Economics FINAL

a) union arrangements

"Closed shop", "union shop", and "modified union shop" are examples of what a) union arrangements b) union types c) union laws d) union protections

False

Although banks are engaged in a number of different activities, the primary one is lending money, which they mainly get from *investors who purchase stock in banks*

c) they drive decisions about what to produce

Consumers are more powerful because a) they have more rights than corporations b) they help decide a business's opportunity costs c) they drive decisions about what to produce d) their interests forced producers to behave ethically

a) "voting" with their dollars

Consumers can influence the production and sale of goods by a) "voting" with their dollars b) saving their money c) reducing their spending habits d) paying off their debt

c) what

Consumers in a free enterprise economy ultimately determine _____________ to produce a) when b) how c) what d) where

b) stimulating aggregate demand

Keynesian economic policies are designed to lower unemployment by _____ a) stimulating aggregate supply b) stimulating aggregate demand c) reducing aggregate demand d) creating government jobs

b) consistent contributions over a long period of time

Most successful investors invest ______ a) large amounts of money once in a while b) consistent contributions over a long period of time c) small amounts of money once in a while d) consistent contributions for a few months

c) reduce the government's role in the economy

Supply-side policies aim to _________ a) strengthen the government's role in the economy b) strengthen the economy by increasing taxes c) reduce the government's role in the economy d) increase regulation of corporations

c) deregulation

Supply-siders generally favor a) tax increases b) decreases in demand c) deregulation d) government intervention

a) entrepreneurs

The four factors of production are land, labor, capital, and a) entrepreneurs b) franchises c) inflation d) the government

c) smart card

The technological development in banking called the _________________ is replacing the magnetic strip technology. a) EFT b) ATM c) smart card d) credit union

a) cutting income tax rates

The theory of the Laffer curve was used to argue for _________ a) cutting the income tax rates b) increasing government revenue c) raising income tax rates d) decreasing aggregate demand

c) free market

The three synonymous terms to describe the US economic system are free enterprise, capitalism, and a) limited role of government b) competition c) free market d) economic freedom

True

True/False --> The period called the baby boom began in 1946 and lasted until 1964

True

True/False --> The reserve requirement is the formula used to compute the amount of a depository institution's required reserves

False

True/False --> The shareholders of a corporate bank *are* responsible for the bank's debts

True

True/False --> The theory of negotiated wages states that organized labor helps to determine pay rates

True

True/False --> There is always some degree of government involvement in a mixed economy

False

True/False --> US economic and social goals are likely to remain unchanged in the future

d) there are unintended effects or spillovers

What happens when some of the costs or benefits associated with production and consumption fall on someone other than the producers or consumers of a product? a) competition is reduced b) there is a loss of resource mobility c) the public good is reduced d) there are unintended effects or spillovers

b) they will decrease

What will happen to interest rates if the Fed lowers the Discount rate? a) they will increase b) they will decrease c) they will stay the same d) not enough information to answer this question

a) they will increase

What will happen to interest rates if the Fed raising the reserve requirement? a) they will increase b) they will decrease c) they will stay the same d) not enough information to answer this question

d) all of the above

What will your "creditworthiness" be based on? a) your credit history b) keeping up with payments c) having a good financial relationship with a bank d) all of the above

c) negative externality

When a factory pollutes a river, the resulting water pollution is an example of a _______ a) technological monopoly b) public good c) negative externality d) neutral spillover effect

a) collective bargaining

When a union negotiates pay and other job-related matters, this is called a) collective bargaining b) going on strike c) cooperative bargaining d) accessing resources

a) trade-offs

When deciding how to use resources, you need to evaluate the costs and benefits of each choice to decide which meets your criteria. These are called a) trade-offs b) opportunities c) resource frontiers d) priorities

c) during the Civil War

When did Congress print paper currency for the first time? a) at the beginning of the Revolutionary War b) when the Constitution was ratified c) during the Civil War d) when the country went on the gold standard

a) higher compensation

When making a risky investment, investors usually demand a _______ . a) higher compensation b) higher selling price c) lower compensation d) lower purchasing price

d) inflation

When the general level of prices rises, the economy is experiencing _________ a) construction b) stagflation c) deflation d) inflation

b) decreases

When the price of something increases, the quantity demanded ___________ a) increases b) decreases c) remains unchanged d) reverses

a) horizontal merger

When two companies that produce the same kind of product merge, this is called a a) horizontal merger b) vertical merger c) conglomeration d) multinational merger

d) the US Bureau of Engraving and Printing

Which agency manufactures US paper money? a) the Bureau of the Mint b) the Comptroller of the Currency c) the Federal Deposit Insurance Corporation d) the US Bureau of Engraving and Printing

c) declined in influence

Which best describes unions in the US over the last 50 years a) grew steadily b) reached more industries c) declined in influence d) mostly outlawed

b) identical products

Which condition is present in pure competition and missing in monopolistic competition? a) marginal analysis b) identical products c) freedom of entry and exit d) very large numbers of buyers and sellers

b) a shift toward a decrease in unemployment

Which economic indicator would most likely indicate an upcoming economic expansion? a) a decline in the leading economic index b) a shift toward a decrease in unemployment c) a 100-point drop in the Dow Jones Industrial Average d) a slight decrease in the length of the average workweek

a) trade

Which is a good synonym for the word barter in the term barter economy? a) trade b) fiat c) specie d) monetary

c) apps

Which is a likely complement to a tablet computer? a) DVDs b) movie tickets c) apps d) pencils

c) the army

Which is an example of a public good? a) a rock band b) a car c) the army d) bread

b) shortage

Which is the opposite of a surplus? a) inelastic b) shortage c) equilibrium d) floor

d) monopoly

Which market structure is defined by a single producer? a) pure competition b) monopolistic competition c) oligopoly d) monopoly

d) professional labor

Which noncompeting category of labor tends to include the highest-paid workers? a) skilled labor b) unskilled labor c) semiskilled labor d) professional labor

a) recession

Which of the following is a factor in preventing economic growth a) recession b) civilian labor force c) GDP d) frictional unemployment

b) keiretsu

Which of the following is a feature of Japanese capitalism that would be illegal in the United States? a) perestroika b) keiretsu c) privatization of business sectors d) collectivization of industry and agriculture

b) depreciation

Which of the following is a noncash charge? a) wages b) depreciation c) dividends d) horizontal merger

a) seizure

Which of the following is a term for a labor-dispute settlement tactic used by neither unions nor management? a) seizure b) stoppage c) mediation d) arbitration

a) most employers match a portion of your contributions

Which of the following is an advantage of a 401(k) plan? a) most employers match a portion of your contributions b) you never pay taxes on your contributions c) you may withdraw funds at any time without penalty d) your contributions are invested in high-return, high-risk funds

a) they produce tax revenue for the countries where they do business

Which of the following is an advantage of a multinational? a) they produce tax revenue for the countries where they do business b) they use cheap labor c) they export scarce resources d) they help preserve traditional ways of life

d) all of the above statements are true

Which of the following is an advantage of sole proprietorship? a) there are almost no requirements to start up a sole proprietorship b) the owner makes all the decisions c) the owner keeps all the profits d) all of the above statements are true

d) price stability

Which of the following is currently considered one of the seven major economic and social goals in the United States? a) conservation b) preserving endangered species c) clean environment d) price stability

c) the jobless who made an effort to find a job during the past month

Which of the following is included in the unemployment rate? a) people who hold only part-time jobs b) people who are too frustrated to look for work c) the jobless who made an effort to find a job during the past month d) all of the above

b) innovation

Which of the following is not a cause of inflation? a) wage-price spiral b) innovation c) excessive monetary growth d) none of the above

c) store of value

Which of the following is one of the three functions of money? a) portability b) scarcity c) store of value d) divisibility

a) it is a command economy with a strong central authority

Which of the following is the best description of the economic system in Cuba? a) it is a command economy with a strong central authority b) it is a command economy in transition to a mixed economic system c) it is a traditional economy with a strong central authority d) it is a mixed economy in transition to a command economy

a) implicit GDP price deflator

Which of the following is the index used to measure changes in gross domestic product? a) implicit GPD price deflator b) product price index (PPI) c) wage-price spiral d) consumer price index (CPI)

b) they work in a businesslike way to promote member interests

Which of the following is true about nonprofit organizations? a) the results of their efforts can be analyzed in the same way as for-profit businesses b) they work in a businesslike way to promote member interests c) most are informal businesses that are no incorporated d) they make up an insignificant part of the economy

c) the both use scarce factors of production

Which of the following is true of both nonprofit organizations and for-profit organizations? a) they both pay income taxes b) they both pay dividends c) the both use scarce factors of production d) they both issue stock

c) the increase in the number of women and teenagers in the workforce

Which of the following partially explains the current decline in union influence? a) the decrease in the number of women in the workforce b) the decrease in the number of teenagers in the workforce c) the increase in the number of women and teenagers in the workforce d) the increase of the average level of education among Americans

b) a contraction of the money supply is associated with higher interest rates

Which of these describes a general connection between the money supply and interest rates? a) an expansion of the money supply is associated with higher interest rates b) a contraction of the money supply is associated with higher interest rates c) a contraction of the money supply is associated with a free in interest rates d) an expansion of the money supply is associated with a free in interest rates

a) they are an incentive to produce more

Which of these best describes the influence of high prices on the behavior of producers? a) they are an incentive to produce more b) they are an incentive to produce less c) they encourage producers to modify their supply schedules d) they have no significant overall effect on producer behavior

a) low prices are an incentive for producers to produce less

Which of these best describes the influence of low prices on the behavior of producers? a) low prices are an incentive for producers to produce less b) low prices are an incentive for producers to produce more c) low prices have no significant influence on the behavior of producers d) low prices influence producers to use fewer raw materials and less labor

c) an easy money policy

Which of these best names the policy implemented by the Fed when a short-term expansion of the economy is called for? a) a monetary policy b) a tight money policy c) an easy money policy d) an excess reserves policy

b) it shifts their market supply curve to the left

Which of these describes an effect of increased government regulation on producers? a) it shifts their market supply curve to the right b) it shifts their market supply curve to the left c) it prompts them to increase output at all possible prices d) it encourages production by requiring the use of new technology

c) unit elastic

Which of these describes an item for which a change in its supply is proportional to a change in its price? a) elastic b) inelastic c) unit elastic d) demand elastic

a) life expectancy will rise

Which of these describes the Census Bureau's forecast for life expectancy in the United States? a) life expectancy will rise b) life expectancy will fall c) life expectancy will fluctuate d) life expectancy will remain steady

b) there are seven of them, chosen by the president and Congress to serve fourteen-year terms

Which of these describes the Fed's Board of Governors? a) there are 14 of them, elected by popular vote every four years b) there are seven of them, chosen by the president and Congress to serve fourteen-year terms c) there are 14 of them, chosen by the president and Congress to serve seven-year terms d) there are seven of them, each of them also serving in a Congressional financial subcommittee

a) they helped sugar farmers while increase the price of sugar for the consumer

Which of these describes the effects of price floors on the US sugar industry? a) they helped sugar farmers while increase the price of sugar for the consumer b) They helped sugar farmers while decreasing the price of sugar for the consumer c) they harmed sugar farmers while increasing the price of sugar for the consumer d) they harmed sugar farmers while decreasing the price of sugar for the consumer

c) a computer monitor packaged as part of a new computer system

Which of these is an example of an intermediate product? a) a new computer monitor sold alone b) a secondhand computer monitor sold alone c) a computer monitor packaged as part of a new computer system d) a computer monitor that has been broken and needs replacement

c) changing the reserve requirement

Which of these is least often used by the Fed as a fiscal policy tool? a) raising the discount rate b) restricting tight money measures c) changing the reserve requirement d) increasing open market operations

d) limited government economic involvement

Which of these is most associated with the economic philosophy of Adam Smith? a) nonprice competition b) laissez-faire price fixing c) natural and geographic monopolies d) limited government economic involvement

b) trade-offs

Which of these is most closely associated with opportunity cost? a) consumerism b) trade-offs c) entrepreneurs d) productivity

c) its slope goes up when the diagram is read from left to right

Which of these is the best description of a normal supply curve? a) its slope is completely horizontal b) its slope goes up when the diagram is read from right to left c) its slope goes up when the diagram is read from left to right d) its slope is mostly horizontal, with occasional vertical fluctuation

c) a price ceiling

Which of these is the most likely to create a shortage of an item? a) a price floor b) a fixed price c) a price ceiling d) a market price

a) a price floor

Which of these is the most likely to create a surplus of an item? a) a price floor b) a fixed price c) a price ceiling d) a market price

c) the Great Depression

Which of these is the most striking example of the costs and risks of pure capitalism? a) the Gosplan b) the Five-Year-Plan c) the Great Depression d) the Great Leap Forward

b) a change in quantity supplied takes place only when there is a change in price

Which of these is true of both an individual supply curve and a market supply curve? a) a change in quantity supplied takes place when a change in demand occurs b) a change in quantity supplied takes place only when there is a change in price c) a change in quantity supplied takes place only when the price remains constant d) a change in quantity supplied takes place only when a change in demand is projected

b) it is barely above the replacement population rate

Which of these is true of the US fertility rate at present? a) it is far below the replacement population rate b) it is barely above the replacement population rate c) it is slightly below the replacement population rate d) it is roughly equal to the replacement population rate

a) the establishment of a base year

Which of these is used by macroeconomists to measure the inflation component of GDP? a) the establishment of a base year b) the calculation of GDP in current dollars c) the creation of an output-expenditure model d) the calculation of the number of households in a country

b) offering profit-sharing plans to employees

Which of these management strategies has contributed to a decline in union influence a) paying employees in current dollars b) offering profit-sharing plans to employees c) establishing glass ceiling hiring and promotion policies d) increasing the number of minimum wage positions available

a) it has widened despite government assistance to low-income individuals

Which of these most accurately describes the "income gap" in the United States? a) it has widened despite government assistance to low-income individuals b) it has narrowed due to increased educational opportunities c) it has narrowed due to government assistance to low-income individuals d) it has held steady due to a lack of educational opportunities

c) halting unfair business practices

Which of these names a function of the Federal Trade Commission? a) enforcing zoning regulations b) establishing economies of scale c) halting unfair business practices d) supervising mortgage foreclosures

a) ideology

Which of these names a non-economic factor that can block formation of effective economic policy a) ideology b) supply-side c) monetarism d) demand-side

b) foreclosure

Which of these names the process by which lenders reclaim a home when its mortgage is not paid? a) collusion b) foreclosure c) intervention d) competition

a) seniority

Which of these offers an explanation for why a less productive worker might make more than his or her peers? a) seniority b) fact-finding c) the equilibrium wage rate d) the market theory of wage determination

c) the reserve requirement

Which of these regulates the amount that a member bank can loan to its customers? a) the prime rate b) the discount rate c) the reserve requirement d) the quantity theory of money

c) an increase in the price of credit

Which of these results from the implementation of a tight money policy? a) a decrease in interest rates b) a decrease in the price of credit c) an increase in the price of credit d) an increase in wage-price controls

b) a leftward shift of that item's supply curve

Which of these results from the repeal of an item's subsidies? a) a decrease in the price of that item b) a leftward shift of that item's supply curve c) a rightward shift of that item's supply curve d) an increase in reliance upon government regulation

False

True/False --> The discount rate is the interest rate charged by the Fed for loans to individuals

False

True/False --> The fractional reserve system is unique to the US

True

True/False --> The government sometimes "fixes" prices to achieve a socially desirable goal

False

True/False --> The market theory of wage determination states that salaries are best set by management

True

True/False --> The minimum wage is an example of a government price control

c) sole proprietorship

A business run by a single person is a a) partnership b) corporation c) sole proprietorship d) limited liability corporation

b) total income after expenses

A business's net income is defined as a) total sales before expenses b) total income after expenses c) total dividends paid to investors d) total expenses before sales

a) durable good

A car is an example of a a) durable good b) nondurable good c) capital good d) service

a) movement along the demand curve

A change in quantity demanded is represented by ____________ a) movement along the demand curve b) a shift of the demand curve c) substitution d) complements

c) conglomerate

A company with four or more businesses that make unrelated products is called a a) horizontal merger b) vertical merger c) conglomerate d) multinational

b) form of stock ownership in a corporation granting one vote per share owned to elect a board of directors

A corporation's common stock is a a) a form of stock ownership in a corporation without any voting rights to elect a board of directors b) form of stock ownership in a corporation granting one vote per share owned to elect a board of directors c) a form of stock ownership with stockholders being the first to get their investment back before other stockholders d) a form of stock ownership that re-invests the dividends due on the stock back into the corporation

a) service cooperative

A credit union is an example of a a) service cooperative b) conglomerate c) producer cooperative d) consumer cooperative

d) technological unemployment

A customer service representative loses his job because his company adopted a new software that does most of his job automatically. That is an example of a) cyclical unemployment b) frictional unemployment c) seasonal unemployment d) technological unemployment

a) recession

A decline in real GDP lasting at least two quarters or more: a) recession b) business fluctuation c) peak d) business cycle

b) stock certificate

A document certifying ownership of part of a corporation is a a) charter b) stock certificate c) dividend check d) bond

c) a temporary investment through leasing or renting a company's successful business model

A franchise is a) a temporary investment through a limited partnership in a start-up business b) a temporary investment through a general partnership in a start-up business c) a temporary investment through leasing or renting a company's successful business model d) a temporary investment through stock ownership in a company's successful business model

b) diminishing marginal utility

A hungry man is willing to pay a high price for food. After he is no longer hungry, he is not willing to pay the same high price. Which of the following best defines this example? a) a complement b) diminishing marginal utility c) unit elasticity d) the substitution effect

d) service co-op

A nonprofit organization that provides services to its members is called a a) consumer co-op b) producer co-op c) market co-op d) service co-op

c) an expansion

A period of recovery from a recession is known as __________ a) an econometric model b) a trough c) an expansion d) a peak

c) file for permission with the government

A person who wishes to incorporate a business needs to a) find stockholders b) pay the government dividends c) file for permission with the government d) do all of the above

b) define resource immobility

A plant in a small town closes, leaving hundreds of people unemployed. There are jobs available at a similar plant in another state, but many of the unemployed workers are unwilling to move or cannot afford to move. An economist might use this example to ____________ a) describe what happens when there is not enough competition b) define resource immobility c) define a public good d) explain an externality

b) provider

A state government builds a highway. This is an example of government fulfilling its role as what? a) protector b) provider c) regulator d) consumer

b) cost-push inflation

A sudden rise in the price of cotton raises the price of clothing and household products. This is an example of: a) wage-price spiral b) cost-push inflation c) demand-pull inflation d) excessive monetary growth

c) a hypothetical graph line showing the direction of data

A trend line is ____ a) a trough on a graph b) a reflection of an external shock c) a hypothetical graph line showing the direction of data d) a peak on a graph

c) get a good return on an investment

A venture capitalist's main goal is usually to a) help individuals achieve their dreams b) help their communities c) get a good return on an investment d) teach entrepreneurs managerial skills

a) consumer cooperative

A voluntary nonprofit organization that buys bulk amount of goods such as food and sells it to members at prices lower than those charged by regular businesses is called a a) consumer cooperative b) service cooperative c) labor union d) credit union

b) mortgage

A woman borrows money from a bank to purchase a house. She promises to give the bank the house if she cannot repay the loan. This woman has signed a a) foreclosure b) mortgage c) trust d) cease and desist order

a) investment

According to Keynes, which sector was most responsible for the instability that led to the Great Depression a) investment b) consumer c) foreign d) government

c) government

According to Keynesian economics, which sector of the economy could offset a decline in business spending? a) consumer b) business c) government d) foreign

b) producers would make more of it

According to the Law of Supply, which of these would happen to an item as its price rose? a) producers would make less of it b) producers would make more of it c) producers would increase the price even more d) producers would lower the price on similar items

c) slows economic growth

Advocates of supply-side economics argue that spending by the federal government ___________ a) helps stimulate economic growth b) has no effect on economic growth c) slows economic growth d) can crash the economy completely

b) financial entities

All of the following parts make up the circular flow of finance except a) savings b) financial entities c) financial assets d) financial intermediaries

b) demand is elastic

An economist performs a total expenditures test and finds that a change in price and a change in revenue move in opposite directions and concludes that the test shows ____________ a) demand is inelastic b) demand is elastic c) demand is unit elastic d) there's not enough demand

c) consumer cooperative

An organization that buys bulk amounts of goods to distribute to members is a a) producer cooperative b) service cooperative c) consumer cooperative d) labor union

b) there would be a surplus of 100 pizzas

At a price of $20 the supply of pizzas is 1,100 while the demand is 1,000. What effect would this have in the market? a) there would be a shortage of 100 pizzas b) there would be a surplus of 100 pizzas c) there would be an equilibrium of 100 pizzas d) the supply curve would shift to the right

b) electronic

Because of technological developments, the banking industry is steadily moving toward _____________ banking a) demand b) electronic c) creditworthy d) reserve

a) market efficiency

By promoting transparency, the government can improve ____________ a) market efficiency b) economies of scale c) profit margins d) zoning

d) the market

The equilibrium price is determined by _____ a) the government b) tax rates c) big corporations d) the market

b) supply and demand and the buyer's assessment of the repayment risk

Bond prices are determined by ___________ a) supply and demand and the buyer's assessment of the bond's par value b) supply and demand and the buyer's assessment of the repayment risk c) the maturity life of a bond and its coupon rate d) the maturity life of a bond and its bond rating

d) thousands

By 1861, about how many kinds of paper currencies were in circulation in the United States a) one b) dozens c) hundreds d) thousands

b) require only a small investment and have various maturity dates

Certificates of Deposits (CDs) are a common investment because they _______________ a) require only a small investment and pay high interest rates at maturity b) require only a small investment and have various maturity dates c) are issued and insured by commercial banks d) are issued and insured by the US government

c) inverse

Changes in quantity demanded and changes in price have a(n) ___________ relationship a) indirect b) positive c) inverse d) neutral

d) responsibilities

Consumers are expected to read the full information about a product before making a purchase. This is an example of a consumer's a) opportunities b) rights c) habits d) responsibilities

d) all of the above

During the Civil War, Congress enacted the National Currency Act, which a) created a National Banking System b) raised money for the Union c) created a national currency d) all of the above

c) disability

Economic equity means that it is illegal to discriminate on the basis of sex, race, religion, or a) income b) status c) disability d) political views

a) quantity supplied equals quantity demanded

Equilibrium is reached when what occurs? a) quantity supplied equals quantity demanded b) there is no change in the quantity supplied c) price increases d) prices are inelastic

d) taxing corporations

Fiscal policy may involve __________ a) estimating the GDP b) regulating labor unions c) recognizing an economic problem d) taxing corporations

a) elementary schools

For which of these is demand most expected to decline by 2050 due to a decline in population growth? a) elementary schools b) medical facilities c) retirement facilities d) infrastructure maintenance

c) a product with many adequate substitutes

For which product is demand likely to be the most elastic? a) a product with no substitutes b) a product with inadequate substitutes c) a product with many adequate substitutes d) it is impossible to tell

c) it would decrease by $1,000

How would the money supply in the market change if the Fed raised the reserve requirement from 20% to 25%. Assume an initial deposit of $1,000 a) it would increase by 5% b) it would decrease by 5% c) it would decrease by $1,000 d) it would increase by $1,000

b) a price system not controlled by government intervention

Friedrich August von Hayek promoted an economic system with a) a price system controlled by government legislation b) a price system not controlled by government intervention c) a price system controlled by a central bank d) a price system not controlled by the global market

d) US inflation makes US exports more expensive overseas

How are the effects of US inflation rates felt around the world? a) The effects of US inflation rates are not felt around the world b) the number of goods and services that each dollar will buy increases c) the dollar's exchange rate rises d) US inflation makes US exports more expensive overseas

b) they can buy them directly on the internet

How can investors purchase equities? a) they *have* to use a stockbroker b) they can buy them directly on the internet c) they can buy a 491(k) plan through a bank d) they can buy futures in corporate bonds

d) recessions became shorter and periods of expansion became longer

How did business cycles change after World War II a) There were no external shocks b) business cycles became much more extreme c) recessions occurred more frequently d) recessions became shorter and periods of expansion became longer

b) analyze how economic policies may affect growth and stability

How do economists use aggregate supply and demand curves? a) to predict the effects of economic policy on consumers b) to analyze how economic policies may affect growth and stability c) to show economic trends over time d) to analyze the effects of past economic policies on consumers

a) aggregate supply increases when production costs decrease

How do production costs affect aggregate supply? a) aggregate supply increases when production costs decrease b) aggregate supply decreases when production costs decrease c) aggregate supply increases when production costs increase d) aggregate supply decreases when production costs remain the same

b) it decreases the buying power of the wage

How does inflation affect the minimum wage a) it increases the buying power of the wage b) it decreases the buying power of the wage c) it creates a conversion of the wage from current dollars to constant dollars d) it creates a conversion of the wage from constant dollars to current dollars

a) it is distributed by banks, which get it from the Fed

How does new money enter into circulation in the US? a) it is distributed by banks, which get it from the Fed b) it is distributed to taxpayers each year in the form of tax refunds c) large businesses use the Fed to exchange their old money for new d) the FDIC distributes new money when insurance claims are paid out to Fed stockholders

a) by granting them nonrecourse loans

How does the government ensure that farmers receive a target price for their goods? a) by granting them nonrecourse loans b) by establishing and maintaining price ceilings c) by purchasing and distributing their crops at market prices d) by forcing certain farm goods to maintain an equilibrium price

b) it has shifted westward

How has America's center of population changed during the past 200 years? a) it has shifted eastward b) it has shifted westward c) it has shifted northward d) it has shifted southward

b) every 10 years; it counts the population and their place of residence

How often does the official US census occur, and what does it do? a) monthly; it counts all families and special groups of the population b) every 10 years; it counts the population and their place of residence c) every 10 years; it classifies urban and rural population and regulates family sizes d) every 5 years; it indicates how many Congressional representatives each state should have

d) subsidizing a positive externality

How would an economist characterize a local government increasing property taxes to improve the school system? a) laissez-faire in action b) an example of collusion c) a cease and desist order d) subsidizing a positive externality

c) as skilled

Kate is an electrician. How would an economist categorize her job? a) as unskilled b) as semiskilled c) as skilled d) as professional

d) all of the above

If a shoe company pays a professional athlete to wear shoes it makes, it is an example of a) imperfect competition b) product differentiation c) nonprice competition d) all of the above

b) equal to the GDP

If all production takes place within a country's border, the aggregate supply over one year will be _____ a) less than the GDP b) equal to the GDP c) unaffected by aggregate demand d) higher than aggregate demand

b) further its work

If the activities of a nonprofit organization produce revenues, the organization uses the money to a) pay dividends to its members b) further its work c) join a chamber of commerce d) grow the business

c) an incentive

In American free enterprise capitalism, the profit motive can be best thought of as what? a) a market b) a regulation c) an incentive d) an efficiency

b) sometimes necessary to help stimulate the economy

In Keyne's view, a short-term budget deficit due to government spending or tax cuts is _____ a) to be avoided at all costs b) sometimes necessary to help stimulate the economy c) economically impossible d) morally wrong

d) neutral

In a competitive market economy, prices are considered a) dictated b) uncompromising c) favorable d) neutral

b) inventory

In a retail business, the stock held in reserve is called a) raw materials b) inventory c) capital d) profits

c) elected union officials

In collective bargaining negotiations, who represents the interests of the workers? a) a third party b) a fact-finder c) elected union officials d) elected company officials

a) government

In the Keynesian model, GDP = C + I + G + (X-M), "G" stands for a) government b) growth c) gross domestic product d) general revenue

b) certificate of deposit

In the banking industry, the term "CD" stands for a) credit of deposit b) certificate of deposit c) certificate of down payment d) creditor's debt

c) banks

In the early 1880s, currency in the United States was issued by: a) the Fed b) Congress c) banks d) a central bank

a) "few"

In the economic term oligopoly, the word part olig- probably means a) "few" b) "single" c) "all" d) "one"

c) investment sector

In the model GDP = C + I + G + (X-M), "I" stands for a) input b) imports c) investment sector d) interest rate

a) work more to pay for basic necessities

Inflation causes people to a) work more to pay for basic necessities b) take more time off work c) work the same hours for the same pay d) spend less for the same amount of goods and serviceds

c) cost-push inflation

Inflation characterized by rising input costs, especially energy and organized labor, which drive up the cost of products for manufacturers is called a) hyperinflation b) creeping inflation c) cost-push inflation d) demand-pull inflation

d) financial investments they understand

Investment analysts recommend people to make investments in _____________. a) investments that promise the highest returns b) investments that are financially complicated c) financial investments recommended to them by friends d) financial investments they understand

c) they are a high-risk investment

Junk bonds usually have low ratings because ____________ a) they are not risky investments b) they have a low rate of return c) they are a high-risk investment d) they have a low risk of default

d) sole proprietorships

Limited life applies to a) corporations b) multinationals c) nonprofit organizations d) sole proprietorships

a) the shareholders

Most mergers take place to improve a company's performance in the eyes of a) the shareholders b) the employees c) government regulators d) tax collectors

d) competition

The struggle among sellers to attract consumers by offering the best products at the lowest prices is known as a) voluntary exchange b) profit motive c) property rights d) competition

b) the government

Markets in the free enterprise system are seldom regulated by a) businesses b) the government c) consumers d) entrepreneurs

d) economic security

Protection from layoffs, illnesses, injuries, or disabilities falls under the goal of a) economic equity b) economic efficiency c) economic growth d) economic security

a) as corporations

Most banks are established: a) as corporations b) by local governments c) to be credit unions d) to fulfill reserve requirements

a) a change in price

On a demand curve, movement along the curve, as opposed to a shift in the entire curve, is a result of _______ a) a change in price b) an increase in demand c) a decrease in demand d) a change in demand

d) slopes down

On a supply and demand graph, the demand curve generally does what? a) slopes up and then down b) slopes down and then up c) slopes up d) slopes down

c) the corporation is subject to many government regulations

One of the disadvantages of forming a corporation is that a) the corporation provides limited liability for its owners b) the corporation can sell stock to raise revenue c) the corporation is subject to many government regulations d) the corporation pays limited taxes

d) both a and b

Policies that make production more efficient are favored by ______ a) supply-siders b) demand-siders c) neither a nor b d) both a and b

a) because other vegetables are available

Prices for common vegetables tend to be elastic. Why? a) because other vegetables are available b) because consumers must eat c) because vegetables cannot be substituted d) because vegetables are inexpensive

a) a medium of exchange

Printed on a Federal Reserve note is this statement: "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE." This reflects money's function as: a) a medium of exchange b) a measure of value c) a store of value d) any of the above

d) are opposites

Pure competition and monopoly ________ a) are the same b) are almost the same c) should not be compared d) are opposites

c) nonprofit organizations

Schools, churches, and community organizations are examples of a) cooperatives b) conglomerates c) nonprofit organizations d) labor unions

d) all of these

The Fed can raise interest rates by a) increasing the reserve requirement b) selling securities in the open market c) raising the discount rate d) all of these e) none of these

c) insure customer deposits if a bank fails

The Federal Deposit Insurance Corporation (FDIC) was created to a) insure customers' money against inflation b) allow customers to make deposits at federal banks c) insure customer deposits if a bank fails d) insure banks if a customer doesn't make enough deposits

b) provide modest bank insurance for depositors

The Federal Deposit Insurance Corporation (FDIC) was created to _______ a) prevent working people from being exploited by employers b) provide modest bank insurance for depositors c) regulate new companies that were soliciting funds from investors d) help people provide for their own retirement

d) central

The Federal Reserve is the nation's ________________ bank a) only b) first c) oldest d) central

a) ensure competition

The Sherman Act, the Clayton Act, and the Federal Trade Commission Act were all designed to a) ensure competition b) promote trusts c) created public goods d) extend mortgages

c) transferable

The characteristics of money include all of the following except: a) divisible b) portable c) transferable d) durable

b) Keynesian economics

The concept of fiscal policies are derived from _________ a) Reaganomics b) Keynesian economics c) supply-side economics d) demand-side economics

a) interest rates

The discount rate and the prime rate are both types of what? a) interest rates b) quantitative easing c) monetarism d) passive fiscal policies

a) charter

The government document that grants permission to establish a corporation is called a a) charter b) stock certificate c) partnership agreement d) limited liability agreement

b) not all monopolies are bad

The government does not try to eliminate all monopolies. Why? a) it would be impossible b) not all monopolies are bad c) the government itself is a monopoly d) there aren't any monopolies anymore

d) all of these

The income earned by females has only been a fraction of that earned by males partially because of a) the uneven distribution of men and women among various occupations b) differences in human capital c) discrimination d) all of these

a) theoretical

The market structure called perfect competition is best described as a) theoretical b) commonplace c) small d) natural

d) premium

The monthly or quarterly fee for an insurance policy is called the a) pension b) fund c) asset d) premium

c) issuing debt

The most common way for governments to cover budget deficits is by _____ a) raising taxes b) printing money c) issuing debt d) defaulting

a) gross domestic product

The most comprehensive measure of a nation's wealth is provided by its a) gross domestic product b) TINSTAAFL rating c) product possibilities curve d) capital goods

d) beneficiary

The person who inherits ownership of a financial asset if the purchaser dies is called the a) recipient b) benefactor c) donor d) beneficiary

b) consumer sovereignty

The phrase "the customer is always right" is most often associated with what term? a) entrepreneurship b) consumer sovereignty c) mixed economy d) regulatory government

c) an automatic stabilizer

The progressive income tax is an example of ______ a) an entitlement b) priming the pump c) an automatic stabilizer d) government dependency

d) coupon rate

The rate of return on a corporate, municipal, or government bond is its _________ a) par value b) compensation rate c) interest rate d) coupon rate

b) credit cards

The risk of ending up with the equivalent of a never-ending loan is one of the disadvantages of using a) debit cards b) credit cards c) savings accounts d) checking accounts

c) What portion of the consumer's income is required for the purchase?

To determine elasticity, which question would an economist ask? a) Can the consumer afford the purchase? b) Is the product highly valued by the consumer? c) What portion of the consumer's income is required for the purchase? d) Are there complementary products the consumer might also purchase?

d) direction, direction

To estimate elasticity, compare the __________ of a price change to the _________ of the change in total revenue a) amount, amount b) amount, direction c) direction, amount d) direction, direction

d) income statement

To get a picture of a business's overall expenses and profits, you should look at its a) inventories b) depreciation c) dividends d) income statement

False

True/False --> The US Constitution requires a national census every 25 years

True

True/False --> The bursting of the housing bubble in 2006-2007 negatively affected consumer buying power and was largely responsible for the Great Recession in 2008-2009

False

True/False --> The depression scrip is an index of 30 representative stocks used to monitor price changes in the overall stock market

False

True/False --> "Easy money policy" is a method of tightening credit and discouraging investment

False

True/False --> *Certificates of deposit* are also known as DDAs or "Demand Deposit Accounts."

False

True/False --> A business cycle begins when the economy reaches a low and begins to climb out of a recession

False

True/False --> A grievance procedure is an informal method of settling workplace disputes

False

True/False --> A statistical series that normally turns down after the economy turns down or turns up after the economy turns up is a leading economic indicator

True

True/False --> An econometric model is used to describe how the economy is expected to perform in the near future

False

True/False --> An equilibrium price is the goal of a price floor or a price ceiling

True

True/False --> Arbitration places a dispute before a third party for a binding settlement

True

True/False --> Certificates of deposit actually are not deposits, but loans from consumers to banks

True

True/False --> Demographers study characteristics of a population

False

True/False --> In the United States, prices are determined entirely by the actions of buyers and sellers

True

True/False --> Investors can buy equities that represent shares of ownership in corporations

True

True/False --> Many employees regularly contribute to a 401(k) plan to build a personal pension fund

True

True/False --> Monetary policy concerns itself with the cost and availability of a credit

False

True/False --> Most of our nation's infrastructure is privately owned and operated

False

True/False --> Mutual funds have small portfolios since they invest in only very large corporations

True

True/False --> Open market operations involved the sale of government securities in financial markets

True

True/False --> People who do not live in incorporated cities are considered part of the rural population

False

True/False --> Portfolio diversification is a popular investment strategy because it quickly earns high profits

True

True/False --> Price floors and price ceilings keep items from attaining their equilibrium prices

True

True/False --> Signaling theory assumes that people with college degrees are worth more in the marketplace than those with only high school diplomas

b) supply and demand

Under perfect competition, what sets the equilibrium price in the market? a) nonprice competition b) supply and demand c) the government d) a monopoly

b) 20 percent

Under the fractional reserve system, which would most likely be a reserve requirement? a) 0 percent b) 20 percent c) 100 percent d) 120 percent

a) the pay rate for that skill increases

Under the market theory of wage determination, what happens when the demand for a skill is high, but the supply of workers for that skill is low? a) the pay rate for that skill increases b) the pay rate for that skill decreases c) employers are likely to seek workers among applicants with advanced degrees d) employers are likely to negotiate with unions to find workers with the needed skill

a) welfare; economic and social help because of need

Under what heading do most federal programs for the needy fall? a) welfare; economic and social help because of need b) social service; day care, foster care, and job training from individual states c) income assistance; economic help for families and people with disabilities d) general assistance; food stamps and Medicaid for people who have low incomes

c) the government

We say the US has a "modified" free enterprise economy because everything we do and everything we buy is in some way affected by a) business b) money c) the government d) inventors

a) money supplies

What are M1 and M2? a) money supplies b) specie c) fiat money d) currency

a) the reserve requirement, open market operations, and the discount rate

What are the Fed's three main tools for conducting monetary policy? a) the reserve requirement, open market operations, and the discount rate b) easy money policy, the discount rate, and the quantity theory of money c) easy money policy, tight money policy, and the quantity theory of money d) the reserve requirement, open market operations, and wage-price controls

c) changes in supply and demand

What are the causes of price changes most of the time? a) change in demand only b) changes in supply only c) changes in supply and demand d) government policy

d) the desire, ability, and willingness to buy a product

What are the characteristics of demand? a) the desire and ability to buy a product b) the ability and willingness to buy a product c) the willingness and desire to buy a product d) the desire, ability, and willingness to buy a product

d) external shocks

What condition can stop the economy from growing and turn an expansion into a contraction? a) decrease in foreign investment b) low-interest capital expenditures c) increase in exports d) external shocks

c) products

What condition differentiates a market of pure competition from one of monopolistic competition a) price b) competition c) products d) firms

c) they keep a portion as legal reserves and loan out a portion at interest

What do Fed member banks do with customer deposits? a) they use them to conduct monetary policy b) they use them to enforce wage-price controls c) they keep a portion as legal reserves and loan out a portion at interest d) they use a portion to calculate interest rates and keep a portion as legal reserves

b) a market failure

What do externalities indicate? a) public goods b) a market failure c) a lack of information d) resource immobility

b) buy more

What do low prices signal buyers to do? a) nothing b) buy more c) buy less d) substitute

a) competitive market

What do most economists believe is the most efficient way to allocate resources a) competitive market b) rationing c) government action d) distorted incentives

c) prices reaching equilibrium

What do price ceilings and price floors prevent? a) shortages b) surpluses c) prices reaching equilibrium d) benefits to consumers

d) decisions

What do prices help buyers and sellers make? a) products b) models c) targets d) decisions

b) shares of a portfolio of securities (stocks)

What does a mutual fund sell? a) stocks for individual investors b) shares of a portfolio of securities (stocks) c) stocks in large corporations to individual investors d) stocks for investment houses

d) the GDP has stopped declining and has begun to increase

What does a trough indicate? a) the GDP has stopped increasing and has begun to decline b) the GDP is stagnant c) there is a GDP gap d) the GDP has stopped declining and has begun to increase

d) that distribution of income has become increasingly unequal over time

What does the Lorenz curve of the US economy show? a) that distribution of income has increased over time b) that distribution of income has remained the same over time c) that distribution of income has become more equal over time d) that distribution of income has become increasingly unequal over time

b) decrease

What effect would a bumper crop (high yield crop) most likely have on the price of that crop? a) increase b) decrease c) equilibrium d) no effect

b) economic freedom

What gives people and businesses the opportunity to make their own decisions a) profit motive b) economic freedom c) command economy d) free enterprise

b) the number supplied equals the number demanded

What happens at the "equilibrium price"? a) the quantity of sellers is the same as the quantity of buyers b) the number supplied equals the number demanded c) the prices are all the same d) the price stops changing

c) receiving equal pay for equal work

What is one of the benefits related to economic equity? a) conserving resources b) living on a fixed income c) receiving equal pay for equal work d) unemployment compensation programs

a) to track monthly changes in prices paid by urban consumers

What is the basic purpose of the consumer price index (CPI)? a) to track monthly changes in prices paid by urban consumers b) to track consumer spending on thousands of goods and services c) to predict future price increases for representative goods and services d) to predict and avoid deflation, or a decline in the general level of prices

a) select a representative selection of commonly purchased goods and services

What is the first step in constructing a price index? a) selecting a representative selection of commonly purchased goods and services b) sample prices of items in stores across the country c) divide the cost of every market basket by the base-year market basket cost d) find the average price of each item in the market basket

a) a change in quantity demanded caused by a change in consumer income

What is the income effect? a) a change in quantity demanded caused by a change in consumer income b) a change in demand caused by substitution c) a proportional change in quantity demanded based on income d) an increase in purchase of complements based on an increase in income

b) it offers diversity in investment

What is the main advantage of a mutual fund for an investor? a) its price doesn't change much b) it offers diversity in investment c) it has a set maturity date d) it can be sold at a profit

c) change in price

What is the main cause of a change in quantity demanded? a) substitution b) changes in revenue c) change in price d) the income effect

a) the amount of time for maturity

What is the main difference between Treasury bonds, Treasury notes, and Treasury bills? a) the amount of time for maturity b) the interest rate c) the minimum purchase requirement d) the method of sale

b) providing entrepreneurs with training to be successful

What is the main purpose of incubators a) helping entrepreneurs think of new business ideas b) providing entrepreneurs with training to be successful c) helping entrepreneurs find investors d) both A and C

b) Medicare

What is the name of the federal health insurance program for senior citizens a) Social Security b) Medicare c) Medicaid d) Social Care

d) an increase in income increases demand

What is the relationship between income and demand? a) a decrease in income increases demand b) a decrease in price decreases income c) an increase in price increases income d) an increase in income increases demand

d) local

What level of government is most closely associated with zoning? a) federal b) interstate c) state d) local

a) it has the power to raise or lower interest rates

What makes the Federal Open Market Committee the Fed's primary policy-making body? a) it has the power to raise or lower interest rates b) it has the power to establish or dissolve Federal Reserve district banks c) it has the power to create or repeal financial protections for consumers d) it has the power to appoint or dismiss members of the Board of Governors

d) the fractional reserve system

What requires banks to keep (rather than lend) a portion of their total deposits? a) the discount rate b) wage-price controls c) open market operations d) the fractional reserve system

d) community service work

What sort of work is usually required of those participating in workfare programs? a) clerical work b) manufacturing work c) service industry work d) community service work

c) total expenditures

What test do economists use to measure elasticity a) utility b) revenue c) total expenditures d) demand

a) cyclical

What type of unemployment is due to changes in the Business Cycle a) cyclical b) long-term c) frictional d) structural

b) they will decrease

What will happen to interest rates if the Fed Open market committee buys securities? a) they will increase b) they will decrease c) they will stay the same d) not enough information to answer this question

a) people have places to safely save and borrowers have sources of financial capital

Which of the following best describes the role of the consumer in the flow of the financial system? a) people have places to safely save and borrowers have sources of financial capital b) people have places to invest in financial markets and borrowers have guaranteed economic growth c) people can spend all their money on goods, thus providing a source of financial capital d) people can save all their money, creating a lack of financial capital

b) signaling theory

Which of the following best expresses the idea that higher education often results in higher earnings? a) fact-finding b) signaling theory c) the theory of negotiated wages d) the market theory of wage determination

c) not enough information

Which of the following can cause market failure? a) too much mobility b) too much competition c) not enough information d) too much information

b) a credit card

Which of the following can cost you money in large interest payments? a) a debit card b) a credit card c) a checking account d) a savings account

b) the economy cannot produce quickly enough for all sectors, and shortages occur

Which of the following describes demand-pull inflation? a) the last stage before monetary collapse b) the economy cannot produce quickly enough for all sectors, and shortages occur c) a 1-3 percent rise in prices over the course of a year d) rising costs in energy which cause higher prices of products

a) the ratios show the relationship between federal income tax rates and revenue

Which of the following describes the idea of the Laffer Curve as it is expressed mathematically a) the ratios show the relationship between federal income tax rates and revenue b) the ratios show the relationship between supply-side and demand-side policies c) the ratios show the relationship between the personal income tax and consumer spending d) the ratios show the relationship between increased government regulation and corporate profits

d) all of the above

Which of the following do economists use to classify markets? a) number of firms b) size of firms c) type of product d) all of the above

d) inadequate competition

Which of the following factors contribute to market failure? a) adequate competition b) knowledge of prices and opportunities c) mobility of resources d) inadequate competition

c) a finance company

Which of the following financial organizations specializes in buying installment contracts from merchants who sell on credit? a) a credit union b) an insurance company c) a finance company d) a bank

a) producers

Which of the following groups does supply-side policy target through stimulation? a) producers b) consumers c) workers d) government

b) GDP would follow a trend line

Which of the following indicates what would happen to the economy if it were not interrupted by alternating periods of recession and recovery? a) depression scrip b) GDP would follow a trend line c) econometric model d) trough

c) a checking account

Which of the following is a DDA? a) a debit card b) a credit card c) a checking account d) a savings account

d) all of the above

Which of the following is a basic characteristic of money? a) portability b) durability c) divisibility d) all of the above

a) economies of scale

Which of the following is a benefit for monopolies? a) economies of scale b) the Federal Trade Commission Act c) cease and desist order d) foreclosure

b) workers who have been without a job for 27 weeks or more

Which of the following is a characteristic of the long-term unemployed a) workers whose skills have become obsolete because of new technology or automated systems b) workers who have been without a job for 27 weeks or more c) workers who are out of a job because of seasonal changes in the weather d) workers who are out of a job because of swings in the business cycle

b) a partnership in which at least one partner has less responsibility in the business operations and less liability for business losses

Which of the following phrases best defines the term limited partnership? a) an organization that limits liability to the corporation rather than the individual owners b) a partnership in which at least one partner has less responsibility in the business operations and less liability for business losses c) a business that is limited to three or fewer investors d) a business model that combines aspects of corporations and partnerships

a) the substitution effect

Which of the following replaces a costly item with a less costly one? a) the substitution effect b) the income effect c) change in demand d) consumer taste

b) a period during which real GDP declines for at least two quarters in a row

Which of the following statements best defines a period of recession in the business cycle? a) a period during which real GDP increases for at least two quarters in a row b) a period during which real GDP declines for at least two quarters in a row c) the economy reaches the point where real GDP stops going up d) the economy reaches a turnaround point where real GDP stops going down

a) a united work force was more likely to bring about changes in the workplace

Which of the following statements best explains why workers began to form unions? a) a united work force was more likely to bring about changes in the workplace b) a well-organized system of workers was more likely to maximize profits c) the introduction of immigrant labor was more likely to raise workplace standards d) the introduction of unions was more likely to offer workers training in using newer technology

b) lockout

Which of the following tactics is used only by management a) picket b) lockout c) boycott d) negotiation

a) legal tender

Which of the following terms best describes "greenbacks"? a) legal tender b) counterfeit currency c) backed by gold d) worthless

a) bull market

Which of the following terms describes a strong stock market b) bull market b) bear market c) spot market d) futures market

a) craft unions and industrial unions

Which of the following were the first types of unions formed in the United States a) craft unions and industrial unions b) craft unions and interdependent unions c) company unions and industrial unions d) company unions and interdependent unions

a) the Dow Jones Industrial Average

Which of the following would give an investor an overall picture of the value of the market? a) the Dow Jones Industrial Average b) the spot market c) the options market d) the Efficient Market Hypothesis

b) timber used to build the new house

Which of the following would not be considered part of a nation's GDP? a) a new house b) timber used to build the new house c) fencing supplies from the hardware store, for an older house d) nails from the hardware store, used to build the fence for the older house

d) compromise

Which of these best describes an economic process similar to "haggling"? a) choice b) fluctuation c) perceived value d) compromise

b) it generates jobs and therefore increases income

Which of these best describes how a business's creation of output affects individuals a) it results in the establishment of a base year b) it generates jobs and therefore increases income c) it increases the number of nonmarket transactions d) it reduces the number of secondhand sales and therefore decreases income

c) a set of compromises between buyers and sellers

Which of these best describes prices in a market economy? a) a signal for consumers to purchase less b) a signal for producers to manufacture less c) a set of compromises between buyers and sellers d) a set of compromises between the government and citizens

a) they were considered troublemakers

Which of these best describes public reaction to the earliest labor organizers? a) they were considered troublemakers b) they were seen as champions of the poor c) most appreciated their efforts on behalf of immigrants d) voters often pressured them into running for public office

a) it is a mostly independent agency that supervises and manages the financial system

Which of these best describes the Federal Reserve System a) it is a mostly independent agency that supervises and manages the financial system b) it is the agency through which Congress supervises and manages the financial system c) it is the agency through which the judiciary supervises and manages the financial system d) it is the agency through which the executive branch supervises and manages the financial system

d) the West and the South have seen greater growth than the North and the East

Which of these describes the overall trend in US population since the 1970s? a) the North and the East have seen greater growth than the West and the South b) the East and the West have seen greater growth than the North and the South c) the North and the South have seen greater growth than the East and the West d) the West and the South have seen greater growth than the North and the East

c) fluctuation

Which of these describes the process of an item finding its economic equilibrium a) variation b) direction c) fluctuation d) expectation

a) demographers compile population information needed to maintain the infrastructure

Which of these describes the relationship of demographers to our nation's infrastructure? a) demographers compile population information needed to maintain the infrastructure b) demographers track the GDP to keep our infrastructure competitive with other nations c) demographers study the infrastructure of rural areas, so it can be duplicated in urban areas d) demographers track the center of population, so the infrastructure can be moved as needed

d) a shift of the supply curve for that item to the right

Which of these do producers of an item hope to achieve when adopting new technologies? a) inelasticity of supply of that item b) a repeal of subsidies for production of that item c) a shift of the supply curve for that item to the left d) a shift of the supply curve for that item to the right

b) equal income distribution and actual income distribution

Which of these does a Lorenz curve compare? a) levels of income and rates of taxation b) equal income distribution and actual income distribution c) the distribution of wealth and the distribution of income d) levels of education and levels of participation in assistance programs

d) Private national banks are required to purchase shares in the Fed

Which of these ensures that the US government does not own the Fed? a) private state banks are required to buy shares in the Fed b) Private State banks are not allowed to buy shares in the Fed c) private individuals are not allowed to buy shares in the Fed d) Private national banks are required to purchase shares in the Fed

a) World War II

Which of these events sparked the most extensive rationing in United States history? a) World War II b) Hurricane Sandy c) the 1970s energy crisis d) the 1999 Baltimore Orioles exhibition game

c) the Federal Open Market Comittee

Which of these exerts the most direct control over interest rates? a) the Board of Governors b) the Federal Reserve district banks c) the Federal Open Market Committee d) the Consumer Financial Protection Bureau

b) SNAP

Which of these government programs provides qualified people with food stamps? a) SSI b) SNAP c) TANF d) Medicaid

b) the nuclear industry

Which of these industries has the least elastic supply curve? a) the toy industry b) the nuclear industry c) the clothing industry d) the entertainment industry

a) the prime rate

Which of these interest rates is set by individual banks? a) the prime rate b) the reserve rate c) the discount rate d) the monetary rate

a) the Fed sells government securities

Which of these is a feature of open market operations a) the Fed sells government securities b) the Fed lowers the prime interest rate c) the Fed raises the reserve requirement d) the Fed purchases member bank reserves

d) administrative expense

Which of these is a major problem in the execution of a rationing system? a) market spikes b) price neutrality c) price flexibility d) administrative expense

c) adjusting interest rates to stimulate the economy

Which of these is a prominent feature of monetary policy? a) adjusting government expenditures to stimulate the economy b) adjusting tax rates to stimulate the economy c) adjusting interest rates to stimulate the economy d) adjusting discretionary spending to stimulate the economy

d) it is unreported

Which of these is always true of an "underground economy" transaction? a) it is legal b) it is illegal c) it is taxed d) it is unreported

a) tax cuts

Which of these is an example of a discretionary fiscal measure? a) tax cuts b) Social Security c) automatic stabilizers d) state unemployment programs

b) babysitting as a favor to a friend

Which of these is an example of a nonmarket transaction? a) maintaining a newspaper route b) babysitting as a favor to a friend c) working for a landscaper to earn spending money d) paying a consultant for ideas on how to improve a product

b) the money supply is linked to the prices of goods and services in the short run

Which of these statements best states the quantity theory of money a) the money supply is directly linked to the rate of inflation in the short run b) the money supply is linked to the prices of goods and services in the short run c) the prime interest rate is a given portion of the overall supply of money d) the unemployment rate is directly linked to the amount of money in circulation

d) the average college graduate makes three times more than the average high-school dropout

Which of these statements best supports signaling theory a) few significant management concessions result from the process of mediation b) most significant concessions result from the process of arbitration c) the average union member has greater job security than the average non-union worker d) the average college graduate makes three times more than the average high-school dropout

c) The Fed is separated from other, more political, parts of the government

Which of these statements could be part of an accurate description of the Federal Reserve System? a) Like Supreme Court justices, officials of the Fed are appointed for life. b) the Fed is both supervised and administrated exclusively by Congress c) the Fed is separated from other, more political, parts of the government d) the political part occupying the White House is responsible for running the Fed

b) a college graduate makes more than twice as much as a high school dropout

Which of these statements most clearly indicates a way to avoid poverty? a) workfare is a program in which welfare recipients work for their benefits b) a college graduate makes more than twice as much as a high school dropout c) tax rates on high incomes have been reduced more than rates on lower incomes d) advantages in technology mean that many service jobs require fewer skills than before

d) the Fed purchased large amounts of risky securities from private banks

Which of these strategies was employed by the Fed for the first time during the Great Recession a) the Fed lowered the interest rates on Treasury securities b) the Fed implemented the Troubled Asset Relief Program c) the Fed enforced the American Recovery and Reinvestment Act d) the Fed purchased large amounts of risky securities from private banks

a) a surplus of that item

Which of these tends to force the price of an item downward? a) a surplus of that item b) a shortage of that item c) attainment of an equilibrium price for that item d) attainment of an equilibrium quantity for that item

b) a shortage of that item

Which of these tends to force the price of an item upward a) a surplus of that item b) a shortage of that item c) attainment of an equilibrium price for that item d) attainment of an equilibrium quantity for that item

d) demand-side economics

Which of these was a reaction to unemployment and other problems during the Great Depression a) quantitative easing b) passive fiscal policies c) supply-side economics d) demand-side economics

a) a decrease in demand for new automobiles

Which of these would most likely negatively impact a country's overall level of income? a) a decrease in demand for new automobiles b) a decrease in demand for used automobiles c) increased tourist activity during the summer months d) increased commercial activity during the year-end holiday season

d) a government contract with a large private firm for road construction

Which of these would most likely positively affect a nation's GDP? a) an increase in the number of non-market sales b) a steady growth of that nation's underground economy c) a government-managed restructuring of the airline industry d) a government contract with a large private firm for road construction

d) the theory of negotiated wages

Which of these would most likely produce an exception to the market theory of wage determination a) seizure b) signaling theory c) the equilibrium wage rate d) the theory of negotiated wages

b) an army general who works in Washington DC

Which person would not be included in the civilian labor force? a) an accountant who works on contract b) an army general who works in Washington DC c) a government employee who works in Indiana d) a sixteen year-old customer service representative

c) a vital medicine

Which product most likely has a demand that is inelastic? a) a meal at a restaurant b) green beans c) a vital medicine d) a vacation

b) Troubled Asset Relief Program

Which program, sponsored by President George W. Bush and passed by Congress, bailed out banks in the Great Recession? a) National Recovery Administration b) Troubled Asset Relief Program c) American Recovery and Reinvestment Act d) Emergency Banking Bill

d) purchasing days determined by license plate numbers

Which rationing method was instituted for gasoline in the mid-1970s? a) distribution of ration vouchers b) administration of gas sales through post offices c) manufacturing of more fuel-efficient automobiles d) purchasing days determined by license plate numbers

a) money was invented to facilitate the exchange of goods and services

Which statement best explains why money was invented? a) money was invented to facilitate the exchange of goods and services b) money was invented to support a barter economy c) money was invented to strengthen the government power and control d) money was invented to life people out of poverty

a) markets can sometimes fail

Which statement is most accurate? a) markets can sometimes fail b) markets can theoretically fail, but not in reality c) market failure is a myth d) market failure is an unproven hypothesis

b) a worker's pay rate is set by supply of and demand for that worker's skills

Which statement is the best explanation of the market theory of wage determination? a) management tends to pay a lower wage to workers who support unions b) a worker's pay rate is set by supply of and demand for that worker's skills c) Management is more willing to pay a high wage to a worker with advanced education d) a worker's value in the labor market is determined primarily by that worker's seniority

b) banks with national charters must join the Fed

Which statement is true about Federal Reserve System membership? a) banks with state charters must join the Fed b) banks with national charters must join the Fed c) banks with state charters are prohibited from joining the Fed d) banks with national charters are prohibited from joining the Fed

a) price ceiling

Which term best describes rent control? a) price ceiling b) subsidy c) equilibrium price d) nonrecourse

c) public goods

Which term describes commodities such as police and fire protection? a) trusts b) externalities c) public goods d) identical products

b) unit elastic

Which term refers to a changing price that causes a proportional change in total revenue? a) elastic b) unit elastic c) inelastic d) total expenditures

d) credit union

Which type of financial organization is a nonprofit service cooperative? a) commercial bank b) mutual fund c) insurance company d) credit union

d) donuts

Which would an economist consider a likely complement for coffee? a) water b) tea c) chicken d) donuts

c) an illegal combination

Which would an economist say best describes a "trust"? a) a feeling in a market b) a public good c) an illegal combination d) a federal order

b) tenants in rent-controlled apartments

Who among the following benefits the most from rent control? a) people with children and pets b) tenants in rent-controlled apartments c) owners of rent-controlled aparments d) new tenants seeking apartments

b) president

Who appoints members of the Fed's Board of Governors? a) Senate b) President c) House of Representatives d) Chair of the Board of Governors

d) federal and state governments

Who issues tax exempt municipal bonds a) local commercial banks b) local credit unions c) state and local governments d) federal and state governments

a) government

Who or what does the modification in a modified free enterprise economy? a) government b) consumers c) entrepreneurs d) businesses

c) the consumer

Who ultimately determines the success of a product? a) the government b) the business producing the product c) the consumer d) the store selling the product

b) because their value is included in that of the final product

Why are intermediate products excluded from macroeconomic calculations of GDP? a) because their products are goods, not services b) because their value is included in that of the final product c) because the GDP is a measure of market output on a local level d) because the GDP is a measure of market output on a national level

d) the demand for gas is largely inelastic

Why does an increase in gas prices lead to less consumer spending on other items? a) the price of gas is largely elastic b) the price of gas is largely inelastic c) the demand for gas is largely elastic d) the demand for gas is largely inelastic

d) because many people have moved from the Northeast to other areas of the country

Why has the center of population of the United States changed over time? a) because most industrial businesses have shifted their locations to the East b) because many businesses have relocated from the West to the South and East c) because most immigrants have chosen to live in the West rather than the East d) because many people have moved from the Northeast to other areas of the country

d) their prices tend to fluctuate widely

Why have agricultural products been the object of many price stabilization efforts? a) their prices would not otherwise reach equilibrium b) their prices are exempt from supply and demand c) their prices are easily controllable d) their prices tend to fluctuate widely

a) because quantity demanded increases as price decreases

Why is a demand curve downward sloping? a) because quantity demanded increases as price decreases b) because of the natural elasticity of the market c) because it shows how increasing incentives changes demand d) because it reflects the desire, ability, and willingness of consumers

a) it has the power to raise and lower interest rates

Why is the Federal Open Market Committee considered the Fed's primary monetary policy-making body? a) it has the power to raise and lower interest rates b) it has the power to enforce consumer protection regulations c) it maintains the payments system for checks and electronic money transfers d) it ensures that the public has accurate information about the terms of credit cards and loans

c) because it has been demonstrated repeatedly

Why is the Law of Demand called a "law"? a) because it is legally required b) because there are no exceptions to it c) because it has been demonstrated repeatedly d) because it is an economic term

b) there may be a period of adjustment to that technology

Why might a producer's introduction of a new technology result in a brief shift of a product's supply curve to the left? a) that technology may reduce production costs b) there may be a period of adjustment to that technology c) there may be an increase in output despite the same amount of input d) that technology may increase production more rapidly than expected

c) government

Without prices, the three basic questions of WHAT, HOW, and FOR WHOM to produce are answered by a) consumers b) producers c) government d) markets

d) portability

You can easily carry money in a pocket or purse. This reflects what characteristic of money? a) legal tender b) limited supply c) durability d) portability

d) all of the above

You pick up a $1 bill. What are you holding? a) currency b) a Federal Reserve note c) fiat money d) all of the above

True

True/False --> Economic growth is necessary as a nation's population increases

False

True/False --> Economic growth usually can be achieved without investing in new resources

False

True/False --> In all societies, the government decides what to produce

False

True/False --> In general, people do not want their economic system to create as many jobs as possible

False

True/False --> Japan, with an aging population, has had difficulty replacing people with machines

True

True/False --> Mixed economies can evolve when societies with different kinds of economies interact

False

True/False --> Mixed economies work to the degree that they embrace democracy

False

True/False --> People's skills, abilities, health, knowledge, and motivation all add up to human capital

False

True/False --> People's wants and needs are limited

True

True/False --> Scarcity is an economic problem with which all societies are faced

True

True/False --> Separation of tasks to be performed by different workers is division of labor

True

True/False --> Social Security is one example of how Americans have modified their free enterprise economy

True

True/False --> Socialist economies include aspects of both command and free enterprise systems

True

True/False --> The minimum wage was established at national and state levels as the lowest legal wage that can be paid to the majority of workers

c) the former Soviet Union

What command economy went from an agricultural society to an industrial nation in a few decades? a) North Korea b) Cuba c) the former Soviet Union d) China

a) capitalism can restore a damaged economy

What conclusion can be drawn about capitalism from South Korea's economic growth in the late 20th century? a) capitalism can restore a damaged economy b) there is no real difference between socialism and capitalism c) socialism can revive an economy over a prolonged period of time d) a transition from capitalism to a command economy can involve struggle

a) South Korea

What country successfully rebuilt its economy after a war in the 1950s by opening its markets to world trade? a) South Korea b) China c) France d) Vietnam

a) free market capitalist economy

The economic system of the United States is considered a a) free market capitalist economy b) command economy c) socialist economy d) traditional economy

a) productivity

The efficient use of scarce resources leads to an increase in a) productivity b) investment c) scarcity d) capital

d) all of the above

The study of economics involves a) explaining how people deal with scarcity b) studying how things are made, bought, sold, and used c) explaining how incomes are earned and how jobs are created d) all of the above

b) nondurable good

A can of soup is an example of a a) durable good b) nondurable good c) capital good d) service

d) inflation

A general rise in the level of prices over time is known as a) a catalyst b) voluntary exchange c) profit d) inflation

c) accumulation of all tangible products

A nation's wealth is determined by its a) accumulation of all tangible and intangible resources b) natural resources c) accumulation of all tangible products d) product possibilities frontier

c) all tangible items

A nation's wealth is made up of a) all intangible items b) all goods and services c) all tangible items d) all tangible and intangible items

False

True/False --> Both goods and services are counted as wealth

False

True/False --> Communist countries like North Korea and Cuba are example of mixed economies

d) scarcity

Consumers waiting in long lines for a new product is an example of a) consumerism b) consumer rights c) consumer responsibilities d) scarcity

d) the factor market

Dave gets a job at a grocery store, which pays him an hourly wage in exchange for his labor. Dave is participating in a) entrepreneurship b) human capital c) the product market d) the factor market

c) it increases efficiency by ensuring that workers become good at specific tasks

Division of labor is practiced because a) companies do not want workers to talk to one another b) it increases efficiency by ensuring that all workers become good at every task c) it increases efficiency by ensuring that workers become good at specific tasks d) it prevents specialization

b) a socialist economy

In which of these systems is the government most likely to provide people with goods and services they could not otherwise afford? a) a market economy b) a socialist economy c) a traditional economy d) a free-enterprise economy

False

True/False --> Economic growth causes the production possibilities frontier to contract.

a) goods and services

Economic growth is most closely associated with an increase in a) goods and services b) economic interdependence c) opportunity cost d) capital and labor

b) the problem of scarcity

Economics is best defined as the study of how societies deal with a) the factors of production b) the problem of scarcity c) the paradox of wealth d) the division of labor

b) Elders and ancestors make certain that things are done in specific ways

How are economic transaction shaped in a traditional economy? a) each community decides as a group for whom the group will produce b) Elders and ancestors make certain that things are done in specific ways c) the three basic questions of production do not arise in this type of economy d) individuals form networks within which they buy, sell, and trade as they choose

d) it establishes laws and rules to maintain competition

How does the government operate in a free enterprise economy? a) it takes a "hands-off" approach to business b) it tells businesses what to produce and what to sell c) it interferes with business only when it is profitable d) it establishes laws and rules to maintain competition

d) socialist economies tend to offer extensive government services but have high tax rates

How is the principle of "There's No Such Things as a Free Lunch" illustrated in a socialist economy? a) socialist economies tend to collapse when they become too large b) the marketplaces in a socialist economy are free for anyone to enter c) socialist policies offer advantages to the wealthy at the expense of those less well-off d) socialist economies tend to offer extensive government services but have high tax rates

d) four

How many distinct factors of production do economists recognize? a) one b) two c) three d) four

c) people are more likely to be productive when it benefits them personally

In a transitioning economy, why would privatization tend to raise a nation's overall standard of living? a) people are less likely to assume the risks of entrepreneurship b) it places the means of production in the hands of the government c) people are more likely to be productive when it benefits them personally d) it places a nation's ruling class in a position to administer the economy efficiently

a) environmental hazards

In its role as protector of the American free enterprise system, one of the issues the government must deal with is a) environmental hazards b) weeding out corruption c) helping businesses get started d) overseeing communications

c) it would expand the frontier

In the mythical country, Alpha, an entrepreneur has introduced a new technology that makes manufacturing twice as efficient as before. How is this likely to affect the production possibilities frontier? a) it would not change the frontier b) it would make the frontier smaller c) it would expand the frontier d) it would change the shape of the frontier

c) socialist

In what kind of economy does the government own some of the factors of production? a) communist b) market c) socialist d) traditional

b) command

In what type of economy does the government decide whether houses or apartments will be built? a) traditional b) command c) mixed d) market

b) the value of the next best alternative

Opportunity cost refers to a) the dollar amount attached to a good or service b) the value of the next best alternative c) the cost of not expanding production d) the cost of labor when production is expanded or changed

b) high value of a nonessential item and the low value of an essential item

Paradox of value refers to the a) high value of an essential item and the low value of a nonessential item b) high value of a nonessential item and the low value of an essential item c) contradiction of what consumers want and what they need d) contradiction between gross domestic product and market value

c) what, how, and for whom

Societies are faced with which three basic questions about production of goods? a) what, how, and why b) what, where, and when c) what, how, and for whom d) when, where, and for whom

a) productivity

The amount of output in a specific amount of time with a given amount of resources is referred to as a) productivity b) human capital c) efficiency d) investment risk

d) Singapore

The country that has the highest per capita income and is a capitalist system is a) the United States b) Norway c) Germany d) Singapore

a) Gross Domestic Product

The dollar value of all final goods, services, and structures produced in a country in a year is known as a) Gross Domestic Product b) Gross National Product c) franchise d) profit motive

True

True/False --> Economic growth is an increase in a nation's output of goods and services over time.

d) Japan's government is highly involved in day-to-day business management

What is the main difference between Japanese capitalism and capitalism in the United States? a) Japan's government regulates private firms to keep competition at a minimum b) Japan does not permit the sale of corporate stock c) Japan has a more dedicated and loyal workforce d) Japan's government is highly involved in day-to-day business management

c) command and socialist economies

What kind of economy offers uniformity in wages regardless of individual productivity? a) all economies b) traditional economies c) command and socialist economies d) market and free-enterprise economies

c) incentives

What motivates people to work, save, and invest? a) government regulations b) a variety of goods c) incentives d) economic freedom

b) cost-benefit analysis

When a business needs to decide whether a certain action is worth the cost, the most helpful analysis would be a(n) a) production possibility comparison b) cost-benefit analysis c) economic model d) needs assessment

b) economic growth

When a nation's total output increases over time, the nation is experiencing a) a decrease in gross domestic product b) economic growth c) economic interdependence d) a contraction of the possibilities curve

b) Singapore

Which country is an example of a capitalist economy? a) Cuba b) Singapore c) Venezuela d) North Korea

b) China

Which nation today is the most striking example of successful privatization? a) Cuba b) China c) North Korea d) Soviet Union

d) entrepreneurs

Which of the factors of production involves taking risks and combining resources to produce a good or service? a) land b) capital c) labor d) entrepreneurs

c) a large and inefficient bureaucracy

Which of the following could raise the cost of production in a command economy? a) a newly discovered source of raw materials b) a free media c) a large and inefficient bureaucracy d) a strict quota system

c) the nationalization of major industries in Hugo Chavez's Venezuela

Which of the following describes a move away from capitalism? a) Sweden's 1980s cutback on social programs b) the transformation of the former Soviet Union in today's Russia c) the nationalization of major industries in Hugo Chavez's Venezuela d) the recent changes in China over the past 25 years

c) the cost of choosing one alternative over another

Which of the following descriptions best explains the meaning of opportunity cost? a) the initial cost of starting a new business b) the cost of business failure c) the cost of choosing one alternative over another d) the risk associated with producing a new item

a) the workers who make the have little incentive to make them well

Which of the following explain why products made under a command economy are more likely to be low quality? a) the workers who make the have little incentive to make them well b) the workers who make them are not given quality-control guidelines c) the workers who make them are left to manage production facilities on their own d) the workers who make them are forced by tradition to use old-fashioned methods

d) both A and C

Which of the following helps determine something's value a) utility b) beauty c) scarcity d) both A and C

c) people must adjust to the costs and risks that are part of capitalism

Which of the following is a cause of struggle in the process of privatization? a) people must adjust to government control of their economy b) people must decide how best to get along without a free market c) people must adjust to the costs and risks that are part of capitalism d) people must become used to no longer owning their own homes or businesses

a) it sustains a high degree of uncertainty

Which of the following is a disadvantage of a market economy? a) it sustains a high degree of uncertainty b) it restricts to personal freedom c) it discourages creativity and new ideas for doing things d) it does not allocate resources as efficiently as other types of economies

a) all production is managed by the government

Which of the following is a feature of a command economy that distinguishes it from a socialist economy? a) all production is managed by the government b) all economic decisions are made by the free market c) all economic decisions are based on custom and habit d) some degree of private ownership and activity is allowed

b) profit motive

Which of the following is largely responsible for the growth of a free enterprise system? a) government b) profit motive c) Gross Domestic Product d) market efficiency

a) command, socialism, free market

Which of the following lists economy systems in order from least to most flexible? a) command, socialism, free market b) free market, socialism, command c) socialism, command, free market d) free market, command, socialism

c) Eastern Europe

Which of the following represents a place where the transition to capitalism is nearly complete but far from fully effective? a) North Korea b) South Korea c) Eastern Europe d) Western Europe

d) it identifies all possible combinations of goods and services an economy can produce

Which of the following statements best describes the purpose of the production possibilities curve? a) it predicts the future production of a nation b) it identifies trends in production c) it shows which products are most profitable d) it identifies all possible combinations of goods and services an economy can produce

c) everyone knows exactly what their function is

Which of the following states an advantage of a traditional economy? a) property rights are based on tradition b) creativity and original though are rewarded c) everyone knows exactly what their function is d) there's no bureaucracy to interfere with organizing the economy

d) all of the above

Which of the following would result in a change in the production possibilities frontier in the mythical country Alpha? a) an influx of immigrants from other countries b) the discovery of an abundant natural resource c) a long drought d) all of the above

a) a classless society in which everyone works for the common good

Which of the statements best describes the communist ideal? a) a classless society in which everyone works for the common good b) a classless society in which workers are motivated by financial incentives c) a society in which workers are motivated by financial incentives d) a society in which a small ruling class administers resources for the common good

d) North Korea

Which of these countries has an economy most similar to that of the former Soviet Union? a) Sweden b) Norway c) South Korea d) North Korea

c) a production possibilities curve

Which of these do economists use to illustrate combinations of output? a) a division of labor b) a factor of production c) a production possibilities curve d) a cost-benefit analysis

c) command economy and capitalism

Which of these economic systems have the least in common? a) market economy and capitalism b) command economy and socialism c) command economy and capitalism d) free-enterprise economy and market economy

a) people become unhappy with aspects of their current economy

Which of these helps explain why mixed economies develop? a) people become unhappy with aspects of their current economy b) people are seldom exposed to the ideas and technologies of other cultures c) government control of an economy tends to make a nation more prosperous d) government control of an economy leads to a diversity of economic approaches

b) there is a high degree of individual freedom

Which of these is a major advantage of a market economy? a) it can change direction rapidly as needed when markets change b) there is a high degree of individual freedom c) there is efficient government control of production and distribution d) people are likely to be offered goods and services they cannot afford

a) there are more mixed economies in the world than any other kind

Which of these is an accurate statement about mixed economies today? a) there are more mixed economies in the world than any other kind b) very few economies today can be accurately described as "mixed" c) mixed economies exist mostly in nations with communist governments d) most nations that once had a mixed economy have evolved into command economies

c) its unemployment rate and GDP and per capita are relatively high

Which of these statements apply to present-day Sweden? a) its taxation and unemployment rates are relatively low b) its unemployment rate and GDP per capita are relatively low c) its unemployment rate and GDP and per capita are relatively high d) its GDP per capita and welfare payout rates are both relatively low

c) new ways of doing things are discouraged

Which of these statements describes a disadvantage of a traditional economy? a) everyone knows his or her role b) new ways of doing things are encouraged c) new ways of doing things are discouraged d) difficult economic decisions are made by the state

d) major economic decisions are made by individuals, not for them

Which of these statements is descriptive of a market economy? a) most media is state-owned and operated b) the government determines what is produced and by whom c) major economic decisions are made for individuals, not by the d) major economic decisions are made by individuals, not for them

d) nothing stops the government from producing things that people don't need or want

Which statement describes a disadvantage of a command economy? a) items tend to be produced solely for the sake of profit b) it cannot "change direction" easily if the need arises to do so c) it does little to help the less advantaged obtain the goods and services they need d) nothing stops the government from producing things that people don't need or want

a) people who hold political power are threatened by fundamental changes

Which statement describes why the people in a nation with a command economy might resist a shift to a free market economy? a) people who hold political power are threatened by fundamental changes b) workers are reluctant to give up their participation in a classless society c) workers are reluctant to accept complete government control of their economy d) factory and business owners are reluctant to place their capital under work authority

a) mixed

Which type of economy is most prevalent in the world today? a) mixed b) market c) command d) traditional

c) workers

Who did Karl Marx believe would be the beneficiaries of socialism? a) property owners b) the government c) workers d) capitalists

a) its citizens objected to the nation's high rate of taxation

Why did Sweden move fro socialism to a more mixed economy in the 1980s a) its citizens objected to the nation's high rate of taxation b) its citizens demanded that elements of communism be adapted c) its government decided that welfare and health benefits were no longer needed d) its government decided that opening the country's petroleum industry would boost the economy