Economics
Alexa is balancing her checkbook before she leaves for college. ... Then she put $115 into her meal account. What is the current balance in Alexa's checking account?
$0
Jennifer wants to use her tax refund to pay off her credit card balance. How much money would Jennifer receive if her withholdings and exemptions are 100 percent accurate?
$0
Brenda took a student loan for $24,000. She is paying 2.25 percent on an eight-year loan and has paid off $18,000 so far. How much does Brenda have left to pay?
$10,320
Maxine needs to balance her checkbook. She has a starting balance of $1,237 in her checking account. She received a $25 check for her birthday. She used her debit card to pay $115 for a haircut and manicure. She then purchased books for her classes for a total of $397. She wrote a check for $350 to pay her car loan as well as a check for $80 to pay her cell phone bill. She withdrew $50 from an ATM machine and paid a fee of $2. Maxine then put half of the remaining money in her checking account into her savings account. How much money did Maxine put into her savings account?
$134
Debbie needs to know how much she will pay on her car loan. Using the simple interest formula, how much will she pay with a principal balance of $12,000, an interest rate of 5 percent, and a 60-month loan?
$15,000
Last month, Diana traveled to another state for work. She used a non-bank ATM a total of eight times. How much in non-bank ATM fees will be charged to her account?
$16
Ricky wants a new car that costs $15,000. His credit union will give him a loan at 4.75 percent for 4 years. What is the total interest Ricky will pay?
$2,850.00
How much did the United States earn in exports in 2015?
$2.3 trillion
Elizabeth has a checking account at a local bank. The bank charges account holders $5 at the end of the month if their account falls below $1,000. The bank also charges $35 at the time of an overdraft and $2 for every ATM use. Elizabeth has $43 in her checking account when she begins balancing her checkbook. She received a paycheck for $216 and a check from her parents for $50. She wrote a $45 check to pay her cell phone bill and a check for $117 to pay her electric bill. She also wrote another check for $110. She used an ATM twice, withdrawing $20 each time. Two weeks later, Elizabeth received her next paycheck for $197 and another check from her parents for $50. What is the current balance in Elizabeth's checking account?
$200
What are examples of government involvement in a mixed market economy? (Select all that apply.)
- Requiring food companies to provide nutrition labels. - Requiring drug companies provide a list of potential side effects. - Requiring car companies to provide information regarding gas mileage.
Which are characteristics to consider when defining a service? (Select all that apply.)
- Services require payment. - Services are intangible activities.
Which accurately describes disadvantages of a corporate business structure? (Select all that apply.)
- Setting up a corporation is complex and may require the advice of an attorney or accountant. - A corporate business structure has a lot more regulations, or laws, compared to other structures.
What are consequences of the Savings and Loan Crisis? (Select all that apply.)
- Some people who worked at S&Ls were jailed for fraud. - United States taxpayers had to pay $100 billion in insurance claims.
Which is true regarding tariffs? (Select all that apply.)
- Tariffs can raise revenue for the government. - Tariffs can lead to a trade freeze.
What are the duties and responsibilities of the Federal Reserve? (Select all that apply.)
- The Federal Reserve stabilizes and safeguards the nation's economy. - The Federal Reserve implements American monetary policy.
How does Congress hold the Federal Reserve accountable? (Select all that apply.)
- The Government Accountability Office (GAO) can audit the Federal Reserve's activities. - Appointees of the Federal Reserve can appear before congressional committees to provide testimony.
After four days, a company has sold only one of a new item, of which they have thirty in stock. What are its options? (Select all that apply.)
- The company can lower the price and wait for sales to increase. - The company can offer a discount coupon with another purchase.
For three years in a row, the federal government's expenditures exceeded its revenue. As a result, the federal debt grew by $4 billion, and the interest payment on the federal debt increased substantially. Which are true about the scenario? (Select all that apply.)
- The federal government's increase in debt led to an increase in interest payments. - The federal government's deficit spending led to an increase in the federal debt.
What are examples of discretionary government spending? (Select all that apply.)
- The government allocates discretionary spending for national parks. - The government allocates discretionary spending for national defense. - The government allocates discretionary spending for space programs.
Which accurately reflect the role of government in a mixed market economy? (Select all that apply.)
- The government requires businesses to provide truthful advertising. - The government owns or partially owns some businesses.
How does the national debt impact private investors? (Select all that apply.)
- The national debt causes a crowding-out effect and increases interest rates for private borrowers. - The national debt requires the government to increase revenue streams and potentially increase taxes.
Which accurately describes advantages of a sole proprietorship?
- The owner of a sole proprietorship has the freedom to make all business decisions. - The owner of a sole proprietorship keeps the profits.
Which depict a negative externality? (Select all that apply.)
- There was an expansion of an airport, which caused greater levels of noise pollution. - There was an expansion of an airport, which decreased property values of nearby homes.
What roles do unions play in business today? (Select all that apply.)
- They ensure fair wages and benefits for employees. - They ensure safe working conditions for employees.
How do government benefit payments, such as social security and veteran benefits, play an indirect role in the market? (Select all that apply.)
- They provide individuals with college loans to further their education. - They are a source of revenue that people use to purchase goods and services.
What are steps that businesses typically take during a recession? (Select all that apply.)
- They reduce production. - They lower prices.
Your town has four coffee shops spread out over two square miles. How do they stay competitive with each other? (Select all that apply.)
- They sell the same product at a lower price. - They sell different items to attract customers.
What are important arguments in favor of trade protection policies? (Select all that apply.)
- Trade protection policies protect infant industries. - Trade protection policies protect a country's security.
Which accurately describes aspects of a partnership business structure? (Select all that apply.)
- Two or more individuals share the losses incurred by a business. - Two or more individuals share the profits generated by a business.
Which government entities play a direct role in the US economy and compete with private businesses? (Select all that apply.)
- United States Postal Service (USPS) - Tennessee Valley Authority (TVA)
Bill recently moved into a new apartment. He wants to purchase a new television. Bill needs to decide between paying cash for a traditional model television or using credit for a newer HD version. Which are disadvantages of using credit? (Select all that apply.)
- Using credit will cost Bill more money over time. - Using credit may tempt Bill to buy more than he can afford.
What are potential causes of a business cycle contraction? (Select all that apply.)
- War causes people to become reluctant to purchase goods. - Production is slowed to minimize excess inventory. - Interest rates are raised, making it more expensive to borrow money.
Which are advantages of credit? (Select all that apply.)
- You make one monthly payment. - You can buy items now and pay for them later.
What are possible consequences for not monitoring your budget? (Select all that apply.)
- Your ability to save and invest for the future may be negatively affected. - You may run low on available money to spend.
Which accurately describe features on a credit report? (Select all that apply.)
- a history of delinquent payments - a person's credit account information, such as lines of credit from credit cards - a person's personal information, such as date of birth and Social Security number
What are the most common fixed expenses for the majority of people? (Select all that apply.)
- automobile loans - house payments
Ann owns two acres of trees. Which factors of production would Ann's situation fall under? (Select all that apply.)
- capital - land
Which are considered producers? (Select all that apply.)
- car mechanic - car builder - car salesman
Which characteristics of capitalism drive retail companies to produce better goods and services by the best workers? (Select all that apply.)
- competition - freedom
Which are characteristics of the US mixed market economy? (Select all that apply.)
- consumer sovereignty - private property - profit motive
What were the top two purposes of the Tennessee Valley Authority Act? (Select all that apply.)
- control flooding in the valley - create employment in the valley
What are major obstacles to economic development for developing countries? (Select all that apply.)
- debt to foreign banks - external debt to foreign banks
What were the functions of the Tennessee Valley Authority Act? (Select all that apply.)
- develop agriculture and forest land in the valley - improve navigation along the Tennessee River
What are the purposes of financial intermediaries? (Select three that apply.)
- enable people to store money in a safe place - enable people to earn a profit storing money - enable people to purchase a certificate of deposit (CD)
Social welfare programs enacted by the government to help people in need focus on which primary areas? (Select all that apply.)
- food - housing - medical care
Kristine and Katherine are looking to team up. They want an already established business with a great corner store location and the independence to make something good turn into something better. Which are their best options? (Select all that apply.)
- franchise - partnership
Which are characteristics that make up capitalism? (Select all that apply.)
- freedom - competition
Which are part of the marketing mix? (Select all that apply.)
- have the proper packaging - have multiple locations - know what people will pay
Georgia wants to open her own business. She is looking for flexible hours, low overhead costs, and no need for a physical store with total control of the company. Which are her best options? (Select all that apply.)
- home-based business - online business
What are the responsibilities of the Federal Reserve? (Select all that apply.)
- implements American monetary policy - enters money into circulation
What are ways a company can increase its market share? (Select all that apply.)
- improve products - lower prices
What were the goals of the Tennessee Valley Authority Act? (Select all that apply.)
- improve the economy of the Southeast - provide power at a lower cost
What are consequences of a weak dollar? (Select all that apply.)
- increase in the cost of imports - unemployment in import industries
Comparative advertising includes which of the following criteria? (Select all that apply.)
- increased quantity - additional features - better price
Which characteristics of capitalism provide an opportunity for entrepreneurship and allow both buyers and sellers to feel they made a return on an investment? (Select all that apply.)
- innovation - profit motivation
Which items are most likely to be highly elastic? (Select all that apply.)
- jewelry - apples
Which factors impact returns on investments? (Select all that apply.)
- level of risk involved with the investment - length of time of the investment
What are examples of nonbank financial intermediaries? (Select all that apply.)
- life insurance companies - finance companies
How does the World Bank Group assist developing countries? (Select all that apply.)
- limited lending institutions that provide loans - a lack of clean water and nutritious foods - lack of educational opportunities for the populace
What are major obstacles to economic development for developing countries? (Select all that apply.)
- limited natural resources - high population growth - low skilled workforce
Julian has an ATM card with his local bank and travels out of state. What features can he use out of state? (Select all that apply.)
- make purchases - withdraw some cash - check his balance
How do you benefit from understanding personal finance? (Select all that apply.)
- making quality choices about money by creating and managing a budget - comprehending the difference between debit and credit cards
What were some of the tasks of the Tennessee Valley Authority Act? (Select all that apply.)
- manufacture nitrates and phosphorus for creating fertilizer - generate and provide hydroelectric power to the valley
Emilio is starting a business similar to two others in the neighborhood. His price will be similar to those already established with a regular supply chain. The economy is currently steady and customers know what to expect in the business he is opening. Which factors does Emilio need to focus on to do well? (Select all that apply.)
- market share - competition
What are the Three Stages of Production? (Select all that apply.)
- negative returns - increasing returns - diminishing returns
How does a company entice the consumer to buy more using marginal analysis? (Select all that apply.)
- offering a buy one, get one free sale - giving away a prize with each purchase
What are typical fees associated with checking accounts from banks without any branches? (Select all that apply.)
- overdraft fees - ATM fees - account minimum fees
Which are considered goods? (Select all that apply.)
- pool table - computer - couch
Which are characteristics of a traditional market system? (Select all that apply.)
- predominance of agriculture - strong community network
According to the video and economists, what are some factors in supply-side economics? (Select all that apply.)
- price of the product - lower income taxes
What are the functions of a finance company? (Select all that apply.)
- purchase installment contracts from merchants - provide loans directly to consumers
Which are offered by joining the military after high school? (Select all that apply.)
- receive tuition assistance after serving a certain number of years - receive training while earning a salary
What are examples of the US government indirectly impacting the economy without being in direct competition with private business?
- regulating gas and electric public utility companies - providing social security benefits to retirees
Which are regulations the government may impose on businesses?
- requirements to provide accurate information to consumers - requirements to protect consumers as well as workers - requirements to ensure that they participate in competition
What are the primary reasons for a market to fail? (Select all that apply.)
- resource immobility of land, capital, and labor - inadequate competition among firms - inadequate information about markets among consumers and sellers
What are examples of banking financial intermediaries? (Select all that apply.)
- savings and loans - commercial banks - credit unions
Which are considered services? (Select all that apply.)
- serving food - housecleaning - tailoring a suit
Why is it important that money stores its value? (Select all that apply.)
- so that sellers will accept it as payment - so that buyers know what their money will buy
What are examples of federal mandatory spending? (Select all that apply.)
- social security - medicare
Which are characteristics of a command market system? (Select all that apply.)
- stricter laws to regulate economic activity - priorities for the production of goods
Which are considered white-collar occupations? (Select all that apply.)
- teacher - architect
Paul is 18 years old and has never had a banking account. He has a job and wants to start saving money to buy a car. What are some important things Paul should consider before opening an account? (Select all that apply.)
- the types of services he will need - whether the financial institution has government oversight
How does a union get its power? (Select all that apply.)
- through the membership of workers - through collective bargaining
What are the primary reasons people choose to invest and trade stocks? (Select all that apply.)
- to earn a dividend - to earn capital gains
When might a country produce a product even though it cannot do so efficiently? (Select all that apply.)
- to increase the balance of trade - to ensure national security
Why must you make adjustments to your budget if your income changes? (Select all that apply.)
- to maintain an understanding of the amount of money you have available - to ensure that your expenses and income remain balanced
What reasons do protectionists cite most for restricting trade? (Select all that apply.)
- to protect US jobs due to cheap labor in other countries - to protect national security and prohibit US reliance on other countries - to protect US infant industries that tend to have high production costs
What arguments can be made for advantages of strong regulation of an industry? (Select all that apply.)
- to provide consumer protection - to ensure there is adequate competition
What is the purpose of credit? (Select all that apply.)
- to provide customers with a powerful tool for creating personal financial success and success in business - to provide customers with the opportunity to purchase and consume goods and services and to pay at a later date
What types of banking transactions can be performed through a mobile app? (Select all that apply.)
- transfer money between savings and checking accounts - receive automatic payments from an employer - set up automatic bill pay
Which are characteristics of a free market economic system? (Select all that apply.)
- unequal distribution of basic needs - freedom of choice to do business
Which is a function of the Federal Deposit Insurance Corporation (FDIC)? (Select all that apply.)
- verify soundness of insured banks - protect consumer rights - notify depositors when a bank closes
Which questions are asked on the W-4 form? (Select all that apply.)
- whether you are a head of household - whether you are a dependent or independent - whether you are single or married
In the realm of economics, how is labor defined? (Select all that apply.)
- workforce hired by companies and businesses - work that people do to earn money to purchase goods or services
Which accurately reflect economic conditions in developing nations? (Select all that apply.)
- Education is often reserved for the wealthiest members of society. - Lending institutions do not exist or only serve wealthy members of society. - Developing nations often lack efficient and effective law enforcement.
Which are advantages of a traditional economic system? (Select all that apply.)
- Everyone knows about their economic role. - Little uncertainty exists about what or how to produce.
Which social welfare government acts and programs were enacted as a result of the Great Depression? (Select all that apply.)
- Federal Deposit Insurance Corporation (FDIC) - Emergency Banking Act
How does Congress hold the Federal Reserve accountable? (Select all that apply.)
- Federal Reserve appointees provide testimony to congressional committees. - The Federal Reserve is audited by the Government Accountability Office (GAO).
How can the national debt impact private businesses? (Select all that apply.)
- Government borrowing can crowd private investors out of the lending market. - Government spending can drive up prices for everyone.
What do taxes pay for at the federal level of the United States?
- Medicare - Social Security
What were the final agreements between Microsoft and the Department of Justice? (Select all that apply.)
- Microsoft had to allow users to remove middleware products like web browsers. - Microsoft had to revise its licensing practices and grant usage rights to share its programming.
Which are accurate regarding debit card reward programs? (Select all that apply.)
- Most debit card reward programs are less lucrative than credit card reward programs. - Some debit card reward programs offer cash back at select retailers.
Which are accurate regarding how government spending affects the economy? (Select all that apply.)
- Opening a military base spurs the economy in the surrounding area. - The government makes payments to poor families and redistributes wealth in the nation.
How does the existence of a large federal debt slow economic growth? (Select all that apply.)
- People are concerned about the future and do not want to invest. - The government may raise taxes to eliminate deficits, which could slow down the economy
Which is true regarding recent banking innovations? (Select all that apply.) Responses
- People can deposit checks without visiting a bank. - Banking apps can be set to alert account holders of low balances.
What were results of the Savings and Loan Crisis? (Select all that apply.)
- People moved their deposits from savings and loan institutions to banks. - The final cost to taxpayers who had to cover the deposit insurance was more than $100 billion. - The Federal Deposit Insurance Corporation (FDIC) replaced the Federal Savings and Loan Insurance Corporation (FSLIC).
What are consequences of rapid inflation? (Select all that apply.)
- People postpone purchasing expensive items, such as homes, until prices drop. - Individual purchasing power decreases, which results in a decrease in demand. - Savings accounts become less desirable because interest earned is lower than inflation
Why would a business want to be in the diminishing returns stage of production? (Select all that apply.)
- Production is still getting additional total product. - Production is close to maximum.
Which is true regarding inelastic demand? (Select all that apply.)
- Products that are inelastic do not have substitutes. - Products that are inelastic meet an important need.
What are examples of public disclosure required by the US government? (Select all that apply.)
- Real estate agents must disclose problematic information about a home to their clients. - Food products must have nutrition labels and lists of ingredients. - Car companies must provide information regarding gas mileage.
What is true regarding tax revenue at the state level?
Many states rely on sales taxes to generate revenue.
What is true about setting up a sole proprietorship?
The owner has unlimited personal liability and is responsible for all debt.
According to the Monthly Budget worksheet, how does a person determine how much money he or she has available to put in savings?
The person subtracts total expenses from total income.
What is an argument for free trade?
The possibility of a trade freeze decreases.
Which is an example of the law of supply?
The price of a product decreases, resulting in a decrease supply.
When demand for a product is high, what should be done to prevent a shortage in the short term?
The price should be adjusted upwards.
Which best describes Karl Marx's viewpoint on capitalism and the emergence of Communism?
The proletariat will overthrow the bourgeoisie due to inequalities resulting in a classless society.
How does a flat tax differ from a value-added tax (VAT)?
The rate remains the same under a flat tax, whereas the rate changes under a VAT.
Why is tax reform needed in the United States?
The tax system has become overly complex and is losing some of its efficiency.
How could adding more efficient technology to the production process change a supply curve?
The technology could cause a shift to the right as production costs decrease.
What does a decline in gross domestic product (GDP) communicate to economists?
The total dollar value of all final goods and services within a 12-month period decreased.
Jill makes $100,000 per year, and Kelly makes $40,000 per year. Under a flat tax, what would be true?
The women would pay the same percentage.
What makes setting up a corporation difficult?
There are many tax and legal requirements that must be met.
Which is the best way a consumer can measure inflation over time?
There is a general increase in prices on the majority of products and services that consumers use.
What occurs when governments increase the minimum wage?
There is a surplus of labor.
Which is an advantage of the sole proprietorship and partnership business models?
They are both easy to start up.
What are variable costs?
They are costs that change based on the number of units produced.
A company's production is slowing. Each additional variable produces more units but at a decreasing rate. This company is in which stage of production?
They are in stage two.
Why do suppliers offer more for sale when prices are high?
They are motivated by profit and see an opportunity to make money.
What is an advantage of credit unions?
They are nonprofit institutions, and their primary concern is the member.
How are payroll taxes used?
They are used for entitlement programs like Social Security.
What is true regarding transfer payments?
They do not result in the purchase of a good by the federal government.
How do improvements in technology impact economic growth in the long run?
They make production more efficient, which leads to growth.
What is the relationship between price and demand?
They move in opposite directions.
What is the relationship between price and supply in the law of supply?
They move in the same direction.
What is true of geographic monopolies?
They often exist in areas where the customer base is small.
What role do state governments play in funding education?
They provide significant funds for education.
Which form is used by employers to withhold the proper amount of income tax from employees' paychecks?
W-4
What is one fundamental principle, or question, of economics?
What should the country produce?
What happens to demand when prices increase?
When prices go up, demand goes down.
How do gross national product (GNP) and gross domestic product (GDP) differ?
While GNP includes production by all people and businesses of a country, GDP only includes production within a country's borders.
How is health insurance different from auto insurance?
While both types of insurance are required, if you do not have health insurance, you will be required to pay a fee on your taxes.
How are whole life insurance and term life insurance different?
Whole life insurance does not expire, but term life insurance does.
How is whole life insurance different from term life insurance?
Whole life insurance does not expire, whereas term life insurance does.
Which international agency would most likely be involved in funding the construction of a water pipeline in a developing country?
World Bank Group
How do you calculate the mode?
You find the data point that occurs most often.
In an even number of points exists in a set, how do you find the median?
You find the mean of the two points in the middle of the set.
If you find an error on your credit report, what is your best option?
You should contact all three agencies with proof of the error so that they can fix it.
When should you start planning for retirement?
You should start planning as soon as you decide on a career path.
What will happen if you avoid a review of your monthly budget?
You will have no record to keep track of where your money is going.
What was the original purpose of savings and loan associations?
a way for groups of people to pool their money so that each member could build or buy a home
When a nation has a(n) _[blank]_ advantage, they can produce a good or service at a lower cost than another nation that has the same resources. Which best completes the sentence?
absolute
Which best explains product advertising features?
advertising that focuses exclusively on the benefits of the product
Madison received $100 as a holiday gift. She used it to buy 50 mineral infused candles for $2 each. Then, she walked around the neighborhood and sold the candles for $4 each. What factors of production did Madison use?
all four factors of production
A person visits the grocery store to buy the materials to make and sell fudge door-to-door. What factors of production are being used?
all of the factors: land, labor, and capital
What is creditworthiness?
an appraisal made by a lender about how likely a customer is to repay a loan as agreed
What is creditworthiness?
an appraisal made by a lender as to how likely a customer is to repay a loan as agreed
What is a benefit of international trade?
an increase in the variety of goods
What is the Government Accountability Office (GAO)?
an independent agency that answers to Congress and audits the Federal Reserve
What is the trade-weighted value of the dollar?
an index showing the measurement of the foreign exchange value of the US dollar in relation to foreign currencies commonly used in trade
When actively applying for a loan, what should you avoid doing with your credit?
applying for new types of credit, such as credit cards or store cards
The local electronics store advertises a television at a discount price to draw in customers. When they ask for the product, it is unavailable, but a higher priced item is offered. What is being described?
bait and switch
Rachelle is saving for college and does not want any student loans. She already has $22,000 but needs to get to $23,000. She has the choice of a bank savings account with 1.5 percent interest for 3 years, a certificate of deposit at 3.5 percent interest for 18 months, a credit union savings account at 2 percent for 2 years, or a savings bond at 1 percent for 5 years. Rachelle is beginning her sophomore year and is on track to start college in 3 years. Which is her best choice?
bank certificate of deposit
Which was most used by early US colonists to purchase and trade goods?
barter system
According to its charter, the Federal Reserve Bank is governed by a(n) _[blank]_ of governors. Which correctly completes the sentence?
board
What is best defined as a "contract in which an individual loans money to a corporation and earns interest on a fixed schedule in return"?
bond
What is a plan for spending your money to meet your wants and needs?
budget
Why are many goods and services produced in a mixed market economy?
businesses desire to make a profit based on the demands of their consumers
How does an individual become a governor of a Federal Reserve branch?
by presidential appointment
Which is best classified as a want?
cable
Which product is most likely to have elastic supply in the short run?
candy
Which political system favors individual economic freedom and free market competition?
capitalism
For a free enterprise system to exist, individuals need to be able to make _[blank]_. Which best completes the sentence?
choices
When measuring GDP, it is important to note that businesses' goods flow to consumers, whose payments for those goods provide profits for those businesses. This process can be depicted as flowing in a _[blank]_ shape. Which accurately completes the sentence?
circular
Which section on your credit report could cause the most damage to your credit score?
collection items
What type of market involves the trade of raw materials such as gold, oil, and corn?
commodity market
Company A uses social media to advertise, while company B places its product in the store. Which is an example of a push marketing strategy?
company B
In the early 1800s, David Ricardo developed the theory of _[blank]_ advantage, which describes how a nation may have lower opportunity costs than another nation. Which best completes the sentence?
comparative
Entrepreneurs who like a challenge and are dedicated to bringing their ideas to life have which qualities?
competitive and innovative
This is the most widely used measure of inflation and is sometimes viewed as an indicator of the effectiveness of government economic policy. It provides information about price changes in the nation's economy to government, business, labor, and private citizens, and it is used by them to help guide economic decisions. What is being described?
consumer price index
What is the primary tool used to measure inflation?
consumer price index
What was the name of the money the Continental Congress authorized?
continentals
Which form of currency was authorized by the Continental Congress and eventually became worthless due to inflation?
continentals
What are variable costs?
costs that change based on production
What are fixed costs?
costs that do not change based on production
Which is most likely to be implemented by the government to overcome structural unemployment?
courses or programs to help workers develop new skills
The term _________ is defined as the ability of a borrower to have access to money from a lender and then to pay back the lender in the future, usually with interest. Which best completes the sentence?
credit
Which is best defined as "the borrowing of money to make purchases now and paying the money back later"?
credit
Which is the term for borrowing money to make purchases right away and then paying the money back later?
credit
Which is an example of an unsecured revolving loan?
credit card
Which financial institutions typically have membership requirements, such as belonging to the military?
credit unions
Which type of unemployment is caused by a contraction of the business cycle?
cyclical
Which is considered a need?
daily meals
A __________ card is issued by a credit union or bank and allows the user to purchase goods and services by electronically deducting funds directly from his or her checking account. Which best completes the sentence?
debit
This is a plastic card that provides access to an account. It can be used to make purchases at a wide variety of stores, restaurants, or other businesses. The holder can make deposits into their account. Money can also be withdrawn from the account as long as the amount withdrawn does not exceed the balance. Which product is described?
debit card
What type of card is issued by a credit union or bank and allows the user to purchase goods and services electronically by deducting funds directly from his or her checking account?
debit card
Which is the largest item in discretionary spending?
defense
What is the largest area of federal discretionary spending each year?
defense spending
The term __________ elasticity is defined as a measure that demonstrates how consumers respond to changes in the prices of goods and services. Which best completes the sentence?
demand
What is a measure that demonstrates how consumers respond to changes in the price of goods and services?
demand elasticity
In addition to checking and savings accounts, many banks offer other services that assist customers in using and managing their money wisely. What are some of the services that customers may use?
direct deposit, mutual funds, and online banking
What is defined as income available after taxes and other mandatory expenses?
disposable income
Which characteristic of money makes it possible to make change at stores?
divisibility
The dollar can be broken down into cents. What characteristic is the dollar displaying in this example?
divisible
What does gross domestic product (GDP) measure?
economic growth
What is a significant expense for states but not for the federal government?
education
What is a measure that demonstrates how producers respond to changes in the prices of products and services?
elastic supply
One way that a strong economy affects _[blank]_ is that it makes business owners more prone to take risks. Which accurately completes the sentence?
entrepreneurship
What is a good or service sold to a foreign nation?
export
The term __________ money is defined as the type of money created by government decree. Which best completes the sentence?
fiat
What is money created by government decree?
fiat money
Which type of money derives its value from government decree, and not from gold or silver?
fiat money
What is the formula for measuring GDP?
final goods and services multiplied by the price
June has $8,000 in an online savings account at six percent interest. She needs to reach $10,000 to pay off her credit cards. How long does June have to save to reach her goal?
five years
When the world was on the gold standard, which system was used to determine the value of a country's currency as compared to another country's currency?
fixed exchange rate
Under which system do the forces of supply and demand establish the value of a country's currency as compared to another country's currency?
flexible exchange rate
Which items are primary areas of assistance for social welfare?
food, housing, and medical care
Manny wishes to sell candy bars to his classmates to earn extra money. Which economic question identifies his consumers? Responses
for whom to produce
One way that a weak economy can affect _[blank]_ is that it can make accepting and distributing goods more difficult, as well as intensify scarcity. Which accurately completes the sentence?
foreign trade
Which economic system is based on private ownership of goods and private decisions to invest in trade or business industries, with the intent of making a profit?
free enterprise economy
What is a significant health care expense spent by state governments?
funding Medicaid programs
What type of government expenditure is defense spending?
goods and services
The US government issued paper money printed with green ink on the back side during the Civil War. What was this form of currency called?
greenbacks
Read the sentence. To calculate _[blank]_, the quantity of final goods and services are multiplied by the price. Which best completes the sentence?
gross domestic product
What is defined as a common indicator of an economy's health based on the total value of goods and services produced during a fiscal year?
gross domestic product
What is defined as the market value of all final goods and services produced in a country in a specific time frame?
gross domestic product
__________ is defined as the market value of all final goods and services produced in a country in a specific time frame. Which best completes the sentence?
gross domestic product
Capitalism drives the constant rotation of business opportunity, _[blank]_, and failure. Which most accurately completes the sentence? Responses
growth
What category of spending is included in mandatory spending of the federal budget?
health care spending
One weakness of a free market economy is instability. Which argument would supporters of a free market economy most likely use to argue that instability is acceptable?
Market corrections are difficult but necessary. The benefits people receive from innovation and freedom in a free market system are worth the cost of instability.
Which antipoverty program offers medical insurance for low-income individuals and families?
Medicaid
Mia has had five credit accounts for 10 years. She has a debt of $2,000 and makes all of her payments on time every month. Sal also makes timely payments on his similar debt. Sal has had credit accounts for two years. Based on the information, who has a better credit score?
Mia has a better credit score because she has managed debt for a longer period of time.
What was the original ruling on the US vs. Microsoft Corporation case by Judge Jackson?
Microsoft was a monopoly and had to be split into separate hardware and software divisions.
Carlos has decided to sell T-shirts to his classmates. Which economic question does Carlos still need to answer?
how to produce
How can the government combat structural unemployment?
implement new training programs to help workers acquire new skills
Where would an allowance be reflected on a budget sheet?
income
Which tax is the main source of revenue for the federal government?
income
Which best defines disposable income?
income available after taxes and other mandatory expenses
What is disposable income?
income that is available after taxes and other mandatory expenses have been paid
Which items are typically included in a monthly budget?
income, fixed expenses, and variable expenses
What is a likely consequence of decades of deficit spending?
increasing debt payments
The term ___________ is defined as the rise in the general price level of goods and services. Which best completes the sentence?
inflation
What is the rise in the general level of prices on goods and services over time called?
inflation
What is the correct structure of a five-paragraph essay?
introductory paragraph, three body paragraphs, and a conclusion paragraph
What economic theory was proposed by Adam Smith and explains that an economy's success is determined by people's ability to pursue their own financial self-interest?
invisible hand
Which economic theory did Adam Smith propose in his book The Wealth of Nations?
invisible hand
How does competition differ between a monopoly and an oligopoly?
Monopolistic competition involves many small firms, while oligopolistic competition involves a few large firms.
The Federal Reserve is considered to be the _[blank]_ bank of the United States of America. Which correctly completes the sentence?
National
Which legislation led to the creation of a national currency and national banking system?
National Bank Act of 1863
Which is an example of regional cooperation to promote economic growth?
Neighboring countries remain separate but work together to promote peace.
If the price of a product becomes too expensive, then the demand for it decreases. Which economics concept is this?
law of demand
Which economics concept states that price and quantity of demand have an inverse relationship?
law of demand
What is the definition of economics?
laws for the home
Which explains why cutting the federal budget is difficult?
Only discretionary spending can be cut, and it is a smaller portion of the budget.
What is the definition of the Law of Variable Proportions?
Output in the short run will change when one input is varied and others remain constant.
Which act enacted by President Barack Obama includes expanded access to private and public health insurance for citizens, yet continues to be a point of contention both politically and socially?
Patient Protection and Affordable Care Act
What is the meaning of the word economics?
laws for the home
Which is a description of scarcity?
People have limited resources, so they must pick which wants to satisfy.
What is an argument against the benefit taxation principle?
People who earn less money simply cannot afford to pay for some benefits.
What is the main advantage of a market economy?
Personal freedom allows people to innovate and allocate resources.
What impact can government policies have on the business cycle?
Policies that raise interest rates may cause an economic contraction.
Which correctly explains the effects of population growth in developing countries?
Population growth is higher in less developed countries, creating greater demands on health care and education.
The local power company is a natural monopoly. What does this mean for the consumer?
Prices are regulated by the government to keep costs lower.
What prevents a monopolistic competition from being perfectly competitive?
Products are not identical.
Goodwheel Tire Company discovered that the material it uses in its tires cause the tire to fail at high speeds. By law, what is Goodwheel required to do?
Public disclosure laws require Goodwheel to inform consumers as soon as possible.
What is the result of government spending on higher education?
Public universities have lower tuition rates than do private universities.
Which accurately describes differences between state and local government expenditures?
Public welfare programs at the local level make up a small part of the budget compared to the state level.
Which action could the government take to slow inflation?
Raise interest rates.
The government decides to raise taxes to spend more on programs. What effect will this most likely have on the economy?
Raising taxes will decrease aggregate demand.
Why does nominal gross domestic product (GDP) sometimes seem larger than real GDP?
Real GDP includes inflation in its calculation, whereas nominal GDP does not.
How is real GDP different from nominal GDP?
Real GDP is adjusted for inflation and often appears lower than nominal GDP.
Alan and Samuel each have a 30-year mortgage. Both mortgages were approved at the same time. Alan pays 5 percent interest, while Samuel only pays 3.5 percent. If Alan and Samuel are the same age and make the same amount of money, why is Alan paying more in interest?
Samuel has a better credit score, so his interest rate is lower.
How does the circular flow of the financial system work?
Savers deposit funds into financial intermediaries, who then lend a portion to borrowers.
Which is true about scarcity?
Scarcity exists because people have unlimited wants and limited resources.
According to the law of demand, what increases the demand in the marketplace?
lower prices
A big-box store purchases 90 saws and charges $50 each. After one week, they have not sold any saws. What could the store do?
lower the price to see if consumers will buy any
A high-priced product has not sold after an extensive ad campaign. What is the most effective solution to encourage sales?
lower the price until an equilibrium price has been established
Which form of economics studies the economy as a whole?
macroeconomics
What is the most important factor in maintaining a high credit score?
making payments on time
What do savings and loans specialize in?
making real estate loans
This economic concept exists whenever there is an exchange of goods and services between two entities. Which is most accurately described in the sentence?
market
A store orders twenty-two items from the manufacturer and sells twenty-two items. What economic condition is this?
market equilibrium
What is a condition in which prices are stable and the quantity of the products supplied is equal to the amount of consumer demand?
market equilibrium
Which disadvantage of a free market economy is most likely to lead to high unemployment?
market failure
What do credit unions offer that banks do not?
memberships
Which form of economics studies the impact of individual and business decisions on economic markets?
microeconomics
Which is an example of a price floor?
minimum wage
The Federal Reserve Bank is responsible for entering _[blank]_ into circulation. Which correctly completes the sentence?
money
Which type of competition is characterized by differentiated products?
monopolistic competition
In a market economy, the exclusive possession or control of the supply or trade in a commodity or service can develop, discouraging competition. What is this called?
monopoly
The exclusive control of the supply or trade in a product or service is identified as what?
monopoly
The housing bubble expanded in 2003 when _[blank]_ were at a 50-year low. Which best completes the sentence?
mortgage interest rates
What are the largest categories of discretionary and mandatory spending?
national defense and Social Security
A business situation in which a specific market segment is controlled by a group—typically two to ten businesses--is known as what?
oligopoly
Which business is likely to have a surplus of goods?
one that sets prices high
You own a greeting card startup business with a limited advertising budget. Which form of advertising offers the greatest benefit at the lowest cost? Responses
online, because it reaches the widest consumer base and is cost-effective
The US government issued greenbacks during the Civil War. What were greenbacks?
paper money printed with green ink on the reverse side
Which action by the government would promote competition among firms?
passing legislation that prevents price-fixing
A(n) _________ loan requires the borrower to write a post-dated check for the amount he or she wishes to borrow, in addition to a fee, in exchange for cash. Which best completes the sentence?
payday
Which type of loan is also known as a cash advance loan or a deferred deposit loan?
payday loan
Which type of loan requires the borrower to write a postdated check for the amount he or she wishes to borrow, in addition to a fee, in exchange for cash?
payday loan
Which is an example of a federal government transfer payment?
payment to individuals with disabilities
A(n) __________ is regular payment dispersed to an individual during retirement from an investment fund to which the individual or his/her employer has contributed. Which best completes the sentence?
pension
a regular payment dispersed to an individual during retirement from an investment fund to which an individual or employer has contributed Which is being defined?
pension
On average, who earns the highest salaries?
people with a professional degree
Anton needs financial management help to better invest his money. He wants to set up some certificates of deposit and mutual funds, as well as purchase stock in local companies. He knows he can go to his local bank and speak to a professional. Which bank official will best assist Anton with his needs?
personal banker
The marketing mix, also known as the Four Ps of Marketing, consists of product, price, promotion, and _[blank]_. Which best completes the sentence?
place
Which items make up the marketing mix?
place, price, promotion, product
Using someone else's work without giving credit is called _[blank]_. Which correctly completes the sentence?
plagiarism
Subprime mortgages allowed many individuals to become homeowners; however, sometimes their credit scores were _[blank]_. Which most accurately completes the sentence?
poor
What type of spending includes line items on a federal budget that have bypassed normal processes and are used to benefit a small group of people or businesses?
pork barrel spending
The _[blank]_ nominates chairmen and vice chairmen to the Federal Reserve. Which correctly completes the sentence?
president
A ___________ is defined as barring prices from exceeding a certain maximum. Which best completes the sentence?
price ceiling
Barring prices from exceeding a certain maximum is an example of which economics concept?
price ceiling
Raul has paid the same amount for his apartment for twenty years. This is an example of which economics concept?
price ceiling
Guaranteeing profit for the retailer is an example of which economics concept?
price floor
Minimum wage is an example of what type of pricing structure?
price floor
All of the dry cleaners within 50 miles charge the same price for services. They meet each week to ensure every store is following along with the collusion. What is being described?
price-fixing
Which are examples of free enterprise?
private property, profit motive, competition
Monopolistic competition is separated from pure competition by _[blank]_. Which best completes the sentence?
product differentiation
What are the four Ps of marketing (also known as the marketing mix)?
product, price, promotion, and place
What are the four Ps of marketing, also known as the marketing mix?
product, price, promotion, and place
The _[blank]_ approach adds up the value at each stage of production, where the value added is the total sales minus the value of intermediate inputs. Which accurately completes the sentence?
production
What is the main job of the Securities and Exchange Commission (SEC)?
protect investors
What is an economic indicator that calculates the total value of goods and services produced during a fiscal year that also factors in inflation?
real gross domestic product
What is a potential negative outcome when the government seeks to ensure specific market outcomes?
regulations that slow down innovations
How are exchange rates determined in a flexible exchange rate system?
supply and demand
What measure demonstrates how producers respond to changes in prices of products and services?
supply elasticity
Company X is making profits providing a new satellite service, but other firms cannot enter their market to compete with them. This is because Company X owns the patent on the process to develop the new service.. What type of monopoly does Company X have?
technological
What does a low price signal about a potential producer/supplier?
that the producer may be creating a product shortage in a market
Who appoints the Board of Governors of the Federal Reserve System?
the US President
In economics, what is the definition of margins?
the ability to identify and observe certain limits
What do the three basic economic questions determine?
the allocation of resources
What is marginal cost?
the cost to produce one additional unit
What is a benefit of international trade?
the diffusion of culture and ideas between nations
What does macroeconomics deal with?
the economy as a whole
In a command economy, who answers the three fundamental economic questions?
the government
What is fiscal policy?
the government affecting the economy through tax policies and federal spending
What does microeconomics deal with?
the impact of individual and business decisions on economic markets
What does the minimum price of an item reflect?
the lowest price that will cover the costs of production
Adding a series of numbers and dividing the sum by the total number of items will supply you with what?
the mean
A monopoly's prices are determined by _[blank]_. Which most accurately completes the sentence?
the monopoly
What is the biggest disadvantage to setting up a sole proprietorship?
the personal liability
What is the definition of risk?
the possibility of losing value on an investment
Sally wants a new exercise machine but does not ... three months that will cover the cost of the machine she wants. Which is her best choice to pay the least amount of interest?
the private label card
What is the definition of economics?
the production, distribution, and consumption of goods and services in one country
What is the definition of return?
the profit or loss accumulated from an investment
What is elasticity of supply?
the relationship between a change in price and a change in quantity supplied
William is looking to track sales at various stores. The price, color, and size of the item being tracked are the same at each store. Which is the dependent variable?
the store
When writing a five-paragraph essay, the introductory paragraph must include a _[blank]_. Which correctly completes the sentence?
these statement
George is saving for a mortgage on a $125,000 house. He needs 20 percent for a down payment. He currently has $22,000. How long will it take George to save the rest of the money when he earns 5 percent interest per year?
three years
Once the federal budget is set, how is money allocated?
through the appropriations committees
Where are the Federal Reserve branches located?
throughout the United States
Which describes the best use of a checking account?
to access cash
What is the primary role of a financial intermediary?
to channel funds between savers and borrowers
What is the purpose of a contractionary fiscal policy?
to decrease the level of aggregate demand to slow rising inflation
What is a goal of the North American Free Trade Agreement?
to decrease trade barriers and tariffs
Why does the consumer price index (CPI) measure inflation?
to determine change in prices over time
Which accurately describes why the government may set a price floor such as minimum wage?
to ensure people earn enough money to afford housing and food
Which is the best reason for why companies use product advertising features?
to focus on a specific benefit
Why do the credit reporting agencies track data on consumers?
to help a lender decide whether a person is a good credit risk
What was the purpose of the Banking Act of 1933?
to improve bank security
What is the purpose of an expansionary fiscal policy?
to increase the level of aggregate demand to grow the economy
What is the purpose of the North American Free Trade Agreement?
to increase trade between Mexico, the United States, and Canada
Why would the government set a price floor for wages?
to promote a livable working wage
The United States engages in free trade with Holland. Last year, the United States decided to put a 75 percent tariff on imported tulips. Why would the United States impose that tariff?
to protect US tulip growers from competition
Why does money need to be in limited supply?
to protect its value
Why was the Federal Deposit Insurance Corporation (FDIC) created?
to protect people's deposits in the event of a bank failure
Why did the US government establish the FDIC?
to provide deposit insurance for banking customers
What reasons would people have to promote social welfare?
to provide for those who cannot afford food, shelter, or medical care
What is the primary role of producers in the marketplace?
to provide goods and services
Why would an economist review real GDP?
to remove the impact of inflation for a year-to-year comparison
What the purpose of an investment account?
to secure long-term protection, growth, or guaranteed income from a principal investment
Why would the government use an expansionary fiscal policy?
to stimulate aggregate demand
When a business wants to calculate all of the money it collects, what is it concerned with?
total revenue
When the amount of a country's imports exceeds the value of its exports, this results in a __________. Which best completes the sentence?
trade deficit
When the amount of a country's exports exceeds the cost of its imports, this is known as a __________. Which best completes the sentence?
trade surplus
Which type of bond is considered the safest and offers the least amount of risk?
treasury bond
A single cable company that buys up all other cable companies to reduce competition and raise prices is known as what?
trust
Which type of expense can change based on use or volume?
variable
Zoe is preparing her monthly budget. She lists her income from her job. She then starts to list her expenses. Her first list of expenses includes food, entertainment, clothes, and gas. What type of expenses are on Zoe's list? Responses
variable
The three basic economic questions everyone must answer are _[blank]_. Which most accurately completes the sentence?
what to produce, how to produce, and for whom to produce
When does the tax rate increase under a progressive tax?
when a person's income increases
What is specialization?
when an individual becomes an expert in a particular area
In which situation is the US government most likely to regulate the marketplace?
when business practices decrease competition
When is a product likely to have elastic supply?
when production of a product is easy to replicate
What is the definition of scarcity?
when society does not have enough resources to produce all of the things people want
When does a country have a trade surplus?
when the cost of a country's exports exceeds the cost of its imports
When does a country have a trade deficit?
when the cost of a country's imports exceeds the value of its exports
When would nominal GDP appear lower than real GDP?
when the rate of inflation is negative
When do entrepreneurs answer the three basic economic questions?
when they are evaluating their resources to decide what to sell
In what key area does the benefit principle of taxation and the ability-to-pay principle of taxation differ?
who should pay the taxes
What is true about the federal budget?
xxx Congress cannot remove anything from the budget unless the president agrees. xxx Congress is required to balance the budget each year.
Why would the government require businesses to disclose information to consumers? (Select all that apply.) 0.25/1
xxx Consumers often buy products without taking sufficient time to investigate them. Businesses may sell dangerous items to consumers in order to make a profit.
Jane has a carpet cleaning business. The cost of production for her business went down due to cleaning solution becoming less expensive. What would happen to the supply curve in this scenario?
xxx The supply curve will shift down.
In what year did Ken withdraw about $1,000 from his bank account?
year 10
The exchange rate for converting US dollars to the British pound is .767. How much is $200 US worth in Great Britain?
£153
Jill is going to buy a car. She wants to get a vehicle with a good safety record and high mileage to the gallon. She compares cars by visiting the manufacturers' websites. Which is true regarding Jill's approach?
She is likely to receive accurate information from the manufacturers because laws require them to provide it.
Joanne just changed jobs and has the option of receiving a paper check or using direct deposit. She has an account with a credit union 10 miles from her home and is a very busy person with little free time. Which is most appropriate for Joanne?
She should have her pay direct deposited so that she does not have to drive to the credit union every week.
__________ is a political system that favors an economic structure in which the means of production is owned and monitored by the government. Which best completes the sentence?
Socialism
What was an effect of the Banking Act of 1863?
Some banks went out of business because of taxes.
When setting financial goals, it is important to set SMART goals. What does the acronym SMART stand for?
Specific, Measurable, Attainable, Relevant, Timely
Which is the most effective solution when planning for retirement?
Start as soon as possible to maximize savings.
Which region of the world accounts for the most people living in extreme poverty?
Sub-Saharan Africa
Which law did President George W. Bush sign to buy toxic assets from financial institutions?
TARP
The Tennessee Valley Authority Act helped open which river up for trade and navigation?
Tennessee River
What is one benefit of term life insurance over whole life insurance?
Term life premiums are generally less expensive than whole life premiums.
How does the Federal Reserve Bank fit into the balance of power among the three branches of the federal government established by the Constitution?
The Chair of the Federal Reserve is appointed by the president and approved by the Senate.
Which is true regarding the FDIC?
The FDIC takes over for failed banks.
Which accurately describes why the FDIC was created?
The FDIC was created in 1933 after many bank failures caused the Great Depression.
Which accurately describes how the Federal Reserve is funded?
The Federal Reserve earns interest from its ownership of government securities.
Why is the Federal Reserve managed by federal government oversight?
The Federal Reserve is responsible for stabilizing prices.
Why is federal oversight crucial to the operation of the Federal Reserve Bank?
The Federal Reserve is the nation's central banking system.
Read the sentence. The gross domestic product (GDP) shrunk by 2 percent over a 12-month period. What can you infer about the economy?
The GDP indicates an economic contraction.
Which accurately describes events of the Industrial Revolution and subsequent emergence of capitalism?
The Industrial Revolution created economic opportunities for the middle class (bourgeoisie) and the desire for profits without government interference.
Which correctly demonstrates the law of demand?
The Pizza Place increases the cost of a slice of pizza from $2.00 to $2.50. The number of slices sold in one day drops from 250 to 175.
Which is an example of absolute poverty?
The Smith family lives in an unsafe, decaying apartment with mold issues, and they oftentimes cannot afford food each day.
The US government plays an impactful role in the economy, both directly and indirectly. Which is an example of the federal government indirectly affecting the market economy?
The US government provides social security benefits for senior citizens.
What is the purpose of a balanced budget amendment to the US constitution?
The amendment would require the US government to spend no more than it collects in taxes and other revenues, excluding borrowing.
Why do business owners have to answer the three economic questions?
The answers determine the best way to use their resources.
Marc just turned 16 and is looking to purchase a vehicle. The bank will grant him a loan under the condition that he opens a checking account and has the monthly payment debited directly from his account. Why would the bank grant Marc the loan under these specific conditions?
The bank is trying to lessen the possibility of default on the loan.
What is true of a perfectly competitive market?
The conditions do not exist in reality.
In a free market economy, which is true regarding the role of the consumer?
The consumer determines what is produced.
The federal government announced significant tax cuts, enabling people to keep a greater portion of their income. What will happen to the demand curve in this situation?
The demand curve will shift right.
A United States company produces widgets in Brazil. Which is true about the calculation of widget production?
The dollar value of the widgets would be included in a GNP calculation.
In the last quarter, there was a 4 percent increase in gross domestic product (GDP). What can be inferred from the scenario?
The economy is growing.
- a rising unemployment rate - a decline in GDP What does the list indicate about economic growth?
The economy is in a decline.
Which accurately describes how the federal budget is established?
The executive branch prepares a budget and sends it to both houses of Congress which will pass budget resolutions.
How can heavy federal debt lead to higher interest rates?
The government causes increased borrowing competition, which leads banks to increase interest rates.
Which could be part of a fiscal policy?
The government increases taxes.
What is an example of government expenditure that positively affects the economy?
The government opens a military base in a small town, increasing demand for local products.
Which is an example of the indirect role of government in the economy?
The government passes laws that keep electricity rates affordable.
Which accurately describes a cause for inflation?
The government places too much money into circulation.
Which explains the US government's role in promoting competition?
The government plays an active role in promoting competition at all levels.
All-Skies Airlines (ASA) has had several safety violations. What is the most likely government response to this situation?
The government will require the airline to report these violations
How do public disclosure laws benefit consumers?
The laws require businesses to provide accurate details so that consumers can make informed decisions.
How do unfunded mandates impact state spending?
The mandates force states to spend money in ways they did not anticipate.
When businesses across an industry increase the price of a good, which could be true regarding market equilibrium?
The market has not reached equilibrium and a price adjustment will help prevent a shortage.
The cost of lumber has increased 145 percent since last quarter. What is the most likely outcome in the furniture market?
The market will see cost-push inflation because the increased cost of inputs force prices higher.
In an odd number of points in a set, how do you find the median?
The median is the number in the middle of the set.
What is a desirable long-term growth rate of the GDP to show the economy is healthy while minimizing effects of inflation?
2 percent to 3 percent
For the set {16,17,17,19,22,26,32,35}, what is the median?
20.5
For the set {20,21,21,23,26,30,36,39}, what is the mode?
21
For the set {16,17,17,19,22,26,32,35}, what is the mean?
23
What is a benefit of creating a budget?
A budget enables you to learn how to live within your means.
In a command economy, labor is a resource that must be allocated. What is meant by this statement?
A central planning authority decides what job each person has.
Which is an example of a shortage?
A consumer tries to buy bread, but the store is sold out.
Which is a characteristic of the takeoff stage of Rostow's Five Stages of Economic Growth?
A country begins to grow rapidly and new industries start to emerge that drive further economic development.
Which is true regarding elasticity of supply?
A factor in supply elasticity is production difficulty.
Which most accurately describes a firm's goal regarding revenue?
A firm will continue producing until its marginal revenue equals its marginal cost.
What would be a government response to slow inflation?
A government could raise taxes to decrease the money in circulation.
What does a high credit score tell a lender?
A high score suggests a person is very likely to repay debt.
How does the length of credit history impact a person's credit score?
A longer history has a positive impact.
Which accurately describes a push marketing tactic to help manufacturers sell more products?
A manufacturer offers department stores incentives for selling its product.
___________ is a political theory that allows for complete freedom of the individual and the absence of government. Which best completes the sentence?
Anarchism
Which disadvantage of the value-added tax (VAT) is most likely to be cited by people with low incomes?
As a consumption tax, everyone pays the same amount, regardless of ability to pay.
What does the law of supply suggest?
As prices increase, supply increases.
Which accurately provides an example of demand elasticity?
As the price of video games decreases by 20 percent, the demand for video games increases by 30 percent.
Which noteworthy legislation limited how much banks could earn from investments, such as the selling of securities, and also established the Federal Deposit Insurance Corporation (FDIC)?
Banking Act of 1933
What is a major difference between banks and credit unions?
Banks seek to make a profit for shareholders; credit unions are nonprofit.
Which correctly explains fixed expenses?
Barbara paid the rent on the first day of the month to keep her apartment.
What is economic incentive in a free enterprise economy?
Businesses sell goods and services and people take jobs for income.
What impact could the opening of a military base have on a local economy?
Businesses would spring up to meet the needs of those on the base.
The free enterprise economy is most closely aligned with which system?
Capitalism
__________ is a political system that favors an economic structure run by businesses and individuals rather than the government. Which best completes the sentence?
Capitalism
Car Company X manufactures automobiles. Its costs of production have recently risen because the cost of electricity needed to power the manufacturing plants have increased. Which best describes the outcome of the above scenario?
Car Company X will decrease the supply of automobiles it produces and likely will sell them at higher prices.
In which political system does the government own all businesses and the economy?
Communism
___________ is a political system in which the government owns all businesses and the economy. Which best completes the sentence?
Communism
Which entity regulates the Federal Reserve Bank by requiring board governors to testify about their work?
Congress
What government action occurred due to the Savings and Loan Crisis?
Congress passed legislation transferring insurance coverage for S&Ls to the FDIC.
Which accurately describes price indexes economists use to monitor prices and inflation?
Consumer price indexes economists use to measure prices and inflation include the consumer price index, the producer price index, and the GDP deflator.
What does the law of demand state about consumer decisions?
Consumers will buy more at lower prices.
What explains the change in quantity demanded, from 12 to 24, as the price decreases?
Consumers will buy more at lower prices.
Which is an accurate comparison of corporate income taxes and individual income taxes?
Corporate income taxes are less than a quarter of individual income taxes.
How does the law of comparable advantage lead to international trade?
Countries make products they can produce efficiently and are able to get the rest of what they need through trade.
What is the function of credit cards?
Credit cards enable individuals to borrow against their line of credit to purchase goods and services.
What is one way credit unions differ from commercial banks?
Credit unions do not exist to make a profit.
How does deposit insurance help prevent a bank panic?
Depositors are less likely to worry about their money and create a run on the bank by withdrawing their funds.
What is an argument for government deregulation of products and services?
Deregulation leads to an increase in consumer choices.
Which is a stock index used to measure the performance and prices of stocks?
Dow Jones Industrial Average
Which accurately describes the difference between elastic and inelastic demand?
Elastic demand refers to a change in demand by consumers when the price of a good or service changes, whereas inelastic demand refers to the lack of change in demand as prices change.
Which accurately describes the difference between elastic and inelastic supply?
Elastic supply refers to a change in production by producers when the price of a good or service changes, whereas inelastic supply refers to the lack of change in production as prices change.
What is the main advantage of a command economy?
Everyone's basic needs are met.
Which government agency provides consumer protection in case of a bank failure and plays a direct role in the US economy?
Federal Deposit Insurance Corporation
Which describes frictional unemployment?
Floyd quits his job at the store to look for a better-paying job in manufacturing.
Which is a true statement about demand?
For demand to exist, there must be a desire, willingness, and ability to pay for a product.
George is 22 years old, single, and has just started his first job. He saves 5 percent of his monthly income for retirement. Kirsten is 30 years old and married with two children. She will start saving 6 percent of her income for retirement when she turns 35. Which person will have more money at age 65 if all other factors are the same?
George will because he is younger and saving for a longer period.
_[blank]_ websites tend to be the most creditable and are safe information sources. Which correctly completes the sentence?
Government (.gov)
What is the difference between government deficit and national debt?
Government deficit is a yearly discrepancy; national debt is accumulated over time.
What 1886 Chicago event was a disturbance that broke out during a campaign by union members who were advocating for an eight-hour workday?
Haymarket Riot
Which best describes Adam Smith's view on economics and government involvement in business?
He believed in a laissez-faire policy in which the government does not interfere in commerce.
Paul is 16 years old and has a job at the local grocery store. He has a savings account and a driver's license. Why is he not eligible for a payday loan?
He must be at least 18 years old and have a checking account.
While Paul's neighbor recovers from foot surgery, Paul walks her dog daily. He enjoys it so much that he decides to start a dog walking business. What is Paul's next step?
He should ask himself how to get started and who to market the business to.
Alfonso is 19 years old and has a high school diploma. Recently, he was promoted to assistant manager at the fast-food restaurant where he has worked since the age of sixteen. His dream is to become the restaurant's manager. What is his best option for achieving his dream?
He should attend classes at the local college to receive training in management.
Larry needs a new computer because his old one just crashed. The computer he chooses costs $1,200. He has enough in his checking account to cover the cost. He also has a credit card with a $2,000 limit and $1,200 available on it. How should Larry purchase his new computer?
He should use his debit card so that he does not risk paying extra money in interest over time.
Which best describes Robert Owen's political ideology and its impact on business?
He was a utopian socialist who believed that workers would flourish in a cooperative environment.
What impact can taxes have on the economy?
Higher taxes reduce demand because consumers have less money to spend.
What is true about the risk and return of an investment?
Higher-risk investments offer the potential for a higher return.
Ronnie is 21 and has three credit cards, each of which has a balance. His debt-to-credit ratio is 80 percent, and he has applied for his first car loan. Why will his interest rate be higher than what is typical?
His interest rate will be higher due to having several credit cards and a high debt-to-credit ratio.
Which is an example of a SMART financial goal?
I want to save $25 dollars per week by packing my own lunch in order to pay off $100 in credit card debt in the next 30 days.
Which describes a way that gross domestic product (GDP) is used to measure the economy?
If GDP decreases for six months straight, a country is in a recession.
Kim received a small raise at work so that her salary went from $58,000 per year to $60,000 per year. She is concerned that it might move her to the next tax bracket. Why would Kim be concerned about that?
If she moves into another bracket, she will pay a higher percentage for a portion of her taxes.
How does a change in population impact gross domestic product (GDP)?
If the population increases but production stays the same, per capita GDP will decrease.
What is a difference between perfect competition and monopolistic competition?
In a perfectly competitive market, products are perfect substitutes for each other. In a monopolistic market, products are differentiated.
How does increasing life expectancy affect population size?
Increasing life expectancy decreases the death rate, which increases population size.
Which accurately describes a downside of the Tennessee Valley Authority Act?
Independent electric companies went out of business due to lower government rates.
Why is scarcity referred to as the fundamental economic problem?
Individuals, businesses, and countries all face the problem of scarcity.
Which international agency consists of 189 countries, promotes international monetary cooperation, and facilitates international trade?
International Monetary Fund
Which is true about central banking in the United States?
It began with the creation of the First Bank of the United States.
Which is true regarding consumer sovereignty?
It can be lost when monopolies are allowed to exist.
How can a developing nation improve its economy if it lacks natural resources?
It can engage in international trade.
How can the World Bank help developing nations economically?
It can provide loans to developing countries to build new infrastructures.
How does the federal debt impact the economy?
It can slow growth by decreasing consumer confidence.
What is true about spending on Social Security?
It cannot be cut because it is part of mandatory spending.
How does an increase in the price of a substitute affect demand for a product?
It causes demand to go up because the product is less expensive than its substitute.
What is the purpose of the Internal Revenue Service?
It collects income taxes for the federal government.
How does the consumer price index help the consumer?
It compares the prices of items from month to month.
What is the purpose of the Office of Inspector General?
It conducts audits of the Federal Reserve to eliminate fraud and waste.
Which is a disadvantage of a free market economy?
It does not provide public goods.
How is the Federal Reserve funded?
It earns interest from government securities.
Why is scarcity a significant problem?
It forces people to make choices.
Which is a way the United States' federal debt impacts its economy?
It has a negative impact because the federal government has to make large interest payments on that debt.
Why is most insider trading against the law?
It helps insiders benefit from information that no one else can access.
How does business competition impact the consumer?
It helps them because it keeps the price of goods low.
How does a rise in life expectancy impact population growth?
It increases population growth.
What effect does government regulation have on businesses?
It takes away some economic freedom from businesses to ensure economic freedom for consumers.
What does the consumer price index (CPI) measure?
It tracks increases in prices to measure inflation.
Why did Congress create the Federal Reserve?
It was created to provide economic stability and a remedy for uninsured investments.
Economists note that personal income rose by 5 percent last year. What impact will the change in personal income have on demand?
It will cause the demand curve to shift right.
What does the law of variable proportions say about marginal product?
It will decline if only one input is increased.
The latest holiday toy has arrived in the store. What will happen to the price as the holiday approaches?
It will increase due to more demand and less supply.
A new technology is created to help a manufacturer. How will this affect production?
It will increase supply because the item can now be produced at a lower price.
Some states collect a sin tax on products like alcohol and tobacco. What outcome would a state expect when levying a sin tax?
It would expect a decrease in demand.
How would a balanced budget amendment to the Constitution discourage deficit spending?
It would require that, in a new budget, expenses could not exceed revenue in most situations.
Which law, signed in 2012, gives private companies more access to capital and makes it easier for certain companies to go public on US stock exchanges?
JOBS Act
Why do command economies fail? (Select all that apply.)
- Large, slow bureaucracies form. - People have little incentive to innovate.
Allen is balancing his checkbook. He starts his ledger with $98. He deposited a paycheck of $453 from his first job and a paycheck of $127 from his second job. He spent $114 at the grocery store and bought $20 of gas. He then paid the minimum due on his credit card, which was $40. He also paid his electric bill for the month, which was $120, and his water bill, which was $68. Finally, Allen transferred $75 from his checking account to his savings account. How much money does Allen have remaining in his checking account?
$241
Jan has auto insurance with a $250 deductible. When she is in a hit-and-run accident, she learns that the repairs will cost $4,500. What will Jan's out-of-pocket expenses be?
$250
Rob is balancing his checkbook. His beginning checking account balance was $1. ... So Rob withdrew the tip money from his checking account and put it into a new savings account. What is Rob's checking account balance?
$33
In the simple interest formula, I=Prt, Robert needs to calculate total monies earned on a savings account with the following information: principal = $4,000; interest rate = 2.5 percent; and time = 7 years. What is the total money in the account?
$4,700
Bill applied for a payday loan. His loan amount was $300 and included a $50 fee. However, he could not repay his loan when it was due. He rolled over the loan two times, and each time it cost $45. How much did Bill spend to repay the entire loan?
$440
Joe works full time as a carpenter and brings home $3,000 per month. He owes a total of $1,500 in fixed expenses every month, which includes items such as rent and insurance. If Joe had $1,000 in variable expenses such as groceries and entertainment, what would be his ending balance?
$500
Miguel opened his first checking and savings accounts. Since Miguel now has checking and savings accounts, he will not have any fees. If he uses a STAR-ATM, he will not be charged a fee. However, if he uses a regular ATM, there will be a $2 fee for each use. Miguel starts with a balance of $65. He wrote a check to his cell phone company for $45. For his birthday, Miguel's family members sent him three checks for $20, $50, and $20. He then received a paycheck for $1,050 through direct deposit. He wrote a check for $305 for his car payment and a check for $95 for his car insurance payment. Miguel then used his debit card to pay his $116 electric bill. Finally, Miguel wanted to go to dinner and the movies with friends, so he withdrew $80 from a STAR-ATM. What is Miguel's balance?
$564
What is the price of widgets when the quantity demanded is 4?
$6
Heathcliff is balancing his checkbook. He starts his ledger with the $145 he has in his account. He records $27 spent at the grocery store followed by $58 spent on his cellphone bill. Then, he receives $540 from work. He then spends $54 at a restaurant and $38 at the movies. He deposits a check from his parents for his birthday worth $180. Then, his landlord cashes his check for rent for $600. How much did Heathcliff earn from work and for his birthday?
$720
Heathcliff is balancing his checkbook. He starts his ledger with the $145 he has in his account. He records $27 spent at the grocery store followed by $58 spent on his cellphone bill. Then, he receives $540 from work. He then spends $54 at a restaurant and $38 at the movies. He deposits a check from his parents for his birthday worth $180. Then, his landlord cashes his check for rent for $600. How much did Heathcliff spend at the grocery store and for his cell phone? Responses
$85
Which accurately describes advantages of a corporate business structure? (Select all that apply.)
- A corporation pays a corporate tax, and that rate may be lower than a personal income tax rate. - A corporate business structure allows owners to raise capital by selling shares of stock.
Which are benefits of a mixed market economy? (Select all that apply.)
- A mixed market economy provides a wide variety of products and services. - A mixed market economy provides some regulation to protect consumers.
Which items can a person use to ensure the return of funds to a payday loan company? (Select all that apply.)
- ACH authorization - personal check
April wants to open checking and savings accounts. Her mom told her to be careful because banks charge fees that can really add up. Before she opens the account, April decides that she should research the fees the banks near her house charge. Which are fees that banks charge account holders? (Select all that apply.)
- ATM fees - overdraft fees - minimum balance fees
Why might the economy slow during wartime? (Select all that apply.)
- An economy may need to divert resources to a war effort. - People might choose to save money instead of buy new products.
What services do commercial banks provide? (Select all that apply.)
- Banks offer customers investment accounts and services. - Banks offer customers the ability to borrow money through loans. - Banks offer customers checking and savings accounts.
When adjustable mortgage rates began to increase, what was the result? (Select all that apply.)
- Banks tightened credit restrictions again. - Thousands of homes were foreclosed on.
Bill recently graduated from high school. He has decided to enter military service. Which statements best describe potential outcomes of joining the military? (Select all that apply.)
- Bill may have access to job training while he is earning a salary in the military. - Bill may receive tuition assistance for school after serving for a certain number of years.
How does an oligopoly help the consumer? (Select all that apply.)
- Companies become innovators as they seek bigger market share. - Product prices tend to remain stable, so the consumer comes back.
What are advantages of a mixed market economic system? (Select all that apply.)
- Competition lowers prices and increases choices. - The private sector is encouraged to make profits. - The government provides essential services.
What were results of the federal government deregulating the airline industry in 1978, known as the Airline Deregulation Act? (Select all that apply.)
- Consumers gained better (lower) prices for airfare. - Many small airlines went out of business. - Large airlines were able to improve productivity.
Which accurately describe differences between credit and debit cards? (Select all that apply.)
- Credit cards charge interest, whereas debit cards do not charge interest. - Credit cards pull money from a predetermined line of credit, whereas debit cards deduct funds from a person's banking account.
Which accurately describe differences between debit and credit cards? (Select all that apply.)
- Credit cards charge interest, whereas debit cards do not charge interest. - Debit cards deduct funds from a person's banking account, whereas credit cards pull money from a predetermined line of credit.
What are some advantages of using a debit card as opposed to cash? (Select all that apply.)
- Debit cards can be replaced if they are lost. - Debit cards can help track spending carefully and accurately.
Where would you find the most useful information about post-secondary education and training? (Select all that apply.)
- Department of Education - military and school websites
What is true regarding economic growth? (Select all that apply.)
- Economic growth creates jobs and in turn provides income. - Economic growth raises per capita gross domestic product (GDP).
Why is cooperative advertising the most common form of advertising used by wholesalers and manufacturers who jointly advertise a product? (Select all that apply.)
- Large quantities can be held in stock. - It allows for sales at a discounted price.
Miguel knows he wants to join the military. What should Miguel do before enlisting to help with employment after his service? (Select all that apply.) Responses
- He should speak with the recruiter about the specific opportunities and jobs that he will be able to pursue. - He should investigate training opportunities available while in the service and tuition assistance available afterwards.
Which are fundamental principles of economics? (Select all that apply.)
- How will it be produced? - How will it be distributed?
Which are disadvantages of credit? (Select all that apply.)
- If you are late making payments, interest rates can increase. - If you fail to make payments, you can hurt your credit score.
What consequences occur when there is insufficient competition in the marketplace? (Select all that apply.)
- Inadequate competition can lead to artificial shortages and higher prices. - Inadequate competition can lead large firms to lobby and influence politicians. - Inadequate competition can lead to poor allocation of scarce resources by large firms.
How has income inequality in the United States changed? (Select all that apply.)
- Income inequality has increased partly due to the demand for skilled workers. - Income inequality has increased partly due to the rise of single parents.
Which options are the two most commonly held viewpoints about social welfare? (Select all that apply.)
- Individuals and private groups should assist those in need; there is no place for the government. - The government or society should provide social welfare.
What are potential causes of a business cycle expansion? (Select all that apply.)
- Interest rates are lowered to encourage borrowing. - A new industry is developed. - Production increases to meet new demands.
Why is measuring economic performance important? (Select all that apply.)
- It can help businesses know how their ability to take risks with new products could be affected. - It can help governments know how their spending could be affected. - It can help individuals know how their standard of living could be affected.
What benefits does competition bring to consumers? (Select all that apply.)
- It can lead to lower prices for consumers on goods and services. - It offers consumers more choices in the marketplace.
The Federal Trade Commission (FTC) protects consumers in what ways? (Select all that apply.)
- It conducts investigations that can result in lawsuits for lawbreakers. - It develops rules and guidelines for maintaining healthy marketplaces.
How does the Federal Reserve stabilize and safeguard the nation's economy? (Select all that apply.)
- It distributes currency and oversees fiscal conditions. - It regulates banks and defends consumer credit rights. - It implements American monetary policy.
What are roles of the government in a mixed market economy? (Select all that apply.)
- It enforces laws against false advertising. - It helps to ensure that prices are fair.
How does familiarity with prices affect the market? (Select all that apply.)
- It forces businesses to respond to consumer demand. - It makes allocating resources more efficient.
What is the purpose of the Tennessee Valley Authority? (Select all that apply.)
- It generates and provides inexpensive hydroelectric power to the Tennessee Valley. - It develops agriculture and forest land in the Tennessee Valley. - It improves navigation along the Tennessee River.
What does the JOBS Act do for companies? (Select all that apply.)
- It gives private companies more access to capital from various sources. - It makes it easier for certain companies to go public on US stock exchanges.
Why is the marketing mix important to advertisers? (Select all that apply.)
- It helps define a particular product and identify what makes it different. - It helps advertisers to spread the word about a product being available.
How do individuals benefit from creating a budget? (Select all that apply.)
- It helps them devise a plan to save money. - It helps them identify their income. - It helps them identify their expenses.
What is true regarding price? (Select all that apply.)
- It is the value of a product in terms of money. - It sends a message to consumers about the worth of a product.
What are benefits of international trade? (Select all that apply.)
- It leads to new and shared ideas as a result of cultural diffusion. - It allows countries to acquire goods they cannot produce efficiently.
Which are characteristics of macroeconomics? (Select all that apply.)
- It measures exports and imports for international trade. - It deals with the overall condition of the economy.
What are functions of the Federal Reserve? (Select all that apply.)
- It offers financial services within the government. - It enters US currency into circulation.
Why would wealthy nations have an interest in the development of poor nations? (Select all that apply.)
- It opens up new markets for goods and services. - They feel an ethical or moral obligation to do so.
What can happen when the United States government plays a direct role in the economy? (Select all that apply.)
- It operates as a monopoly. - It acts as an employer. - It competes with private businesses.
How is the JOBS Act helping to stimulate business? (Select all that apply.)
- It permits companies to sell securities through crowdfunding or the Internet. - It offers easier registration for a public company under federal regulations.
What does the FDIC do when a bank fails? (Select all that apply.)
- It sells off a bank's remaining assets to settle any debts. - It notifies depositors if their bank has been sold.
Why might the government intervene to set prices? (Select all that apply.) Responses
- It wants to ensure that the country can produce items it needs in an emergency. - It wants to ensure that all people can afford food. - It wants to ensure that the government has the resources it needs.
Which is an argument in favor of a minimum wage?
A minimum wage helps workers afford housing and food for their families.
What is a characteristic of a need?
A need is something you cannot live without, such as water.
In which situation is a consumer exercising consumer sovereignty?
A person does not like the food served at a restaurant and chooses another restaurant.
What is the process for qualifying for a payday loan?
A person must possess an active checking account, valid identification, and be at least 18 years old.
Which is an example of specialization?
A person studies nursing and works in a hospital.
How does time impact elasticity of supply?
A product can become more elastic in the long run.
A price ceiling helps consumers by keeping costs low, but what is the possible downside?
A retailer's potential income is limited.
What will most likely happen if a toy supplier sets a price too low for a product?
A shortage will occur in which demand exceeds the supply of the product.
Which famous economist wrote The Wealth of Nations?
Adam Smith
Which accurately describes a principle argued by Adam Smith to drive a free market economy?
Adam Smith argued for a laissez-faire economy that is free of government intervention.
Jorge lives in a country that uses a progressive tax system in which his taxable income is taxed at a specific percentage. In 2016, Jorge made $90,000 and was taxed at 25 percent. He is due for a $5,000 raise in 2017. At that time, his tax bracket will change to 30 percent. Which is true regarding Jorge's financial situation after his raise?
After the raise, Jorge will take home $1,000 less per year.Bill recently graduated from high school. He has decided to enter military service.
What would most likely happen if the federal government decreased taxes for its citizens?
Aggregate demand would increase, especially for wealthy individuals.
_[blank]_ of the Constitution states that the government's collection of income taxes is legal. Which accurately completes the sentence?
Amendment XVI
How does an increase of the retiree (elderly) population impact the economy?
An increase in nonproducing citizens decreases per capita GDP.
Which is true about per capita GDP?
An increase in population can have a negative impact on per capita GDP if the additional population does not produce.
Which political theory allows for voluntary cooperation between citizens and the absence of government?
Anarchism
What is true of a savings account?
It is a low liquidity asset that receives a moderate return in interest.
What is true of military spending in the United States?
It is a major portion of discretionary spending.
What is true of education spending?
It is a significant expense of state governments.
An important function of money is to act as a store of value. Gold is excellent as a store of value. What is a difficulty with using gold as money?
It is difficult to divide into smaller units.
Which advantage of a value-added tax is most likely to win Americans' acceptance?
It is much more difficult to evade paying taxes.
What is true regarding seasonal unemployment?
It is not as troubling to the government as other types of unemployment.
Which is a feature of a flat tax?
It is not progressive and remains the same for all consumers.
What is true regarding mandatory spending?
It is set by law and cannot be altered.
What role does income tax serve for the federal government?
It is the largest source of revenue for the federal government.
Country A is running a trade deficit. What must Country A do to reverse this trend?
It must increase trade exports with other countries.
What is the function of a union?
It offers protection for workers who may have little power as individuals.
How does the government protect investors?
It oversees the buying and selling of securities so that consumers are not taken advantage of by businesses.
Which is an argument against implementing a value-added tax (VAT)?
It places an unfair burden on people with lower incomes.
A few states have adopted a balanced budget amendment. What is the purpose of the balanced budget amendment enacted by these states?
It prevents states from deficit spending.
What is a purpose of the Federal Deposit Insurance Corporation (FDIC)?
It protects consumers from losing their money if a bank fails.
What is the purpose of a minimum wage?
It protects workers by providing a price floor for wages.
What is the primary function of the Federal Deposit Insurance Corporation?
It provides consumers protection in case of a bank failure.
Which is an argument against the use of the ability-to-pay principal of taxation?
It reduces the incentive to work hard and take risks to succeed.
What is true about the United States national debt?
It requires the government to pay large yearly interest payments.
A business sells widgets. Each week, it receives a shipment on Monday and is sold out by Tuesday. This leaves many people in the community without widgets. What should the business do to help the market reach equilibrium?
It should increase the price of the widgets.
What is a progressive income tax?
a tax in which the tax rate increases as a person's income increases
A city decides that the main road through town is too busy at 5:00 p.m., when everyone leaves work. The city decides to put up a toll booth where people have to pay one dollar to use the road from 4:00 p.m. to 6:00 p.m. After six months, the city realizes that there has been no change in the number of people using the road. If the city's goal was to decrease the traffic on that road, what did they do wrong?
They sent the wrong signal to consumers by setting a price that was too low.
How do business partners share liability?
They share all liability jointly.
Why did workers join forces?
They sought a more powerful voice and legal leverage when negotiating with companies.
What is true regarding taxes in a market economy?
They tend to be low in order to encourage work.
Which is a benefit of oligopolies?
They tend to keep prices stable.
What is true of labor unions?
They use collective bargaining to gain rights for worker salaries and workplace safety.
Why do entrepreneurs ask the three basic economic questions?
They want to use their resources wisely to make a profit.
What position did labor unions take on the free trade agreements passed in the 1990s?
They were opposed to them because they feared the loss of US jobs.
What was a problem with using cowrie shells as an early form of money?
They were too plentiful.
If a product is inelastic, how will consumers likely respond to a price increase?
They will continue to purchase the product and decrease other purchases if necessary.
How can infant industries be harmed by open free trade?
They will not survive due to high production costs.
What were the results of the Smoot-Hawley Tariff passed by Congress in 1930?
Thousands of imported goods were taxed, resulting in a trade freeze between the United States and several countries.
Which accurately describes the barter system during the colonial era of the United States before a national currency evolved?
Tobacco and animal skins were common mediums of exchange.
What has happened when demand-pull causes inflation?
Too much money chased too few goods.
What is the difference between marginal product and total product?
Total product is defined as the total output of a firm, whereas marginal product is defined as the change in output when a firm introduces one more unit of input.
How does total revenue differ from marginal revenue?
Total revenue is a measure of all the money a business makes, whereas marginal revenue measures the money from one additional unit.
Which of Rostow's Five Stages of Economic Growth involves agricultural production and hunting and gathering?
Traditional society
What are the three largest credit reporting agencies?
TransUnion, Equifax, and Experian
When citing sources in MLA format, you should include the _[blank]_, or web address, of your source at the end of each citation. Which correctly completes the sentence?
URL
Why were businesses opposed to labor unions during the late 1800s and early 1900s?
Unions demanded higher pay and safer working conditions for workers, which cut into a company's profits.
Which supports the idea that unions are essential in a free market?
Unions provide a way to support workers' rights, fair wages and workplace safety.
Why is it important to use multiple methods of both broadcast and online media advertising?
Using multiple methods allows for wider exposure to advertise the product or service.
What are bank reserves?
a bank's holding of deposits and physical cash in the bank's vault
Which is the best example of direct vendor advertising?
a commercial during the Super Bowl for Starbucks coffee
What is the definition of a bond?
a contract to loan money to a corporation and earn interest on a fixed schedule in return
Sandy wants a new bed but does not want to pay for it right away. Which is her best option?
a credit card
Which government tax policy is most likely to result in an increase in consumer demand?
a decrease in personal income tax
Anna says the tax system needs to be simplified. She says it takes the average US taxpayer approximately 14 hours to complete and file federal taxes. If Anna is correct, which tax would simplify the tax system and maintain equity and efficiency?
a flat tax that does not include deductions
What do traditional and command economies have in common?
a focus on the community rather than the individual
Allen lives in the mountains in the northern part of his state. He has only one option for phone and Internet service. With what type of monopoly does Allen do business?
a geographic monopoly
What is the consumer price index (CPI)?
a measure of inflation
What is demand elasticity?
a measure of the impact a price change has on demand
What would count as a negative against your credit score?
a payment made more than 30 days past due
What does a high credit score indicate?
a person who has a history of repaying debts on time
What is a budget?
a plan for spending your money to meet your wants and needs
What is included in the consumer price index (CPI)?
a sampling of goods across industries
Which accurately describes a money market account?
a savings account at a bank that requires a high minimum balance
What is the definition of a stock?
a security sold by a corporation in exchange for shares of ownership in the company
What is overdraft protection?
a service that prevents checking account holders from accidently bouncing a check
What would happen if the price of a product remained low even though demand for the product was very high?
a shortage
Which could cause rapid inflation?
a significant wage increase
What is automatic bill pay?
a system people can use to have their bills paid each month from their bank account
Which accurately describes a 401(k) plan?
a tax deferred retirement plan offered by employers
What is a proportional tax?
a tax in which the percentage a person pays in taxes stays the same regardless of income
Joanne, a former account manager at a large corporation, recently lost her job. Although her family can still pay its bills and afford groceries, the family no longer has discretionary income for leisure activities, such as going to restaurants or movie theaters. They have much less money compared to their friends and neighbors. This is an example of _[blank]_. Which most accurately completes the sentence?
relative poverty
Sally needs to pay her bills this month. Her bills include rent, utilities, groceries, concert tickets, airfare, car insurance, a car rental, and a trip to an urgent care facility. What are Sally's fixed expenses?
rent and car insurance
Which are considered fixed expenses?
rent, cable TV, and car insurance
When society does not have enough resources to produce all of the things people want, it is known as _[blank]_. Which correctly completes the sentence?
scarcity
Which criteria for effective taxes is violated by confusing instructions?
simplicity
Why should an effective tax be efficient?
so the costs of collection are as low
Which political system favors an economic structure in which the means of production are owned and monitored by the government?
socialism
What is the consumer's role in the marketplace?
someone who acquires and uses goods and services through economic exchanges
The housing bubble was caused in part by people buying homes to fix and sell for a higher price. What is this known as?
speculating
Which type of discretionary spending usually has wide support?
spending that helps a large group
A(n) __________ is a security sold by a corporation in exchange for shares of ownership in the company. What best completes the sentence?
stock
If Jim hides $30 under his mattress and he still has $30 there three weeks later, what function has the money fulfilled?
store of value
An entrepreneur with the ability to motivate others in a collaborative environment that fosters team goals and work productivity has which qualities?
strong leadership and vision