Econ final

What term best describes the land, labor, capital, and entrepreneurship that is used to create new goods and services?

Factors of Production

What are the characteristics of perfect (or pure) competition?

Sellers are free to enter or exit the market, many buyers and sellers participate, similar or identical products available

Which of the following people would be counted by the Bureau of Labor Statistics as part of the unemployment rate in the U.S.?

a 40-year-old man who was working, but has been laid-off by his company

What of the following purposes does the Federal Reserve Banking System NOT serve?

a place for consumers to make deposits and get loans

Currently, who are the top two trading partners of the United States, measured in total value of all goods exchanged?

Canada and China

What is the concept of demand elasticity?

Demand elasticity is how responsive consumers are to changes in price.

In disputes between labor union demands and corporate managers, name the technique where a neutral third party expert is hired who reviews the differences between management and union demands and imposes a decision that is binding for both sides.

arbitration

What do Social Security taxes pay for?

benefits to older citizens, surviving family members of wage earners, and people with certain disabilities

A _____________ can be described as a period of macroeconomic expansion followed by a period of contraction.

business cycle

If a general business partnership fails, who is responsible for the debts still owed?

each one of the partners

In contrast with classical economics, Keynesian economics

encourages more government spending during times of recession.

A person who starts a new business or develops an original idea is known as a(n) __________.

entrepreneur

What is the name for a specific type of corporation that requires licensing for a trademark or methods of doing business?

franchise

All of the following are low-risk investments EXCEPT

junk bonds

Measurement of the types of goods consumers purchase is a key indicator of the direction of a nation's economy. Which of the following is known as a consumer nondurable good?

college textbook

What is the source of the net benefits and profits that come from increased international trade?

comparative advantage

While not every state collects this type of revenue, what is the biggest source of direct revenue collected by state governments in the United States?

state income tax

When the quantity supplied of a good or service is greater than the quantity demanded, economists call this a

surplus

One example of expansionary fiscal policy would be cutting

taxes

Which of the following could help a country move its production possibilities curve outward (shift to the right)?

technological innovations make production across all industries more efficient

All of the following are part of fiscal policy EXCEPT

the Fed (Federal Reserve Board) changing the money supply through changes to the discount rate

What is fiscal policy?

the federal government's tax and spending plans

Which of the following best describes gross domestic product (a nation's GDP)?

the total value of all goods and services produced within a nation's territory during a given year

As the United States began to abandon the gold standard for the dollar in the 1930s and completely dismiss the gold standard in the 1970s,

the value of the dollar has declined.

A ___________ may exist in markets where it is most efficient for only one large firm to provide a product.

natural monopoly

The highest point in a nation's cycle of economic expansion is called a

peak

The opportunity cost of a large-scale or personal economic decision can be analyzed by using a

production possibilities graph

What is one monopoly that the U.S. government has traditionally permitted in modern times?

professional sports leagues

An example of equity is

share of stock.

The Dow Jones Industrial Average consists of

30 stocks that are considered representative of the market as a whole.

In the modern world, economists and policy makers believe that a nation is efficiently using its resources if it can meet a ____ target unemployment rate.

4 to 6 percent

Which of the following examples best illustrates the law of supply?

A hamburger stand increases the number of sandwiches they supply every day that the price is increased.

Which of the following is NOT part of the structure of the Federal Reserve Banking System

Congressional Budget Office (CBO)

Which of the following is a major difference between corporations and other kinds of business structures?

Corporations exist as a separate entity (body) apart from its owners.

A credit card allows you to withdraw money directly from your checking account.

False

What was the original expected role of the government in the earliest years of the United States' market economy?

Government was expected to follow a laissez-faire policy of not getting involved in business.

Which of the following organizations does NOT illustrate an international trend toward lower tariffs and more free trade?

Greenpeace

What is the name/acronym of the international organization formed to stabilize international exchange rates and to facilitate development of nations?

IMF

Price inflation can be difficult for consumers AND producers. Which of the following is a major problem for businesses during long periods of inflation?

It is difficult for them to predict their production costs.

Which of the following is a treaty to eliminate all trade barriers between the nations of the United States, Canada, and Mexico?

NAFTA

The business practice of this type company is to provide funds or income to individuals after working a certain number of years.

Pension Funds

What do taxes collected under the Federal Insurance Contribution Act (FICA) fund?

Social Security and Medicare

What best describes technology's role as an important factor of production?

Technology incorporates the knowledge and skill sets and software that makes production more efficient.

How does the Federal Reserve's regulation of the money supply impact banking and the American economy?

The Fed's actions impact the inflation rate and overall economic growth.

Why does the U.S. government give monopolistic power to companies by issuing patents, copyrights, and trademarks?

The U.S. government promotes the incentives of profit so that business firms can gain for their research and efforts.

If the United States government gives a foreign country most-favored nation (MFN) status, what does that mean?

The country pays the low tariffs as those paid by all MFN nations.

Which of the following descriptions is NOT characteristic of U.S. Free Enterprise system?

The government actively works to evenly distribute wealth among the people of the nation.

What aspect of the modern American free enterprise system is different than its pure market economy of the past?

The government has taken on a larger role in regulating the economy and providing services for citizens in need

What do all of these words have in common: free enterprise, free market, and capitalism?

These words can be used interchangeably to describe the US economy.

What action best describes the role that households play in the circular flow of goods and services?

They buy goods and services from the product market.

Which of the following statements is true about such historical economic recessions as the Panics of 1837, 1857, 1873, as well as the Great Depression of the 1930s?

They illustrate the trough part of the business cycle.

A credit card functions as a loan when you use it to make a purchase.

True

Savers, borrowers, and financial intermediaries (such as banks) contribute to the financial system

True

Which of the following would be the best example of fiat money?

U.S. one dollar bill

Which of the following are examples of an inelastic good during a cold, winter storm?

Warm jackets, blankets, heater

Many less-developed countries and regions in the world have huge debt problems. Which of the following statements is NOT true about this debt issue?

When these debt problems occur, the U.S. stops all trade with that region or country.

Which of the following best explains a natural monopoly?

a government choosing a supplier for all of the buyers in a market

Which of the following best describes the market structure known as an oligopoly?

a market with only a few business firms controlling the majority of the market's production

What is the economics term to describe when a nation's people import more goods and services than they export to other countries?

a trade deficit

The purchase of durable goods is a leading indicator of manufacturing activity. Which of the following is an example of a durable good?

aircraft engine

If Bolivia is the only country in the western hemisphere that can produce highly-demanded lithium from its mines, Bolivia's producers have

an absolute advantage in lithium production.

Investing in a money market mutual fund is a higher risk than investing in a certificate of deposit because unlike CDs, money market funds

are not insured by the FDIC

Money market mutual funds generally have a higher risk than savings accounts because mutual funds

are not insured by the Federal Deposit Insurance Corporation.

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by American consumers for a market basket of consumer goods and services. How does the Bureau of Labor Statistics determine the items to be used in the market basket?

conducting consumer spending surveys

Which of the following is specific kind of a corporation that is an association of individuals organized around a specific economic, social, or cultural need through a jointly-owned enterprise.

cooperative

How does investing promote financial growth?

creates more money to be used by more people or firms

____________ is a term that refers to bills and coins.

currency

What kind of table lists the quantity of a good that people will buy at different prices?

demand schedule

In a market characterized by monopolistic competition, firms often use non-price competition to increase sales. Which of the following is NOT a form of non-price competition?

discounts

The economic resources that are used to make all services and goods are known as the

factors of production.

As the federal government has added more rules and regulations to the conduct of business in the American economy in modern times,

federal taxation of individuals and companies has grown.

What type of currency system is characterized by one country basing its national currency's value on that of another nation?

fixed exchange-rate system

Nations, including the United States, have established trade policies at different times to protect young, infant industries as they begin to grow. Which of the following is not a trade barrier?

free-trade agreement

What is the biggest advantage for a country that has the headquarters of a large, multinational corporation?

greater employment opportunities

This is used to describe the dollar value of all final goods and services produced within a country's borders in a given year.

gross domestic product

What are some characteristics of a monopoly?

high barriers for entry into the market A single seller price discrimination

How do banks make most of their profits?

interest charges on loans

The World Bank

is the largest provider of development assistance for the less developed regions and nations of the world.

The school's Young Entrepreneurs Club wants to raise money to help cover the price of the bus rental for their journey to New York to visit its financial district. The members have designed a school spirit shirt to sell as a fundraiser. Use the demand schedule listed below to answer the question that follows. What economic principle does this demand schedule help illustrate? $30 75 $25 100 $20 125 $15. 150 $10 175 $5 200

law of demand

What is the basic economic concept that says the more and more you consume of a good, the less and less satisfaction you will receive?

law of diminishing marginal utility

The concept that with the purchase of more and more of a good, the less satisfaction you will receive with each on is called

law of diminishing marginal utility.

The school's Young Entrepreneurs Club has been invited to go to New York to visit the financial district. It will cost the club a minimum of $10,000.00 to charter a bus to hold their 50 members. After getting quotes from t-shirt companies for a fundraiser, they created the following supply schedule. Use the schedule to answer the question that follows. $30 175 $25 150 $20 125 $15. 100 $10 75 $5. 50

law of supply

What does the Federal Deposit Insurance Corporation (FDIC) have to do with banks and your money?

makes sure that bank customers do not lose their money if a bank fails

Cities often have to build large public works, buildings, and other capital. In order to have enough money to build these works,_____ are sold to investors to finance the projects.

municipal bonds

When you own one certificate of common stock in a corporation, you

own one share of the corporation.

What are examples of complementary goods? Mark all that apply.

peanut butter and jelly

A market with many firms producing the same goods is in __________.

perfect competition

What is the major source of tax revenue for local governments in the U.S.?

property taxes

One of the best economic indicators of a nation's economy is the value of its gross domestic product. When economists convert GDP to a value in constant, or unchanging, prices, this value is called

real GDP

This happens when there is a prolonged contraction in the economy.

recession

Economic choices must be made because people and businesses have limited resources. This fact causes there to be limits to the amount of goods and services that can be made or purchased. This situation forms the basis for the most fundamental economic concept called. . .

scarcity

As a teenager, Frank discovered that he loved to cook. After attending culinary school, he borrowed money from the bank to get his business start-up funds that he used to open a small restaurant. He is personally liable to pay the bank back. If the business goes under Frank could personally lose his house and car if he defaults on the loan. Based on this description, what type of business structure is Frank's business?

sole proprietorship

Which of the following is NOT an example of the increasing role of government in the American free enterprise system in the past century?

the balanced budget achieved in the year 2000

When revenues exceed expenditures in the national budget,

there is a budget surplus

All decisions involve _________ because we must give up some alternatives when we choose a certain course of action.

trade-off

When you purchase coffee at Starbucks using your credit card,

you are borrowing money from the institution that issued your credit card as it pays Starbucks for your coffee.

Which of the following would be the best example of commodity money?

5 bars of gold

These institutions take deposits from savers then lend out some of the funds to businesses and individuals.

Banks, Savings & Loans, and Credit Unions

The Federal Reserve System / FDIC guarantees a bank deposit of up to ______.

100,000

Which is the best description of a business located in an economy that is based on the characteristics of free enterprise?

A franchise restaurant owner offers an after-school special offer to feed a family of four for $30.00 in the hopes to draw customers away from a competing restaurant down the street.

Which of the following forces of business regulation describes the business standards and behaviors that we personally choose to create and follow in regards to how we treat human capital and how we will run our businesses?

Business Ethics

Which of the following best describes how currency rates can affect trade?

Business firms that import from other countries benefit when their currency becomes stronger, since it enables them to purchase more.

Choose the letter of the economic system row in the table below that best describes the characteristics of socialism.

Choice C

Corporations make up roughly 20 percent of the number of businesses in the United States, but produce about 90 percent of the goods and services in America. What do these facts explain about the advantages and disadvantages of corporations versus other types of business structures?

Corporations can raise large sums of capital investment to grow their business on a large scale.

The nation of Economica's economic indicators over the past half year have reported that the economy has: a growing Gross Domestic Product (GDP), low unemployment rates, and increasing tax revenues. Based on these indicators, what is most likely to be true for Economica's current business cycle?

Economica is in an expansionary period with increasing production, which will result in a higher standard of living for many of its people.

Which of the following is an advantage of a partnership structure over the sole proprietorship business structure?

Partnerships enable individuals to pool together more factors of production for growth.

According to the cost-push theory, what is responsible for inflation?

Producers raise prices of goods and services they sell to meet increased costs.

Unemployment rates are one of the key economic indicators of a nation's financial health. Which of the following is the main difference between seasonal unemployment and structural unemployment?

Seasonal unemployment occurs because of labor demand changes during a year, whereas structural occurs because the workers lack skills.

Which of the following rank in the highest expenditures in the federal budget in recent times?

Social Security and Medicare-related spending

Which of the following is a major disadvantage to using import barriers to make domestic (American) goods cheaper?

The American manufacturers are likely to lose the incentive to produce efficiently and prices will rise.

Which of the following does NOT describe an effect of modern technological advancements on the economic growth of a nation?

The costs of production will rise sharply for an extended time across the nation.

If we say that a nation's currency depreciates, what does this mean?

The country's products become cheaper to other nations.

According to the demand-pull theory, what is responsible for inflation?

The demand for goods and services is exceeding current supply.

When entrepreneurs in the United States choose to design and produce automobiles in Michigan, U.S.A. for sale overseas, how is the U.S. GDP affected?

The value of the American-made cars sold on the foreign market is added to the U.S. GDP.

The largest provider of development assistance for less-developed nations and regions in the world is the

World Bank

Which of the following is considered to be a non-price determinant that causes shifts in supply curves?

costs of production

One example of contractionary fiscal policy would be

decreasing government spending.

You would refer to a(n) ________ to find the quantity that a person would purchase as each price that could be offered in a market.

demand curve

The measure of a country's development that is best for comparing standards of living and wealth between people of different countries is

gross domestic product per capita.

Which of the following is not a characteristic of money?

identifiable

The purpose of expansionary fiscal policy is to

increase national output.

What is the incentive for a manufacturer to sell a certain product?

making profit through sales

Which of the following is NOT one of the basic tools used to implement U.S. monetary policy?

new tax laws passed by Congress and signed by the President

The investment strategy of diversification is often recommended because diversification

reduces overall risk on your investments

The main advantage of diversification as an investment policy is that it

reduces risk to investors

What is monetary policy?

regulation of the money supply, interest rates, and banking in the U.S. economy

Adam Smith, the Father of Modern Economics, stated that all economic decisions in a market economy were regulated by an "invisible hand" of ...

self-interest and competition

Your family likes to use the orange juice to make breakfast smoothies every morning. You were sent to the store to buy more orange juice, but the store is out of orange juice. You decide to purchase mango juice instead. This is an example of a/an...

substitute good.

U.S. Savings Bonds are different than almost all other bonds because

the buyer does not receive interest payment until he cashes the bond in.

Savings bonds differ from most other bonds in that

the buyer does not receive periodic interest payments in exchange for a lower purchase price.

Which of the following would be added to the gross domestic product (GDP) of the United States?

the income your barber or stylist makes earns

When you give up a movie date night in order to prepare for the SAT, the missed movie date is known as a/an ___?___ in economics.

trade-off

The 'market basket' that is used by the Bureau of Labor Statistics to measure inflation using the Consumer Price Index (CPI) is made up of which of the following?

typical goods and services for an urban household

John Maynard Keynes said that the main disadvantage of the government saving money (tightening its belt) instead of spending money during a recession is

unemployment gets even worse

Which statement would best explain why free enterprise economies tend to have a higher standard of living?

Private ownership of property, businesses, and the factors of production allow individuals to build their personal wealth.

The imaginary nation of Economica can produce either tennis shoes or cell phones. Interpret its Production Possibility Curve graph to identify which of the statements about the production possibilities for Economica is correct.

Production would be inefficient at point F and could indicate that the nation was not fully utilizing the all of its labor or resources.

Let's combine your knowledge of supply and demand with your understanding about labor and jobs. What would happen to job opportunities for the lowest-paying jobs in a market in which the government raises the minimum wage?

The quantity of labor demanded would go down.

What will happen to an economics market in equilibrium when there is an increase in supply?

The quantity supplied will be greater than quantity demanded, so the price will drop lower.

Which of the following characteristics does NOT describe pure competition (perfect competition)?

The sellers are offering a wide variety of different products

What do the Sherman Antitrust Act, Clayton Act, and the Federal Trade Commission Act have in common?

These are federal laws designed to limit unfair business practices that could reduce competition and create illegal monopolies.

What type of economy best matches this description in how it answers the basic economic questions? The society produces what they have always produced. The society usually produces it in the same way as their ancestors. The society's members generally work in the same industries as their parents and grandparents. The goods and services that are produced are usually shared with the community. Hunting and agriculture are often the primary industries in this type of economy.

Traditional Economies

"Duty-free" shops in airports and on ships in international waters sell merchandise that can be brought into the country without which of the following barriers to trade?

import tariffs

If people's salaries increase, their willingness and ability to purchase an item at a given price will also increase. What is this non-price determinant of demand called?

income effect

Which of the following is NOT an advantage of incorporating your business?

two highest-ranking board members assume responsibility for all of the liabilities and debts

Many advanced, modern nations today like the United States and Australia have a mixed economic system because they value free enterprise, but they also

use government to regulate business and protect consumers.

Which one of the following is NOT one of the main characteristics of money?

variety

I am so important that millions of Americans wake up every day to see how much I have grown or receded. Economists constructed me as a mathematical index related to the price values of 30 large, industrial stocks. Big companies like Goodyear, IBM, Exxon-Mobil, and General Motors are part of my index number. How I grow or fall over time indicates whether the private sector of the American economy is growing. What am I?

Dow Jones Industrial Average

What word best describes the factor of production that is most responsible for creating the innovative businesses that became Microsoft, Apple, Spotify, Pinterest, and Facebook?

Entrepreneur

The mission of this Federal agency is: "To prevent business practices that are anti-competitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity." What is the name of this agency?

Federal Trade Commission

Which of these statements is NOT a problem that results from scarcity?

Government control of private property limits the ability for individuals to build wealth.

What does it mean if we say that the demand for green beans is inelastic?

Increasing the price on green beans does not have a significant impact on buying habits.

Which of the following is an important advantage of a free enterprise economy?

It can offer a wide variety of services and goods for consumers

These particular companies, provide financial protection for the family or others on behalf of the purchaser.

Life Insurance