Economics Final

Which statement best supports the conclusion that open economies lead to better market outcomes?

By reducing tariffs and opening domestic industries to competition from foreign businesses, countries can increase the quantity and quality of goods and services produced and consumed at the lowest cost possible.

Last season, a potato farmer experienced a financial loss after producing more than was demanded by consumers. Which of the following methods should the farmer follow to determine what his/her best course of action is?

Compare the benefits and costs of decreasing production.

Which of the following statements about scarcity is most likely true?

Consumers respond to scarcity by making trade-offs.

Select all of the following that count as money in the basic United States money supply.

Currency Coins Checking account deposits

Joe is able to mow 10 yards on weekends. He charges $20 per yard. His mower and gas cost him $20 each week. How would Joe figure out his profit for a week.

Find the revenue by multiplying the number of yards by the price, then subtract the cost. His profit is $180.

Which statement is true about the (mostly) closed economy in the former Soviet Union?

Following World War II, the country appeared to be growing and had the potential to surpass even the United States.

Which of the following statements expresses economic reasoning when considering trade barriers versus free trade?

Free trade offers the most benefits to U.S. and international trading partners, once the costs have been accounted for.

a student in the ninth grade works part-time at a fast food restaurant after school to help earn money to pay for college. Which statement best summarizes his goal?

He wants to increase his ability to save in the present so he can increase his ability to consume in the future

Which of the following will likely cause businesses to cut back on production of their good or services?

Higher wages

Which of the effects is caused by new businesses supplying a new good and service to the market? I. expansion of consumer choice . II. creation of new jobs . III. innovation of new goods and services . IV. decreased prices in the market

I, II, and III

An advantage of a command economy is that

In theory, everyone receives a relatively equal allocation of resources.

Which of the following statements accurately describes one of the three functions of stable money?

It indicates the relative value of products and resources.

Which of the following is NOT true about a public good?

It is an externality, so it has a cost to a third party, other than the buyer and seller.

Jay deposited $500 in his savings account. His bank held a portion of the deposit in reserve and loaned out the rest. Eve borrowed the portion that Jay's bank loaned out. She deposited money in her bank, and then her bank loaned out a portion of it. Which of the following statements is true about this scenario?

It is known as the fractional reserve banking system.

Why is per capita GDP not a great measure of the standard of living in a country?

It shows an average, when in reality incomes and production can vary wildly.

Which of the following is true of actual GDP?

It stands for Gross Domestic Product. It is the money value of all final goods and services produced within a country within a particular period.

Which result was the unintended consequence of the North American Free Trade Agreement (NAFTA)?

Jobs were lost when factories moved to areas with lower-cost workers.

In one hour of work, Jodi can make 10 plates and 5 boxes, Sam can make 8 plates and 6 boxes, Shanice can make 10 plates and 7 boxes, and Anthony can make 8 plates and 8 boxes. They have agreed to specialize and trade what each one makes. Which specialization arrangement will help the group benefit the most from trade after one hour of work?

Jodi and Sam should make plates while Shanice and Anthony make boxes.

Less economic freedom:

Life expectancy falls, Fiscal and monetary policies used frequently,Income per person decreases

More economic freedom:

Life expectancy rises, Income per person increases, Increases in economic growth, Income of the poorest 10 percent of a population is higher on average

Joe wants to increase his profit from his lawn-mowing service. Which are strategies that he might use?

Lower costs by hiring lower cost labor Increase revenue by mowing more yards Continue to mow the same number of yards but raise the prices.

When setting up a budget, the first step is

Mapping out your consumption

Which of the following are situations in which a limited government should intervene in the economy?

Negative externalities Monopolies Private property not being protected

Nominal GDP is not as useful of a measure as Real GDP. Why?

Nominal GDP does no adjust for prices changes over time.

Which statement expresses economic reasoning when considering a closed versus an open economy?

Open borders offer the most benefits to the most people after factoring in the costs of the concentrated group most immediately affected.

Which economic scenario is truer for a command economy than a free market economy?

People have more job security.

Which result was the intended consequence of the North American Free Trade Agreement (NAFTA)?

Production and consumption increased across the region.

Historically, the U.S. auto industry dominated sales in the U.S. market. Since 2000, domestic auto producers have faced increased competition from foreign auto producers, resulting in decreased domestic sales. This has put pressure on the U.S.auto industry to cut costs in order to stay competitive in the domestic market. Based on the argument above, which of the following criticisms would a supporter of government solutions make against this free market environment?

Relying on free markets would result in decreased employment opportunities or wages for U.S. auto workers.

Robert and Hadia are working together on a science project for class. There are two main tasks the group must complete: running experiments and analyzing data after the experiments are done. Robert can complete one experiment in an hour and one data analysis in 20 minutes. Hadia can complete one experiment in two hours and one data analysis in one hour. Which statement best summarizes who should be doing each task and why?

Robert should analyze data and Hadia should do experiments, because they each have a comparative advantage in doing those tasks.

Which of the following is NOT a positive intervention in the market by a limited government?

Setting price ceilings and floors.

A person decides to purse her dream of becoming a professional athlete by joining a high school team. Which of the following statements best explains how that choice benefits her and others?

She improves her own and others' skills by participating in practices.

Which is an example of thinking on the margin?

Sydney gains an extra hour of sleep if she does not go to debate practice prior to the start of her school day. Ahmed spends 5 hours going door to door in his neighborhood. He generates an additional $500 from his landscape business.

The government added a tariff on all magic beans coming into the United States, because the U.S. magic beans market had been hit hard by a storm. Now, 50 years later, it is still more expensive to buy magic beans internationally, even though they cost less to produce and are better quality. Which of the following statements about this scenario is true?

The U.S. magic bean industry is enjoying a concentrated benefit.

What are the likely results of the U.S. tariffs and other trade barriers instituted in 2017 and following?

The tariffs will create pressure on competitors to raise their tariffs, increasing the price of all imported goods. Many companies will pass the cost increases on to the customers.

Which of the following are characteristics of a healthy, growing economy?

There is efficient employment of the labor force. Innovation is advancing. There is economic freedom across households and businesses.

For which decision could you use the PACED model?

Which route to take to school

Which of the following is a likely reason for the government to address a market failure?

You bank is going out of business and will not be able to give money back to its depositors

The term opportunity cost is best described as something that

a person gives up when a choice is made

Which use of an inherited estate demonstrates the highest economic freedom?

a requirement to pay inheritance tax on the inherited income

What is the effect of globalization for most countries in the world economy?

advancements in technology

What tool is available to the U.S. government for addressing social issues?

all of the above

A pair of shoes produced in South Korea, but sold in the U.S. would:

be reported on South Korean GDP

How do consumers demonstrate diminishing marginal utility?

by decreasing the amount they are willing to pay for additional goods

In Shawn's lawn mowing business, the money he spends each week on the lawn mower, weed eater, and leaf blower would be considered which factor of production?

capital

Factory buildings, assembly line equipment, telephone equipment are what type of productive resource?

capital resources

Which phrase best describes the structure of the U.S. Federal Reserve Banking System?

central-regional

Which of the following actions represents a tools of monetary policy for the U.S. government?

changing required reserves

What method of decision making is most effective?

comparing the opportunity costs of alternatives

Which of the following is factored into the balance of trade?

current account

The economy is in a recession, and companies are laying off workers across the nation. Tom has lost his job due to one of these layoffs associated with the downturn. Which type of unemployment is he facing? *

cyclical unemployment

A simple definition of economics is that it is the science of

decision making

Identify a role of limited government.

defining and protecting private property rights

On Saturday, Juan has a free hour where he can play basketball, play on his phone, or read a book. The opportunity cost of reading the book

depends on the value of playing basketball or playing on the phone

Which choice can the U.S. government or Federal Reserve System make encourage free trade?

enter into trade agreements

Recent college graduates often face uncertainty in that they may have to wait for a few months before they can secure employment. What kind of unemployment would this be classified as?

frictional unemployment

What contributes to U.S. laborers' earning wages that are proportionately higher than workers in lower-wage nations?

higher education level

High levels of per capita GDP indicate

higher standards of living

Which tool is potentially available to the international market for addressing social issues?

incentives

What would an open border supporter say is a positive reason for an open border?

innovation

According to the Economic Freedom of the World report, which of the following indicators is used to show that countries with high economic freedom have more well-being?

life expectancy

When you consider the extra costs or benefits of a decision you make, what type of thinking are you applying to your decision?

marginal thinking

What are the functions of money? Select the best answer to complete the sentences. Money is a ___ because sellers will part with things in exchange for money, knowing that it can be used to purchase other goods and services. Money indicates the relative value of products and resources, so it functions as a ____. You can keep money to use in the future because money is a ___.

medium of exchange; unit of account; store of value

Which of the following is associated with a social issue instead of an economic issue?

moral judgment

Which type of GDP is measured using the current year's prices?

nominal GDP

A government agency is considering funding a public dog park. Which of the following should the agency consider in order for the dog part to qualify as a public good?

non-rivalry

Over time, which of the following has been a result of economic development?

population boom

Which approach to studying behavior and decision-making focuses on observable facts that can be tested, tracked, and repeated?

positive

If you open a car wash service and spend $50.00 on supplies and sell washes for $10 each, after the 5th car you wash, the next $10.00 is referred to as

profit

Which one of the following business choices has the least benefit for consumers?

raising prices to levels higher than consumers generally are willing to pay

Select the cause of government failure that each example represents. The city imposes a one-cent tax on all bags used for customer groceries. While some people point it out and complain, most people choose to ignore it.

rational ignorance effect

Which type of GDP measurement includes the use of base year prices in an effort to allow more accurate year to year comparison of growth?

real GDP

If there are not enough goods, services, and resources available for everyone to have everything they need or want, it is called

scarcity

What would a closed economy supporter say is a positive reason for a closed economy?

self-sufficiency

Select the cause of government failure that each example represents. A politician supports a highly visible sports stadium for the hometown team, but doesn't mention that the taxpayers will be paying for it for the next 40 years in extra local taxes.

short-sightedness effect

Which issue has developed in North Korea's population that has not happened in neighboring South Korea?

significantly less average income

Select the cause of government failure that each example represents. The city's elected officials pass a law that all residents must use the same trash collection service and their choice is limited to the two plans being offered. This plan clearly favors a single trash collection company.

special-interest effect

The city council passes a law that all citizens must use the same Internet service. With no legal competitors, the Internet company raises its prices. Which of the following causes of government failure is represented in the scenario?

special-interest effect

Imagine that drones are now delivering the mail. Susan works for the U.S. Postal Service and drives a route, but was recently laid off because drones are cheaper and faster. There are openings for drone operators in her area, but none for mail delivery-people. What type of unemployment does she face?

structural unemployment

Ty works as a bank teller. When several ATMs were placed in his neighborhood, he was laid off. There are several new openings for ATM maintenance, but he does not have the skills to fill this position. Which type of unemployment is Ty facing?

structural unemployment

An advantage of a free market economy is that

the market is very responsive to the needs and wants of the people.

The equation of exchange shows

the relationship between the combined money in an economy and the amount of goods and services

When an economic choice is made, an economist would most likely define the term opportunity cost as the cost of

the second best choice

Choose the correct sequence found on one "wave" of a growth trend on the business cycle

trough; recovery; peak; recession

How should an entrepreneur best make a sound decision about how to grow his/her performance?

weighing the costs and benefits of individual choices

Which of these is NOT one of three basic concepts all economic systems must address?

what prices government will charge for goods and services

Which of the following people would be considered part of the labor force?

A 17 year old student who works 3 hours per week for a tutoring service Who person who isn't working now, but will start work in a week A person who has a job, but has been on sick leave for two months A person who doesn't work who filled out a job application last week

What is an example of a final good or service that WOULD be included in GDP?

A new car sold by Tesla.