Sarver Econ exam
A
An economy that is producing the maximum amount of goods and services is considered a.efficient. b.underutilized. c.growing. d.trading off.
B
Which is a commodity? a. cars b. gasoline c. gift wrap d. winter coats
C
Which is an example of an economic shortage? a. a farmer without enough water for crops b. too many jobs available c. a toy store without dolls d. too much bread on the store shelves
A
Which of the following are factors of production? a.capital and land b.scarcity and shortages c.technology and productivity d.economics and business decisions
A
Which of the following are ways the government controls markets? a. price ceilings and price floors b. equilibrium price and equilibrium point c. shortages and surpluses d. subsidies and disequilibrium
B
Which of the following describes a centrally planned economy? a. The central government follows laissez-faire policies. b. The central government makes all economic decisions. c. The central government lets factories set their own goals. d. The central government lets the market set wages for jobs.
C
Which of the following financial institutions should be listed at point B in the table? a. credit union b. finance company c. savings and loan association d. commercial bank
A
Which of the following financial institutions should be listed at point C in the table? a. credit union b. finance company c. savings and loan association d. commercial bank
B
Which of the following is a financial asset traded on financial asset markets? a. growth stock b. certificates of deposit c. income stock d. call option
B
Which of the following is an advantage of a sole proprietorship? a. It is easy to expand if it succeeds. b. It faces few government rules. c. It is easy to get financing to start one. d. It has the lowest federal income taxes.
B
Which of the following is an advantage of a sole proprietorship? a. It is easy to expand if it succeeds. b. It is the least regulated form of business organization. c. It is easy to get financing to start one. d. It has the lowest rate of federal income taxes.
A
Which of the following is an example of classical economics? a. free markets regulating themselves b. government intervening to increase production c. markets failing to return to equilibrium d. government intervening to boost demand
D
Which of the following is an example of representative money? a. a fur coat b. diamonds c. gold earrings d. an IOU note
A
What can businesses deduct from income? a.health benefits b.profits c.earnings d.revenues
C
A company owner wants to makes more baseballs. It costs $4.00 to make 10 baseballs. It costs $4.10 to make 11 baseballs. What is the marginal cost of making one more baseball? a. 20 cents b. 30 cents c. 10 cents d. 40 cents
C
A country is changing from a centrally planned economy to a free market economy. What will be one difficulty for citizens in this country? a. Farmers will have to grow the crops that government instructs them to. b. Only poor quality goods will become available to consumers. c. Workers will lose job security and guaranteed incomes. d. Entrepreneurs will have fewer opportunities to start new businesses.
A
Acme Party Supplies is a consumer cooperative. Its prices are usually lower than other party supply stores because consumer cooperatives a. buy goods in large quantities. b. charge annual membership fees. c. require members to work at the store. d. help members sell their products.
B
A demand curve is accurate only as long as ceteris paribus is true. What does this Latin phrase mean? a. Goods are used in place of one another. b. All things other than price stay constant. c. Demand for goods remains elastic. d. Supply can keep up with prices.
C
A government deregulates its airlines. What is likely to happen next? a. More people buy airplane tickets. b. Airlines purchase better airplanes. c. Airlines have more control over prices. d. More airplanes fly to more places.
C
A major disadvantage of the sole proprietorship is that a. the business cannot be sold off if it does well. b. the business can be difficult to relocate. c. the sole proprietor may have problems borrowing money from a bank. d. no one can work for the business owner.
D
A tax rate that increases as income rises is a a. proportional tax. c. variable tax. b. regressive tax. d. progressive tax.
C
According to the graph, if a firm enjoys economies of scale, a. its average total cost will increase as production increases. b. its marginal revenue will increase as production increases. c. its average total cost will decrease as production increases. d. its variable costs will decrease as production increases.
D
According to Keynesian economics, the government could prevent, or reduce the severity of, inflation by a. increasing transfer payments. b. applying an expansionary fiscal policy c. increasing federal spending d. applying a contractionary fiscal policy.
B
According to the cartoon, federal income tax lacks which quality of a good tax? a. simplicity b. equity c. certainty d. efficiency
A
According to the diagram, some of the physical flow travels from firms to the government. Which of the following would be part of that flow? a. computers for government offices b. salaries for government employees c. import taxes paid by foreign businesses d. Social Security checks paid each month
B
According to the graph, how well did My Company's stock perform against that of its industry as a whole and against the market, as measured by the stocks in the S&P 500? a. It performed much better than both the market and the industry. b. It performed worse than both the market and the industry. c. It performed better than the market, but worse than the industry. d. It performed better than the industry, but worse than the market.
B
An economist who focuses on microeconomics might study which of the following? a.inflation b.household credit card debt c.income d.unemployment
D
Banks create money by a. printing and issuing paper currency. b. making interest rates on loans higher than those on savings accounts. c. exchanging gold for paper currency. d. lending money they are not required to hold in reserve.
A
Based on the graph, which of the following statements best describes the U.S. economy in 2009? a. It ended the year with strong growth. b. It experienced strong growth at the beginning of the year. c. It experienced strong growth in the middle of the year. d. It was generally strong and growing steadily all year long.
D
Congress passed the Federal Reserve Act in order to a. effectively respond to the Great Depression. b. decentralize the banking system. c. strengthen the Second Bank of the United States. d. encourage business expansion and give banks a source of emergency cash.
C
Your receipt from a department store says that you paid a 5 percent sales tax on sports equipment. This sales tax is an example of a(n) a.proportional tax. b.progressive tax. c.regressive tax. d.income tax.
B
Due to an increase in her rent, Isa needs to cut back her spending on other items. Which of the following types of goods will Isa consume less of? a. substitutes b. normal goods c. inferior goods d. complements
A
Each society answers the three basic economic questions based on a. its unique combination of values and goals. b. the number of factor payments. c. its degree of economic growth. d. the desire to achieve economic freedom.
A
How are prices and output of goods in a monopoly different from the prices and output of goods in perfect competition? a. Output is low and prices are high. b.output is high and prices are low. c. Output is the same, but prices are lower. d. Output is the same, but prices are higher.
B
The charter of the Second Bank of the United States was not renewed in 1836 because a. the bank was corrupt and badly run. b. many people feared that the bank gave the government too much power. c. the bank ran out of money. d. Congress believed the country needed a more centralized banking system.
A
Financial intermediaries include a. savings and loan associations, credit unions, and pension funds. b. stockbrokers, brokerage firms, and speculators. c. all buyers, savers, traders, and investors. d. financial asset markets and the stock exchange.
A
For which of the following goods is supply likely to be inelastic in the short term whether prices rise or fall? a. cargo ships b. haircuts c. newspapers d. staples
C
Gerda owns a grocery store. Increasing prices make her willing to supply more. What is the first thing Gerda does? a. increase her tax payments b. move to a bigger store c. have people work more hours d. limit the variety of food she sells
A
Germany tries to keep the value of its currency constant against that of France. This means that the two countries practice a a. fixed exchange-rate system. b. flexible exchange-rate system. c. floating currency exchange. d. constant pricing system.
B
How can the demand for one good be affected by increased demand for another one? a. When goods are bought together, increased demand for one will increase demand for the other. b. If goods are used together, increased demand for one will increase demand for the other. c. If goods are substitutes, increased demand for one will increase demand for the other. d. A drop in the price for a good will increase demand for it and its substitute.
B
How did World War II affect the business cycle? a. It sent the country into a deep trough. b. It caused an expansion. c. It caused a depression. d. It created a small recession.
A
How did the U.S. business cycle change in the first few years of the 1930s? a. It contracted quickly. b. It expanded slowly. c. It expanded quickly. d. It reached a peak.
B
How do budget deficits contribute to the national debt? a. The national debt is increased by double each budget deficit. b. The national debt is increased by each budget deficit. c. The national debt is reduced by each budget deficit. d. The interest rate paid on the national debt is increased by each budget deficit.
A
How do economists calculate GDP for one year using the expenditure approach? a. Add together all the amounts spent on final goods and services. b. Add up all the incomes received. c. Add the amounts spent on goods and services to the incomes received. d. Subtract the amounts received as income from the goods and services.
A
How do economists calculate GDP using the expenditure approach? a. They add up all the amounts spent on final goods and services. b. They add up all the incomes received. c. They subtract the value of all goods and services from all incomes. d. They subtract all incomes from the value of all goods and services.
D
How does a bank make most of its profit on its business? a. by collecting fees on credit card purchases b. by collecting fees on safe deposit boxes c. by receiving fees from the government for handling federal and state accounts d. by paying out less in interest on deposits than it earns in interest on loans
D
How is the U.S. government involved in the factor market? a. It buys paper from firms. b. It purchases telephones and computers. c. It tells businesses and firms what to purchase. d. It pays wages to government employees.
C
How is the unemployment rate determined? a. Divide the number of unemployed people by the total population, and multiply by 100. b. Subtract the number of employed people from the total population. c. Divide the number of unemployed people by the labor force, and multiply by 100. d. Add the number of employed and unemployed people, and divide by 100.
C
How would the adjustment of the Fed's structure by Congress in 1935 have protected this man's savings? a. The Fed could print money which it could put into circulation, thus easing concerns over a cash shortage in the bank. b. The Fed could have ordered the bank to be shut down until public worries passed. c. The Fed could use its more centralized power so regional banks could act consistently while addressing the needs of each district. d. The Fed could have used its powers to prevent customers from waging an illegal bank run.
B
Human capital includes a. the salary paid to an accountant. b. the knowledge a taxi driver has of the city streets. c. the machinery run by a seamstress to weave cloth. d. the equipment used by a doctor to cure a patient.
B
If a baker's supply of bread exceeds the demand for bread, he should a. stop selling bread. b. lower the price of bread c. sell only bread. d. raise the price of bread.
A
If a sole proprietorship fails, the owner of the business a. must pay all the business debts. b. must pay off the investors. c. has to do a lot of legal work to close the business. d. must wait 10 business days before starting another business.
C
If the city builds 15 new roads, how many new schools can it build? a.0 b.8 c.2 d.5
B
In a centrally planned economy, the forces of self-interest and competition a. work together. c. regulate prices. b. are absent. d. override the central bureaucracy.
B
In a perfectly competitive market, output a. maximizes profits for the company owners. b. is just enough to cover opportunity costs. c. exceeds customer demands for the supply. d. reflects the trends of the stock market.
B
In the 1800s, people in mining towns in the West often paid for goods with gold. What was the function of gold? a. It was used as part of a barter system. b. It was used as a currency. c. It was used as representative money. d. It was used as fiat money.
B
Karen wants to buy stock, but she is worried about the current "bear market." What does a bear market mean? a. Stock prices are rising, making it a good time to buy. b.Many investors are selling their stocks. c. Stock prices are rising, making it a bad time to buy. d. Many investors are buying stocks.
A
The United States placed a limit on the number of cars that can be brought into the country for sale. What is this is an example of? a. import quota b. import tax c. customs duty d. voluntary export restraint
C
Little Joe's Company made $50,000 in taxable income one year. Big Al's Company made $20,000,000 in taxable income that year. The corporate tax rate is 15 percent on the first $100,000 of income and 35 percent on income over $100,000. How much does each company owe? a. Little Joe: $17,500; Big Al $3,000,000 b. Little Joe: $7,500; Big Al $3,000,000 c. Little Joe: $7,500; Big Al $6,980,000 d. Little Joe: $17,500; Big Al $6,965,000
C
Money market mutual funds are riskier than savings accounts because they a. cannot be cashed in for at least six months. b. are invested in bonds with high failure rates. c. are not insured by the federal government. d. yield low returns because of their interest rates.
B
Students are publishing an annual literary magazine at their school. How many copies should they print and what price should they charge for each copy? a. 300 copies at $3 each b. 200 copies at $4 each c. 250 copies at $5 each d. 100 copies at $6 each
B
Suppose the Federal Reserve sets the required reserve ratio (RRR) at 25 percent. How much of your $1,000 deposit must a bank keep in reserve? a. $25 b. $250 c. $2.50 d. none
B
Suppose the people in the cartoon hire employees for various departments in the corporation. Who are the people at the table? a.stockholders b.corporate officers c.the board of directors d.entrepreneurs
A
Suppose the supply of walnuts is inelastic. What will growers do if the price changes? a. They will not produce more walnuts, even if the price doubles. b. They will quickly produce more walnuts, even if there is a small increase in price. c. They will produce more walnuts when the price drops. d. They will have to respond to decreasing marginal returns of labor.
A
The Federal Reserve regulates the required reserve ratio in order to a. control the amount of money in circulation. b. reduce lags in monetary policy. c. discourage banks from making risky loans. d. change the discount rate more easily.
B
The currency in Great Britain is the pound (£), and the price of a particular British car is £12,000. Suppose the exchange rate is £0.67 per dollar. What is the price of the British car in the United States? a. $52,174 b. $17,910 c. $14,662 d. $8,040
B
The currency in Great Britain is the pound (£). Suppose the exchange rate is £0.67 per U.S. dollar. The price of a particular British car is approximately £12,000. About how much would the British car cost in U.S. dollars? a. $50,000 b. $18,000 c. $15,000 d. $8,000
B
The diagram shows money flowing to the government from firms and households in a mixed economy. How would you label points a and c on the diagram? a. labor b. taxes c. government-owned factors d. government purchases
C
The fact that money can withstand the wear and tear that comes from being used over and over again is a measure of its a. portability. b. currency. c. durability. d. uniformity.
C
The future production possibilities frontier on this graph shows what might happen if a.resources were underutilized. b.there was a shortage of paving equipment. c.the cost of building materials went down. d.more resources went to building roads.
D
The government claimed that, to illegally extend its control over the market, Microsoft had used a. predatory pricing and mergers. b. predatory pricing and buying out competitors. c. predatory pricing and forming a cartel. d. predatory pricing and requiring customers to buy other products.
A
The government of a country must make a decision between increasing military spending and subsidizing wheat farmers. This is an example of a. a guns or butter issue. b. decision-making at the margin. c. underutilization of resources. d. the law of increasing costs.
B
The graph shows how many new schools and new roads a city can build using all of its resources. What trend does the graph show? a. As more new schools are built, the number of new roads increases. b. As more new schools are built, the number of new roads decreases. c. As the number of new roads decreases, the number of new schools also decreases. d. The number of new roads has no effect on the number of new schools.
C
The law of increasing costs means that as production shifts from one item to another, a. the cost of production gets cheaper and cheaper. b. the cost of producing an item stays the same no matter how many are produced. c. more and more resources are necessary to increase production of the second item. d. the land costs of increasing production rise much more steeply than do the labor costs.
D
The main difference between monopolistic competition and perfect competition is that a. in perfect competition prices are set by the government. b. in perfect competition the buyer is free to buy from any seller. c. in monopolistic competition there are fewer sellers and more buyers. d. in monopolistic competition sellers can profit from differences between products.
A
The physical capital used by a woodworker to make furniture would include a. saws and drills. b. trees and oil. c. hard work and time. d. a workshop and money.
A
This graph best supports the conclusion that a. three countries account for almost half of all U.S. foreign debt. b. the majority of U.S. debt was held by foreign countries. c. Brazil held less U.S. debt than any other nation. d. foreign debt seriously weakened the U.S. economy.
A
To convert U.S. dollars into another currency, a. multiply the number of dollars by the number of units of the other currency per dollar. b. divide the rate of exchange by the number of units of the other currency. c. multiply the number of units of the other currency by 2 and add the rate of exchange. d. divide the number of dollars by the number of units of the other currency.
B
To improve its standard of living, a nation's economy must a. remain stable. b. grow through innovation. c. reach economic equity. d. allow the central government to make economic decisions.
D
Traditional economies are usually a. small, close communities that welcome change and new technology. b. large, widespread communities that welcome change and new technology. c. large, widespread communities that are able to deal effectively with environmental disaster. d. small, close communities that avoid change and new technology.
C
What can a decision-making grid do? a. tell you the right decision to make b. show you every possible consequence of your decision c. help you determine some of the opportunity costs for your decision d. show you every possible benefit of your decision
A
What can the Federal Open Market Committee do to increase the money supply? a. buy government securities b. sell government securities c. raise the discount rate d. lower reserve requirements
A
What can the Federal Reserve do to encourage banks to lend out more of their reserves? a. It can reduce the discount rate. b. It can raise the reserve requirements. c. It can increase the prime rate. d. It can reduce the money supply.
C
What condition has been reached when buyers purchase exactly as much as sellers are willing to sell? a. supply and demand b. shortage c. equilibrium d. price floor
B
What condition is necessary for a fiat money system to work? a. Money owed by customers must be paid on time. b. The government must control the money supply. c. Banks must hold enough gold to cover paper money they give out. d. Customers with checking accounts cannot earn interest.
A
What did John Maynard Keynes believe should be the government's role in the economy? a. active involvement b. contractionary fiscal policy c. laissez-faire d. emergency action only
B
What does elasticity of demand measure? a. an increase in the quantity available b. how buyers will cut back or increase their demand when price rises or falls c. a decrease in the quantity demanded d. the amount of time consumers need to change their demand for a good
C
What does limited liability mean for stockholders? a. The corporation is not responsible for stockholders' debts. b. The corporation's managers are not responsible for its debts. c. Stockholders can lose only the money they invested. d. The corporation can sell stock.
D
What does this graph show? a.the percentage of jobs lost or gained during that period b.the percent change in cash the federal government has available c.the average percentage of lending rates that most banks offered d.the percent change in total value of American goods and services
D
What happens as production of one item switches to the production of another item? a. The cost of production decreases. b. Land costs rise more than labor costs. c. The cost of production stays the same. d. More resources are needed.
C
What happens when a company gains market power? a. It must invest its profits in future goods. b. It decreases its share of profits in the industry. c. It has the ability to set prices and output for the industry. d. It makes very good products that benefit society.
A
What happens when you make a purchase at a store using a credit card? a. The credit card issuer pays the store the amount of the purchase. b. The money is immediately deducted from your checking account. c. The amount of the purchase is deducted from a prepaid account. d. The store gets repaid a little money each month, plus interest.
C
What is a disadvantage of using trade barriers to protect U.S. businesses? a. U.S. businesses may cut jobs. b. U.S. businesses may reduce import quotas. c. Other countries may raise tariffs on U.S. goods. d. Other countries may reduce quotas.
A
What is a major advantage of a sole proprietorship? a. The owner has full control over business. b. The owner has no liability for business debts. c. Human capital is unlimited. d. Finding good employees is easy.
A
What is a possible disadvantage in the use of trade barriers to help domestic companies compete? a. Domestic manufacturers may cut jobs for both citizens and immigrants. b. Domestic manufacturers may punish foreign manufacturers by imposing import quotas. c. Domestic manufacturers may lose the incentive to keep prices low. d. The line between imported and domestic goods may become harder and harder to draw.
D
What is a prospectus? a. a pool of money from various investors b. a report for an individual's investments c. a collection of financial assets d. a report for possible investors
D
What is fractional reserve banking? a. Only some deposits must be paid on demand. b. Banks lend only some of their money as mortgages. c. People transfer money and pay bills electronically. d. Banks keep some money on hand and lend out the rest.
B
What is labor productivity? a. the total number of workers in an economy b. the amount of output produced per worker c. the total amount of work produced in an economy d. the average training per worker
A
What is one reason governments give farmers subsidies? a. to keep food supplies up b. to help farmers pay back debts c. to increase the cost of production d. to help people forget past shortages
C
What is one reason the U.S. government regulates car manufacturing? a. to keep out foreign-made cars b. to keep U.S. car prices competitive c. to offset the pollution caused by cars d. to protect market competition
D
What is the difference between a business cycle and the day-to-day fluctuations of the stock market? a. Day-to-day fluctuations are more predictable than a business cycle. b. Day-to-day fluctuations have a greater impact on people's finances than a business cycle. c. A business cycle is usually more restricted, whereas day-to-day fluctuations are worldwide. d. A business cycle consists of prolonged fluctuations rather than day-to-day fluctuations.
B
Which is NOT a function of the Federal Reserve? a. process checks for the federal government b. loan money to individuals and small businesses c. regulate the money supply d. clear checks
A
What is the difference between a primary market and a secondary market? a. primary market: financial assets can be redeemed only by the original investor; secondary market: assets can be resold b. primary market: paid first if a firm is in trouble; secondary market: gets what is left. c. primary market: redeemed by a firm's assets; secondary market: redeemed by money owed to a firm d. primary market: money lent for less than a year; secondary market: money lent for a longer time
A
What is the difference between a shortage and scarcity? A. A shortage can be temporary or long-term, but scarcity always exists. b.A shortage results from rising prices; scarcity results from falling prices. c.A shortage is a lack of all goods and services; scarcity concerns a single item. D.There is no real difference between a shortage and a scarcity.
C
What is the difference between how simple and compound interest are paid? a. simple interest: as long as money is in the bank; compound interest: a year at a time b. simple interest: once a year; compound interest: quarterly c. simple interest: on principal only; compound interest: on both principal and interest d. Simple and compound interest are two names for the same thing.
C
What is the difference between real GDP and nominal GDP? a. Real GDP is accurate to hundreds of dollars; nominal GDP is accurate to thousands of dollars. b. Real GDP includes nonmarket activities; nominal GDP has no nonmarket activities. c. Real GDP is based on constant prices; nominal GDP is based on the current year's prices. d. Real GDP allows for depreciation; nominal GDP allows for no depreciation.
B
What is the government's goal in buying excess crops or other agricultural products? a. to raise minimum wage b. to keep prices from going down c. to set legal price ceilings d. to lower prices
A
What is the intent of both deregulation and antitrust laws? a. to increase competition b. to increase government control c. to prevent inefficiency d. to prevent monopolies
B
What is the main activity of a producer cooperative? a. buying products for its members b. selling products for its members c. producing products for its members d. donating products for its members
B
What is the purpose of PAYGO? a. to write the federal budget, which Congress and the President must approve b. to decrease deficits by requiring Congress to raise enough revenue to cover direct-spending increases c. to require the federal government to balance the budget or face automatic spending cuts d. to help families with dependent children by paying them cash
A
What is the relationship between interest rates and the demand for loans? a. When interest rates increase, demand for loans decreases. b. When interest rates decrease, demand for loans decreases. c. Interest rates are determined by demand for loans. d. When interest rates change, demand for loans is not affected.
B
What is the relationship between unequal resources and specialization? a. Specialization causes unequal resources. b. Unequal resources lead to specialization. c. Unequal resources prevent specialization. d. Specialization limits the effects of resources.
C
What kind of assets are traded using futures contracts? a. stocks b. bonds c. commodities d. real estate
D
What kinds of goods can be compared on a production possibilities curve? a.farm goods and factory goods b.two types of farm goods c.two types of factory goods d.any two categories of goods
B
What might happen if the government creates more money to cover a large deficit? a. crowding-out effect b. hyperinflation c. recession d. unemployment
B
What percentage of all businesses are partnerships? a. 2 percent b. 9 percent c. 15 percent d. 25 percent
D
What steps have some countries taken to protect their domestic economy from the influence of multinational corporations? a. raising the price of the multinational's goods b. developing their internal economies c. limiting the multinational's supplies d. limiting the multinational's local sales
B
What type of policy can the Federal Reserve use to slow an expanding economy that is causing high inflation? a. lower interest rates b. cut the money supply c. increase tax cuts d. expand the money supply
C
What will happen to price, supply, and demand when a surplus of a product develops? a. Price and demand will rise. At the same time, supply will fall. b. Price will rise. At the same time, supply and demand will fall. c. Price and supply will fall. At the same time, demand will rise. d. Price will fall. At the same time, demand and supply will rise.
C
When a nation exports more than it imports, economists say it has a. insufficient trade. b. an unfavorable balance of payments. c. a trade surplus. d. a trade deficit.
B
When any effort by government causes the supply of a good to rise, what happens to the supply curve? a. It shifts to the left. b. It shifts to the right. c. A point on the curve moves up. d. The supply curve is not affected.
A
When demand is elastic, why is it harder for sellers to shift a new tax to consumers? a. Consumers will not buy the good or service if it costs too much. b. When the supply decreases, consumers worry about a shortage. c. Consumers need to buy the good or service no matter how much it costs. d. When the supply increases, the price increases.
B
When government intervention causes the supply of a good to rise, what happens to the supply curve? a. It shifts to the left. b. It shifts to the right. c. It reverses direction. d. The supply curve is not affected.
D
Where are traditional economies usually found? a. in small communities that welcome change b. in large communities that welcome change c. in large communities that are able to deal with environmental disaster d. in small communities that avoid change
D
Which describes a bear market? a. Stocks are staying the same. b. Some stocks are going up and some are going down. c. Most stock prices are rising. d. Most stock prices are falling.
D
Which of the following is the best argument in favor of free trade? a. Free trade protects a country's infant industries. b. Countries with the fewest trade barriers are members of trade organizations. c. Free trade allows a country to impose sanctions on a trading partner. d. Countries with the fewest trade barriers have the highest standard of living.
C
Which of the following is the biggest disadvantage of using shells instead of coins as money? a. durability b. portability c. uniformity d. divisibility
C
Which of the following might bank examiners classify as a problem bank? a. a bank holding company that owns more than one bank within the same geographic region b. a bank that needs to obtain an emergency loan from the Fed to maintain its required reserves c. a bank that has taken excessive risks in its investment and loan practices d. a bank that maintains excess reserves in anticipation of future economic problems
D
Which of the following products has inelastic demand? a. a particular soft drink b. candy bars c. steak d. medicine
B
Which of the following statements reflects the information on the "Percent of Total U.S. Businesses" graph? a. Most businesses are corporations. b. Sole proprietorships are the easiest type of business to start. c. Most businesses are franchises. d. Partnerships do not have as many financial risks as other business types.
B
Which of these is a limitation of GDP? a. It does not include government goods and services. b. It does not measure a country's well-being. c. It does not measure the success of a country's economy. d. It does not include goods that are exported.
D
Which of these is missing in a centrally planned economy? a.bureaucracy b.poorly made goods c.social goals D.incentives
C
Who issues U.S. paper currency? a. the Treasury Department b. the U.S. Mint c. the district Federal Reserve Banks d. the U.S. bank examiners
B
Why are coins easier than gold bars to use as money? a. Coins are more durable. b. Coins are more portable. c. Coins are more uniform. d. Coins are more limited.
D
Why do companies practice price discrimination? a. Price discrimination enables companies to charge all consumers the same price for a good or service. b. Price discrimination allows companies to defend an illegal monopoly against free market competition. c. Price discrimination provides individual producers with an advantage in perfectly competitive markets. d. Price discrimination maximizes profits by charging different prices to different groups of consumers.
B
Why does a bank sometimes hold excess reserves? a. to make interest rates go up b. to be sure it can meet customer demands c. to make check clearing easier d. to protect itself from the high cost of borrowing
C
Why does an economist create a market demand schedule? a. to learn what demands the market will make under unusual conditions b. to have an idea of how a market would change if conditions in an area changed c. to predict how people will change their buying habits when prices change d. to show how various conditions can change the demand for a good
C
Why does higher savings lead to higher GDP? a. The government taxes savings to pay for education. b. Stockbrokers, brokerage firms, and speculators gain more profits. c. The saved money is lent by banks to businesses, who use the money to expand. d. A higher savings rate encourages immigration, which increases the number of workers.
D
Why don't government planners try to end seasonal unemployment? a. It would eliminate too many jobs. b. Many people do not want to work all year. c. It would be too expensive. d. It is a natural part of a healthy economy.
D
Why is the inside lag for monetary policy shorter than for fiscal policy? a. Congress and the President can act quickly to change monetary policy. b. The Federal Open Market Committee must get Congressional approval. c. It can take a long time for new government spending to take effect. d. The Federal Open Market Committee can act almost immediately.
C
Why would investors buy junk bonds? a. Junk bonds are safe investments. b. Junk bonds are investment grade. c. Junk bonds pay higher interest. d. Junk bonds are sold by interesting firms.
A
You are a financial advisor whose client wants stock that pays regular dividends. You advise him to buy a. income stock. b. growth stock. c. common stock. d. preferred stock.
C
You bought two new CDs with the last $30 in your checking account, and your next payday is on Monday. What is the opportunity cost of these CDs? a. the difference between the cost to produce the CDs and the price you paid for them b. the $30 check that you wrote for the CDs c. the night out with your friends that you miss because you can't afford it now d. the satisfaction of knowing you are the first of your friends to have these CDs
D
You want to buy stock, but you are concerned about losing your investment if the company goes out of business. What kind of stock should you buy? a. income stock b. growth stock c. Common stock d. preferred stock
A
Your pay stub from your job deducts money for FICA. What does this mean? a. Money is being withheld to fund Social Security and Medicare. b. Money is being withheld for federal, state, and city taxes. c. Money is being withheld for personal exemptions and deductions. d. Money is being withheld for excise and estate taxes.