Economics Final True/False

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True

A demand curve illustrates the quantity demanded at all possible prices at a given time

False

A demand schedule is created from a demand curve

False

A desire to buy a product is the only requirement needed for demand to exist

True

An increase in output as each new input is added as in the addition of a worker describe stage one of the stages of production

True

An increase in the cost of inputs can cause the supply curve to shift to the left

True

Benjamin Franklin and Alexander Hamilton devised the monetary system used in the United States today

True

Capitalism is a competitive economic system in which private citizens own the factors of production

True

Cooperatives can be organized to help consumers, provide services, or help producers

True

Despite the Federal Reserve System, massive banking failures occurred during the Great Depression

True

Economic growth occurs when a nations total output of goods and services increases over time

False

Economic interdependence limits a nations growth and usually reduces the efficiency of production

True

Economic products consist of both goods and services that are useful, relatively scarce, and transferable to others

True

Fiat money has no inherent worth

True

Fixed cost is the cost of a business incurs even if there are no employees and no production takes place

False

Full unemployment is reached when the unemployment rate drops below 7 percent

True

Half of all savings and loan associations went out of business during the 1980s

True

In economics, land refers to the natural resources needed for production, such as forests, minerals, and climate

True

Labor unions use collective bargaining to negotiate job-related issues with management

True

Limited liability is one characteristic of the corporate form of business organizations

True

Many schools, medical care facilities, and churches operate as nonprofit organizations

True

Marginal analysis compares the additional benefits of an action to its additional cost

False

One advantage of a corporation is the ease of obtaining a charter

True

One disadvantage of a general partnership is each partners responsibility for the acts of all other partners

True

People form partnerships because it often improves a businesses management and can usually attract capital more easily than proprietorships

True

Preferred stock represents the non voting ownership of a corporation

True

Productivity will decrease if workers are unmotivated

False

Social security is an example of governments direct role in the economy

False

Sole proprietorships must request a charter from the state in which they are organized

False

Structural unemployment is usually temporary

False

The Law of Variable Proportions states that in the short run, output will not change as one production input is varied while the others remain constant

True

The United States has a modified private enterprise economy

False

The circular flow of economic activity describes an economy that is free of markets

True

The entrepreneur organizes land, capital, and labor for production in hopes of earning a profit

False

The four factors of production are land, capital, labor, and financing

False

The introduction of technology usually has no effect on supply

True

The law of demand states that more of a product will be purchased at low prices than at high prices

False

The law of supply states that suppliers will normally offer less for sale at higher prices and more for sale at lower prices

True

The number of items sold multiplied by the average price of each item yields the total revenue of a business

False

The profit motive states that the consumer decides WHAT goods and services to produce

True

The theory of production deals with the relationship between the factors of production and the output of goods and services

True

The unemployment rate does not take into account the number of part-time workers who want to have full-time jobs

True

The unemployment rate is calculated by dividing the number of unemployed persons by the total number of persons in the civilian labor force

False

The worst downturn of the business cycle in the United States occurred during the Cold War

True

Time is an opportunity cost when a manufacturer assigns workers to one task rather than to another

False

To be a successful medium of exchange money must exist in an unlimited supply

False

Voluntary exchange is a characteristic of command economics

True

When manufactured goods are used to produce other goods and services, they are called capital goods

False

When more suppliers enter the market, the market supply will typically decline


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