ECON FINAL
Which of the following is a characteristic of a traditional economic system?
children working the same jobs as their parents
Measurement of the types of goods consumers purchase is a key indicator of the direction of a nation's economy. Which of the following is known as a consumer nondurable good?
college textbook
Compared to the modern economies of Australia and the U.S.A., the People's Republic of China and the USSR during the Cold War were known as
communist.
What is the source of the net benefits and profits that come from increased international trade?
comparative advantage
Which of the following is considered to be a non-price determinant that causes shifts in supply curves?
costs of production
In a market characterized by monopolistic competition, firms often use non-price competition to increase sales. Which of the following is NOT a form of non-price competition?
discounts
The economic resources that are used to make all services and goods are known as the
factors of production
Economists use what term to describe the most fundamental economic concept that all nations and people have unlimited wants but limited resources?
scarcity
Price inflation can be difficult for consumers AND producers. Which of the following is a major problem for businesses during long periods of inflation?
It is difficult for them to predict their production costs.
Which is the best description for labor as a factor of production?
Labor includes all of the human work and human input that goes into producing a good or service.
What word best describes all of the natural resources that are used to produce a good or service?
Land
Adam Smith, the Father of Modern Economics, stated that all economic decisions in a market economy were regulated by an "invisible hand" of ...
self-interest and competition.
John Maynard Keynes said that the main disadvantage of the government saving money (tightening its belt) instead of spending money during a recession is
unemployment gets even worse.
Which of the following would be added to the gross domestic product (GDP) of the United States?
the income your barber or stylist makes earns
The data from supply and demand schedules was used to create the supply and demand graph below. Study the graph to answer the question below: What statement cannot be supported by the information in the supply and demand graph?
This graph indicates that a shift in the demand curve will occur due to a change in shirt prices.
An economist would most likely use the terms free enterprise, market economy, or capitalism to describe which nation's economy?
United States
Which of the following best describes the market structure known as an oligopoly?
a market with only a few business firms controlling the majority of the market's production
The purchase of durable goods is a leading indicator of manufacturing activity. Which of the following is an example of a durable good?
aircraft engine
Economics is the study of
how people use scarce resources to fulfill their wants and needs.
Exxon-Mobil and Walmart are examples of a kind of corporation that produces goods and services for sale around the world. What is this special type of company called?
multinational
Cities often have to build large public works, buildings, and other capital. In order to have enough money to build these works,_____ are sold to investors to finance the projects.
municipal bonds
What is the major source of tax revenue for local governments in the U.S.?
property taxes
The role of the entrepreneur in a capitalist economy is
pulling the resources of production together.
All of the following are low-risk investments EXCEPT
junk bonds.
The data from a supply schedule and demand schedule was used to create the supply and demand graph below. Study the graph to answer the question below. What is the equilibrium price according to the graph below?
$20
In the modern world, economists and policy makers believe that a nation is efficiently using its resources if it can meet a ____ target unemployment rate.
4 to 6 percent
Which of the following best describes collective bargaining?
A labor union's representatives and a company's representatives meet to negotiate a labor contract for workers at the company.
Which of the following philosophers promoted a free market economy?
Adam Smith
Which of the following is likely to be the result in a nation with a very low unemployment rate, hovering between 1 and 2 percent?
Companies will have problems hiring enough workers with the skill set they need.
These institutions take deposits from savers then lend out some of the funds to businesses and individuals.
Banks, Savings & Loans, and Credit Unions
Let's assume that Bolivia is one of five countries in the world that has lithium deposits. What would it take for Bolivia to have a comparative advantage on the world lithium market?
Bolivia would have to have lower costs in bringing together the factors of production and distribution of lithium than other nations.
Which of the following forces of business regulation describes the business standards and behaviors that we personally choose to create and follow in regards to how we treat human capital and how we will run our businesses?
Business Ethics
Which of the following best describes how currency rates can affect trade?
Business firms that import from other countries benefit when their currency becomes stronger, since it enables them to purchase more.
Which of the following is NOT part of the structure of the Federal Reserve Banking System
Congressional Budget Office (CBO)
Corporations make up roughly 20 percent of the number of businesses in the United States, but produce about 90 percent of the goods and services in America. What do these facts explain about the advantages and disadvantages of corporations versus other types of business structures?
Corporations can raise large sums of capital investment to grow their business on a large scale.
Which of the following is a major difference between corporations and other kinds of business structures?
Corporations exist as a separate entity (body) apart from its owners.
The nation of Economica's economic indicators over the past half year have reported that the economy has: a growing Gross Domestic Product (GDP), low unemployment rates, and increasing tax revenues. Based on these indicators, what is most likely to be true for Economica's current business cycle?
Economica is in an expansionary period with increasing production, which will result in a higher standard of living for many of its people
The mission of this Federal agency is: "To prevent business practices that are anti-competitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity." What is the name of this agency?
Federal Trade Commission
In which economic system would an individual be more likely to invest their own money to open a hamburger franchise with the hope of earning enough profit to purchase their own home?
Free Enterprise, Communist, Market Economies
Which nations are modern examples of socialist nations?
Germany and Denmark
What is the name/acronym of the international organization formed to stabilize international exchange rates and to facilitate development of nations?
IMF
Economica will have an opportunity cost of 10 units of tennis shoes if its production levels move from Point C to Point D on the production possibilities graph. How does this scenario illustrate the economic concept of scarcity?
If Economica increases the number of cells phones it produces, then it doesn't have enough resources to make as many tennis shoes.
What does it mean if we say that the demand for green beans is inelastic?
Increasing the price on green beans does not have a significant impact on buying habits.
Which of the following is an important advantage of a free enterprise economy?
It can offer a wide variety of services and goods for consumers.
These institutions practice pooling the savings of many individuals and investing that money in a variety of stocks, bonds, and other financial assets.
Mutual Funds
Which of the following is an advantage of a partnership structure over the sole proprietorship business structure?
Partnerships enable individuals to pool together more factors of production for growth.
The business practice of this type company is to provide funds or income to individuals after working a certain number of years.
Pension Funds
What would happen to prices of goods in the United States if Congress established major limits and restrictions on imported goods?
Prices would rise.
Which statement would best explain why free enterprise economies tend to have a higher standard of living?
Private ownership of property, businesses, and the factors of production allow individuals to build their personal wealth.
According to the cost-push theory, what is responsible for inflation?
Producers raise prices of goods and services they sell to meet increased costs.
The Production Possibility Curve graph indicates that the imaginary nation of Economica can produce goods efficiently along the production possibility frontier line. What economic principle prevents Economica from producing tennis shoes and cell phones at point G?
Scarcity makes it impossible for Economica to produce at Point G because the nation has too few resources to meet the requirements needed to produce all goods at that level.
Unemployment rates are one of the key economic indicators of a nation's financial health. Which of the following is the main difference between seasonal unemployment and structural unemployment?
Seasonal unemployment occurs because of labor demand changes during a year, whereas structural occurs because the workers lack skills.
What do taxes collected under the Federal Insurance Contribution Act (FICA) fund?
Social Security and Medicare
Which of the following rank in the highest expenditures in the federal budget in recent times?
Social Security and Medicare-related spending
What best describes technology's role as an important factor of production?
Technology incorporates the knowledge and skill sets and software that makes production more efficient.
Which of the following is a major disadvantage to using import barriers to make domestic (American) goods cheaper?
The American manufacturers are likely to lose the incentive to produce efficiently and prices will rise.
How does the Federal Reserve's regulation of the money supply impact banking and the American economy?
The Fed's actions impact the inflation rate and overall economic growth.
Which of the following does NOT describe an effect of modern technological advancements on the economic growth of a nation?
The costs of production will rise sharply for an extended time across the nation.
If the average price of a hot dog in America increases substantially, but hamburgers stay relatively the same, what will happen to the demand curve for hamburgers?
The demand curve for hamburgers is likely to shift to the right.
Government is part of the circular flow of the American economy because
The federal government employs people and produces certain goods and services.
When graphed, what is the relationship between prices and the quantity supplied?
There is a direct relationship.
When the selling price of a service or good increases, what is the relationship to the quantity demanded?
The quantity demanded will decrease.
Let's combine your knowledge of supply and demand with your understanding about labor and jobs. What would happen to job opportunities for the lowest-paying jobs in a market in which the government raises the minimum wage?
The quantity of labor demanded would go down.
What will happen to an economics market in equilibrium when there is an increase in supply?
The quantity supplied will be greater than quantity demanded, so the price will drop lower.
Which of the following characteristics does NOT describe pure competition (perfect competition)?
The sellers are offering a wide variety of different products.
The nation's economy is in an economic trough. Production is down and unemployment is at its highest mark since the Great Depression in the 1930s. The government decides to increase government spending and reduce taxes. What is the most likely result of this fiscal policy?
The unemployment rate will begin fall as production increases in order to supply goods for government purchases and for consumers with more disposable income.
When entrepreneurs in the United States choose to design and produce automobiles in Michigan, U.S.A. for sale overseas, how is the U.S. GDP affected?
The value of the American-made cars sold on the foreign market is added to the U.S. GDP.
What do the Sherman Antitrust Act, Clayton Act, and the Federal Trade Commission Act have in common?
These are federal laws designed to limit unfair business practices that could reduce competition and create illegal monopolies.
What do all of these words have in common: free enterprise, free market, and capitalism?
These words can be used interchangeably to describe the US economy.
Which of the following statements is true about such historical economic recessions as the Panics of 1837, 1857, 1873, as well as the Great Depression of the 1930s?
They illustrate the trough part of the business cycle.
How does the foreign exchange currency market work? If I want to buy Japanese cars, I must supply Japanese currency. That means that the supply of dollars will increase in the market which drives down the value (too much of something makes it cheap). On the other hand, the Japanese Yen is being demanded which drives up the value of the Yen (it appreciates and the dollar depreciates). Which currency appreciates and which currency depreciates if the U.S. wants to buy German cars.
U.S. dollar will go down and the German euro will go up.
Which of the following is not one of the key economic questions all societies must answer?
Who will supply the new technologies to produce better products?
The largest provider of development assistance for less-developed nations and regions in the world is the
World Bank.
Assume you buy 1000 shares of common stock in Xerox Corporation; what does this mean?
You are a shareholder in the ownership of Xerox.
Which of the following best explains a natural monopoly?
a government choosing a supplier for all of the buyers in a market
Which of the following people would be counted by the Bureau of Labor Statistics as part of the unemployment rate in the U.S.?
a 40-year-old man who was working, but has been laid-off by his company
If Bolivia is the only country in the western hemisphere that can produce highly-demanded lithium from its mines, Bolivia's producers have
an absolute advantage in lithium production.
In disputes between labor union demands and corporate managers, name the technique where a neutral third party expert is hired who reviews the differences between management and union demands and imposes a decision that is binding for both sides.
arbitration
Money market mutual funds generally have a higher risk than savings accounts because mutual funds
are not insured by the Federal Deposit Insurance Corporation.
The money and capital resources that belong to a corporation or partnership or LLC are called
assets.
Which of the following goods would be counted as part of the GDP in the U.S.?
automobiles manufactured in Tennessee, U.S.A. at a factory owned by Nissan, a Japanese car company
Why do production possibilities frontier curves usually bend outward on a graph?
because there are increasing costs of production and less output as you move down the curve.
What do Social Security taxes pay for?
benefits to older citizens, surviving family members of wage earners, and people with certain disabilities
Economics philosopher Adam Smith theorized that in a market economy, self-interest would govern people's behavior. The "invisible hand" that would regulate the market, according to Smith, is
competition.
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by American consumers for a market basket of consumer goods and services. How does the Bureau of Labor Statistics determine the items to be used in the market basket?
conducting consumer spending surveys
One example of contractionary fiscal policy would be
decreasing government spending.
If we analyze the production of a person, firm, or nation on a production possibilities graph, and we find them producing along the production possibilities curve or frontier, how would you best describe that economy?
efficiently using its scarce resources
f we analyze the production of a person, firm, or nation on a production possibilities graph, and we find them producing along the production possibilities curve or frontier, how would you best describe that economy?
efficiently using its scarce resources
In contrast with classical economics, Keynesian economics
encourages more government spending during times of recession.
The point in a market where quantity supplied and quantity demanded are equal is called
equilibrium price.
As the federal government has added more rules and regulations to the conduct of business in the American economy in modern times,
federal taxation of individuals and companies has grown.
What type of currency system is characterized by one country basing its national currency's value on that of another nation?
fixed exchange-rate system
Nations, including the United States, have established trade policies at different times to protect young, infant industries as they begin to grow. Which of the following is not a trade barrier?
free-trade agreement
What is the biggest advantage for a country that has the headquarters of a large, multinational corporation?
greater employment opportunities
The measure of a country's development that is best for comparing standards of living and wealth between people of different countries is
gross domestic product per capita.
If people's salaries increase, their willingness and ability to purchase an item at a given price will also increase. What is this non-price determinant of demand called?
income effect
The purpose of expansionary fiscal policy is to
increase national output.
How do banks make most of their profits?
interest charges on loans
What is the basic economic concept that says the more and more you consume of a good, the less and less satisfaction you will receive?
law of diminishing marginal utility
The concept that with the purchase of more and more of a good, the less satisfaction you will receive with each on is called
law of diminishing marginal utility.
What does the Federal Deposit Insurance Corporation (FDIC) have to do with banks and your money?
makes sure that bank customers do not lose their money if a bank fails
Which of the following best describes monopolistic competition?
many business firms selling similar but not identical products or services
Which of the following types of corporations is a special type that does not distribute its surplus funds to stockholders, instead uses the funds to pursue its goals, such as charitable organizations.
non-profit organization
When people make one economic choice, they give up many other choices. The lost potential value that a person would have gotten by making a different choice is known as. . .
opportunity cost
When you own one certificate of common stock in a corporation, you
own one share of the corporation.
Because everyone experiences scarcity, the opportunity cost of a large-scale or personal economic decision can be analyzed by using a
production possibilities graph.
One of the best economic indicators of a nation's economy is the value of its gross domestic product. When economists convert GDP to a value in constant, or unchanging, prices, this value is called
real GDP.
The investment strategy of diversification is often recommended because diversification
reduces overall risk on your investments.
What is monetary policy?
regulation of the money supply, interest rates, and banking in the U.S. economy
While not every state collects this type of revenue, what is the biggest source of direct revenue collected by state governments in the United States?
state income tax
Which of the following strategies is NOT a strategy used primarily by corporate management when negotiations break down with the labor union?
strike
Economists. . .
study all of these things and more.
What do economists call a graph of the quantity supplied of a good or service at all suppliers at different prices?
supply curve
Because people have economic freedom in free enterprise economies, people tend to ...
take more entrepreneurial risks to open new businesses in order to build wealth.
All of the following are part of fiscal policy EXCEPT
the Fed (Federal Reserve Board) changing the money supply through changes to the discount rate
Which of the following is NOT an example of the increasing role of government in the American free enterprise system in the past century?
the balanced budget achieved in the year 2000
What is fiscal policy?
the federal government's tax and spending plans
As the United States began to abandon the gold standard for the dollar in the 1930s and completely dismiss the gold standard in the 1970s,
the value of the dollar has declined.
When you give up a movie date night in order to prepare for the SAT, the missed movie date is known as a/an ___?___ in economics.
trade-off
The 'market basket' that is used by the Bureau of Labor Statistics to measure inflation using the Consumer Price Index (CPI) is made up of which of the following?
typical goods and services for an urban household
Which one of the following is NOT one of the main characteristics of money?
variety
When you purchase coffee at Starbucks using your credit card,
you are borrowing money from the institution that issued your credit card as it pays Starbucks for your coffee.