economics

Beta can produce either ten apples or three oranges. Cama can produce either twelve apples or three oranges. Which of the following is true?

Cama has an absolute advantage in the production of apples.

Not only can the public's savings rate have a multiplier effect on economic expansion and growth in GDP, but also the

Executive Branch of the federal government and the Federal Reserve can have a multiplier effect on business growth and growth in the money supply.

In case of a bank failure, the funds of individual depositors are protected by the

FDIC

In a recession, fiscal policy calls for the government to decrease taxes and increase spending.

TRUE

The importance and influence of technology has made it essential

for young adults to get as much education and as develop as many skills as possible.

The economic goals of the American free-enterprise system include

freedom, equity, and growth.

Technology creates economic

growth and efficiency

Since economics is the science of choice, the Internet has

increased the number of choices available to us.

Technology has devalued labor and enhanced the value of

information and knowledge

The Federal Deposit Insurance Corporation (FDIC)

insures bank depositors' savings

Economic knowledge

is important in every job

The Agriculture Adjustment Act brought much criticism because

it offered farmers money to destroy crops and leave land uncultivated

The time periods between when an economic policy is decided to when it actually takes effect are called

lags

Which of the following was a cause of the recession of the 1980s?

large government deficits and increased consumer spending

Choose which economic rule states that the additional satisfaction people get from consuming one more unit of a product will lessen with each additional unit they consume

law of diminishing marginal utility

Which of the following is a function of our current banking system?

lnending money

As an economic term, land includes

natural resources

The labor movement resulted in

outlawing child labor, eight-hour work days, and safer working conditions

the economic prosperity of the 1920s

overproduction

President George W. Bush, the 43rd President of the United States believes

participating in the world economy makes the U.S. economy stronger

What economic concept do the Fourth and Fifth Amendments to the Constitution identify?

private ownership of property

A country has an absolute advantage when it can

produce more of a product than another country

An individual buys a finished product for the purpose of consumption in a

product market

In the United States, income tax is an example of a __________ tax, while sales tax is an example of a __________ tax.

progressive; regressive

The purpose of economic regulations in the United States is to

promote economic growth, stability, and equity

The Hawley-Smoot Tariff is an example of

protectionism

The purpose of the Montgomery GI Bill was to

provide economic assistance, including education and housing assistance, to all veterans

The Civilian Conservation Corps

provided work to single young men, requiring them to send most of the money home to their families

The North American Free Trade Agreement (NAFTA)

reduced trade barriers among the US, Canada, and Mexico

All money in the United States today is

fiat money.

What are the three functions of money? (Mark all that apply)

Standard of value, medium exchange and store of value

1) The __________ of President Coolidge brought short-term economic growth to the United States during the 1920s. 2)The use of the __________ rapidly reduced the price of automobiles, making them affordable to many more Americans. 3) The main cause for __________ in the 1920s was the large debts that countries such as Germany were forced to pay after World War I. 4)The decline of the __________ in the 1920s was one of the early warning signs of the Great Depression. 5) One of the main tools used by labor unions is __________. 6) The __________ virtually turned the United States' World War I economy into a command economy. 7)The __________ reflected the efforts of workers to improve their economic position.

1)laissez faire policies 2) assembly line 3)decline in foreign trade 4) agriculture industry 5)collective bargaining 6)war industries board 7) labor movement.

Choose which of the following describes a free enterprise system?

Individuals are free to own and control the factors of production

Why did the first national bank fail?

Many felt the national bank gave the federal government too much power, and Congress refused to renew the twenty-year charter in 1811.

Which statement describes the critical role played by profits in a market economy?

Profits encourage businesses to efficiently produce the things people want.

Hypothetical situation: The economy has been declining for six months. The unemployment rate has increased by 2 percent in the past six months, and many Americans are looking for work. Production has decreased and many businesses are simply not investing or hiring new workers. Consumers are saving (not spending) their money because they are worried about current events. From what you learned in this course, what is the most logical action for the Federal Reserve to take?

They should lower the discount rate and buy government securities in order to expand the money supply.

The Federal Reserve, our nation's central bank, has been using a practice called Quantitative Easing (QE).

This is implemented by printing money to buy or sell short term government bonds in order to keep interbank interest rates at a very low targeted value.

What event actually brought the United States completely out of the Great Depression?

WWII

Scarcity is a problem only for economies that use money as a medium of exchange.

false

Specialization does not promote economic efficiency because it increases the need for foreign trade.

false

The fundamental economic problem is the number of businesses that fail all over the world.

false

The pen has a high utility for a writer when the ink is dry and it does not write.

false

An import is

a good or service that is brought from a foreign country

Placing money in a checking account is an example of using money as

a store of value.

The economic prosperity of the 1990s was primarily due to

all of these

During the Cold War, the United States government spent large amounts of money

all of these are correct

In order to control inflation, governments may

all of these are correct

A labor union is

all of these are correct.

Specialization promotes efficiency of the world economy by

allowing nations to only produce the goods they produce efficiently

George Sparks has just been laid off. He had an excellent job as a computer programmer, but due to company cutbacks he lost his job. While looking for another job, he is able to collect unemployment insurance. This is an example of

an automatic stabilizer

The most significant legacy of the New Deal was

an increase in the size of the Federal Government and expansion of government

Economists are hired by private businesses to

analyze economic data

Members of the Board of Governors:

are appointed by the President with approval of the Senate.

Entry level economists typically must have a

bachelors degree

Electronic commerce, or e-commerce, has made it possible for

businesses to reach customers anywhere in the world.

NAFTA instituted a free trade policy between

canada, mexico, and the US

According to modern theory, it is beneficial for a country to trade a good with another country if one country has a(n) __________ in the production of that good.

comparative advantage

The War Industries Board

converted businesses to the war effort during World War I

Today money consists of

currency, checking and savings deposits.

President Ronald Reagan's new economic strategy, Reaganomics, included

cutting taxes and decreasing government spending

When the Federal Reserve decides it is necessary to expand the money supply they might

decrease the reserve requirement

John Maynard Keynes believed that all economic problems are caused by

decreases in business sector spending

The Environmental Protection Agency (EPA) impacts the economy by

developing and enforcing regulations that protect human health and the environment

Labor movement refers to the

efforts of workers to improve their economic position

The four factors of production are the resources of land, labor, capital and

entrepreneurship

The need to make choices arises because

everything that exists is limited

A baker purchases flour so he can make goods and sell them in his bakery. The baker purchased the flour in a product market.

false

Economic regulations help fulfill Adam Smith's idea of a laissez-faire economy.

false

Economics is an exact science.

false

Economics is the study of the flow of money in societies.

false

In order to become an economist you need only a high school diploma.

false

Monetary policy alone is a more effective economic policy than fiscal policy.

false

Monetary policy alone is the most effective economic policy.

false

One result of NAFTA is a decline in trade between the nations of North America.

false

The three Rs of the New Deal were

reform, relief, and recovery

What are the four main functions of banks today?

storing money, transferring money, lending money, and financial services

John Furry purchased a vacation package from a telephone solicitor. The person asked John for a two-hundred-dollar deposit via credit card in order to reserve his package. John gave the solicitor his credit card number, but he never received the vacation. The agency responsible for investigating this fraud is

the Federal Trade Commission

One of the most important economic results of World War I for the United States was

the United States moving from being a debtor nation to a creditor nation

Martha works at a retail store. She is paid by the store in a factor market and buys her clothing at the store in a product market. This cycle of individuals and businesses interacting is called

the circular flow of economic activity

The state of hostility that existed between the two world powers from World War II through the 1980s was called

the cold war

it offered farmers money to destroy crops and leave land uncultivated

the cold war

New technology and consumer spending created

the economic prosperity of the 1920s

Kelly, a rich businesswoman, finds that no matter how many pairs of shoes she buys, she can still find plenty more that she wants. Her salary only allows her to buy fifty pairs of shoes per year. She cannot buy as many shoes as she wants. Kelly is facing

the fundamental economic problem of scarcity

Crazy Eight is very excited because he is opening a new business. He purchased a building, equipment, a license, and computers, and he remodeled his building. He also was able to acquire a patent for his new idea. He invested all his savings in the new business and he is hoping his new business will take off. Crazy Eight was able to open this new business because

the government guarantees he is able to own property and ideas

In a trade-off, evaluate what the value of an opportunity cost is

the next best alternative

Economics can be defined as

the study of how people satisfy seemingly unlimited wants with scarce resources

You receive a coupon in the mail that gives you a free meal at your favorite restaurant. You go to the restaurant and enjoy your free meal. The next time you go to the restaurant, you notice the price of your favorite dish has been raised. This example illustrates the concept of

there is no such thing as a free lunch

What is the purpose of the Federal Reserve?

to regulate the money supply in order to create a stable economy

Bill Gates is an example of an entrepreneur because he developed a company and started a business.

true

In the United States, service jobs are the jobs of the future.

true

Monetary policy is the use of economic principles and programs by the Federal Reserve in order to control the money supply, availability of credit, and interest rates.

true

One of the main reasons for increasing economic regulations in the United States is the increasing population.

true

The chairperson of the Federal Reserve is said to be the second most powerful person in the United States.

true

The fundamental economic problem is that we do not have enough resources to satisfy all of our wants.

true

The opportunity cost of taking an unpaid vacation from work is the amount of money you would have made if you would have worked.

true

The primary and most used tool of the Federal Reserve is open market operations.

true

The terrorist attacks of September 11, 2001, caused a decline in consumer spending.

true

There is no such thing as a free lunch.

true

Fractional reserve banking makes it possible for banks to

use some deposits to make loans.