econ exam

Who was Adam Smith?

*He was a philosopher who promoted the idea of free enterprise.* He was an economist who spoke against the market economy. He was an official who ran an important government agency. He was a producer who operated a factory in Scotland.

What are the two steps a producer can take to gain an absolute advantage?

*Produce more goods.* Use high-quality resources. Produce more expensive goods. *Use fewer resources.* Produce high-quality goods. Use local resources.

In a mixed market economy, what is a typical way the government can reduce unemployment?

*The government can pay for projects to create work.* The government can control new factories to provide jobs. The government can create new farm fields to hire workers. The government can raise taxes to encourage employment.

An extended recessionary period is indicative of

*a depression.* the start of a depression. a growing recession. the end of a recession.

What do the indicators used by economists reveal?

*changes in production and demand* changes in employment levels changes in prices changes in the health of an economy

President Roslin of Country XYZ knows that a new policy is needed to help solve the problem of rising unemployment in her nation. Her next step is to

*develop a plan.* mplement a plan. identify the problem. solve the problem.

According to the law of demand, as prices increase, quantity demanded

*increases* decreases. stays the same. disappears.

Hayek believed that the economy could be hard to measure because

*individuals have the power to make decisions and are unpredictable.* individuals have the power to make decisions and are predictable. government has the power to make decisions and is unpredictable. government has the power to make decisions and is predictable.

Economists can use new technology to

*study data and patterns.* create and apply automation. improve production and shipping. increase demand and consumption.

The graph shows the marginal cost of producing soccer cleats for Sabrina's Soccer. At which level of production does the company make the most profit?

*the first pair of cleats* the second pair of cleats the third pair of cleats the fourth pair of cleats

Aggregate supply is best described as the

*total output of all products and services.* point of equilibrium. nation's real gross national product. excess supply in the market.

Which organization created a shared economy?

European Union

The graph below shows the value of the US dollar versus the Canadian dollar. According to the graph, the American dollar was the strongest during which month?

October 2012. November 2012. February 2013. *March 2013.*

Which best describes an opportunity cost?

accepting an opportunity to do something else when making an economic decision *giving up an opportunity to do something else when making an economic decision* accepting an opportunity to help accomplish something else when making an economic decision giving up an opportunity to increase prices when making an economic decision

When does government regulate producers in a mixed-market economy?

always *as needed* as requested never

Producer A's opportunity cost would be

analyzing the climate to see which fruit would grow better. studying the profitability of growing apples versus oranges. researching what competitors are doing. *choosing to grow both fruit varieties or only apples.*

Jacob is considering buying a new car. Which nonrenewable resource should influence the decision?

labor water minerals *petroleum*

In a competitive market, a computer store offers customers a warranty to help pay for any future damages. This is an example of

following a federal regulation. lowering prices for customers. *reducing the risk for consumers.* creating a new or better product.

Economic policy must strike a balance between ideals and

freedom. *needs.* supply and demand. private property.

When the government injects money into the economy, consumers may have less purchasing power, which may lead to

higher unemployment. lower production. *higher production*. increases in taxes.

When entrepreneurs develop new products, other companies also experience growth because they

immediately copy the successful product. *create many companion products.* try to develop their own products. attempt to improve the product.

The chart shows the marginal cost of producing apple pies. This chart demonstrates that the marginal cost

initially decreases as production increases. *initially increases as production increases.* eventually decreases as production increases. eventually increases as production decreases.

Which are indicators that economists use to measure how an economy grows? Select all that apply.

monitoring election results *measuring how much the economy produces* monitoring the popularity of different music groups studying the economy of another country *tracking the unemployment rate*

What new laws did the New York Factory Investigating Commission request? Check all that apply.

no factory workers under age ten use of central air-conditioning systems a minimum wage for all workers *increased sanitation standards* *fire alarms and sprinkler systems*

Public property is land or goods

owned by an individual. *owned by the government.* used for private businesses. used to gain personal wealth.

What is one main objective in the study of economics?

recognizing the relationship between producers and consumers

The law of supply states that as the price of a good declines, the quantity supplied of that good

remains the same. decreases. *increases* disappears.

John Maynard Keynes developed new economic theories in response to the

stock market crash of 1929. *Great Depression of the 1930s*. first and second world wars. economic boom of the 1950s.

A regulatory agency that attempts to limit risk in the banking system is

the FDA. the EPA. *the OCC.* the HHS.

The graph shows the price of a good compared to the quantity demanded. This graph demonstrates how

the amount produced slightly changes with the price. the amount produced greatly changes with the price. the quantity demanded *changes slightly with the price.* the quantity demanded changes greatly with the price.

Which are affected by the factors of production? Check all that apply.

the demand of the item *the availability of the item* *the cost of the item* *the quality of the item* the popularity of the item

What is the role of the three questions of economics?

to assess product profitability *to aid in production decisions* to offset a poor economy to determine quality and cost

What is one reason why the government would provide financial assistance to an entrepreneur?

to decrease the high rate of failure of new businesses *to encourage the invention and development of products* to stimulate the economy while decreasing unemployment to limit the amount of personal funds used to start the business

Gross domestic product (GDP) is the value of goods and services produced in a country annually. It can best be described as measuring an economy's

total output.

The higher a country's gross domestic product (GDP), the more likely it is that the country

wealthy. *is developed.* has high inflation. has little debt.

The graph shows a point of equilibrium. What is the price at which equilibrium is achieved?

$8 *$9* $10 $30

Which best describes how advertising influences consumer choice in an oligopoly?

*Advertising coaxes people to buy new products.* Advertising alerts consumers to price reductions. Advertising undermines competition. Advertising informs brand knowledge.

Which situation is an example of comparative advantage?

A country decides to export goods when another country does not. *A country decides to create goods at half the cost of another country.* A country decides to grow wheat and when another country raises cattle. A country decides to invest in technology and another country does not.

Why is the slow growth that can result from a contractionary policy a positive effect?

It can increase interest rates. It can decrease available credit. It can increase the money supply. *It can decrease inflation.*

What is the best definition of profit?

Profit is the possible income from producing an additional item. Profit is the price of producing one additional unit of a good. Profit is the additional income gained from selling an additional good. *Profit is the financial gain from business activity minus expenses.*

Which occurs during disequilibrium? Check all that apply.

Supply and demand meet. *Supply is less than demand.* Supply and demand set prices. *Supply is greater than demand.* Supply and demand set production.

What is one way that technology can improve the production of goods?

Websites can allow consumers to purchase goods online. *Container ships can transport a number of goods at once.* Automation can create goods more cheaply and easily. Airlines can send goods from one place to another.

When artists pass away, the supply of their paintings most likely becomes .

Worthless *Elastic* Inelastic Plentiful

Which of these practices describe how producers in oligopolies generally try to create competition? Check all that apply.

by keeping prices low by offering promotions by advertising by cultivating brand loyalty by overcoming barriers to entry by developing a specific image

How do trade agreements help the countries involved?

by restricting imports by accelerating production by expanding tax revenues *by decreasing trade barriers*

In a free market system, price controls can include both floors and

ceilings

The factors of production include the number of

customers needed to make a profit on a good. consumers who show an interest in a good. *employees needed to manufacture a good* producers who supply the same good.

The Fed may respond to a recession by

discouraging consumer borrowing. *decreasing interest rates.* decreasing government spending. decreasing available credit.

Which factors influence changes in consumer demand? Check all that apply.

elasticity clearance sales income

When it spends money on education, a government is trying to

find a way to meet a social need. encourage immediate economic growth. *meet a social need and improve the economy.* find a way to spend budget surpluses.