Economics Unit 1

In 2015, how much debt did the U.S. government have?

$14 trillion

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Select FIVE characteristics of a command economy.

*There is no private property or private business. *The government makes all economic decisions. *there is limited availability of goods. *There is a totalitarian form of government. *There is equal distribution of wealth.

1) trough 2) total economic output 3) peak 4) time

1) D 2) A 3) C 4) B

Which scenario best explains scarcity?

A man has $20 but wants to take his girlfriend to a fancy steak restaurant, where he needs $70.

What was the main argument used against a national bank?

A bank was unconstitutional because the Constitution did not explicitly provide for one.

What is perhaps the most important responsibility that consumers have?

educating themselves on products before making a buying decision

Which answer is NOT characteristic of a command economic system?

encouragement of the pursuit of wealth

An economy going from the trough to the peak is said to be in a state of _______.

expansion

What is the purpose of interest?

for the lender to make money in exchange for giving money to those who need it

According to the tenets of the market economic system, the ___ has little to no role in the country's economy.

government

Which system has profit as a primary motivating factor?

market

In which system does the government control some vital industries while allowing free markets in others?

mixed

For how long must a country's economy and GDP decline in order for the country to be considered to be in a recession?

six months

Select THREE historical common causes of U.S. recessions

surplus of things such as agricultural products and gold overspeculation bad loans

The Department of _______ is responsible for the making of money or the collection of it through taxes by the U.S. government.

the Treasury

The creators of the mixed economic system were from ______

the United Kingdom

The concept of a "double coincidence of wants" is the instrumental part of ___

the barter system

Fluctuations of expansion and recession are part of ___.

the business cycle

Which length of time makes up a quarter, or the period of time that governments use to measure their economies?

three months

Economic ______ is a method of making economic decisions by first weighing the benefits and costs associated with each measure.

perspective

When a shopper makes a rational choice, he or she may ___.

pick the item that represents the greatest value

Select THREE causes of the Great Depression

poor use of credit surplus of agricultural goods leading to lower prices higher tariffs

What is the goal of a mixed economic system?

prevent the abuses and shortcomings of both the command and market systems

In a(n) __________ economy, transactions are typically done through barter rather than currency

traditional

Which system is often characterized as an agricultural economy with little technology?

traditional

Which philosopher is most associated with the market economy?

Adam Smith

Give an example of a company that would add to the GNP of the United States.

An American company manufactures furniture in North Carolina that is sold in the united States and other countries

Which of these scenarios best represents a traditional economic system?

An Amish family sells the furniture they have made for generations.

Which company would add to the GDP of the United States?

An Indian company produces electronic devices at a factory in California

What was the problem that created bank runs?

Banks did not have enough cash on hand for all its depositors, so people rushed to withdraw their money.

How did foreign powers convince the United States of the need for a stronger federal government?

Both the British and the French closed off ports to American shipping. North African pirates confiscated American goods and kidnapped American sailors. the Spanish refused to allow the Americans access to the Mississippi River.

Which answer was NOT a weakness of the Articles of Confederation?

Congress could not negotiate treaties with foreign countries

The _______ War and the subsequent agricultural surplus contributed to the recession of 1857.

Crimean

Which example illustrates opportunity cost?

Daniel has $20. He is considering whether to spend it on movie tickets or a book he wants to read.

__________ detailed the flaws of capitalism and how it could eventually end with a worker operated government with no social classes.

Das Kapital

Select the first THREE executive departments in the U.S. government.

Department of the Treasury Department of State Department of War

The _______, also known as the Necessary and Proper Clause, is a portion of the U.S. Constitution that allows the federal government to pass laws to assist in carrying out its duties.

Elastic Clause

The ______ movement influenced the foundational ideas of the market economic system

Enlightenment

Which government agency deals most directly with consumers in how it protects their rights?

Federal Trade Commission

Which organization does NOT work for consumers?

Federal Treasury

Choose the TWO German philosophers who wrote Das Kapital and the Communist Manifesto.

Friedrich Engels Karl Marx

____ means taking in old bonds and reissuing them at full value.

Funding at par

During the Revolutionary War, Alexander Hamilton worked as an assistant to ___.

George Washington

Select FOUR characteristics of a market economy system. Check all the apply.

private ownership of property and business the pursuit of self-interest consumer power in directing the economy usually honesty in business dealings due to mutual self-interest

With support from the _______ Party, R.H. Tawney pushed Great Britain toward a mixed economic system.

Labour

The ___ is an independent and private organization that tracks the actions of the business cycle.

National Bureau of Economic Research

What was the effect of the Specie Circular policy?

Paper currency lost value.

The depression of 1893 was directly responsible for the growing popularity of the ______ Party

Populist

___ was an economic historian who heavily influenced the British Labour Party after World War I to move the country towards a mixed economy.

R.H. Tawney

The collapse of ________ greatly altered U.S. military spending.

Russia

_______ is the problem that arises due to limited resources and unlimited wants.

Scarcity

Alexander Hamilton was the first ___.

Secretary of the Treasury

How did the national government taking on the state debts strengthen the United States?

Taking on the state debts united the states because they then had an interest in seeing the young nation succeed in paying off the bonds.

____ is a pamphlet of communist economic thinking that highlights the need for a new type of government and economy.

The Communist Manifesto

What is the only way that capitalists say can ensure everyone has the chance to be wealthy?

The government leaves alone those who are wealthy.

Why were some of the states upset at the federal government paying off their debts?

The states did not want to be answerable to the federal government and therefore be put in a weaker position.

Economically, the government divides its earning marks into ______, each of which lasts three months.

quarters

A country's GDP economic peak is followed by ____.

recession

Select the four rights of a consumer.

right to be heard right to safety right to choose right to be informed

___ was one of the leading opponents to Alexander Hamilton's request for a national bank.

Thomas Jefferson

Describe Karl Marx and Friedrich Engels' THREE main points in the Communist Manifesto.

World history is defined by class struggle. There are inherent flaws in capitalism. Capitalism features exploitation of workers (proletariat) by the owners.

Credit refers to ___.

a consumer's record of going into and getting out of debt in a faithful and punctual way

Which agency is responsible for putting together business cycle information, particularly when business economies peak and plummet?

a private company outside of the government

What follows a country's economic peak?

a recession

a) a recession that occured partially due to Andrew Jackson's call to only use hard currency in the sale of public land in order to weaken the national bank b) the Great Depression c) the worst U.S. economic crisis prior to the Great Depression; led to the growing popularity of the Populist Party d) a recession caused by a great influx of gold into the market and a surplus of grain due to participation in the Crimean War e) a recession created during the Era of Good Feelings due to overspeculation f) a recession caused by banks making risky loans to homebuyers, leading to a collapse in home prices, unemployment, and declining stock prices g) a recession that was known for the widespread call for the return of the greenbacks

a) 1837 b) 1929 c) 1893 d) 1857 e) 1819 f) 2008 g) 1873

a) A woman considers her salary when buying a new car. b) A young man does not go out with friends as he saves for a new suit. c) Americans cannot drive as much because of high gas prices. d) Tickets for a concert sell for high prices online because more people wish to attend than tickets are available. e) A young woman pays for medical insurance rather than purchasing a new television.

a) Economic b) Economic c) Scarcity d) Scarcity e) Economic

a) The U.S. Constitution was the first governing document in U.S. history. b) The Congress under the Articles of Confederation possessed strong legislative (law-passing) powers. c) Under the Articles, the Congress made up the legislative branch. d) Under the Articles, the judicial branch was a powerful force in the federal government. e) Under the Articles, the Congress had the power to collect taxes from the states. f) Under the Articles, the Congress did not have the power to regulate commerce or tariffs. g) Under the Articles, the Congress could amend the document with the approval of two-thirds of the states. h) Under the Articles, the position of the President did not exist.

a) False b) False c) True d) False e) False f) True g) False h) True

a) Bartering is a method of acquiring goods through trading that is typical of traditional economies. b) Bartering is made easier through a double coincidence of wants. c) Afghanistan has a traditional economic system. d) Growing crops for profit is known as subsistence farming.

a) True b) False c) True d) False

a) Government spending on healthcare has increased due to recent legislation. b) Social Security is normally paid out in one lump payment upon retirement. c) The baby boomer generation represents a challenge to the Social Security system. d) Military spending changed a great deal in the 1970s. e) The current national debt is roughly $450 billion dollars. f) China holds a vast portion of the U.S. national debt. g) The current U.S. budget calls for about $1 trillion a year. h) Roughly 21% of the U.S. budget is spent on national defense. I) About 5% of the U.S. budget is spent on welfare. j) According to experts, most Americans have little understanding of economics.

a) True b) False c) True d) False e) False f) True g) False h) True i) False j) True

Which of these purchases would require you to have good credit?

an $8,000 loan for a car

Select TWO things that Alexander Hamilton passed to pay the U.S. debt.

an 8% tariff on imported goods a tax on whiskey

A(n) ________ is a form of loan that the debtor is legally responsible to repay with interest by a certain date.

bond

Which country or region best exemplifies a traditional economy?

rural Africa

Karl Marx and Friedrich Engels believed that ________ was(were) wrong and that workers should control the economy

capitalism

Which system provides little chance to succeed or gain wealth?

command

It is required that you have good _______ in order to purchase a home.

credit

Once in office, Alexander Hamilton first sought to deal with the country's ___.

debt

Which answer is a characteristic of a market economic system?

all of these

How did Alexander Hamilton justify his argument for a national bank?

Hamilton stated that since the government was responsible for taxes and tariffs, it needed a place to keep the money. Therefore, he reasoned that the Elastic Clause gave the government the power to create a national bank.

Select THREE facts about Adam Smith. Check all that apply.

He authored The Wealth of Nations, a major work explaining that a free market would thrive under the idea of mutual self-interest. The Scottish philosopher influenced the efforts and ideas of democracy advocated by our Founding Fathers. He was greatly influenced by the Enlightenment movement.

What is a criticism of the market economy?

It does not promote fairness or take care of those who have difficulties succeeding within the system.

Select FOUR reasons why lack of incentive is one reason for the failure of communism.

It often results in a lack of available goods. It hampers incentive and improvements. The type of government normally associated with communism does not allow for personal freedom. It is illegal to own property or business.

a) conducting of business b) a tax on imported goods c) any bill passed by the House of Representatives to potentially raise money for government operation d) any measure the government uses to collect revenue from the people to help pay for various services or government actions

a) commerce b) tariff c) revenue bill d) tax

a) history of your payment record b) choice made considering opportunity cost c) learning as much as you can before buying something d) the cost associated with giving up something in order to get something else e) debt that is not guaranteed by anything and typically warrants a high interest rate f) money owed to another g) money charged by a lender to a customer for borrowing money h) debt that is guaranteed by the thing that is purchased

a) credit b) rational choice c) consumer responsibility d) opportunity cost e) unsecured debt f) debt g) interest h) secured debt

a) to take possession of one's property due to the inability to repay a debt b) a person who places money in a bank c) a long and severe form of a recession d) a rise in price due to currency devaluing e) the overvaluing of property or anything else f) an executive order requiring the purchase of public land be made in gold or silver g) a form of money such as gold or silver that is more durable than paper

a) foreclose b) depositor c) depression d) inflation e) overspeculation f) Specie Circular g) hard currency

a) value of all goods made within a country b) value of all goods native to a country whether they are produced in the country or not c) a series of economic expansions and contractions d) when a country's GDP is at its best e) a decline of a country's GDP (peak to trough) f) when a country's GDP is at its worst g) a growth of a country's GDP (trough to peak)

a) gross domestic product (GDP) b) gross national product (GNP) c) business cycle d) peak e) recession f) trough g) expansion

a) the physical or virtual place where buyers and sellers go to conduct business b) another economic term for a market economy c) the idea that the buyer and seller both seek to do what is right for the other in order to guarantee their continued access to the other d) the collective word for the consumers and sellers within a country e) a capitalistic economic system in which the market determines the major questions of economic production and development f) the main goal of those in business in a market economy g) an economic system in which the government controls vital industries while allowing capitalist or market principles to exist in the rest of the economy h) the individual buyer, seller, or trader of goods in an economic system

a) marketplace b) capitalism c) self-interest d) market e) market economy f) profit g) mixed economy h) consumers

a) system under which people within a community perform the same economic functions as their forefathers and ancestors b) requires that, in a transaction, people have something the other wants and are willing to give it up for that other item c) the trading of one item to receive another item; creates a double coincidence of wants d) an economy in which all decisions are made by the government with little to no input by the people e) farming that is done simply to feed the family of the grower and not to sell goods for a profit f) form of government that stemmed from the economic ideas of Karl Marx and preaches the idea that all citizens should be equal in wealth and status g) a centralized government with near-complete control over the lives of citizens h) a French word that explains the working class as written by Karl Marx and Friedrich Engels

a) traditional economic system b) double coincidence of wants c) barter system d) command economy e) subsistence farming f) communism g) totalitarian h) proletariat

The portion of U.S. government spending going toward _____ took up the largest percentage of the 2016 budget.

healthcare

The things you miss out on when you decide to spend your money on something else are considered ___.

opportunity costs