Economics
Technology can help governments handle economic emergencies, such as
crop and resource shortages.
In the free-enterprise system of the United States, the government
makes some economic decisions.
Which is the best example of outsourcing?
A US shoe company opens a factory in China and hires Chinese workers to make shoes.
Based on the diagram, which example describes how a bank injects money into the economy?
A bank approves a mortgage for a customer.
What is the relationship between risk and return?
A higher risk often means a higher return.
How do indicators relate to standard of living?
Indicators comprise the measure of standard of living.
What is the difference between inflation and deflation?
Inflation can result from rising demand and reduces the value of money. Deflation can result from falling demand and boosts the value of money.
What are the effects of rapid inflation? Check all that apply.
Interest rates increase. Uncertainty increases. Real income declines.
Which is the best option for someone who wants to improve his or her credit and pay less interest on the debt?
$100 a month because it will reduce the amount of debt owed
If Massachusetts has a sales tax of 6 percent and New Hampshire has no sales tax, how much money can be saved by buying a $1,000 television in New Hampshire?
$60
If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of banks having more money to lend?
Interest rates will decrease.
A currency is a system of money created and used by
a nation or region of the world.
Economic interactions involving which of the following would most likely be studied in macroeconomics?
International Monetary Fund policy.
Deflation
1. causes steadily falling prices 2. increases the value of money 3. usually occurs as demand falls
On April 3, 2013, one euro could be exchanged for about how many Japanese yen?
119
Banks make the most money and take the most risk with an interest rate of
18 percent.
How has Internet access changed and affected globalization from 2003 to 2013?
A thirty percent increase in Internet access has sped up globalization.
Which describes the difference between a trade surplus and a trade deficit?
A trade surplus is when a country exports more than it imports, while a trade deficit happens when imports exceed exports
Which is an example of how a denomination is divisible?
An American dollar is equal to four quarters.
How is an excise tax different from a sales tax?
An excise tax applies to specific products.
Which activity is done in Step 2 of comparison shopping?
Assess the purchase objectively.
Which statements best explain how globalization offers an advantage to businesses? Check all that apply.
Businesses can take advantage of favorable laws to make products cheaply. Businesses can take advantage of favorable taxes to make products cheaply. Businesses can take advantage of new forms of technology to make products cheaply. Businesses can take advantage of faster technology to make products faster.
Which region is most likely to export bananas to the United States?
Central America
This is a table that could be used to maintain a record of account transactions. It is similar to what is found in a checkbook ledger. Some of its column headings are missing. How should these columns be labeled?
Check Number, Description, Balance
Which of these is an advantage unique to checking accounts?
Checking accounts allow used checks to act as receipts.
Which best describes the effect of globalization on China's economy?
China is shifting toward specialization in industry and services and away from agriculture.
Why do prices increase when demand for a product is high?
Companies know that people will be willing to spend more to get an in-demand product
Why is compound interest preferable to simple interest?
Compound interest pays interest on the principal and the interest earned in each period.
When Seb reconciles his accounts, what is the first step he should take?
Confirm his records are accurate and include all transactions.
Which situation best reflects the concept of free enterprise?
Consumers have a choice between two bakeries in a single city block.
How can the use of new technology in industry benefit consumers?
Consumers have greater access to information.
Which statement best describes the impact of scarcity?
Consumers must pay higher prices for many items.
What can the reader reasonably conclude from information in the graph?
Fewer new businesses were started in 2010 than in other years.
The _____ is designed to help increase US productivity, GDP, and employment.
National Export Initiative
How do consumers' feelings about the economy help contribute to growth?
Positive consumer attitudes influence spending habits.
A car dealership analyzing whether it will loan money to William to buy a new car finds that his credit score is in the "very good" range. Which statement best describes the lender's viewpoint of William?
He is a low-risk borrower who qualifies for lower interest rates.
Why might variable expenses change a great deal at different times of year?
Heating and cooling costs might vary considerably.
US federal income tax is progressive by law, but which best explains why wealthy individuals can often pay far less in taxes than the top tax rate?
High-income earners use tax laws to their advantage to reduce their tax rates.
What led to Henry Ford's success as an entrepreneur?
His innovative production methods.
According to Brooks's article, what was the main effect of entrepreneurship in China?
Poverty noticeably declined.
The image shows Gale's investments during one year. Investments during One Year What does the information demonstrate about Gale's investments?
If she had purchased only the stock and had not diversified her investments, she would have lost money.
In regard to trade, the United States
Imports and exports of goods and services
How would a manufacturer benefit by using fewer scarce resources?
The product would be less expensive to produce.
Which explains a difference between income and taxable income?
Income is what a person earns, while taxable income reflects what is left after paying federal taxes.
How has globalization made countries more interdependent? Check all that apply.
Countries now rely on one another for vital resources. Countries now rely on each other for new industries. Countries now rely on one another for chances to import. Countries rely on each other for cheaper products. Countries now rely on one another for chances to export.
What is the simplest change that can be made to the budget to produce more savings next month?
Decrease food expenses.
Which statement best describes why it is difficult to sell a home during a recession?
Demand greatly decreases.
What are the signs of low inflation? Check all that apply.
Demand steadily rises. Prices continue to increase. The economy grows in a healthy way.
This diagram shows a government's approach to taxing and spending. Which of the following would be a good title for this diagram?
Fiscal Policy
What is most likely the reason variable expenses should be planned after fixed expenses?
Fixed expenses are required and constant, but variable expenses are more flexible.
What does the table show about the relationship between different measures of development?
GNI per capita better reflects standard of living than GDP.
Why is GNI per capital a better measure of standard of living than GDP?
GNI per capita indicates how much each person makes on average.
Which best describes why gender equality is an important factor influencing development?
Gender equality means that everyone can contribute to development.
Which statement best describes how globalization connects the world?
Globalization helps create new forms of transportation, communication, and technology.
Which statements best describe how governments respond to changes in the business cycle? Check all that apply.
Governments manipulate interest rates.
What part does interest play in deficit spending?
Governments must pay interest on money they borrow when they take on debt.
One way to measure economic growth is by using GDP, which stands for
Gross Domestic Product
______ per capita measures the average annual income per person per year.
Gross National Income
How do Human Development Index (HDI) and gross domestic product (GDP) compare in what they measure?
HDI measures human development, while GDP measures economic development.
Which statements apply to a certificate of deposit (CD)? Check all that apply.
It can be purchased from a banking institution. It can be purchased for almost any amount.
How does government instability affect other development factors?
It can undermine other factors.
What role does competition play in international trade?
It drives down prices for consumers
Which best describes why infrastructure is important for a country?
It helps society meet basic needs.
Which statement best describes how the Fed responds to recessions?
It increases the money supply.
The graph shows the federal debt between 1993 and 2013. What trend about the federal debt does the graph reveal?
It is increasing.
What does the table indicate about the development of Barbados?
It is not economically developed but has a relatively high standard of living.
Which best describes what a subsidy does?
It keeps the price of domestic goods relatively low.
What are the advantages of following a strict repayment schedule? Check all that apply.
It prevents additional fees from being charged. It prevents some interest rate increases. It shows that the borrower is responsible.
The United States is said to have an absolute advantage in producing food compared with Japan. What does that mean?
It produces food more efficiently than Japan.
Which statement best describes an education at a vocational school?
It usually takes two years to complete and tends to focus on technical training.
What effect would a tax increase have on income?
It would not affect gross income.
These lists outline the details of two jobs. Which statement correctly compares the two jobs?
Job B offers more days off and employee benefits.
The North American Free Trade Agreement created a free trade zone between Canada, the United States, and
Mexico
Which of the following statements most accurately describes the federal government and its employees?
Millions of Americans work for the federal government.
What advantages does money have over bartered goods? Check all that apply.
Money has a set value, and bartered goods do not. Money is more portable than bartered goods.Money allows people to easily store value they earn.
Which best describes the relationship between education and life expectancy?
More education can help increase life expectancy
If expansionary taxation policies encourage growth, are they always appropriate to implement?
No, government services could create inflation, which decreases the purchasing power of consumers.
Which country has the highest standard of living?
Norway
What is an example of a country that makes use of another nation's currency?
Panama
What would happen if currency in all countries had fewer denominations?
People could not charge as many different prices for goods.
How do quotas help domestic producers?
Quotas facilitate the sale of more domestic goods.
The graph compares the cost of living in three different cities. Which statement best explains this graph?
San Francisco has the highest cost of living of the three cities.
Which is the best way to achieve long-term financial goals?
Save more money from net income.
What is one benefit of purchasing saving bonds?
Saving bonds are purchased from the government and guaranteed to increase in value.
Bella has a credit score of 720. Based on the graph, which description most likely explains her score?
She pays her bills on time and has a lower amount of debt.
Which best describes the difference between sole proprietorships and partnerships?
Sole proprietors keep all profits and have unlimited liability, while partners split profits and share liabilities.
Which can be considered disadvantages of sole proprietorships and partnerships?
Sole proprietorships require one person to do many things, while partnerships require many people to weigh in on decisions.
Why are many children in Niger unable to receive an education? Check all that apply.
Some children work to support their families. There is insufficient free public education. Few laws exist that force children to go to school.
Which best describes how a recession develops as demand and production decrease?
The recession feeds on itself.
Which region specializes in diamonds?
Sub-Saharan Africa
What is one consequence of stagflation?
The economy drastically slows down as money loses its buying power.
The graph shows the federal budget from 1980 to 2010. What conclusion can be drawn from this graph?
The federal budget is usually unbalanced.
In what circumstance would a property insurance claim be rejected?
The insurance company finds that a homeowner intentionally caused damage.
What must happen in order for an insurance company to make a payout? Check all that apply.
The insurance company must verify the claim. The insured party must file a claim. The insurance policy must be in place. The insured party must experience a covered loss.
Which of the following best describes the circular flow model?
The model represents the movement of money throughout the economy.
What does the diagram show about tax revenue?
The most revenue comes from individual and payroll taxes.
How can an insurance company make a profit by taking in premiums and making payouts?
The value of the premiums the company takes in is higher than the value of the payouts it makes.
Which statements apply to leasing a car? Check all that apply.
There are mileage restrictions on the car. You must return the car after the lease ends. There are penalties for ending the lease early.
Which statement best describes how lenders determine borrowing conditions for a customer?
They access the customer's credit reports.
How do bank loans help the nation's economy?
They allow businesses to expand and improve.
Which statement best explains scholarships that cover the costs of an education?
They are often based on achievement.
What happens to earnings in a cooperative?
They are shared with member owners.
What do quotas and embargoes have in common?
They both set limits on imported goods.
Which best describes the effect negative incentives have on a certain course of action?
They make the action less profitable.
Why might people choose to rent a home rather than buy a home?
They may be relocated for a job.
Which best explains how contractionary policies can hamper economic growth?
They reduce disposable income.
The first map shows colonial powers and their holdings (1945). The second map shows human development worldwide. Compare the two maps. What do the maps indicate about regions that gained independence in the second half of the twentieth century?
They remain less developed than their colonial powers.
How do corporations raise money and resources to expand? Check all that apply
They request a bank loan. They agree to sell stocks. They issue bonds.
Which person is a victim of identity theft?
Thomas, whose credit card information was stolen and maxed out at a jewelry store
What is one problem that might commonly occur when one is bartering?
Two people have different ideas about the value of an item.
Which federal agency calculates the Consumer Price Index (CPI)?
US Bureau of Labor Statistics
Which questions about risk should someone ask before making a big purchase? Check all that apply.
What problems are most likely to happen? What could go wrong? What problems could be most damaging?
Which statement most accurately describes the trends shown on this graph?
When GDP falls, unemployment rises.
Which questions should someone ask when deciding whether to lease or buy a car? Check all that apply.
Will I use it more than the allowed lease mileage? How long do I want the car? How much do I want to spend?
Which power source has been least developed?
Wind
How can the use of new technology in industry benefit workers?
Workers can gain new knowledge and skills.
Glenn and Maggie own a regional chain of juice bars and are looking to expand in the coming year. They already have fifty shops, but they know they will need a loan to reach their goal of one hundred twenty five shops. Which type of banking institution is most suitable for Glenn and Maggie's business?
a commercial bank
Which is the best example of a country that is dependent on other countries?
a country that has little fertile soil
On a production possibility curve, data points that fall outside of the curve represent
a currently unattainable production.
Which is the best definition of inflation?
a gradual increase in the price of goods and services
Sofia has saved $10,000. She wants to be sure that she is earning interest on her money and can add to her savings. She also wants to be able to access her money if the need should arise. Which type of account is most suitable for Sofia's needs?
a money market account
What is the definition of liability?
a responsibility to pay for or fix a problem
Typically, high inflation is a sign of
a struggling economy because wages cannot keep up with the increase in prices.
Which best describes a regressive tax?
a tax that charges high-income earners a lower percentage than low-income earners
Samira is a freshman basketball player who hopes to go to college on a basketball scholarship. She is offered the chance to play on her school's varsity basketball team, which plays in tournaments during holiday breaks. Samira usually spends her breaks working at the local hardware store. After careful consideration, Samira decides to stay on the freshman basketball team and keep working over breaks. The fact that Samira may miss out on a scholarship opportunity by staying on the freshman team illustrates
a tradeoff.
Paying for transportation to and from work is an example of
a variable expense.
The Free Trade Agreement Tariff Tool allows US businesses to
access tariff rates when planning to export.
Which strategy best helps a famous brand company reach consumers?
advertising nationally
When creating a budget, log fixed expenses
after income.
Opportunity cost occurs because of a producer's need to
allocate resources.
The government of country A has determined there is a coal shortage based on mining reports. As a result of these data, the government decreases coal exports to other nations. Access to information helped country A
allocate resources.
Based on economic theory, if a person wants to purchase a large stereo system, what must necessarily occur?
allocation of resources
An entrepreneur conducted many experiments in a project without success. What characteristic must this person have to succeed?
an ability to learn from mistakes
What kind of advantage does a country have if it can make a product more inexpensively?
an absolute advantage
Which job-related factor do both lists show?
annual wages
A disadvantage of forming a partnership is that owners
are fully responsible for their partners' losses.
What is the purpose of comparison shopping?
attempting to find the best deal on a product
Which types of credit are most similar to each other?
auto loan and mortgage loan
Governments collect taxes to ensure that
citizens contribute to meeting society's needs.
Which of these is most likely the US government's aim in taxing imported goods?
to protect domestic businesses
Federal and state governments protect victims of identity theft by
creating laws that impose fines and jail time for identity thieves.
Which best describes a central bank's primary role?
creating monetary policy
Missing one payment may cause borrowers to
be charged a late fee.
Why does the US import oil?
because it does not produce enough oil
If the value of the US dollar declines in relation to other currencies, goods imported into the United States will
become more expensive.
The safest way for someone to make an online purchase is to
buy from a reputable website.
The best time for Americans to import French cheese is when they can
buy the most euros for US dollars
Read the scenario. Brad has a steady job, earns a solid income, and plans to live in a nearby city for the long term. He is looking to purchase both a car and a place to live, and he is very interested in building up equity and credit. Which of the following illustrates the most economically sound choice for Brad?
buying both a car and a home
What types of investments do banks use to make a profit? Check all that apply.
buying stocks and bonds buying several properties buying the rights to loans
What is one way for an entrepreneur to decrease risk?
by creating a strong business strategy
How do embargoes most negatively affect a domestic market?
by depriving domestic producers of needed goods, restricting their ability to trade
How do trade agreements of international organizations affect trade?
by encouraging countries to balance imports and exports
How do government regulators protect consumers?
by ensuring lenders comply with the law
During a recession, what is one way governments try to encourage growth?
by increasing unemployment benefits
How have airplanes changed the way the world does business? Check all that apply.
by making long trips less expensive by making long trips in less time by opening up new trade markets by increasing travel options
How can a student pay for an education as part of a work-study program?
by taking a school job as part of a financial aid plan
Which of these qualify as variable expenses? Check all that apply.
clothing purchases monthly groceries cable tv
APR on a loan may be adjusted based on a borrower's
credit history.
Read the passage about a family health insurance plan. What is the $25 fee Maria's mother paid when Maria visited the doctor?
co-payment
The most economical way to purchase large items, such as furniture, is to buy with
cash
down payment is an upfront payment of ____ to make a purchase.
cash
Which is the most liquid form of money?
cash and currency in circulation
Which technologies have made global communication instant and more effective? Check all that apply.
cell phones wireless devices smart phones
The Federal Reserve Bank of the United States is also known as the
central bank.
Globalization is the process of
connecting the world over time.
Lenders are prohibited from
considering borrowers' race, sex, and national origin.
Which are examples of programs or projects most likely funded by taxes paid by citizens of the United States? Check all that apply.
constructing a highway collecting garbage maintaining state parks
The most common measure of inflation is a statistic called the
consumer price index
A business owner would most likely create a cooperative instead of buying a franchise because
cooperatives allow all owners to share profits, while franchises are required to share profits with a parent company.
Purchasing power parity is used to compare the gross domestic product between
countries
What types of money are included in the M2 category? Check all that apply.
currency savings accounts checking accounts short-term investment accounts
As a result of decreased production, David lost his job designing cars. Which terms can be used to describe David? Check all that apply.
cyclically unemployed unemployed
A currency shared by several countries in Europe is the
euro
High government expenditures can lead to a bigger
deficit.
This leads to _____ inflation.
demand-pull
When the US government becomes aware of economic changes, the discovery is most likely to influence
how the nation allocates resources.
Many checking accounts offer multiple ways of accessing money in addition to checks. Which of these can be used to access money in a checking account?
debit card
What is the main goal in creating the federal budget?
deciding how to manage the government's tax revenue and expenditures
Which consequences can victims of identity theft face? Check all that apply.
difficulty getting a loan or credit card an increase in debt a loss of money difficulty landing a new job
What consequences do borrowers face if they miss many payments? Check all that apply.
difficulty getting loans garnished wages lost collateral
Credit regulations require lenders to
disclose credit terms to borrowers.
Spending that can change from year to year is known as spending.
discretionary
Time is measured along the x-axis. What is measured along the y-axis?
economic output
A specific territory or zone that has laws and regulations different from the rest of the country is called a(n)
economic zone.
What are some of the common characteristics of industrialized nations with advanced economies? Check all that apply.
educated citizens access to health care higher incomes
Which of these are indicators measured by the HDI? Check all that apply.
education gross national income life expectancy
Which term best describes the type of assistance non-governmental organization such as Doctors Without Borders provide?
humanitarian aid
Trade agreements can cause jobs to go to countries that provide those jobs
efficiently.
In which category do commodities belong?
either short- or long-term investment
What term describes a ban or restriction on trade with another country?
embargo
What is the main role of the US Import Administration?
enforcing conditions of trade agreements
Each currency has a changing value relative to other currencies. This is referred to as a currency's
exchange rate
Successful entrepreneurs contribute to the economy by
expanding markets.
The exchange of factors of production for income occurs ___ in the market.
factor
One negative consequence of using automation to improve manufacturing production is that
factories often need fewer workers
Which are types of income tax that people pay? Check all that apply.
federal local state
The _____ rate is the interest rate banks charge each other for borrowing or storing money.
federal funds
What must an entrepreneur do after creating a business plan?
finance
Which group does the Fed serve?
financial institutions
Which of the following are considered needs? Check all that apply.
food residence water
"Everyone's rights should be protected" is an argument
for regulation.
How is a savings account most useful?
for using money in the near future but not right away
The pie graph shows sources of income for people ages 65 and over in 2010. According to this chart, among people 65 and over, investment income represents the
fourth largest source of income.
When someone is considering a career as a lawyer, future earnings are the
future benefit.
Opportunity cost means that something needs to be
given up.
Bank deposits help the nation's economy by
giving banks the money to loan and invest.
Which body or group is most able to use money to influence the economy?
government
One fact about all currency is that it
has a changing value.
Countries establish internal economic zones in order to
have fewer economic restrictions.
Economic patterns
help economists make forecasts, which are also called predictions.
Which of the following is a characteristic of the prosperity phase of the business cycle?
high levels of production
Stagflation occurs when high inflation combines with
high unemployment and a low level of production.
What type of labor force might a pottery factory want to focus on when hiring?
highly skilled
The circular flow model examines interactions between which two groups?
households and firms
What is the definition of liquidity?
how easily an investment can be exchanged for cash
This graph shows the US unemployment rate from August 2010 to November 2011. This graph could help an economist predict
how many people will be out of work in the next year.
The term liquidity refers to
how quickly money can be exchanged.
Sara would like to open a bank account. What will she need to do this? Check all that apply.
identification card money to start the account proof of address
Money for a personal loan is usually issued to the borrower
in one lump sum.
Tariffs and subsidies are both types of
incentives.
Which describes a type of tax that people pay on money they earn?
income tax
Which of these are goals of an expansionary policy? Check all that apply.
increased available credit increased money supply decreased interest rates
What is a potential negative effect of an expansionary policy?
increased inflation
Which process helps countries import things they cannot make while allowing them to specialize in exports?
international trade
A factory owner might decide to manufacture shirts in Pakistan instead of the United States because
it is less expensive to make shirts there
International trade organizations promote free trade by encouraging countries to
limit their protectionism policies.
Economies must answer the three economic questions because resources are
limited
Which best describes a central bank's primary goals?
limiting inflation and reducing unemployment
The main advantage that corporations have is
limiting liability for owners and stockholders.
Economists studying the money supply categorize the status of the money based on
liquidity.
Which describes a type of tax that funds city programs?
local income tax
The document shows a personal allowances worksheet. The document asks about dependents because the number can
lower overall taxes.
This graph shows the US unemployment rate from August 2010 to November 2011. This graph could help the US government
make an economic prediction.
Spending that is required by law is known as ____ spending.
mandatory
The Federal Reserve manages the nation's currency and money supply by
manipulating interest rates and acting as a lender to banks.
The benefits a worker receives from an employer typically include
medical and dental coverage.
Most people prefer to pay health insurance premiums rather than pay out-of-pocket for medical expenses because
medical costs can be extremely high, and insurance is more affordable than paying out-of-pocket for a hospital stay.
Which is a kind of federal payroll tax?
medicare tax
What area of economics focuses on the interactions between individual consumers and producers?
microeconomics
To be successful, what must an entrepreneur be willing to invest? Check all that apply.
money time considerable effort
A country with an absolute advantage can produce a good or service
more efficiently than another country.
Which type of loan most often involves long-term repayment over 30 years?
mortgage loans
An economic incentive is best described as something that
motivates producers or consumers to take action.
Which of these investments may be long term? Check all that apply.
mutual funds bonds retirement funds commodities
Often duties and taxes are imposed on cars that are imported from other countries. What types of incentives are these duties and taxes?
negative incentive and tariff.
When someone is considering a career as a lawyer, future earnings minus the cost of law school is the
net benefit.
A monthly fixed rate mortgage payment
never changes.
The Middle East is best associated with which internationally traded product?
oil
The graph shows government spending as a percentage of GDP from 1990 to 2012. At its peak, government spending made up about
one quarter of GDP.
Credit unions differ from retail banks because they are
owned by their members.
Two doctors who join forces in business form a
partnership
Income reaches the highest level at the ____ point of the business cycle.
peak
Bryan receives an e-mail from a group posing as a police officers association and asking for bank account information. This is an example of
phishing.
Which type of incentive makes it more profitable to follow a certain course of action?
positive
Read the passage about Nelson's car insurance. What is the $75 payment Nelson must make each month?
premium
Which is always a cost when buying insurance?
premium
Cost-push inflation occurs when
producers need more money to make and distribute goods.
What is collateral?
property given as security for a loan
The chart shows how two people with different incomes are taxed. According to the chart, the citizens are being taxed
proportionally
What are standards designed to do? Check all that apply.
protect consumers limit imports ensure safety
The basic purpose of insurance is to provide
protection.
It is important for victims of identity theft to contact the authorities
quickly to protect themselves from financial losses.
An entrepreneur keeps backup funds in a savings account so that if their business experiences a loss, they will be able to recuperate. What type of risk management is this an example of?
reducing risk.
When governments inject money into the economy, which of the following are their goals? Check all that apply.
reducing unemployment improving economic stability encouraging competition improving production
What kind of money is a gold certificate considered to be?
representative
A _____ can be defined as whatever people use to create services and goods.
resource
An entrepreneur must accept being accountable for the failure of the company because the entrepreneur is
responsible for organizing the business.
Long-term investments are most commonly used to save money for .
retirement
For the time period shown, the value of the US dollar was generally
rising against the Canadian dollar.
Based on the chart, the primary responsibility of shareholders is to
run the business by electing a board of directors, who then hire the company's leaders.
Which investment is best for someone who is likely to need cash soon?
savings account
Which is an example of a short-term investment?
savings account
Banks pay interest to customers through a
savings account.
Bankruptcy is considered a last resort because it stays on someone's record for
seven to ten years.
People who buy stock in a company are known as
shareholders
Which is the correct order of entities who benefit when banks make a profit?
shareholders, companies, and the economy
When revenues are higher than expenditures in a budget, that budget shows a deficit.
shows a surplus.
Before creating a business plan, an entrepreneur must research ______ businesses in the past.
similar
A federal payroll tax that supports retired workers is
social security tax.
The most common business organizations in the United States are
sole proprietorships.
To create a balanced budget, one must make sure to
spend less than or equal to income.
Which of these factors would strengthen demand for a nation's currency on the international market? Select all that apply.
stability of government victory in war low unemployment rates
In addition to federal income tax, many people also pay
state income tax.
Which best describes what a central bank uses monetary policy to do?
steer the economy away from recession and toward growth
Which is an example of a high-risk investment?
stock in a start-up company
Which of these is a banking activity of the Fed?
storing money for banks
Which factor plays a role in establishing the value of a country's currency?
supply and demand
What does deficit spending require a government to do?
take on debt
A(n)_____ is a tax issued by the federal government on imported goods.
tariff
Sales tax is calculated by multiplying the price of an item by the
tax rate
What must an entrepreneur assume when starting a business?
that clever market strategies may still fail to sell a product
The Federal Reserve transfers profits from its twelve regional banks to
the Department of the Treasury.
What is the full name of the US central bank, known as the Fed?
the Federal Reserve Bank
Which organization maintains the Human Development Index (HDI)?
the United Nations
What does life expectancy measure?
the average number of years that a population is likely to live
When the prices of raw materials or labor increase, this causes an increase in ________ resulting in ______ for consumers.
the cost of production higher prices
What determines the value of an item?
the resources consumed in production
Property taxes are usually determined based on
the value of the property.
Where do banks get money to lend to borrowers?
their depositors
Franchises are attractive to business owners because
they have a proven business model.
Because many successful business owners fail on their first attempts, the reader should assume that
they learned from their mistakes.
Why were free trade zones created in China?
to attract investments by foreign countries
What is the most common reason why countries create trade agreements?
to create free trade
What is one purpose of writing a business plan before entering the market?
to differentiate the new company from the competition
Which best describes why governments collect taxes?
to fund government programs
A reason that countries trade with each other is
to get products they cannot produce.
The best reason to record income at the top of a budget is
to know how much money is available.
Which of these is the best reason for Nina to maintain up-to-date and accurate records of her bank accounts?
to know how much money she has for budgeting
What is the purpose of quotas?
to limit how much of a good can be imported
Which best explains why a sole proprietor would want a partner?
to make it easier to raise funds for expansion
Which best describes why countries establish limits on trade? Check all that apply.
to restrict foreign influence in a sector to restrict importation of a foreign good to punish other countries
What are the most likely reasons a US corporation would open a factory in China? Check all that apply.
to take advantage of affordable land prices to take advantage of abundant resources to take advantage of lower labor costs to take advantage of favorable tax laws
What can be a result of free trade? Check all that apply.
trade imbalances increased pollution exploitation of workers new opportunities
To barter means to
trade.
It's important for countries to exchange currencies so that goods from other nations can be
traded
A credit score tells a lender how
trustworthy someone is as a borrower.
Which are costs of a college education? Check all that apply.
tuition books and fees room and board student loan interest
When individuals are looking for jobs but are unable to find work, they are said to be
unemployed
The development of many new businesses helps limit
unemployment
Businesses can take advantage of faster technology to make products faster.
value of the currencies for two or more countries.
On which of these are individuals required to pay income taxes in the United States? Check all that apply.
wages tips investment earnings
If investors can earn 10 percent interest in an account in Mexico but just 3 percent in the United States, those investors will most likely
want to invest in Mexico, which will cause the peso to appreciate.
Producers can generate instant sales by using
websites.
From what part of income should someone take savings?
what otherwise would be discretionary income
When can a credit agency release someone's credit information in Florida?
when a consumer authorizes it
The chart shows facts related to professional interpreters. The job outlook suggests that the translator field
will likely to continue to grow.
The chart shows that federal and state taxes are
withheld from employee pay.
Why is net income lower than gross income?
withholdings
In what time period did hydroelectric power usage reach its peak?
1990-2000
Which best describes why taxes and savings are considered leakage factors?
They take money out of the economic system.
Inflation
1. causes steadily rising prices 2. reduces the value of money 3. reduces purchasing power
What is the best definition of economic data?
Economic data is information used for calculation, analysis, or planning.
The three questions of economics are based on decisions made by economies. What statement best describes why economies must make these decisions?
Economies must make these decisions because resources are limited.
What is true of representative money? Check all that apply.
It can be exchanged for a valuable good. It was used in systems involving a "gold standard." It can be traded for a commodity such as silver.
The inflationary spiral explains the causes and effects of high inflation. The spiral usually begins with an increase in demand. What is the direct effect of this increase?
Producers raise prices to continue to make a profit.
Land, labor, and capital also are known as factors of
Production
Which statement best describes the circular flow model?
The model represents the movement of money and resources throughout the economy.
Why are imports, which bring goods into a country, considered a leakage factor?
The money paid to producers of imports leaves the country.
Based on the lesson, how are individuals and economies similar?
They both must decide how to allocate resources.
When people have more money and eagerly spend it, this increases
demand
If an economy does not answer the three economic questions, resources may
run out
These are the four stages of the business cycle: 1. Depression 2. Prosperity 3. Recession 4. Recovery In which order do these stages occur?
2, 3, 1, 4
A company makes $200,000 in a year and has $150,000 in production costs, leaving them with $50,000. The $200,000 represents
revenue
Most resources are nonrenewable, and wants and needs are unlimited. This is an example of
scarcity
Why is gasoline weighted more heavily than tomatoes in a calculation of the annual inflation rate in the United States?
Americans spend more money on gasoline than tomatoes, on average.
Which of the following illustrates an opportunity cost?Amir only has time to study or to play basketball.
Amir only has time to study or to play basketball.
Which scenario is an example of cost-push inflation?
An increase in workers' wages raises the production cost of cars, and car prices rise as a result.
What do these graphs indicate about the relationship between employment levels and prices during economic cycles?
As unemployment rates rise, average prices fall.
The chart below shows a production possibility schedule for a pastry shop that makes $0.50 profit per donut and $0.75 profit per bagel.
B yields the largest profit
Which scenario best reflects the relationship between production and demand in a recession?
Car dealerships cannot sell their stock.
Which statements correctly identify limitations of the factors of production? Check all that apply.
Economies must consider their limitations when answering the three questions of economics. Capital includes all money and physical facilities needed to create a product. Labor is a factor driven by the size of the population, education, and standard of living.
Which statement best describes why a government's actions are important in macroeconomics? Check all that apply.
Government is both a consumer and a producer. Government can use policy to influence the economy.
Which best explains why banks consider interest on loans to be important?
Interest helps them cover business costs.
Which of the following statements about opportunity cost are true? CHECK ALL THAT APPLY.
It exists because resources are scarce. It influences consumers. It influences producers.
How is using money related to bartering?
It is a substitute for bartering.
John has a large apple orchard. He has decided to bake pies and sell them at the local farmer's market. Which best describes John's use of economics?
John is using available and renewable resources.
Which best describes the purpose served by economic models within an economic system?
Models identify patterns.
What might happen if an economy is unable to produce wanted goods and services?
People will look elsewhere for them.
In microeconomics, what occurs when equilibrium is reached?
Prices are set.
The government has the right to own all land, buildings, and factories in a
command economy.
Negative
consequences can result when an economy does not answer the three economic questions.
In a competitive market, an electronics company releases a smartphone that is much faster than older models. This is an example of
creating an innovative product.
When government intervention makes currency worthless, this condition is called
hyperinflation.
Rescooperate Ice Cream Shop recently analyzed their books. They found that in the past year, they made $100,000 selling ice cream and spent $75,000 on supplies and factory space. The remaining $25,000 represents
profit
Which of the following lists the proper placement of terms, from left to right, to complete the equation?
profit, revenue, production cost
Producers can create their maximum combination of goods, as long as they
properly allocate resources.
According to the graph, 1971 to 1976 was a period of stagflation due to
rising unemployment and inflation.
New technology in _______ allows producers to use materials from all over the world to manufacture goods.
shipping
In a command economy, a cotton farm floods after a heavy storm. The repair work most likely will be paid by
the government group that runs the farm.
School band members need to raise money for new uniforms. Some members want to sell energy drinks at a football game, but others want to organize a car wash in the school parking lot. Based on economics, what would be most influential in making the decision?
the value of the resources
People might choose to use a debit card rather than cash for purchases because
they do not want to carry around large amounts of cash.
Which of the following are examples of limited resources on the part of consumers?
time and money
How do economists use data? Check all that apply.
to follow and predict unemployment rates to explain trends in production and shipping
