Economic Unit 4 review
Which statements describe a free enterprise system? Check all that apply.
Citizens can own property. Supply and demand drives production. Consumers and producers make their own decisions. Citizens can accumulate wealth.
Which of these statements describes what the diagram is showing?
Economic policy must reach a balance between needs and ideals.
Which would be the best label for the circle in the center?
Government Economic Policies
Contractionary reduce give deficit or gain surplus by
High income tax, less disposable income, lower profit, less spending, improve government finances
An organization whose members have a common cause for which they seek to influence public policy is called an
Interest group
What is likely to happen if a new aggregate demand curve moves to the right?
Prices and output would rise in the short and long run
Security federal agency that require finance. oversee broker, dealer, and adviser
SEC
If a sales tax is the same for all goods sold within a given area, why are sales taxes considered regressive?
Sales tax disproportionately affects low-income earners.
Which best describes the difference between sole proprietorships and partnerships?
Sole proprietors keep all profits and have unlimited liability, while partners split profits and share liabilities.
A disadvantage of corporations is that shareholders have to pay__ on profits.
Taxes
Which most likely explains why the costs and benefits shown by the EPA are higher than the other regulatory agencies?
The EPA legislates and enforces more regulations that reap greater benefits than the other agencies.
Which describes the process of how a business incorporates?
The business must gain government permission and issue a stock sale, followed by a shareholder vote.
Governments collects taxes to ensure that
citizens contribute to meeting society's needs.
Which best describes a central bank's primary goals?
controlling inflation and reducing unemployment
)Franchising is typically done by
corporation
Which best describes a central bank's primary role?
creating monetary policy
A new business should be based on an entrepreneur's individual interests because the entrepreneur must
dedicate as many hours as needed to the work
High government expenditures can lead to a bigger
deficit.
Government regulation is intended to
discourage producers from taking harmful actions.
Spending that can change from year to year is known as spending.
discretionary
The pie chart shows federal spending in 2010. Which of the following was the highest spending priority for the federal government in 2010?
education/health and human services
Which of these policies would a government take when it comes to employment?
ensuring that as many workers are employed as possible
The___ rate is the interest rate banks charge each other for borrowing or storing money.
federal funds
What must an entrepreneur do after creating a business plan?
finance the business
Classical economics played an important role in helping the United States establish .
free enterprise
What is one benefit for US workers who have a college degree rather than a high school diploma?
Those with a college degree earn nearly twice as much as those without college.
____laws ensure that workers are paid if they are injured on the job.
Worker compensation
Which document determines the number of shares a company can sell?
a corporate charter
Public policy can be best defined as
a course of action the government takes in response to an issue or problem.
What event had an enormous effect on US workplace safety?
a deadly factory fire
An economic thinker who influenced early economists was
adam smith
Which are results of regulation in a mixed-market economy? Check all that apply.
advantages for government control of externalities control of markets
Who benefits most from workplace safety regulations?
all workers, who are less likely to miss work because of injury or face high medical bills
A disadvantage of forming a partnership is that owners
are fully responsible for their partners' losses.
An entrepreneur who opens a franchise must
assume debt
What is one way for an entrepreneur to decrease risk?
by creating a strong business strategy
In which of the following ways do governments spend money to meet public needs? Check all that apply.
by providing health care by supporting education by building roads and bridges by protecting the public
What is a major factor in the decline of some occupations, such as those in the textiles and clothing industries?
changing technologies
Economists studying the money supply categorize the status of the money based on
liquidity.
Milton Friedman led a new economic school of thought called
monetarism.
To be successful, what must an entrepreneur be willing to invest? Check all that apply.
money, time, considerable effort
The graph shows government spending as a percentage of GDP from 1990 to 2012. At its peak, government spending made up about
one quarter of GDP.
An entrepreneur would most likely be a
person who works well alone.
The Food and Drug Administration sets standards for
product labeling
When governments inject money into the economy, which of the following are their goals? Check all that apply.
reducing unemployment improving economic stability encouraging competition improving production
Rules ensuring that businesses offer safe products to consumers are part of a nation's
regulatory policy.
An entrepreneur must accept being accountable for the failure of the company because the entrepreneur is
responsible for organizing the business.
Based on the chart, the primary responsibility of shareholders is to
run the business by electing a board of directors, who then hire the company's leaders.
Regulatory agencies such as the OCC and the FDIC add to the banking system.
safety
People who buy stock in a company are known as
shareholders
When revenues are higher than expenditures in a budget, that budget
show a surplus
When expenditures are higher than revenues in a budget, that budget
shows a deficit.
The most common business organizations in the United States are
sole proprietorships.
Proportion taxes
11% on person who earn 40 grand per year and 11% on person who earns 120k per year
In how many cities are Federal Reserve district banks located?
12
What can the reader conclude from the graph?
A company offering physical therapy most likely has only an 80 percent chance of surviving for at least two years.
In which situation would government regulation most likely be necessary?
A factory requires employees to work in unsafe conditions.
Which statements accurately describe debts and deficits? Check all that apply.
A government's budget deficit causes debt to increase. Debt requires a government to pay back more than it has borrowed. The deficit is the amount a government spends above what it brings in.
If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of interest rates being increased?
Borrowing will decrease
Which statement best describes how the Fed responds to recessions?
It increases the money supply.
Why does the Fed pay interest to banks?
It is interest on money held in reserve.
The General Theory of Employment, Interest and Money was written by
John Maynard Keynes.
Spending that is required by law is known as ___ spending.
Mandatory
What makes enforcing safety standards a challenge for the Food and Drug Administration?
Many foods are imported from other countries, and the FDA must ensure those foods meet the same standards as US goods.
According to Milton Friedman, policy is the best way to influence the economy's aggregate demand.
Monetary
If expansionary taxation policies encourage growth, are they always appropriate to implement?
No, government services could be reduced and cause serious problems for individuals and businesses
Which describes an example of the economic system known as free enterprise?
People are free to shop for the best price on products because there is open competition.
What role does a fast-food corporation play when it agrees to franchise its business? Check all that apply.
The franchisor will select a location. The franchisor will supply training. The franchisor will supply advertising. The franchisor will collect most profits.
How will an increase in the percentage of older Americans affect the healthcare field?
The healthcare field will create new jobs because more people will need care.
Read the excerpt from a letter about the early trade union movement. The trade union movement came into being as a movement of hunger. It was made necessary by conditions. It was in the beginning formed in response to a hunger for enough to eat . . . As it became possible to secure more food, other hungers demandedsatisfaction . . . The demands were for more and better food, for better clothes and for better homes. It required a struggle to satisfy these needs . . . [A]t every step of the way it was necessary to overcome the stubborn opposition of employers who were resolved not to recede and not to relinquish any of the powers and privileges which they possessed. —Samuel Gompers, 1920 What does the author believe about factory owners?
They are greedy and selfish.
What happens to earnings in a cooperative?
They are shared with member owners.
How did Adam Smith's economic ideas help the United States establish a free enterprise system? Check all that apply.
They led to open competition for consumers. They led to individual ownership of property. They led to freedom of choice for consumers and producers.
Which best describes how individuals help the economy grow?
They work to influence money supply
Successfully starting and running a business requires drive, talent, and clear vision of a long-range .
goal
Economic interdependence means that economic policies must balance the needs of
governments, individuals, and businesses.
Which of these effects of expansionary spending would a government most want to avoid?
higher inflation
A government might enact expansionary spending when it is trying to
increase aggregate demand for goods.
What is a potential negative effect of an expansionary policy?
increased inflation
Which are examples of sole proprietorships? Check all that apply.
independent workers tax preparers freelance writers
A sales tax is a type of
indirect tax.
According to the scenario, what is the greatest economic challenge that Country D is facing?
inflation
Monetarism plays a role in economic growth by
influencing the supply of money.
Which are duties of OSHA? Check all that apply.
investigating worker complaints, inspecting businesses
What course of action might a government take to respond to the downturn revealed in this graph?
investing in job-training programs
What is the definition of collective bargaining?
labor union and employer negotiations about wages and other issues
Which of these is a banking activity of the Fed?
storing money for banks
What does deficit spending require a government to do?
take on debt
AN ___ is a tax issued by the federal government on imported goods
tarif
What gives the US government the power to collect taxes?
the Constitution
A regulatory agency that makes sure banks follow federal laws is
the FDIC.
Based on the scenario, who is most affected by the situation taking place within Country D?
the government, workers, and businesses of Country D
What is the definition of minimum wage?
the lowest hourly pay that workers can receive
Both newspaper journalists and postal workers have been negatively affected by
the popularity of electronic communication and the Internet.
Franchises are attractive to business owners because
they have a proven business model.
Because many successful business owners fail on their first attempts, the reader should assume that
they learned from their mistake
To be successful, an entrepreneur must be willing to invest money, considerable effort, and.
time
What is one purpose of writing a business plan before entering the market?
to differentiate the new company from the competition
A goal of financial regulatory agencies is to
to prevent monopoly
The development of many new businesses helps limit
unemployment.
The job outlook for physical therapists
will improve overtime