Economics Exam
Imported oil accounts for nearly 55% of US consumption and oil has a major impact on the overall health of the economy. "United States," The World Factbook, Central Intelligence Agency, 2017 The UK has large coal, natural gas, and oil resources, but its oil and natural gas reserves are declining; the UK has been a net importer of energy since 2005. "United Kingdom," The World Factbook, Central Intelligence Agency, 2017 Which is a similarity between oil resources of the United States and those of the United Kingdom?
Both countries import oil resources to meet their needs.
What is the most significant contribution North Carolina makes to the global economy?
Its industrial sector produces goods that are sold in other countries
What type of services do property taxes typically fund?
Local fire departments and local law-enforcement agencies
What is typically true of scarce resources in a market economy?
They are allocated by authority, with scarce resources often controlled by those in power.
Individuals who are interested in certain occupations should also find out if they have the necessary ...
aptitudes
In traditional economies, there is little mechanization. Many things are made by hand, which is slow and labor intensive. Increasingly, countries are abandoning traditional economic activities and adopting more efficient market economies.In market economies, the desire to purchase goods and services drives workers to earn more money and the desire to maximize profit drives businesses to increase supply to satisfy consumer demand. Based on the text, what is a disadvantage found in traditional economies that is not as evident in market economies?
low productivity
Because Alexa enjoys working with children and has a knack for developing fun activities that help them understand puzzles and numerical formulas, she might consider a career as a ...
math teacher.
How does North Carolina contribute to the economy of the United States?
By employing many people in jobs that export goods, North Carolina's industries help to increase the wealth created by the US economy.
Why do all societies have to make decisions about how resources will be used?
There are not enough resources for those who want them
How does a government's imposition of a tariff on a foreign good most likely impact the good in the domestic market?
It raises the price.
An apple farmer regularly sold a portion of his crop at a local farmer's market once each month. Most Saturdays, the farmer charged $1.50 per apple. Two months in a row, the farmer sold all of the apples within a few hours. The next month, the farmer returned to the market, and priced his apples for $3.00 per pound. However, the farmer failed to sell all of his apples and was forced to bring many of them home. Which principle of economics does the passage BEST illustrate?
the law of demand, which states that as a product's price increases, demand for the product decreases
The FTC's mission is protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education.Every day we:• Pursue strong and effective law enforcement against deceptive, unfair and anticompetitive business practices;• Advance consumers' interests by sharing our expertise with federal and state legislatures and U.S. and international government agencies[.] How does the FTC create economic stability?
by prohibiting actions by businesses that harm consumers
What is the largest benefit of free trade agreements like the North American Free Trade Agreement (NAFTA)?
there is a removal of trade barriers between the participants
How do the methods used by the governments to manage resources compare?
Country X's government mainly allows the private sector to determine how resources are used, while Country Y's government controls all decisions about the use of resources.
Carolena works for a car manufacturer as a mechanic, where she assembles the vehicles and constructs many of their parts. The company offers an employee discount, which Carolena uses to buy the family car. Carolena works well with her manager, who shows her the new car designs that are given to them by the design department. Carolena often attends social functions held by her manager for their team, and she even hosts some of the gatherings at her own house. Based on the text, what BEST summarizes how a factor of production can contribute to relationships between consumers and producers?
Carolena provides labor as a producer by assembling the vehicles for the company and purchases a car from the company as a consumer.
In 2015 . . . . , foreign-controlled companies employed 260,400 North Carolina workers. Major sources of foreign investment in North Carolina included the United Kingdom, Germany, and Japan.Foreign investment in North Carolina was responsible for 7.0 percent of the state's total private-industry employment in 2015. "State Benefits of Trade: North Carolina" Office of the United States Trade Representative Based on the text, how does North Carolina benefit from foreign investment?
It increases employment opportunities for North Carolinians.
The McDonalds logo is known through out the world. Which economic trend contributed to the ability of this company to spead its franchises?
globalization
What information should you make sure you know about your student loan before you borrow?
he amount you need to borrow , Not Selected The details of the interest rate , Not Selected Your repayment options , Not Selected Correct answer:
Tasha loved creating jewelry and sold pieces to her friends and family members. Her business began to grow as her friends and family shared her jewelry with their friends. Eventually, Tasha got to a point where she wanted to expand her business to include an online shop so she could reach more customers. She invested in business cards, packaging materials, and more jewelry-making supplies. She understood that initially her profits would be lower because she was expanding her business and increasing the amount of investment, but she knew with hard work she could grow into a profitable business. Which title best matches the text?
Diminishing Returns: The Cost of Expanding Your Business
Which statement BEST describes gross pay?
Earnings before deductions are withheld
Which of the following is an example of a public good?
Fireworks display in a city park
Japan and Saudi Arabia both produce oil and cell phones and do not trade with each other. The countries are considering specializing in one product or the other and then trading with each other. Would this benefit Japan and Saudi Arabia? Why or why not?
Specializing and trading would benefit both countries because Japan has a comparative advantage in cell phones and Saudi Arabia has a comparative advantage in oil.
Which one of the following is considered a need?
food
What do we call a company, like General Electric, which owns numerous buisnesses which are not directly connected together?
conglomerate
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. "Consumer Price Index" U.S. Bureau of Labor Statistics Based on the text, what information does the Consumer Price Index provide?
a measurement of the cost for consumers of a certain group of goods
Based on your knowledge of the business cycle, what began at the end of 2007?
a recession
What takes place when there is inflation on goods and services?
the price increases
Which economic system most closely follows the economic philosophy of laissez-faire economics?
market
Trust busting in the United States refers to the government's efforts to break up or regulate large corporations, particularly during the late 19th and early 20th centuries. It was a response to the growing power of corporations like Standard Oil and the railroad companies. Trust busting was championed by people like President Theodore Roosevelt and resulted in landmark antitrust legislation such as the Sherman Antitrust Act of 1890. According to the text, what types of modern market comeptition most resemble the trusts of the late 19th Century?
monopolies
Jane is a movie producer. She has just produced a new movie and she wants to ensure that she has the exclusive right to distribute the film. What is the role the government wouldmost likelyplay in protecting Jane's property rights in this situation?
opyright law would prevent other people from showing the movie without her permission.
How does the federal government protect a company's name or symbol?
It issues a trademark.
How does the state government fund education?
by setting aside a significant portion of the state's tax revenue for schools and colleges
Using the chart above which tax bracket would John and his wife Michelle be in if their taxable income was $125,000?
22%
What is an equilibrium price, and how is it determined in a market?
An equilibrium price is the happy medium where the supply and demand are the same. This is determined in the market by consumer data.
What factor is most likely to contribute to a shortage of a product in the market?
An unexpected increase in consumer demand while production remains constant.
What is a key characteristic of a general partnership
Access to the resources and skills of two or more people
ow did government actions affect the national debt during this period?
Because the government operated at a budget deficit due to high levels of spending, the national debt increased.
Companies that are faced with vigorous competition are continually pressed to become more efficient and more productive. They know that their competitors are constantly seeking ways to reduce costs, in order to increase profits or gain a competitive advantage. With that constant pressure, firms know that if they do not keep pace in making efficiency and productivity improvements, they may well see their market position shrink, if not evaporate completely. It is exactly this process of fierce competition between rivals that leads firms to strive to offer higher quality goods, better services and lower prices. "The Role of Competition in Promoting Dynamic Markets and Economic Growth" by Deputy Assistant Attorney General William J. Kolasky, November 12, 2002U.S. Department of Justice, Antitrust Division Based on the text, what is the relationship between competition and the success of producers in a market economy?
Competition motivates producers to streamline their operations to create affordable goods and services of quality and value.
A woman is planning to move into a home in a new city. Before moving in, she wants to establish electric and Internet services. As she started to look for service providers, she realized that a single provider maintained a monopoly over electric services in the city, requiring her to establish electric service with that company. After establishing electric service, she wanted to obtain Internet service. After conducting some research, she realized that there were only three Internet providers to choose from. As a result of this oligopoly, Internet service was more expensive than it had been in her previous town, where there were more options. Based on the text, what distinguishes a monopoly from an oligopoly?
Consumer decisions are more limited in a monopoly than in an oligopoly.
Which of the following best describes the relationship between trade-offs and opportunity costs?
Opportunity costs are incurred when trade offs are made
Which statement is an accurate observation about the connection between taxes and government spending?
The government would struggle to pay for its services if it did not collect individual income taxes.
What do the supply and demand curves on the graph indicate about the market for air conditioners?
The market is at equilibrium because, at the current price, the demand for air conditioners is being met by the number of air conditioners being supplied.
Based on the graphic, what would be the most likely impact of this price floor being imposed on the supply of Product X?
The price floor would result in a surplus of Product X.
ssuming unchanged demand, how does a decrease in the supply of a product most likely affect the price of the product?
The price will rise.
Which of these situations best eximplfies the concept of a complementary good?
air pods and cell phone
What is the goal of economic freedom?
allow individuals or groups to make choices
What is the opportunity cost of this market structure?
ecause this is a perfectly competitive market, companies have no control over the prices at which they sell their goods.
Which factor of production covers the willingness of an investor to start a new business?
entreprenuership
Which of these MOST often results from additional education?
Higher Income
Which of the following items is NOT measured in a nation's Gross Domestic Product (GDP)?
A yard sale of used items.
Carolena works for a car manufacturer as a mechanic, where she assembles the vehicles and constructs many of their parts. The company offers an employee discount, which Carolena uses to buy the family car. Carolena works well with her manager, who shows her the new car designs that are given to them by the design department. Carolena often attends social functions held by her manager for their team, and she even hosts some of the gatherings at her own house. Based on the text, what BEST summarizes how a factor of production can contribute to relationships between consumers and producers?
Carolena provides labor as a producer by assembling the vehicles for the company and purchases a car from the company as a consumer.
An equilibrium price is the happy medium where the supply and demand are the same. This is determined in the market by consumer data.
Deregulation impacts industries and competition by letting more businesses and companies start up quickly with nothing holding them back and it allows for more potential investing.
How can a person increase his chances of finding a job in the workforce?
Develop marketable skills
When there is little or no competition, consumers are made worse off if a firm uses its market power to raise prices, lower quality for consumers, or block entry by entrepreneurs. . . . Competition between firms may also help workers. In the same way that two firms might compete against one another and lower prices to entice consumers to purchase a product, firms competing to hire from a specialized labor market may raise wages to attract and retain workers. Benefits of Competition and Indicators of Market PowerCouncil of Economic Advisors, April 2016 Based on the text, which statement distinguishes high-competition from low-competition environments in a market economy?
High-competition environments generally provide greater benefits to both consumers and workers than do low-competition environments.
Which of the following statements is not true regarding education and financial position?
Higher education always guarantees a higher income.
How would a two percent rise in interest rates most likely affect new housing?
Housing construction would slow down.
If a company is trying to decide if it should be based online vs in a phsycial location, which basic economic question is being addressed?
How will goods and services be distributed?
uring our bilateral [meeting] yesterday, Commissioner Shibata of the [Japanese Fair Trade Commission] shared with me a recent study by our National Bureau of Economic Research showing how deregulation contributed to the growth of the British economy over the last twenty years. In the United States, we have found that deregulation has reduced prices by as much as 30-75 percent in many key sectors as it forced those industries to restructure in order to become more efficient. "The Role of Competition in Promoting Dynamic Markets and Economic Growth" by Deputy Assistant Attorney General William J. KolaskU.S. Department of Justice, Antitrust Division According to Kolask, how does deregulation affect a market economy?
It decreases government oversight, which lowers prices and improves productivity.
One way that interest rates matter is they influence borrowing costs and spending decisions of households and businesses. Lower interest rates, for example, would encourage more people to obtain a mortgage for a new home or to borrow money for an automobile or for home improvement. Lower rates also would encourage businesses to borrow funds to invest in expansion such as purchasing new equipment, updating plants, or hiring more workers. Higher interest rates would restrain such borrowing by consumers and businesses. "FAQs: Why Do Interest Rates Matter?" Board of Governors of the Federal Reserve System Based on the text, how does the Federal Reserve's lowering of the interest ratesmost likelyaffect domestic employment?
It encourages companies to expand their workforce.
Originally, [the Asia-Pacific Economic Cooperation] was founded because of the growing interdependence of Pacific Rim economies. Over the past two decades, this interdependence has only increased, giving the organization growing importance each year. The broad goal of APEC is to decrease trade and investment barriers, facilitate business in the region while working to raise living standards across the region through sustainable economic growth and ultimately lead to a Free Trade Area of the Asia-Pacific. "A Primer on the Asia-Pacific Economic Cooperation or APEC," August 8, 2012 from tradeology, International Trade Administration Based on the text, how has trade affected the Pacific Rim nations?
It has enabled the member nations to develop strong national economies.
This Act (Title VII of the Consumer Credit Protection Act) prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act. The Act also requires creditors to provide applicants, upon request, with the reasons underlying decisions to deny credit. The Dodd-Frank Act added, among other things, a requirement that creditors provide to applicants a copy of all appraisals and other written valuations used in connection with the applicant's application for first lien loans secured by a dwelling. "Equal Credit Opportunity Act," Federal Trade Commission Based on the text, how does federal regulation of the consumer credit industry affect market activity?
It increases the number of consumers who can access credit.
The goals of monetary policy are to promote maximum employment, stable prices and moderate long-term interest rates. By implementing effective monetary policy, the Fed can maintain stable prices, thereby supporting conditions for long-term economic growth and maximum employment. "Monetary Policy Basics," The Federal Reserve Based on the text, how does effective monetary policy influence the economy?
It keeps prices steady, with the aim of increasing employment.
One important benefit of competition is a boost to innovation. Competition among companies can spur the invention of new or better products, or more efficient processes. "FTC Fact Sheet: How Competition Works," Federal Trade Commission Based on the text, what is the role of competition in a market economy?
It leads to the development of better, more affordable goods and services.
North Carolina forests accounted for a total of 832,522 thousand cubic feet (MCF) of timber products, while the forest products industry produced a total of 810,608 MCF within the State.North Carolina imported 105,045 MCF into the State and exported 126,959 MCF out of the State, making them a net exporter of roundwood.There are about 201 primary wood processing mills accounting for production in the State. Adapted from "Timber Product Output and Use: North Carolina, 2018" U.S. Department of Agriculture, Forest Service Based on the text, how does the North Carolina timber and forest products industry contribute to the U.S. economy?
It provides an important source of timber for state and national industries.
Total nonfarm payroll employment rose by 128,000 in October, and the unemployment rate was little changed at 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in food services and drinking places, social assistance, and financial activities. Within manufacturing, employment in motor vehicles and parts decreased due to strike activity. Federal government employment was down, reflecting a drop in the number of temporary jobs for the 2020 Census. "Employment Situation News Release: The Employment Situation - October 2019" Economic News ReleaseU.S. Department of Labor, Bureau of Labor Statistics What does the data about the unemployment rate relate about the economy?
Low unemployment rates indicate a strong economy.
Command vs. market economies' use of human resources:In a centrally planned economy, where the quantity of goods produced is more important than their quality or fitness for customer purpose, managers could afford to look at employees as "hands." Independent judgment was often discouraged, and objectivity was seldom valued. . . . In today's market economies, however, a business enterprise needs to tap all the human potential available to it to compete effectively. Enterprises now recognize that they must invest in their employees. Business Ethics: A Manual for Managing a Responsible Business Enterprise in Emerging Market Economies, 2004 U.S. Department of Commerce, International Trade Commission Based on the text, which comparison can be made between how command economies and market economies use human capital?
Market economies encourage workers to be innovative, while command economies are less likely to invest in their workers.
Monopolists may choose not to upgrade quality or variety, which would also leave customers worse off than if the market had competitors. And monopolists may be less rigorous in pursuing efficient cost reductions. . . . Competition between firms may also help workers. In the same way that two firms might compete against one another and lower prices to entice consumers to purchase a product, firms competing to hire from a specialized labor market may raise wages to attract and retain workers. "Benefits of Competition and Indicators of Market Power" Council of Advisers Economic Brief, May 2016, The White House Based on the text, what distinguishes monopolies from competitive market structures?
Monopolies limit choices, while competitive markets offer greater consumer choice and diverse employment opportunities.
Which situation best illustrates the concept of comparative advantage?
Nation Q has the largest pool of specialized workers in a particular field.
Microsoft was found to have a monopoly over operating systems software for IBM-compatible personal computers. Microsoft was able to use its dominant position in the operating systems market to exclude other software developers and prevent computer makers from installing non-Microsoft browser software to run with Microsoft's operating system software. . . . These actions hampered efforts by computer makers to use or promote competing browsers. . . . The court found that, although Microsoft did not tie up all ways of competing, its actions did prevent rivals from using the lowest-cost means of taking market share away from Microsoft. "Monopolization Defined"U.S. Federal Trade Commission Based on the text, which factor distinguishes a monopolistic market from other types of markets?
One company excludes other companies with similar products.
It's March 15, 1913, and according to The New York Times, the National Housewives League is concerned. Meat prices are up, and the group wants something done about it. In huge print, a headline proclaims their solution: "Raise meat animals, housewives advise. Tell the home farmers that is up to them to check soaring prices." "One Hundred Years of Price Change: the Consumer Price Index and the American Inflation Experience" by Stephen B. Reed, Monthly Labor Review, April 2014 Bureau of Labor Statistics, U.S. Department of Labor Based on the text, how did the National Housewives League believe farmers could influence the price of meat?
Raising more animals would increase the supply and lower the equilibrium price.
Which statement about decision-making under different market structures is correct?
Supply and demand determine the prices of goods in market structures with perfect competition.
How will organizations within the US government help to provide financial security for these individuals?
Tanya's savings will be insured by the FDIC to protect them against loss, while the SEC will enforce laws to ensure that the stock market Randall has invested in remains fair.
How does the Federal Budget reflect both spending and revenue priorities?
The Federal Budgets reflects both spending and revenue priorities by determining where they are putting there money and how much they will take from the people. An example of this would be from the budget increasing spending for social security and cutting some funding in the defense department. In order to get the money to fund these departments the government has to tax more and take revenue from the people. The higher the budget the higher the taxes.
How can the Federal Reserve and Congress promote economic growth?
The Federal Reserve can influence the money supply, while Congress sets tax rates and government spending.
Which regulatory agency we have covered in this unit has the greatest impact on your life and why?
The NLRB is the agency that has the greatest impact on me. This agency protect my right as a worker and allows me to protest for better working environment. This agency also allows for me to be able to freely quit my job and find a new one.
According to the information, what impact did the Phase One agreement have on US markets?
The agreement increased the value of goods exchanged between the United States and China by establishing a set of rules to govern trade.
If you purchase energy efficient appliances or make energy-saving improvements to your home or business, you can save money on your utility bills. You can also save more money on these purchases, in the form of tax incentives, such as tax credits and rebates, or sales tax holidays. Adapted from "Going Green," USA.gov Based on the text, which is an effect of government energy regulations on market activity?
They influence consumer decisions about which appliances to purchase.
Economic development incentives—state and local government efforts to encourage economic development—are one of a limited number of tools local policymakers have for stimulating local economies. Some broad measures—investments in infrastructure (such as transportation), human capital (education, for example), and social infrastructure (such as recreational facilities)—may produce significant results over the long term. Economic Development Incentives: Research Approaches and Current Views" by Dan GorinFederal Reserve Bulletin, Vol. 93, 2007, The Federal Reserve Board What is the role of economic incentives in determining where manufactured goods are produced in a market system?
They may lure manufacturers to areas with more capable workers, and more distribution channels for their goods.
very state imposes a liquid fuel tax on gasoline and diesel fuel purchased within the state. Most often the tax on gasoline and diesel fuel is a cents-per-gallon tax. . . . Liquid fuel taxes are collected by the distributor. The distributor must then submit the tax revenue to the state government.Liquid fuel taxes are user taxes. A user tax is paid by those people who will most directly benefit from the service it pays for. Because money is required to build and maintain highways and roads, the idea is that drivers who use state highways should pay for them through taxes. "State and Local Taxes" U.S. Department of the Treasury Based on the text, what causes states to tax gasoline?
They want to fund transportation infrastructure.
What is the primary purpose of a patent?
To grant the inventor exclusive rights to make, use, and sell their invention for a limited time.
What is the primary purpose of a supply schedule in economics?
To illustrate the relationship between a product's price and the quantity that producers are willing to supply.
How can students and families maximize the financial aid they'll receive?
Use extra cash to pay off debts outstanding Apply to as many scholarships as possible
Today when people refer to Wall Street, the term encompasses the businesses directly related to stock exchanges and the financial market. These are the companies that list on any of the stock exchanges as well as those companies, like investment firms, that invest in those companies and help companies "go public" (issue stocks and bond). Used even more broadly, many use "Wall Street" to symbolize big business and investing in the United States. "Wall Street"Library of Congress The [Federal Trade Commission's] mission is to protect consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity. "Mission"U.S. Federal Trade Commission Based on the texts, what differentiates Wall Street from the Federal Trade Commission in terms of its function in the U.S. economy?
Wall Street firms operate to make a profit for their investors, while the Federal Trade Commission ensures that they do so fairly in a competitive market.
Which of the following best describes vertical integration in economics?
Which of the following best describes vertical integration in economics?
The free enterprise system does not produce all the services needed by society. Some services are more efficiently provided when government agencies plan and administer them. Two good examples are national defense and state or local police protection. Everyone benefits from these services, and the most practical way to pay for them is through taxes, instead of a system of service fees. Other examples are the management of our natural resources, such as our water supply or publicly-owned land, and the construction of hospitals or highways. "Resource Center: Economics of Taxation" U.S. Department of the Treasury Based on the text, how do taxes serve the general welfare in a free enterprise system?
by providing for some of the essential needs of all citizens
The Fed [Federal Reserve] is responsible for ensuring a supply of money and credit in the system sufficient to maintain a healthy, growing economy. At the same time, the Fed must not inject so much money into the economy that the money loses its value. If the Federal Reserve let the money supply grow too rapidly, then the amount of money in the economy would be greater than the quantities of goods and services for sale. This oversupply of money would lead to widespread escalation of prices—what we know as inflation. "Free Enterprise, the Economy, and Monetary Policy," Federal Reserve Bank of Dallas Based on the text, how does the Federal Reserve influence market activity in the United States?
by regulating how much currency circulates within the economy
Market economies operate under the assumption that the law of supply and demand drive the price of goods or services. Strict supporters of this system believe that the government should have no interference in the economy. For example, they believe that the government should not be involved in any price fixing, setting quotas, or providing subsidies to particular industries. An entrepreneur will produce what consumers want at a price that will ensure purchases and profits.
to determine the price for goods and services
GDP measures the market value of the goods, services, and structures produced by the nation's economy in a particular period. While GDP is used as an indicator of economic activity, it is not a measure of well-being (for example, it does not account for rates of poverty, crime, or literacy). "Measuring the Economy: A Primer on GDP and the National Income and Product Accounts," December 2015 Bureau of Economic Analysis, U.S. Department of Commerce Based on the text, what is the primary way economists use the GDP?
to determine whether an economy is growing or experiencing a recession