the stock market? A. Buy growth stocks recommended by a relative. B. Buy preferred stocks with a three-month call option. C. Buy blue chip income stocks through a brokerage firm. D. Buy the hottest common stocks and sell them as soon as the price rises. might
C
Which of the following statements about M1 assets is true? A. M1 assets cannot be converted into cash easily. B. M1 assets are stored in savings accounts. C. M1 assets can be converted into cash easily. D. M1 assets do not have liquidity.
C
Why does the United States government issue savings bonds? A. To improve its bond rating B. To earn interest C. To pay for government projects D. To raise taxes
C
Which of the following is an example of money's divisibility? A. Coins and bills can last a long time in circulation. B. Twenty dollar bills are easy to carry around in a wallet or pocket. C. A ten dollar bill can purchase a five dollar item, with five dollars change coming back D. If Jane and Ranita both have a ten dollar bill they can purchase the same $10 t-shirt.
C. A ten dollar bill can purchase a five dollar item, with five dollars change coming back
Which of the following is among the reasons why average real wages have declined in the last couple of decades? A. Less competition from foreign countries has decreased the demand for workers. B. A decrease in the number of people obtaining college degrees has decreased the number of high- wage jobs. C. Deregulation of some industries has increased competition, causing employers to cut wages. D. A decreased use of temporary work has limited wage growth.
C. Deregulation of some industries has increased competition, causing employers to cut wages.
Which law requires that men and women performing the same job receive the same pay? A. Civil Rights Act of 1964 B. Fair Labor Standards Act of 1938 C. Equal Pay Act of 1963 D. Federal Employees' Compensation Act
C. Equal Pay Act of 1963
Why is the demand for labor called a derived demand? A. It is set by the supply of labor. B. It is set by the demand for labor at the lowest price. C. It is set by the demand for another good or service. D. It is set by the supply of goods and services demanded.
C. It is set by the demand for another good or service.
Which is a reason that there are fewer union jobs in the South? A. There are fewer blue-collar workers in the South. B. Foreign competition has a greater impact on the South. C. There are more right-to-work laws in the South. D. There are more manufacturing jobs in the South.
C. There are more right-to-work laws in the South.
Which of these is NOT one of the three uses of money? A. A medium of exchange B. A store of value C. A means to barter D. A unit of account
C. a means to barter
What were the main goals of the early labor movement in the United States? A. equal pay for managers and laborers B. a full-time job for everyone wanting to work C. higher wages, shorter hours, and a safer workplace D. automatic annual increases in worker pay and benefits
C. higher wages, shorter hours, and a safer workplace
Which of the following is a reason that companies engage in offshoring? A. Educational opportunities for workers may be greater in some other countries B. Factories in some countries may utilize newer technology. C. Labor costs may be lower in some other countries. D. The cost of building factories is higher in some other countries.
C. labor costs may be lower in some other countries
Which describes a way the government provides an incentive to a non-profit hospital so that it can offer free services to poor patients? A. Having fewer doctors at the hospital B. Not requiring the hospital to maintain health standards C. Not requiring the hospital to pay taxes D. Allowing the hospital to turn away some patients who need services
C. not requiring the hospital to pay taxes
Which of these is the best example of commodity money? A. silver certificates B. quarters C. salt D. dollar bills
C. salt
Why is using money as a medium of exchange preferable to bartering? A. the relative value of bartered goods remains the same over time B. The value of money fluctuates over time. C. The relative value of goods is difficult to establish in a barter system. D. The value of bartered goods decreases after they are purchased.
C. the relative value of goods is difficult to establish in a barter system.
Which of the following could be a reason a worker joins a labor union? A. to obtain a new job B. to avoid paying employment taxes C. to improve working conditions D. to avoid a wage increase
C. to improve working conditions
Why would someone be willing to share the economic right to business ownership by forming a general partnership? A. to benefit from being connected to a well-known brand name B. to enjoy a greater share of profits C. to limit liability D. to avoid paying additional income tax
C. to limit liability
Consumer and producer cooperatives are focused mainly on A. lending money. B. keeping members healthy. C. providing cheap insurance. D. buying and selling goods.
D
Cooperatives are based on several principles, which include voluntary and open membership, democratic control of the organization by its members, and sharing of contributions and benefits by members. What does "democratic control" LIKELY mean in this context? A. Members can engage in political discussions. B. Members are free to open their own businesses. C. Members belong to the Democratic Party. D. Members make decisions by voting.
D
How are the Dow Jones Industrial Average and the S&P 500 similar? A. Both report the daily change in price of all stocks. B. Both rose in value during the 2007-2009 bear market. C. Both measure how well hundreds of stocks are doing. D. Both track the performance of the stock market.
D
How do corporations raise capital? A. by transferring funds from the owners to the investors B. through grants from the board of directors C. by taking out loans against the owners' assets D. by selling stocks and bonds
D
How does a lack of financial resources for fringe benefits affect a sole proprietor's ability to run a business? A. It makes it difficult for the owner to make a profit. B. It makes it difficult for the owner to promote the business. C. It makes it difficult for the owner to pay competitive wages. D. It makes it difficult for the owner attract good employees.
D
How does the Fed try to control inflation? A. controlling prices B. clearing checks C. regulating banks D. regulating the money supply
D
How does the principle of compound interest help encourage investment? A. Compound interest means borrowers pay more for their loans. B. Compound interest means borrowers pay less for their loans. C. Compound interest means savers earn less on their investments. D. Compound interest means savers earn more on their investments.
D
In what type of market is money lent for periods longer than a year? A. money market B. secondary market C. primary market D. capital market
D
In which financial crisis did the Fed respond most aggressively? A. the Panic of 1907 B. the Great Depression C. the early 1950s D. 2008
D
Ivers Paint, founded in 1999, is a corporation that manufactures paint supply products. On Friday, officials announced that the company would merge with the Kildare Paint Supply Store, a partnership started in 1995 by the Kildare brothers. "This merger will benefit consumers because Ivers will be able to operate more efficiently and offer our products at a lower price at the Kildare Paint Supply Store," said a representative from Ivers Paint. Based on the excerpt from a news story, which statement best describes the merger of Ivers Paint and Kildare Paint Supply? A. It is a conglomerate merger because one company is involved in manufacturing and the other in selling. B. It is a partnership merger because one of the companies is a partnership. C. It is a horizontal merger because both companies are involved in the paint supply business. D. It is a vertical merger because the two companies are involved in different stages of the paint supply business.
D
Read the quote below. Why did the sight of money make the customers less fearful? "Upon approaching the town (with a bank whose customers had withdrawn a lot of money) the pilot guided the plane low over the main street to dramatize its arrival and then landed in a nearby field. From there the Fed officials were ceremoniously escorted into town by the police and the money was stacked along the bank's teller windows. The sight of all that money piled up inside the bank quelled the customers' fears and saved the bank from failing." - "Born of a Panic: Forming the Federal Reserve System," Federal Reserve Board, Minneapolis A. They realized that the Fed officials could issue more money if needed. B. They realized the Fed officials would provide relief to people in need. C. They realized the Great Depression would be averted. D. They realized the bank wouldn't run out of money.
D
Suppose a firm that makes appliances merges with a company that produces running shoes, and it later buys a dairy. What is the combination called? A. franchise B. horizontal merger C. cooperative D. conglomerate
D
The Federal Reserve System acts as lender of last resort to what group? A. Businesses in general B. Consumers C. Federal government D. Financial institutions
D
The board of directors and the officers of a corporation make decisions that have a major impact on the corporation's earnings, which may result in profits and losses. In either case, the corporation's stockholders will hold management accountable for the company's performance. Under what circumstances might stockholders be displeased with a corporation's performance? A. if the company's stocks are bought on the stock exchange B. if the company's stocks are sold on the stock exchange C. if the company's stocks increase in value on the stock exchange D. if the company's stocks lose value on the stock exchange
D
What does the board of directors in a corporation do? A. work in the various departments of the corporation B. run the corporation and oversee its operations C. own the corporation D. make all major decisions for the corporation
D
What is credit risk? A. the risk that you may not be able to convert the investment back into cash quickly enough to meet your needs B. the risk that inflation rates will erode the value of your assets C. the risk that you may have to pass up better opportunities for investment D. the risk that borrowers may not pay back the money they have borrowed or may be late on payments
D
What relationship does risk have to return? A. With lower risk, the potential for a return disappears. B. The higher the risk, the lower the potential for return. C. The lower the risk, the greater the potential for return. D. The higher the risk, the greater the potential for return.
D
What role does the Securities and Exchange Commission fulfill with regard to corporations? A. It trades securities on the stock market. B. it issues licenses to business owners. C. It forms limited liability corporations. D. It regulates the stock market.
D
Which aspect of the Federal Reserve System helps establish its independence from the government? A. Appointment of the Board of Governors by the president B. Its division into 12 Federal Reserve Districts C. Ownership of Federal Reserve System by member banks D. Role of the Fed as the government's banking agent
D
Which is a disadvantage of sole proprietorships? A. full control B. few regulations C. easy to start and end D. limited access to resources
D
Which of the following actions would help you lower the risks of investing? A. Invest more money. B. Invest less money. C. Invest directly in businesses and avoid financial intermediaries. D. Diversify your investments.
D
Which of the following is a tool that the Fed uses to regulate the money supply? A. Bank examinations B. Check clearing policies C. Issuing of government checks D. Reserve requirements
D
Which of the following is generally true about financial intermediaries? A. Intermediaries are government agencies. B. Intermediaries channel money from investors to savers. C. Intermediaries increase the level of risk for investors. D. Intermediaries provide information to savers and investors.
D
Which type of business organization might offer low-interest loans to its members? A. a business association B. a trade association C. a consumer cooperative D. a service cooperative
D
Which type of financial institution plays the largest role in the economy? A. credit unions B. savings banks C. savings and loan associations D. commercial banks
D
Why did President Roosevelt want to take the United States off of the gold standard during the Great Depression? A. He wanted to increase the value of the dollar. B. He wanted to decrease the money supply. C. He wanted to give the Treasury more power. D. He wanted to give the Fed more power.
D
Why did Roosevelt want to take the United States off the gold standard? A. He wanted to increase the value of the dollar. B. He wanted to decrease the value of gold. C. He wanted to encourage people to trust their banks. D. He wanted to give the Fed more control of the money supply.
D
Why do some people invest in hedge funds? A. Because they want a fund that doesn't diversify. B. Because they want to invest a small amount of money. C. Because they want a fund with less risk. D. Because they might make a huge profit.
D
Why do you think ratings are helpful to investors? A. They lower potential risk. B. They raise potential risk. C. They improve the yield for investors. D. They help investors judge potential risk.
D
Why is it important to protect members of the Federal Reserve Board of Governors from political pressures? A. Political pressures could lead to one district being overrepresented. B. Political pressures could lead to reappointment. C. Political pressures always favor the wealthy. D. Political pressures could cause them to make poor decisions.
D
Why is liability the biggest disadvantage of a sole proprietorship? A. The owner may not be able to complete work on time. B. The owner might be unable to pay his or her employees. C. The owner may have difficulty getting loans from banks. D. The owner could lose personal property if the business fails.
D
Why might ranchers want to lock in a price today for their cattle by signing a six-month futures contract? A. To be able to pay off the put option when the futures contract expires. B. To be able to buy a new herd of cattle when the six months is up. C. To be able to sell all of their cattle for a profit a year from now. D. To be able to plan on a certain amount of income in the future.
D
Why is the demand for labor called a derived demand? A. the supply of labor is derived from the demand for labor B. the demand for labor is derived from the supply of labor C. the demand for a product or service is derived from a demand for workers who can supply that product or service D. The demand for labor is based on a demand for a product or service that workers can supply
D. The demand for labor is based on a demand for a product or service that workers can supply.
Why might a company lay off union workers who have successfully negotiated for higher wages? A. An arbitrator has told the company that the workers must be laid off. B. The company wants to encourage other workers to work for less money. C. The company no longer needs to remain competitive. D. The employer cannot afford the higher wages.
D. The employer cannot afford the higher wages.
Which of the following is a practice that U.S. companies might follow to lower costs? A. hiring fewer female workers B. hiring fewer foreign-born workers C. hiring more full-time workers D. hiring more part-time workers
D. hiring more part-time workers
Which of the following is true about bartering? A. It is usually fast and convenient B. It is often used in urban areas the United States C. it involves the exchange of currency D. It involves the exchange of goods and services
D. it involves the exchange of goods and services
Which of these describes an action an employer may take to reduce the cost of wages? A. hiring permanent, rather than temporary, workers B. including featherbedding jobs in union contracts C. substituting workers for machines D. outsourcing jobs to another country
D. outsourcing jobs to another country
The fact that you can pay for a five-dollar item with a ten-dollar bill and get five dollars back in change shows which of the following? A. that money is durable B. that money is a store of value C. that money is uniform D. that money is divisible
D. that money is divisible
Which of the following must a company that wants to hire guest workers show? A. that the guest workers they hire will eventually leave the United States B. that using guest workers will cause company profits to increase C. that the guest workers they hire will eventually become permanent workers D. that using guest workers will not lower the wages of native-born workers
D. that using guest workers will not lower the wages of native-born workers
Which of the following is NOT information the Bureau of Labor Statistics provides? A. the number of people in the U.S. labor force B. the number of employed and unemployed people in the labor force C. the monthly unemployment rate D. the future employment figures for specific companies
D. the future employment figures for specific companies
In order to do business, what is one regulation that corporations have to follow? A. They have to form limited liability corporations. B. They have to have an advisory board that makes financial decisions. C. They have to sell stocks and bonds on the stock exchange. D. They have to file quarterly and annual reports with the SEC.
D. they have to file quarterly and annual reports with the SEC
