Economics Chapter 2
In which political system does the government own all businesses and the economy?
Communism
How does deposit insurance help prevent a bank panic?
Depositors are less likely to worry about their money and create a run on the bank by withdrawing their funds.
Which accurately describes the difference between elastic and inelastic supply?
Elastic supply refers to a change in production by producers when the price of a good or service changes, whereas inelastic supply refers to the lack of change in production as prices change.
Which government agency provides consumer protection in case of a bank failure and plays a direct role in the US economy?
Federal Deposit Insurance Corporation
Read the scenario. While Paul's neighbor recovers from foot surgery, Paul walks her dog daily. He enjoys it so much that he decides to start a dog walking business. What is Paul's next step?
He should ask himself how to get started and who to market the business to.
Read the sentence. The housing bubble was caused in part by people buying homes to fix and sell for a higher price. What is this known as?
INCORRECT investing CORRECT speculating
Which is true about scarcity?
INCORRECT Scarcity forces the government to allocate the factors of production. CORRECT Scarcity exists because people have unlimited wants and limited resources.
Why is scarcity referred to as the fundamental economic problem?
INCORRECT The four basic questions must be asked because of scarcity. CORRECT Individuals, businesses, and countries all face the problem of scarcity.
Read the scenario. Madison received $100 as a holiday gift. She used it to buy 50 mineral infused candles for $2 each. Then, she walked around the neighborhood and sold the candles for $4 each. What factors of production did Madison use? capital and land entrepreneurship and capital all four factors of production labor and capital
INCORRECT entrepreneurship and capital INCORRECT labor and capital
Which characteristics of capitalism provide an opportunity for entrepreneurship and allow both buyers and sellers to feel they made a return on an investment? (Select all that apply.)
INCORRECT 0% competition voluntary exchange and trade INCORRECT 0% freedom competition
Read the scenario. Ann owns two acres of trees. Which factors of production would Ann's situation fall under? (Select all that apply.)
INCORRECT 50% land CORRECT capital land
Which are characteristics to consider when defining a service? (Select all that apply.)
Services are intangible activities. Services require payment.
Which law did President George W. Bush sign to buy toxic assets from financial institutions?
TARP
The Tennessee Valley Authority Act helped open which river up for trade and navigation?
Tennessee River
Which is true regarding the FDIC?
The FDIC takes over for failed banks.
Which accurately describes why the FDIC was created?
The FDIC was created in 1933 after many bank failures caused the Great Depression.
Which correctly demonstrates the law of demand?
The Pizza Place increases the cost of a slice of pizza from $2.00 to $2.50. The number of slices sold in one day drops from 250 to 175.
Read the sentence. The US government plays an impactful role in the economy, both directly and indirectly. Which is an example of the federal government indirectly affecting the market economy?
The US government provides social security benefits for senior citizens.
Which are characteristics that make up capitalism? (Select all that apply.)
competition freedom
Which characteristics of capitalism drive retail companies to produce better goods and services by the best workers? (Select all that apply.)
competition freedom
Entrepreneurs who like a challenge and are dedicated to bringing their ideas to life have which qualities?
competitive and innovative
Which are considered goods? (Select all that apply.)
computer couch pool table
What were the top two purposes of the Tennessee Valley Authority Act? (Select all that apply.)
control flooding in the valley create employment in the valley
Which is considered a need?
daily meals
What is a measure that demonstrates how consumers respond to changes in the price of goods and services?
demand elasticity
What is a measure that demonstrates how producers respond to changes in the prices of products and services?
elastic supply
Which economic system is based on private ownership of goods and private decisions to invest in trade or business industries, with the intent of making a profit?
free enterprise economy
Which accurately describes aspects of a partnership business structure? (Select all that apply.)
Two or more individuals share the profits generated by a business. Two or more individuals share the losses incurred by a business.
What is one fundamental principle, or question, of economics?
What should the country produce?
How do you calculate the mode?
You find the data point that occurs most often.
Which is best classified as a want?
cable
Read the sentence. For a free enterprise system to exist, individuals need to be able to make _[blank]_. Which best completes the sentence?
choices
Read the statement. If the price of a product becomes too expensive, then the demand for it decreases. Which economics concept is this?
law of demand
Which economics concept states that price and quantity of demand have an inverse relationship?
law of demand
According to the video and economists, what are some factors in supply-side economics? (Select all that apply.)
lower income taxes price of the product
What were some of the tasks of the Tennessee Valley Authority Act? (Select all that apply.)
manufacture nitrates and phosphorus for creating fertilizer generate and provide hydroelectric power to the valley
Read the sentence. The housing bubble expanded in 2003 when _[blank]_ were at a 50-year low. Which best completes the sentence?
mortgage interest rates
Read the scenario. Georgia wants to open her own business. She is looking for flexible hours, low overhead costs, and no need for a physical store with total control of the company. Which are her best options? (Select all that apply.)
online business home-based business
Read the scenario. Kristine and Katherine are looking to team up. They want an already established business with a great corner store location and the independence to make something good turn into something better. Which are their best options? (Select all that apply.)
partnership franchise
Read the sentence. Subprime mortgages allowed many individuals to become homeowners; however, sometimes their credit scores were _[blank]_. Which most accurately completes the sentence?
poor
Which are characteristics of a command market system? (Select all that apply.)
priorities for the production of goods stricter laws to regulate economic activity
Which are examples of free enterprise?
private property, profit motive, competition
Read the sentence. When society does not have enough resources to produce all of the things people want, it is known as _[blank]_. Which correctly completes the sentence?
scarcity
What is the consumer's role in the marketplace?
someone who acquires and uses goods and services through economic exchanges
Which most accurately describes a firm's goal regarding revenue?
A firm will continue producing until its marginal revenue equals its marginal cost.
What is a characteristic of a need?
A need is something you cannot live without, such as water.
Which is an example of specialization?
A person studies nursing and works in a hospital.
Which famous economist wrote The Wealth of Nations?
Adam Smith
Which political theory allows for voluntary cooperation between citizens and the absence of government?
Anarchism
Which accurately provides an example of demand elasticity?
As the price of video games decreases by 20 percent, the demand for video games increases by 30 percent.
The free enterprise economy is most closely aligned with which system?
Capitalism
What does the JOBS Act do for companies? (Select all that apply.)
It gives private companies more access to capital from various sources. It makes it easier for certain companies to go public on US stock exchanges.
How does business competition impact the consumer?
It helps them because it keeps the price of goods low.
What benefits does competition bring to consumers? (Select all that apply.)
It offers consumers more choices in the marketplace. It can lead to lower prices for consumers on goods and services.
How is the JOBS Act helping to stimulate business? (Select all that apply.)
It permits companies to sell securities through crowdfunding or the Internet. It offers easier registration for a public company under federal regulations.
What is the primary function of the Federal Deposit Insurance Corporation?
It provides consumers protection in case of a bank failure.
In what year did Ken withdraw about $1,000 from his bank account?
year 10
What effect does government regulation have on businesses?
It takes away some economic freedom from businesses to ensure economic freedom for consumers.
Read the sentence. A new technology is created to help a manufacturer. How will this affect production?
It will increase supply because the item can now be produced at a lower price.
What were results of the federal government deregulating the airline industry in 1978, known as the Airline Deregulation Act? (Select all that apply.)
Large airlines were able to improve productivity. Consumers gained better (lower) prices for airfare. Many small airlines went out of business.
Read the statement. One weakness of a free market economy is instability. Which argument would supporters of a free market economy most likely use to argue that instability is acceptable?
Market corrections are difficult but necessary. The benefits people receive from innovation and freedom in a free market system are worth the cost of instability.
What is the definition of the Law of Variable Proportions?
Output in the short run will change when one input is varied and others remain constant.
Which are regulations the government may impose on businesses?
PARTIAL 67% requirements to ensure that they participate in competition requirements to provide accurate information to consumers CORRECT requirements to protect consumers as well as workers requirements to ensure that they participate in competition requirements to provide accurate information to consumers
What can happen when the United States government plays a direct role in the economy? (Select all that apply.)
PARTIAL 67% It competes with private businesses. It acts as an employer.
Which are considered producers? (Select all that apply.)
PARTIAL 67% car mechanic car builder CORRECT car mechanic car builder car salesman
Which is a function of the Federal Deposit Insurance Corporation (FDIC)? (Select all that apply.)
PARTIAL 67% verify soundness of insured banks notify depositors when a bank closes
Which is a description of scarcity?
People have limited resources, so they must pick which wants to satisfy.
In a free market economy, which is true regarding the role of the consumer?
The consumer determines what is produced.
Which is an example of the indirect role of government in the economy?
The government passes laws that keep electricity rates affordable.
Which explains the US government's role in promoting competition?
The government plays an active role in promoting competition at all levels.
Which is an advantage of the sole proprietorship and partnership business models?
They are both easy to start up.
Why do suppliers offer more for sale when prices are high?
They are motivated by profit and see an opportunity to make money.
What is the relationship between price and demand?
They move in opposite directions.
What is the relationship between price and supply in the law of supply?
They move in the same direction.
Why do entrepreneurs ask the three basic economic questions?
They want to use their resources wisely to make a profit.
How does a company entice the consumer to buy more using marginal analysis? (Select all that apply.)
giving away a prize with each purchase offering a buy one, get one free sale
Read the sentence. Capitalism drives the constant rotation of business opportunity, _[blank]_, and failure. Which most accurately completes the sentence?
growth
Read the sentence. Carlos has decided to sell T-shirts to his classmates. Which economic question does Carlos still need to answer?
how to produce
What were the functions of the Tennessee Valley Authority Act? (Select all that apply.)
improve navigation along the Tennessee River develop agriculture and forest land in the valley
What were the goals of the Tennessee Valley Authority Act? (Select all that apply.)
improve the economy of the Southeast provide power at a lower cost
What are the Three Stages of Production? (Select all that apply.)
increasing returns diminishing returns negative returns
What economic theory was proposed by Adam Smith and explains that an economy's success is determined by people's ability to pursue their own financial self-interest?
invisible hand
Which are characteristics of a traditional market system? (Select all that apply.)
strong community network predominance of agriculture
An entrepreneur with the ability to motivate others in a collaborative environment that fosters team goals and work productivity has which qualities?
strong leadership and vision
Which are considered services? (Select all that apply.)
tailoring a suit serving food housecleaning
In economics, what is the definition of margins?
the ability to identify and observe certain limits
What do the three basic economic questions determine?
the allocation of resources
What is marginal cost?
the cost to produce one additional unit
What does macroeconomics deal with?
the economy as a whole
In a command economy, who answers the three fundamental economic questions? the marketplace the government the people the businesses
the government
What does microeconomics deal with?
the impact of individual and business decisions on economic markets
Adding a series of numbers and dividing the sum by the total number of items will supply you with what?
the mean
What is the definition of economics?
the production, distribution, and consumption of goods and services in one country
Read the scenario. William is looking to track sales at various stores. The price, color, and size of the item being tracked are the same at each store. Which is the dependent variable?
the store
Why was the Federal Deposit Insurance Corporation (FDIC) created?
to protect people's deposits in the event of a bank failure
Why did the US government establish the FDIC?
to provide deposit insurance for banking customers
What is the primary role of producers in the marketplace?
to provide goods and services
What is specialization?
when an individual becomes an expert in a particular area
In which situation is the US government most likely to regulate the marketplace?
when business practices decrease competition
When do entrepreneurs answer the three basic economic questions?
when they are evaluating their resources to decide what to sell