Econ Final Review

15) Which relationship is the BEST example of the Law of Supply? A) The quantity of a good supplied rises as the price rises. B) The quantity of a good supplied rises as the price falls. C) The quantity of a good supplied falls as the price rises. D) The quantity of a good supplied is not impacted by price.

a

19) United States Combating Use of Standards as Trade Barriers by Benjamin H. Wu, accessed from usinfo.state.gov/xarchives Since standards and technical regulations affect over 80 percent of global commodity trade, domestic source restrictions by foreign governments, in the form of standards as trade barriers, are a concern and have prompted the Department of Commerce to take recent action. The U.S. Department of Commerce, along with the Department of State and Office of the U.S. Trade Representative, have been working hard to ensure that U.S. software companies continue to have access to Chinese government customers. We will continue to work vigorously to achieve this goal. In promoting free trade, the author is seems to be supporting A)fair and responsive standards to reduce trade barriers. B)fair and responsive standards to increase trade barriers. C)higher standards on Chinese goods to reduce software piracy. D)lower standards on Chinese goods to decrease investment by U.S. companies in China.

a

20) What product is likely to have the MOST elastic demand? A)bananas B)gasoline C)insulin D)water

a

1) Which of these would have the LEAST impact on the price of a product? A)how the product looks B)demand for that product C)cost of the factors of production D)the cost of delivering that product

a

10) Which tax is paid by the MOST people in the United States? A) sales tax B) excise tax C) payroll tax D) property tax

a

27) One way that individuals try to protect themselves agains the possibility of becoming unemployed is by maintaining an emergency fund, usually in a very liquid state, such as a savings account. How is such a fund threatened, if unemployment is accompanied by high inflation? A) Inflation reduces the purchasing power of the money in the emergency funds. B) Banks may lower their interest rates so much that the emergency accounts will earn very little. C) Due to bank failures, emergency funds may not be available for withdrawal as quickly as they are needed. D) People may be tempted to use their emergency funds for additional job training to become more employable.

a

29) The Federal Reserve has kept interest rates very low. Some might argue that this could lead to A)inflation. B)deflation. C)a strong dollar. D)higher unemployment.

a

3) United States Combating Use of Standards as Trade Barriers While U.S. standards concerns are not specific to just China, because American industry has demonstrated a clear interest to compete and participate in the Chinese marketplace, it is important that there is a standards development process that is open, transparent, participatory, and fair in China. Tensions have arisen... when certain countries take restrictive action that could potentially exclude market access to U.S. businesses. In this regard, I have been asked by the Committee to address a specific example where China has caused great concern with U.S. industry in its application of domestic source requirement standards - China's pending software procurement regulation which could limit the ability of U.S. industry to sell software products and services to the Chinese government. U.S. software companies, which are widely recognized as industry leaders for their leading-edge innovation, have invested billions of dollars in China to participate directly in China's growing information technology market. Based on Assistant Secretary Wu's testimony, the U.S. Commerce Department is MOST concerned about A)rising trade barriers on goods to China. B)rising trade barriers on goods from China. C)lowering trade barriers on goods to China. D)lowering trade barriers on goods from China.

a

33) Which action would be a change in the government's fiscal policy? A)an increase in taxes B)a decrease in unemployment C)a decrease in collected revenues D)an increase in the price of goods

a

36) Farming and mining are examples of which type of economic activity? A)primary B)quaternary C)quinary D)secondary

a

38) Acme Furniture Manufacturers has just purchased a large supply of exotic lumber that is ready for use in their new line of furniture. This purchase BEST represents which of the factors of production? A)capital B)entrepreneurship C)labor D)land

a

43) ________ is the ability to repay a loan. A)Capacity B)Capital C)Character D)Collateral

a

44) Which of these would be counted when calculating the GDP of the United States? A)cost of goods produced in Michigan B)number of people going to school in Idaho C)amount of loans made to the United States D)quality of services rendered in the United States

a

49) I. Two countries produce the same goods for the same opportinity cost II. Two countries produce different goods for different opportinity costs III. Two countries are isolated by geography and politics IV. Two countries have the same identical markets What fact or facts support a situation where trade is advantageous? A)II only B)IV only C)III and IV only D)I, III, and IV only

a

5) When considering creditworthiness, which person is likely to pay the GREATEST credit card finance charges if they all charge the same amount each month on their cards? A) James, who always pays the minimum each month B) Georgia, who sometimes pays more than the minimum amount C) Mary Lou, who always pays the full credit bill each month D) Mark, who usually pays his credit card bill in full, if he can afford to

a

5) Why is there no competition in a monopoly? A)There are no close substitutes. B)There are too many substitutes. C)Prices are set by the government. D)The government forbids competition.

a

7) On a supply and demand graph, if the demand curve shifts to the left, what would be the resulting effect on equilibrium price and quantity? A)price will fall and quantity will fall B)price will fall and quantity will rise C)price will rise and quantity will fall D)price will rise and quantity will also rise

a

7) Using this chart, you can conclude that in Australia's economy A) buyers and sellers determine what goods are made. B) private property is rationed out according to need. C) the national government owns most of the land resources. D) the provincial governments own most of the capital resources.

a

15) The Federal Reserve uses various measures to change the money supply and encourage economic activity. This is referred to as A)fiscal policy. B)monetary policy. C)demand economics. D)supply side economics.

b

43) Which factor might cause an increase in the supply of a product? A) a decrease in productivity B) fewer sellers in the marketplace C) the introduction of new technology D) an increase in the cost of raw materials

c

1) The Federal Reserve System controls the size of the A) tax supply. B) money supply. C) demand supply. D) production supply.

b

13) · park entry fees · sales tax · individual income tax What do ALL of these have in common? A)they are mainly voluntary charges B)they are sources of state revenue C)they are examples of graduated taxes D)they are responsible for equal amounts of revenue

b

14) Ben is choosing between two savings accounts. Both accounts pay 3% interest. Account X pays compound interest. Account Y pays simple interest. Ben should choose account X because A) the interest would be tax free. B) it would pay interest on interest. C) the interest rate would decrease over time. D) the interest rate would increase over time.

b

16) The PRIMARY reason that natural monopolies are allowed to exist in areas such as energy production is that A)it would be too difficult to regulate these industries. B)it is more efficient for society to allow one company to be in control. C)it is not in the public interest to deregulate the providing of utilities. D)it would create inflationary pressures to allow more than one company to compete.

b

17) At which price does quantity demanded equal quantity supplied? A) $.75 per pound B) $.64 per pound C) 500 thousand pounds D) 600 thousand pounds

b

17) Since the 1980s, Australia has increased its role in international trade significantly. Which of these actions would have helped to achieve this result? A)raising domestic taxes B)reducing barriers to trade C)focusing only on importing D)becoming politically liberal

b

19) If a new machine was developed that picked coffee beans twice as fast as is currently possible, what would you expect to happen to the price of coffee? A) The price would increse to pay for the new machinery. B) The price would decrease because there would be more coffee available. C) The price would increase due to greater demand for coffee picked this way. D) The price would decrease because fewer would want coffee picked by machine.

b

23) Countries which export more than they import (i.e., which have a surplus in their balance of trade) still will have a $0 balance of payments. What is one way this occurs? A) The country will have to import more goods in the following year. B) The country will have funded the imports of other nations through loans. C) The country will have to negotiate new trade agreements with other nations. D) The country will have to increase its debt to cover the costs of the surplus.

b

24) The Federal Reserve uses interest rates to help the economy maintain economic growth and curb inflation. The Federal Reserve kept interest rates low during 2000-2004 to encourage economic growth after the dot-com crash. The intended result was growth in real GDP, and a housing "boom" (also a "housing bubble")in the United States. What was the unintended consequence or outcome of this monetary policy? A) The 9-11 attacks on Washington and New York City B) Rising inflation, a crash in the "housing bubble," and a recession from 2007-2010 C) Lower inflation and the largest growth in rGDP since WWII with a healthy economy into 2013 D) Rising inflation and the arrest of the Federal Reserve Chairman for causing the Great Depression

b

25) Before the opening of his sporting goods store, Mr. Stevens researches the types of sports equipment most likely to sell in his area. The knowledge gained in this research is an example of A) labor. B) human capital. C) physical capital. D) allocation of resources.

b

26) In 1987, the United Nations General Assembly passed a resolution that prohibited countries from buying oil from South Africa in an effort to persuade the nation to end the racist policies of apartheid. This is an example of a(n) A) blockade. B) embargo. C) quota. D) tariff.

b

27) In 1999, the U.S. announced trade sanctions worth $116.8 million, targeting goods from France, Germany, Italy and Denmark. The sanctions were in retaliation for a ban on U.S. hormone-treated beef by which organization? A)ASEAN B)EU C)NAFTA D)WTO

b

29) Why do firms spend money and time to advertise? A) It is a tax write-off for charity. B) To showcase their product among the competition. C) Regulations say that companies must advertise their product. D) There is no competition, so the company must inform the public.

b

34) Which market structure is BEST indicated by the photograph? A) monopoly B) oligopoly C) pure competition D) modified competition

b

35) A period of very low (or no) inflation would MOST likely lead to A)higher tuition costs. B)lower prices on books. C)more demand for college degrees. D)less demand for skilled workers.

b

38) Which result would you expect from a U.S. import quota on automobiles? A) lower automobile prices for U.S. customers B) higher automobile prices for U.S. customers C) fewer domestic jobs in the automobile industry D) more foreign automobiles flowing into the U.S.

b

40) Country X and Country Y are the same size in terms of population, area, and capital stock. If both countries devote all of their efforts to producing widgets, Country X can produce 10 million widgets, while Country Y can produce 5 million. Based on the information given, Country X has A)a monopoly on the production of widgets. B)an absolute advantage in producing widgets. C)a comparative advantage in producing widgets. D)a lower opportunity cost in the production of widgets.

b

42)In markets both parties are better off when they engage in voluntary, non-fraudulent exchange. What is the role of government in promoting such exchange? A)There is no role for the government; the government only impedes exchange. B)The governments role is to create legislation to prevent fraud. C)The role of government is to make sure all individuals are treated equally. D)The governments role is to make sure sellers make a profit and stay in business.

b

45) Bart has decided to buy some water balloons rather than get an extra milk at lunch. Choosing among economic alternatives is referred to as A) scarcity. B) a trade-off. C) interdependence. D) labor allocation.

b

46) In the mid-2000s problems with corporations such as Enron, Worldcom, and Tyco demonstrated renewed and growing public concern about A)the volatile energy market. B)unchecked business practices. C)the depletion of America's natural resources. D)the effect of foreign competition in U.S. markets.

b

47) With regards to economic growth, what is the goal of an expansionary fiscal policy? A)to increase trade deficits B)to increase economic growth C)to decrease economic growth D)to maintain current economic levels

b

48)Provides security for principle Modest interest rate M2 or near money Provides great liquidity What does this describe? A)commodity B)savings accounts C)representative money D)money market accounts

b

6) Which statement is a PRIMARY characteristic of a capitalist system? A)graduated income tax B)private ownership of property C)equal distribution of resources D)governmental regulation of business

b

8) Foreign Exchange Rates County / Currency Foreign Currency in U.S. Dollars U.S. Dollars in Foreign Currency UK / Pound 2.0292 .4928 Japan / Yen .0084 118.9599 India / Rupee .0248 40.3950 Canada / Dollar .9394 1.0645 Micah is an exchange student living in Japan. He wants to buy a new-release movie for 2,000 Japanese yen. When he calls home, he discovers the movie sells for $25. Micah decides to A)wait because the movie costs relatively the same amount in both countries. B)buy the movie in Japan because it is relatively less expensive than in the U.S. C)wait to buy the movie in the U.S. because it is relatively less expensive in the U.S. D)buy the movie in the U.S. and pay $10 to ship it because the total cost will still be less.

b

9) In addition to creating jobs and obtaining scarce resources, why do countries trade with one another? A)To increase tariffs and quotas B)For comparative advantage C)To limit imports and exports D)For environmental protection

b

10) A modest price increase for a monthly cell phone package has had little or no effect on demand. This MOST LIKELY indicates that demand for the product is A)complementary. B)elastic. C)inelastic. D)variable.

c

11) A government institutes a rule that schools are allowed to sell whatever foods it chooses, provided that those foods are not high in sugar. Such a ruling is aligned with which economic system? A)command B)market C)mixed D)tradtional

c

11) Why do banks and other financial institutions require collateral for loans? A) to raise needed funds B) banks want profit motives C) to reduce the risk of lending D) to assess the trustworthiness of the customer

c

12) Number of Workers Total Costs Marginal Costs Total Revenue Marginal Revenue Total Profit 0 $50.00 --- --- --- $ (50.00) 1 $140.00 $12.86 $105.00 $15.00 $ (35.00) 2 $230.00 $6.92 $300.00 $15.00 $70.00 3 $320.00 $5.00 $570.00 $15.00 $250.00 4 $410.00 $3.75 $930.00 $15.00 $520.00 5 $500.00 $3.21 $1,3500.00 $15.00 $850.00 6 $590.00 $4.50 $1,650.00 $15.00 $1,060.00 7 $680.00 $4.74 $1,935.00 $15.00 $1,210.00 8 $770.00 $10.00 $2,070.00 $15.00 $1,300.00 9 $860.00 $15.00 $2,160.00 $15.00 $1,300.00 10 $950.00 $22.50 $2,220.00 $15.00 $1,270.00 11 $1,040.00 --- $2175.00 $15.00 $1,135.00 The owners of a local business are making a rational decision about how many workers to hire. How many workers would cause the marginal costs to exceed the marginal benefits? A)8 B)9 C)10 D)11

c

12) Bob would like to increase his earnings. The option MOST LIKELY to increase his earnings potential in the long-term is to A) spend money to renew current training. B) take a similar position with a different company. C) spend money for additional training and education. D) laterally transfer to a different job within his company.

c

13) How does voluntary trade promote economic progress? A) It makes individuals self-sufficient. B) It discourages trade on the basis of comparative advantages. C) It encourages businesses to seek lower per-unit costs by adopting mass production methods. D) It moves goods, services and resources from people who value them more to individuals who value them less.

c

14) If someone is interested in pursuing a career with a relatively high earnings potential, which would be the best choice? A)a career that has a relatively low supply of workers B)a career that has a relatively high demand for workers C)a career that has a relatively low supply and high demand for workers D)a career that is well established with plentiful workers who would be mentors

c

22) A way to measure the economy's performance is to measure categories of national A) exports. B) imports. C) income. D) resources.

c

22) If the supply of computer engineers increases at the same time that the demand for these workers decreases, what would be the MOST LIKELY effect on wages for these workers? A)Wages would stay the same as job opportunities increase. B)Wages would increase as the number of workers increases. C)Wages would decline as the competition for jobs increases. D)Wages would increase as competition for these workers increases.

c

23) How do private property rights contribute to a capitalist system? A)The government owns most of the factors of production. B)High quality products and reasonable prices are guaranteed. C)Individuals are free to own the resources used to produce goods. D)Businesses can determine what to produce based on consumer demand.

c

26) What is the primary way in which insurance allows you to be covered for a loss, even if you haven't had it for very long? A)You get money from them. B)You pay more money later. C)You share the risk with others. D)Insurance helps you to avoid things.

c

28)The process by which the government manages spending and taxes to influence the direction of the economy is A)tax policy. B)trade policy. C)fiscal policy. D)monetary policy.

c

3) Increased education and training within a nation will most likely result in A) a decrease in entrepreneurship. B) a decrease in Gross Domestic Product (GDP). C) an increase in Gross Domestic Product (GDP). D) an increase in the presence of natural resources.

c

30) If the price of buying a car starts rising in the United States, consumers may need to look no further than the dollar's recent slide against major foreign currencies. On the other hand, economically depressed Midwestern farmers may find it easier to sell surplus grain overseas if a weak dollar makes it cheaper for foreigners to buy U.S. goods. The dollar spent much of last week on the skids, flirting with its lowest level of the year against the Japanese yen...It also has lost ground to the Euro. According to the passage, one benefit of a weak dollar might be A)increased car sales. B)decreased car sales. C)increased surplus grain sales. D)decreased surplus grain sales.

c

30) Which is an argument against free trade? A) Allowing unlimited trade levels will help insure fair competition among all sides. B) Fewer trade barriers will lead to increased trade, production, and revenues for all sides. C) Removing import duties will give an unfair advantage to countries in which labor is cheap. D) A "level playing field" for trade is best achieved by protecting US firms from unfair competition.

c

32) Which effect of high inflation might make it difficult for students to pay for college? A)Rising prices B)Low unemployment C)High interest rates D)Falling purchasing power

c

33)Excerpt from A Petition, published in 1845 by Frederic Bastiat 'From the Manufacturers of Candles, Tapers, Lanterns, Candlesticks, Street Lamps,.... To the Honorable Members of the Chamber of Deputies.... You are on the right track. You reject abstract theories and have little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry...." Which quote BEST represents the idea of trade barriers? A) "You are on the right track." B) "You reject abstract theories" C) "You wish to free him from foreign competition" D) "[You] have little regard for abundance and low prices"

c

35) When a government funds programs at levels greater than the revenue it is receiving, A) the national debt decreases. B) the income tax rates increase. C) the budget includes deficit spending. D) congress must submit a new budget for review.

c

36) Over a three year period, the United States experienced an increase in the real GDP, low inflation, and a declining unemployment rate. For this period, the United States A) was in an economic trough. B) was in a stagnant economic period. C) appeared to be entering a recession. D) was in the middle of an economic boom.

c

37) Which item is NOT a means to finance government spending? A)money creation B)capital gains taxes C)government subsidies D)personal income taxes

c

39) A price set below the current market price is a characteristic of a A)price floor. B)regular price. C)price ceiling. D)equilibrium price.

c

39) The town of Matildaville is attempting to reduce the amount of litter on the side of the roads. Which proposed program would be a negative incentive? A) free food for cleaning up B) money for keeping your road clean C) $200 fine for each piece of litter D) concert tickets for a clean up day

c

4) Money can be easily converted into goods or services. This is an example of which "function of money"? A) store of value B) measure of value C) medium of exchange D) commodity transfer

c

42) Which of these international trade concepts results in specialization and trade increases in total world output? A) absolute advantage B) balance of payments C) comparative advantage D) international tariffs

c

48) Rationing is a system under which an agency such as the government decides everyone's "fair" share. Rationing has often been used during wartime. If people receive a set ration regardless of the amount of work completed, how would this affect peoples' incentive to work? A) The incentive to work will not change. B) People might feel more inclined to work. C) People might feel less inclined to work. D) There is no effect on the incentive to work.

c

50) A corporation is LEAST LIKELY to have which advantage? A)ability to sell stock B)ability to raise capital C)establishment of price ceilings D)limited liability of stockholders

c

50) Which of the four fundamental questions relates most directly to consumer sovereignty? A) Who will get the goods and services? B) How will the system promote progress? C) What goods and services will be produced? D) How will the goods and services be produced?

c

6) Which statement describes an opportunity cost that could result from the government regulating businesses? A) Less recalls occur as a result of government regulations. B) Government regulations can lead to an increase in product safety. C) Government regulations can lead to an increase in production costs. D) Consumer protection declines as a result of government regulations.

c

8) Homer wants to borrow money from the Springfield Bank to buy a new trampoline. The bank requires collateral for a loan. What is collateral? A) a signed statement that the loan will be repaid B) an increased interest rate for a high risk loan C) something of value which the bank will receive if the loan is not repaid D) money deposited in the bank which is greater than the amount of the loan

c

9) Countries around the world specialize production, and trade with other countries based upon A) the overall size of the economy. B) the rate of inflation in the economy. C) the comparative advantage in production. D) the amount of capital available to produce products with.

c

16) Why are regressive taxes considered heaviest on low income taxpayers? A) Low income people should not have to pay taxes. B) The tax is on their income, and they pay a higher income tax. C) A sales tax is going to be a greater percent of a wealthy persons income than a low income persons income. D) The tax is levied on something other than income but ends up being a higher percentage of their income than it would be for a higher earner.

d

18) If the price for widgets was set at $4 A)buyers would purchase all of the available widgets. B)producers would discover that the price was too low. C)buyers would purchase more widgets than are available. D)producers would discover that the price should be lowered.

d

18) The amended Telemarketing and Consumer Fraud Abuse Protection Act of 1994 states: A consumer [can] stop calls from all companies within the FTC's jurisdiction by placing his or her telephone number on a central "do-not-call" registry... except when the consumer has an "established business relationship" with the seller on whose behalf the call is made. An economic aspect of the Federal Trade Commission's "do-not-call" registry is that it A) reduces the amount of junk mail received by consumers. B) permits telemarketing calls to new clients on the registry. C) restricts all telemarketing calls to consumers on the registry list. D) allows consumers to engage in voluntary transactions with businesses.

d

2) As one of the factors of production, capital can be defined as A)the goods and services a business produces. B)the supply of labor needed to produce goods. C)the people that purchase goods and services. D)the equipment and factories needed to produce goods.

d

2) Which result occurs when federal government expenditures are greater than the federal government's total receipts? A) reduced net exports B) increased excise taxes C) a federal budget surplus D) a federal budget deficit

d

21) A nation's ability to produce a product more efficiently than another country is referred to as A) globalization. B) foreign trade. C) interdependence. D) absolute advantage.

d

21) Workers on an assembly line are an example of A)allocation. B)entrepreneurs. C)homogenization. D)specialization.

d

24) Unanticipated inflation can cause all of the following EXCEPT A)production of goods and services decreases. B)government gains tax revenue from income increases. C)debtors repay creditors with dollars that are worth less. D)fixed incomes increase more rapidly than the price level.

d

25) The primary function of banks in the United States is to A)print money. B)make banking laws. C)build homes and businesses. D)provide checking and savings accounts to customers.

d

28) In which situation might GDP (gross domestic product) NOT be an accurate indicator of the health of a country's economy? A) The country is embarking on large public works projects. B) The country has recently joined a new trade organization. C) The country relies on agriculture for most of its export revenues. D) The country has suffered a disaster and is receiving financial aid from overseas.

d

31) A technology company needs 10 workers experienced in a newly developed programming language. Plenty of applicants express interest in the job; however, only three have the necessary education and experience to complete the work. The remaining unemployed individuals are an example of ___ unemployment. A) cyclical B) frictional C) seasonal D) structural

d

31)Derek's Credit Report Furniture City Brooklyn, NY Balance: $578 Date Open: 12/01/2011 Account Type: Installment High Balance: $2500 Terms: $115 for 24 months Pay Status: Late over 60 days Date Closed: 8/30/2012 by Company Why would Derek be denied credit for a new car? A)He lives in Brooklyn, New York. B)He still owes a balance for his furniture. C)His payments are too high to afford a car payment. D)He has been late on payments and had account closed.

d

34) You have $1000 in a savings account and the compound interest rate is 5% per year. After 5 years, how much money approximately do you have in the savings account if you left the money to grow? A)$1000 B)$1215 C)$1250 D)$1276

d

37) A farmer sells a truckload of grain for $1000. He then takes the cash to the tractor dealer and buys a new set of tires for his cultivator. This illustrates that one function of money is to be a A) medium of exchange. B) measure of value. C) store of value. D) bartered item.

d

4) In which situation might GDP (gross domestic product) NOT be an accurate indicator of the health of a country's economy? A)The country is embarking on large public works projects. B)The country has recently joined a new trade organization. C)The country relies on agriculture for most of its export revenues. D)The country has suffered a disaster and is receiving financial aid from overseas.

d

41) The amended Telemarketing and Consumer Fraud Abuse Protection Act of 1994 states: A consumer [can] stop calls from all companies within the FTC's jurisdiction by placing his or her telephone number on a central "do-not-call" registry... except when the consumer has an "established business relationship" with the seller on whose behalf the call is made. An economic aspect of the Federal Trade Commission's "do-not-call" registry is that it A)reduces the amount of junk mail received by consumers. B)permits telemarketing calls to new clients on the registry. C)restricts all telemarketing calls to consumers on the registry list. D)allows consumers to engage in voluntary transactions with businesses.

d

44) · Atlanta · Boston · Cleveland · Dallas All of these represent A) state capitals. B) cities with major ports. C) U.S. Court of Appeals cities. D) Federal Reserve System districts.

d

45)Which of these would help improve Colombia's economy? A)increasing government spending B)eliminating taxes on personal property C)reducing the number of government workers D)establishing free trade agreements with other countries

d

47) Although it lost most of its value during and after World War II, the currency of Japan is now one of the strongest in the world. Japan's currency is called the A) Riel. B) Ruble. C) Won. D) Yen.

d

49) Which of these is a major motivation for countries to trade with one another? A) decrease in wages B) access to illegal goods C) higher costs to consumers D) obtaining scarce resources

d