Economics 6-10
When adjustable mortgage rates began to increase, what was the result? (Select all that apply.) Banks tightened credit restrictions again. Banks lowered mortgage rates to help people. More mortgages were approved for customers. Thousands of homes were foreclosed on.
Banks tightened credit restrictions again. Thousands of homes were foreclosed on.
What is economic incentive in a free enterprise economy? People buy and sell products or services they want, which makes them happy. Businesses have the right to own property such as cars, houses, and land. Businesses sell goods and services and people take jobs for income. Buyers have the right to choose the goods and services they want and need.
Businesses sell goods and services and people take jobs for income.
Read the sentence. Carlos has decided to sell T-shirts to his classmates. Which economic question does Carlos still need to answer? how to produce why to produce what to produce for whom to produce
how to produce
Which disadvantage of a free market economy is most likely to lead to high unemployment? the large gap between rich and poor false price signals market failure monopolistic practices
market failure
Which are examples of free enterprise? no government interference, profit motive, economic freedom private property, profit motive, competition limited government, community property, economic freedom government regulation, profit sharing, competition
private property, profit motive, competition
Read the sentence. The three basic economic questions everyone must answer are _[blank]_. Which most accurately completes the sentence? what to produce, how to produce, and for whom to produce how much money to make, how to produce, and where to sell how to produce, how much to produce, and where to sell when to produce, what to produce, and where to produce
what to produce, how to produce, and for whom to produce
Which accurately describes disadvantages of a corporate business structure? (Select all that apply.) A corporate business structure does not allow owners to raise capital by selling shares of stock. A corporate business structure has a lot more regulations, or laws, compared to other structures. Setting up a corporation is complex and may require the advice of an attorney or accountant. Owners of a corporation have unlimited liability that includes their personal assets.
A corporate business structure has a lot more regulations, or laws, compared to other structures. Setting up a corporation is complex and may require the advice of an attorney or accountant.
Which accurately describes advantages of a corporate business structure? (Select all that apply.) A corporation pays a corporate tax, and that rate may be lower than a personal income tax rate. A corporate business structure allows owners to raise capital by selling shares of stock. The business becomes a legal entity separate from the person or people who set it up. Owners of a corporation retain complete control of day-to-day business operations.
A corporation pays a corporate tax, and that rate may be lower than a personal income tax rate. The business becomes a legal entity separate from the person or people who set it up. Partial
Which is a disadvantage of a free market economy? It forces businesses to make choices. It does not provide public goods. It promotes intense competition. It requires government regulation.
It forces businesses to make choices. Wrong
What is the purpose of the Tennessee Valley Authority? (Select all that apply.) It provides state-sponsored healthcare to citizens of the Tennessee Valley. It generates and provides inexpensive hydroelectric power to the Tennessee Valley. It improves navigation along the Tennessee River. It develops agriculture and forest land in the Tennessee Valley.
It generates and provides inexpensive hydroelectric power to the Tennessee Valley. It improves navigation along the Tennessee River. Partial
What are roles of the government in a mixed market economy? (Select all that apply.) It helps to ensure that prices are fair. It enforces laws against false advertising. It ensures businesses are able to make a profit. It helps to prevent monopolies.
It helps to ensure that prices are fair. It ensures businesses are able to make a profit. Partial
Why do economists need to find the answer to all three of the basic economic questions? Businesses need to know what to produce. There are not enough resources to satisfy people's seemingly unlimited wants. The country needs housing for all of its people. Mass production reduces the production cost of an item.
Mass production reduces the production cost of an item. Wrong
Which is true about scarcity? Scarcity leads governments to make the best economic decisions. Scarcity forces the government to allocate the factors of production. Scarcity exists because people have unlimited wants and limited resources. Scarcity results from the unwillingness of people to share.
Scarcity forces the government to allocate the factors of production. wrong Scarcity exists because people have unlimited wants and limited resources.
Which are advantages of a traditional economic system? (Select all that apply.) Everyone knows about their economic role. The standard of living is generally very high. The state offers tax exemptions for entrepreneurs. Little uncertainty exists about what or how to produce.
Everyone knows about their economic role. Little uncertainty exists about what or how to produce.
How does deposit insurance help prevent a bank panic? Banks make more responsible investments because they have the protection of the government. The government provides close supervision to ensure that banks maintain strong balance sheets so they do not fail. The stock market remains strong in the face of an economic slowdown because people know their investments are covered. Depositors are less likely to worry about their money and create a run on the bank by withdrawing their funds.
Depositors are less likely to worry about their money and create a run on the bank by withdrawing their funds.
What is the main advantage of a command economy? People have a variety of career choices. There is a strong incentive to innovate. Careful planning prevents shortages and surpluses. Everyone's basic needs are met.
Everyone's basic needs are met.
Which government entities play a direct role in the US economy and compete with private businesses? (Select all that apply.) Federal Deposit Insurance Corporation (FDIC) Tennessee Valley Authority (TVA) Department of Homeland Security (DHS) United States Postal Service (USPS)
Federal Deposit Insurance Corporation (FDIC) United States Postal Service (USPS) Partial
Read the scenario. While Paul's neighbor recovers from foot surgery, Paul walks her dog daily. He enjoys it so much that he decides to start a dog walking business. What is Paul's next step? He should ask himself how to get started and who to market the business to. He should buy new leashes for the dogs. He should determine the best dog walking routes. He should secure some capital.
He should ask himself how to get started and who to market the business to.
Which best describes Robert Owen's political ideology and its impact on business? He was a Communist who believed business could only flourish if the government owned it. He believed in a laissez-faire political system and the absence of government in business practices. He was a utopian socialist who believed that workers would flourish in a cooperative environment. He believed in nationalism and uniformity in culture and language to improve business profit.
He was a utopian socialist who believed that workers would flourish in a cooperative environment.
Which accurately describes a downside of the Tennessee Valley Authority Act? People had to move due to the damming of the river and reduced flooding. The Tennessee Valley Authority caused devastating air and water pollution to residents of the Tennessee Valley. Independent electric companies went out of business due to lower government rates. The Tennessee Valley Authority increased healthcare costs to residents of the Tennessee Valley.
Independent electric companies went out of business due to lower government rates.
Why is scarcity referred to as the fundamental Decisions about capital are made based on scarcity. Individuals, businesses, and countries all face the problem of scarcity. People and companies are more likely to take risks because of scarcity. The four basic questions must be asked because of scarcity.
Individuals, businesses, and countries all face the problem of scarcity.
Which is true regarding consumer sovereignty? It is only present when there is perfect competition. It allows businesses to take advantage of consumers. It creates competition between buyers and sellers. It can be lost when monopolies are allowed to exist.
It allows businesses to take advantage of consumers. Wrong
Why is ownership of private property important in the American free enterprise economy? It is a fundamental American right. It allows individuals to use their resources for personal gain. It prohibits businesses from taking advantage of people. It creates a system that ensures the most efficient use of resources.
It allows individuals to use their resources for personal gain.
What is true about the United States Postal Service (USPS)? It can raise the price of a stamp with congressional approval. It stopped providing package services in 1971. It operates as a nonprofit entity. It competes with private businesses.
It can raise the price of a stamp with congressional approval. Wrong It operates as a nonprofit entity. Wrong
Which are characteristics to consider when defining a service? (Select all that apply.) Services require payment. Services are physical items. Services are intangible activities. Services are tangible activities.
Services require payment. Services are intangible activities.
Which law did President George W. Bush sign to buy toxic assets from financial institutions? FRB FDIC TARP AIG
TARP
Why do business owners have to answer the three economic questions? The answers are required by federal law. The answers help determine whether a resource is scarce. The answers determine the best way to use their resources. The answers are something banks want when they review a business plan.
The answers determine the best way to use their resources.
What were the top two purposes of the Tennessee Valley Authority Act? (Select all that apply.) control flooding in the valley increase car traffic in the valley create employment in the valley increase presidential favor in the valley
control flooding in the valley create employment in the valley
Which is a function of the Federal Deposit Insurance Corporation (FDIC)? (Select all that apply.) protect consumer rights verify soundness of insured banks cover securities investments notify depositors when a bank closes
cover securities investments notify depositors when a bank closes Partial verify soundness of insured banks ?
What is a fundamental role of government in the United States? ensuring equality protecting property offering resources collecting taxes
ensuring equality Wrong protecting property
Read the scenario. Madison received $100 as a holiday gift. She used it to buy 50 mineral infused candles for $2 each. Then, she walked around the neighborhood and sold the candles for $4 each. What factors of production did Madison use? entrepreneurship and capital all four factors of production labor and capital capital and land
entrepreneurship and capital Wrong labor and capital Wrong
Which economic system is based on private ownership of goods and private decisions to invest in trade or business industries, with the intent of making a profit? free enterprise economy communist economy closed economy command economy
free enterprise economy
Which are characteristics that make up capitalism? (Select all that apply.) freedom competition government control equality
freedom competition
What were some of the tasks of the Tennessee Valley Authority Act? (Select all that apply.) generate and provide hydroelectric power to the valley create roads and bridges in the valley manufacture nitrates and phosphorus for creating fertilizer pay the senator for allowing this to happen
generate and provide hydroelectric power to the valley manufacture nitrates and phosphorus for creating fertilizer
What is the relationship between scarcity and trade-offs? Scarcity is a consequence of too many trade-offs. Scarcity exists because trade-offs exist. Trade-offs lead to scarcity. Trade-offs are made as a result of scarcity.
Trade-offs are made as a result of scarcity.
What do traditional and command economies have in common? a focus on agriculture rather than technology a focus on innovation rather than stagnation a focus on self-interest rather than the community a focus on the community rather than the individual
a focus on self-interest rather than the community Wrong
When do entrepreneurs answer the three basic economic questions? when they are evaluating their resources to decide what to sell after they have produced their product and are going to market when they are surveying consumers about the new product they developed after they have visited the bank to determine if they can borrow capital
after they have produced their product and are going to market Wrong when they are evaluating their resources to decide what to sell
Read the sentence. A person visits the grocery store to buy the materials to make and sell fudge door-to-door. What factors of production are being used? only land and labor only land and capital only labor and capital all of the factors: land, labor, and capital
all of the factors: land, labor, and capital
Why are many goods and services produced in a mixed market economy? a central command authority determines what will be produced and sold labor unions require members to provide a selection of goods or services government regulations mandate producers to provide a selection of goods or services businesses desire to make a profit based on the demands of their consumers
businesses desire to make a profit based on the demands of their consumers
How does a command economy address a disadvantage that market economies have? by providing opportunities for innovation by discouraging monopolistic behavior by promoting competition among firms by ensuring that everyone's basic needs are met
by ensuring that everyone's basic needs are met
How does a mixed market economy provide an incentive to innovate? by ensuring consumer sovereignty by offering economic freedom by offering the potential for profit by preventing monopolies
by offering economic freedom Wrong potential profit
Which political system favors individual economic freedom and free market competition? Marxism fascism capitalism Communism
capitalism
Which political system favors an economic structure in which the means of production are owned and monitored by the government? romanticism socialism capitalism feudalism
capitalism Wrong socialism
Which are considered producers? (Select all that apply.) car mechanic car buyer car builder car salesman
car mechanic car salesman Partial car builder Still partial
Read the sentence. For a free enterprise system to exist, individuals need to be able to make _[blank]_. Which best completes the sentence? choices credit money problems
money Wrong problems Wrong
Which are characteristics of a mixed market system? (Select all that apply.) greater tax rates on public finances zero controls on business ownership of private property limited consumer choices
ownership of private property greater tax rates on public finances
Which action by the government would promote competition among firms? passing legislation that prevents price-fixing increasing oversight and ownership of public utilities enacting government policies described by Friedrich Engels repealing antitrust laws enacted by the Senate
passing legislation that prevents price-fixing
Which are examples of consumer exchanges? (Select all that apply.) producing a wreath for a company buying lunch at a restaurant digging for raw materials paying a teen to mow the lawn
paying a teen to mow the lawn buying lunch at a restaurant
The Tennessee Valley Authority Act helped open which river up for trade and navigation? Mississippi River Missouri River Tennessee River Colorado River
Tennessee River
Read the statement. In a command economy, labor is a resource that must be allocated. What is meant by this statement? A democratically elected government decides how labor and other means of production are used. The people use their labor to innovate and create goods that the community wants. The people have control over how their labor is used. A central planning authority decides what job each person has.
A democratically elected government decides how labor and other means of production are used. Wrong
In which situation is a consumer exercising consumer sovereignty? A person likes the food at a restaurant and recommends it to friends. A person does not like the food served at a restaurant and refuses to pay. A person does not like the food served at a restaurant and chooses another restaurant. A person likes the food at a restaurant and attempts to copy the recipes at home.
A person does not like the food served at a restaurant and chooses another restaurant.
Which accurately describes a principle argued by Adam Smith to drive a free market economy? Adam Smith argued for a laissez-faire economy that is free of government intervention. Adam Smith co-wrote the Communist Manifesto with Karl Marx, which promoted communism. Adam Smith argued for a traditional economy in which history and tradition determines manufacturing. Adam Smith and Frederic Engels promoted socialism in which government owns manufacturing.
Adam Smith argued for a laissez-faire economy that is free of government intervention.
Which is true regarding scarcity? All individuals and businesses face the problem of scarcity. Wealthy individuals are the only people who do not face the problem of scarcity. When people face scarcity, they should try to avoid making trade-offs. If people carefully answered the three economic questions, then scarcity would not exist.
All individuals and businesses face the problem of scarcity.
Read the statement. In the United States, businesses are driven by profit. How does the profit motive benefit the American consumer? Firms need to hire people to produce goods so that more people will be employed. Firms that want to stay in business provide products that are pleasing to consumers. Firms that provide the highest-quality products will make the most money. Firms ensure that prices stay low so that more consumers can afford to buy them.
Firms that want to stay in business provide products that are pleasing to consumers.
Which best describes Adam Smith's view on economics and government involvement in business? He believed in a laissez-faire policy in which the government does not interfere in commerce. He wrote TheCommunist Manifesto and believed the government should control commerce. He believed the Catholic Church should oversee a nation's business and commerce. He preached enlightened absolutism and the monarchy's control of business and commerce.
He believed in a laissez-faire policy in which the government does not interfere in commerce.
Which are fundamental principles of economics? (Select all that apply.) How will it be produced? How will it be defended? How will it be taxed? How will it be distributed?
How will it be produced? How will it be distributed?
What were results of the federal government deregulating the airline industry in 1978, known as the Airline Deregulation Act? (Select all that apply.) Many small airlines went out of business. Large airlines were able to improve productivity. Consumers gained better (lower) prices for airfare. Many small airlines were able to penetrate the market.
Many small airlines went out of business. Consumers gained better (lower) prices for airfare. Partial Many small airlines were able to penetrate the market.
What is the main advantage of a market economy? The government can force quick economic change by amending the constitution. Income gaps between the rich and poor are minimized. The government owns and manages production of goods and services. Personal freedom allows people to innovate and allocate resources.
Personal freedom allows people to innovate and allocate resources.
Which accurately describes events of the Industrial Revolution and subsequent emergence of capitalism? The Industrial Revolution resulted in better working conditions for people in the lower class and in fewer labor unions in France, Britain, and Spain. The Industrial Revolution resulted in the reemergence of the Catholic Church oversight of European monarchs and capitalist opportunities. The Industrial Revolution created economic opportunities for the middle class (bourgeoisie) and the desire for profits without government interference. The Industrial Revolution led to the discovery of heliocentric theory, influencing the writing of the Magna Carta and the separation of church as state.
The Industrial Revolution created economic opportunities for the middle class (bourgeoisie) and the desire for profits without government interference.
What are disadvantages of a market economic system? (Select all that apply.) There are no incentives to work hard. There is little government support for environmental protection. There is no government support for the elderly. There is a lack of private property for citizens.
There is no government support for the elderly. There is a lack of private property for citizens. Partial There are no incentives to work hard. partial?
Which type of government regulation is designed to increase business competition? tariff laws that tax certain imports that rival American-made products environmental laws that manage and prevent wasteful use of natural resources regulations that prohibit a single business from controlling the market patent laws that protect people's inventions and innovations
regulations that prohibit a single business from controlling the market
Which are regulations the government may impose on businesses? requirements to work with other businesses to control prices and access requirements to protect consumers as well as workers requirements to provide accurate information to consumers requirements to ensure that they participate in competition
requirements to protect consumers as well as workers requirements to provide accurate information to consumers Partial requirements to work with other businesses to control prices and access partial still
In a command economy, who answers the three fundamental economic questions? the businesses the marketplace the people the government
the businesses Wrong
What is the biggest disadvantage to setting up a sole proprietorship? the legal paperwork the tax burden the financial system the personal liability
the personal liability
Why does the government regulate public utilities? to offer alternative energy sources to ensure that there is adequate competition to promote the use of new technologies to protect consumers from high prices
to protect consumers from high prices
What can happen when the United States government plays a direct role in the economy? (Select all that apply.) It negotiates trade agreements. It competes with private businesses. It operates as a monopoly. It acts as an employer.
It competes with private businesses. It acts as an employer. Partial It negotiates trade agreements.
Which are characteristics of macroeconomics? (Select all that apply.) It deals with the overall condition of the economy. It demographically measures the number of households demanding products or services. It examines how much is produced and the consumers' willingness to buy. It measures exports and imports for international trade.
It deals with the overall condition of the economy. It measures exports and imports for international trade.
Which are characteristics of microeconomics? (Select all that apply.) It determines the number of suppliers and businesses. It studies economic growth patterns and formulates solutions. It deals with the prices of goods and services. It drives public policy and regulations for fair business practices.
It determines the number of suppliers and businesses. It deals with the prices of goods and services.
What is one disadvantage of a free market? It does not provide public services. It does not encourage people to work hard. It does not answer the three fundamental economic questions. It does not value individual rights.
It does not provide public services.
What effect does government regulation have on businesses? It takes away some economic freedom from businesses to ensure economic freedom for consumers. It increases the cost of production for businesses in the long term, but it does not impact them in the short term. It decreases production costs for businesses in exchange for them agreeing to lower their prices to consumers. It gives businesses economic freedom so that they are able to make greater profits and employ more people.
It gives businesses economic freedom so that they are able to make greater profits and employ more people. Wrong
What does the FDIC do when a bank fails? (Select all that apply.) It notifies depositors if their bank has been sold. It sells off a bank's remaining assets to settle any debts. It prosecutes any bank owners who violated the law. It provides advice to consumers on choosing a new bank.
It notifies depositors if their bank has been sold. It sells off a bank's remaining assets to settle any debts.
Why is scarcity a significant problem? It requires people to conserve resources. It determines the type of economic system used. It forces people to make choices. It leads to opportunity cost.
It requires people to conserve resources. Wrong
How is a mixed market economy different from other economic systems? People are considered equal, and the government ensures that everyone's basic needs are met. People are free to choose and purchase goods and services based on their own wants and needs, while some government exists to protect the public. People can allocate their resources in any way they see fit without government interference. People can be certain about their role in the community and governmental decisions are based on history.
People are free to choose and purchase goods and services based on their own wants and needs, while some government exists to protect the public.
Which is an example of the indirect role of government in the economy? The government has partial ownership in a business along with investors. The government passes laws that keep electricity rates affordable. The government competes with private business to ensure quality products. The government provides a service that private businesses will not offer.
The government passes laws that keep electricity rates affordable.
Which accurately describes advantages of a sole proprietorship? The owner of a sole proprietorship has the freedom to make all business decisions. The owner of a sole proprietorship is able to sell stock to raise capital. The owner of a sole proprietorship has limited liability as the business pays all expenses. The owner of a sole proprietorship keeps the profits.
The owner of a sole proprietorship has the freedom to make all business decisions. The owner of a sole proprietorship keeps the profits.
What are advantages of a mixed market economic system? (Select all that apply.) The private sector is encouraged to make profits. Competition lowers prices and increases choices. The government provides essential services. Low taxes reduce income inequality.
The private sector is encouraged to make profits. Competition lowers prices and increases choices. The government provides essential services. partial
Which best describes Karl Marx's viewpoint on capitalism and the emergence of Communism? The government should exist to support private business and the import and export of goods. The proletariat will overthrow the bourgeoisie due to inequalities resulting in a classless society. The government should not intervene in business and finance and should instead favor a laissez-faire policy. The bourgeoisie will overthrow the proletariat due to inequalities resulting in a classless society.
The proletariat will overthrow the bourgeoisie due to inequalities resulting in a classless society.
How do government benefit payments, such as social security and veteran benefits, help the economy? (Select all that apply.) They prevent inflation because the payments are modest in amount. They offer a safety net for people who may be struggling for some reason. They are a source of revenue that people use to consume goods and services. They provide individuals with the opportunity to further their education.
They offer a safety net for people who may be struggling for some reason. They are a source of revenue that people use to consume goods and services. Partial
How do business partners share liability? They share liability only if ordered to by a court ruling. They share all liability jointly. They share liability based on who invested the most. They share liability based on the partnership agreement.
They share all liability jointly.
What is true regarding taxes in a market economy? They tend to be high because government is more efficient. They tend to be low because the services provided are inexpensive. They tend to be high so that the government can develop a budget surplus. They tend to be low in order to encourage work.
They tend to be high because government is more efficient. Wrong They tend to be low in order to encourage work.
Why do entrepreneurs ask the three basic economic questions? They want to make the best possible trade-off. They want to prevent the problems caused by starting a business. They want to use their resources wisely to make a profit. They want to avoid having an opportunity cost.
They want to use their resources wisely to make a profit.
Which characteristics of capitalism provide an opportunity for entrepreneurship and allow both buyers and sellers to feel they made a return on an investment? (Select all that apply.) voluntary exchange and trade freedom innovation competition profit motivation
innovation competition profit motivation Partial
Read the sentence. The housing bubble was caused in part by people buying homes to fix and sell for a higher price. What is this known as? investing mortgaging speculating foreclosing
investing Wrong mortgaging Wrong
Read the scenario. Ann owns two acres of trees. Which factors of production would Ann's situation fall under? (Select all that apply.) labor capital land entrepreneurship
labor capital land Partial
Why was the Federal Deposit Insurance Corporation (FDIC) created? to protect banks in the event people began to withdraw funds to protect the economy from another stock market crash to protect people's deposits in the event of a bank failure to protect the government from providing too much coverage
to protect people's deposits in the event of a bank failure
Which are characteristics of a free market economic system? (Select all that apply.) priorities for the production of goods central plan to allocate resources unequal distribution of basic needs freedom of choice to do business
unequal distribution of basic needs freedom of choice to do business
What were secondary benefits to the government raising the standard of living for the people of the Tennessee Valley region? (Select all that apply.) unlimited employment tax breaks for the region inexpensive electricity increased crops and animals
unlimited employment Wrong inexpensive electricity Yes
What is specialization? when an individual becomes an expert in a particular area when a business provides services that help communities when the government offers military protection when the market offers higher wages for more important jobs
when an individual becomes an expert in a particular area
When would the government's response to a market failure be controversial? (Select all that apply.) when it raises taxes to increase revenue for government programs when it encourages businesses to provide skills development for workers when it encourages businesses to hire veterans when it chooses to redistribute income to different populations
when it chooses to redistribute income to different populations when it encourages businesses to provide skills development for workers Partial when it raises taxes to increase revenue for government programs
