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Which person below is an entrepreneur?
A) a person who writes technical manuals for a computer company
B) an artist who runs a business painting murals
C) an ice skater in a professional ice show
D) a secretary in a law firm
Each society answers the three basic economic questions based on...
A) its unique combination of values and goals.
B) the desire to achieve economic freedom.
C) its degree of economic growth.D) the number of factor payments.
Who owns the factors of production?
C) the market
What does the process of specialization do for an economy?
A) It fosters competition
B) It eliminates unemployment
C) It makes production more efficient
D) It makes labor easier to control.
In what kind of an economy does the government make all the decisions?
B) free enterprise
C) centrally planned
Which of the following best describes the economy of the United States?
A) mixed, but more like a free market
B) free market
C) mixed, but more centrally planned
D) centrally planned
A) economic equity
B) economic freedom
C) economic security
D) economic efficiency
What is considered a negative effect of government regulation?
A) It allows businesses to sell unsafe products.
B) It protects consumers but harms the environment
C) It does not protect the well-being of the public.
D) It is expensive for businesses to follow all the rules.
Policymakers pursue all of the following goals to stabilize the economy except...
A) high unemployment
B) stable productivity.
C) stable prices.
D) steady growth.
Which of the following programs was President Roosevelt establishing when he spoke these words?
A) Temporary Assistance for Needy Families
B) War on Poverty
C) The New Deal
D) Social Security
Roosevelt said that the government cannot insure all citizens against all hazards. How does the government encourage private efforts to provide social services?
A) cash transfers
B) in-kind benefits
C) federal grants
D) Medicaid and Medicare
Jeff and Margaret qualify for Section 8 housing, a subsidized housing program administered by the federal government. What kind of benefit are they receiving?
A) Social Security benefit
B) faith-based initiative
C) cash transfer
D) in-kind benefit
What causes a shift in the demand curve?
A) a decrease in price
B) a change in price and availability
C) an increase in price
D) a change in an area other than price
How does elasticity affect a company’s pricing policy?
A) If demand is unitary elastic, the company knows that an increase price would increase total revenues.
B) If demand is elastic at the current price, the company knows that an increase price would reduce total revenues.
C) If demand is unitary elastic, the company knows that a decrease in price would decrease total revenues.
D) If demand is inelastic, the company knows that an increase in price would reduce total revenues.
How does the price range affect the elasticity of demand for a product?
A) Demand for all products is elastic if the price is low enough.
B) Demand for a good can be inelastic at a low price, but elastic at a high price.
C) Price range has little effect on elasticity of demand for a good.
D) Demand for a good can be elastic at a low price but inelastic at a high price
In July, an automobile company announces that next year’s models, with more features, will start to arrive in September or October. What is likely to happen to demand for this year’s model in August?
A) Demand will go to zero because everyone will want the new model.
B) Demand will fall in anticipation of lower prices
C) Demand will stay the same and price will stay the same.
D) Demand will rise in anticipation of higher prices.
Which of the following is the correct mathematical formula for calculating elasticity of demand?
A) percentage change in substitutes / percentage change in value demanded.
B) percentage change in quantity demanded / percentage change in price.
C) percentage change in overall price / percentage change in market demanded.
D) percentage change in price demanded / percentage change in quality desired.
How is the total cost of a factory or other production site determined?
A) marginal cost plus variable costs
B) fixed costs plus variable costs
C) marginal cost plus output cost
D) marginal cost plus fixed costs
The price of home computers rises. According to the law of supply, manufacturers will respond to this price increase by...
A) keeping computer production steady.
B) decreasing computer production.
C) increasing computer production.
D) halting computer production.
A) It is easy to expand if it succeeds.
B) It is easy to get financing to start one.
C) It is the least regulated form of business organization.
D) It has the lowest rate of federal income taxes.
Which of the following would be considered no longer part of the labor force?
A) anyone who once sought work, but has given up looking for a job
B) anyone who worked 15 hours in a family business for no pay
C) anyone who worked only one hour for pay within the past week
D) anyone who has a job, but was out sick for more than a week
Which person would be considered outside the labor force?
A) someone who worked only 1 hour for pay within the past week
B) someone who has a job, but was out sick for more than a week
C) someone who worked 15 hours in a family business for no pay
D) someone who once sought work, but has given up looking for a job
Savers and borrowers are linked through financial institutions when...
A) the financial institutions offer the same rate of exchange to each.
B) savers deposit money that is used to loan money to borrowers.
C) borrowers take money from financial institutions to invest with savers.
D) both savers and borrowers invest in the same markets.
Country A has more than three times the population of Country B. However, Country A’s literacy rate is 38 percent lower than Country B’s. What is this difference an example of?
B) voluntary export restraint
C) unequal resource distribution
D) absolute advantage
In general, what happens to the price of a good or service when a shortage of that good or service occurs?
A) It increases until quantity demanded equals quantity supplied.
B) A price ceiling is imposed, lowering the price to meet the demand.
C) It remains unchanged while quantity demanded drops
D) It decreases until quantity demanded equals quantity supplied.
What happens to the price of a good or service when there is excess demand?
A) The price goes up.
B) The government sets the price.
C) The price goes down.
D) The price stays the same.
Why does a government place price ceilings, such as rent control, on some “essential” goods?
A) to keep people from starting new businesses.
B) to keep the goods from becoming too expensive.
C) to encourage businesses to produce more.
D) to lower demand for these goods
Which of the following is most likely to lead directly to a black market?
A) a supply shock
C) a price floor
In monopolistic competition, what happens when a firm begins to charge an excessive price for its product?
A) The firm will not sell enough of the product and go out of business.
B) Consumers will choose a rival firm’s product instead.
C) The government will regulate the price of the product.
D) Consumers will boycott the product.
A car company is opening a new factory. Which of the following is one of its start-up costs?
A) salaries for the workers
B) advertising costs to help sell cars
C) machines to make car parts
D) taxes paid on each new car made
What is the purpose of government allowing and regulating a natural monopoly?
A) to take a percentage of the profits made by the monopoly
B) to limit waste and maintain reasonable prices
C) to protect industries critical to national defense
D) to encourage monopolies to lower their development costs
A major advantage of a franchise is that...
A) the franchisee can choose their own suppliers.
B) the parent company provides guidance on running the business.
C) the parent company has strict operating standards.
D) the franchisee can launch new product lines.
Cooperative organizations are controlled by...
A) the membership.
B) their shareholders.
C) the state government
D) the board of directors.
Which of the following types of corporate earnings are subject to taxation, leading people to say that corporations are taxed twice?
A) dividends and capital gains
B) certificates of incorporation and capital gains
C) bonds and corporate profits
D) corporate profits and stockholder income
What is one difference between blue-collar workers and white-collar workers?
A) Blue-collar workers are more likely to work in an office than white-collar workers.
B) Blue-collar workers are more likely to be in a union than white-collar workers
C) Blue-collar workers have better benefits than white-collar workers.
D) Blue-collar workers earn less money than white-collar workers.
What is one reason union membership in the United States has fallen in recent years?
A) the decline in part-time jobs
B) the shift in jobs to the Midwest
C) the decline in manufacturing jobs
D) .the growth of the automobile industry
According to some economic theories, what happens to job opportunities in low-paying jobs when the minimum wage goes up?
A) The supply of labor for the jobs goes down.
B) Job opportunities become more interesting.
C) The quantity of labor demanded goes up.
D) The quantity of labor demanded goes down.
What does the Equal Employment Opportunity Commission (EEOC) enforce?
A) binding agreements between unions and businesses
B) opportunities for offshore employees of U.S. companies
C) federal laws against workplace discriminationD) educational requirements for professional workers
Bruno and Charlie work at the same restaurant. Bruno earns minimum wage as a dishwasher. Charlie earns $2.00 more per hour as a cook. What accounts for the difference in their wages?
A) Bruno’s job is professional, while Charlie’s is skilled.
B) Bruno’s job is unskilled, while Charlie’s is semiskilled
C) Both jobs are unskilled, but Charlie works harder.
D) Charlie’s job is professional, while Bruno’s is blue-collar.
Which of the following best explains why workers join unions?
A) They want to improve their wages, hours, or working conditions.
B) If they did not join unions, they would have to quit their jobs.
C) Unions offer social opportunities and family benefits.D) State right-to-work laws require them to join unions
Why is divisibility an important characteristic of money?
A) It would be annoying if you could not exchange money in foreign countries
B) Money would lose its value if there were an unlimited supply
C) It would be hard to use money if you always had to use exact change.D) Money would have no value if it could not be exchanged for gold
Which type of money has no value of its own but is valuable because it can be exchanged for something else of value?
As part of the nation’s recovery from the Great Depression of the 1930s, the banking system was reformed in which of the following ways?
A) Banks were deregulated by the government.
B) The banking system was taken off the gold standard.
C) The Federal Reserve Banks were closed.
D) The government paid off loans for large corporations.
What was one cause of the Savings and Loan crisis in the 1980s?
A) defaults on sub-prime mortgages
B) too much regulation
C) not enough gold to back loans
D) losses from risky loans
What happens during a bank run?
A) The price of gold specie suddenly increases.
B) Customers withdraw more money than the bank has on hand.
C) States charter more banks than their citizens need.
D) The federal government orders all banks to close.
Why is representative money more useful than commodity money?
A) Representative money is portable, durable, divisible, and acceptable.
B) Representative money exists in unlimited supply, so more people use it
C) Representative money has value because the government says it does
D) Representative money can be used for other things besides currency.
Which of the following is an example of demand deposits?
A) traveler’s checks
B) money in a mutual fund
C) money in a checking account
D) credit cards
What kind of assets are traded using futures contracts?
B) real estate
C) stocksD) bonds
How are savings bonds different from other bonds?
A) Savings bond holders do not receive regular interest payments.
B) Saving bonds are issued in large amounts.
C) Saving bonds are held for a very short time.
D) Savings bonds provide a higher rate of return.
How do economists calculate GDP for one year using the expenditure approach?
A) Add up all the incomes received
B) Add the amounts spent on goods and services to the incomes received.
C) Add together all the amounts spent on final goods and services.D) Subtract the amounts received as income from the goods and services.
What are the leading economic indicators supposed to predict?
B) nonmarket activities
C) business cycles
D) consumer expectations
What is one way to measure technological progress?
A) total growth minus increases in capital and labor.
B) increases in labor minus increases in capital
C) increases in capital minus increases in labor.
D) total growth plus increase in capital and labor.
Which is a durable good?
C) box of cereal
D) baseball cards
No foreign companies make goods in the country of Newlandia. But many Newlandian companies make goods in foreign countries. What effect does this have on Newlandia?
A) Newlandia’s GDP is greater than its GNP
B) Newlandia’s GDP is equal to its national income.
C) Newlandia’s GNP is greater than its GDP.
D) Newlandia’s GDP and GNP are equal.
How does the Bureau of Labor Statistics determine how items in the market basket should change over time?
A) by calculating the inflation rate
B) by computing the CPI
C) by evaluating the census
D) by conducting a consumer survey
Many Americans were shocked by the rise in inflation in 2008 because...
A) It came following several unexpected political events.
B) It was coupled by a spike in the CPI
C) It broke a trend of relatively low inflation.
D) It was more extreme than any inflation shift since the Great Depression.
Celinda loses her manufacturing job when her work is moved to another country. Celinda needs to get training in another field to get a job. What type of unemployment does she experience?
A) frictional unemploymen
B) cyclical unemployment
C) seasonal unemployment
D) structural unemployment
For which expense do state governments provide financial help to their local governments?
A) election supervision
B) parks and recreation
C) trash and garbage collectionD) public school systems
In most communities, the main source of funding for local public schools probably comes from...
A) local property taxes.
B) federal income taxes
C) state sales taxes.
D) payroll taxes.
The sales tax on a $20 hammer is 7 percent, or $1.40. Why is this tax a bigger burden for Josh, who has a $15,000 income, than for Aaron, who has a $150,000 income?
A) The tax rate is higher for Josh than for Aaron
B) Josh will have to pay a greater property tax on the hammer than Aaron will.
C) Josh will have to pay the tax sooner than Aaron
D) The tax represents a larger proportion of Josh’s income.
What is one major argument against a constitutional amendment requiring a balanced budget?
A) It would make it hard for the government to respond to rapid changes in the economy
B) It would make it hard for Congress to pass a budget that the President would sign.
C) It would require Congress to cut popular programs.
D) It would force Congress to be more careful about its spending
An example of contractionary fiscal policy would be...
A) cutting income taxes
B) increasing production of consumer goods
C) expanding government regulation of private industry.
D) decreasing government spending
Which of the following activities creates money?
A) saving money in a piggy bank at home
B) depositing money into a checking account
C) printing new currency to replace worn-out money
D) withdrawing money from a checking account
Why do low interest rates encourage business investment?
A) Lower interest rates cause the money supply to expand.
B) Lower interest rates cause the money supply to decrease.
C) It is cheaper to borrow money when interest rates are low.
D) Inflation is lower when interest rates are low.
A) open market operations
B) money creation
C) easy money policy
D) raising the discount rate
What happens when a nation’s currency depreciates?
A) Its volume of trade decreases.
B) Its trade barriers increase.
C) Its products become more expensive in other countries.
D) Its products become cheaper in other countries.
Country A and Country B have the same GDP, yet Country A has a much lower standard of living than Country B. The most likely cause of this difference is that...
A) Country B has more doctors than Country A.
B) Country B has more natural resources than Country A.
C) Country A has a much larger population than Country B.
D) Country A is more self-sufficient than Country B.
A) Sierra Leone ranked last in all social indicators and in per capita GDP.
B) Russia ranked lower than Saudi Arabia even though its social indicators were all higher.
C) In most of the countries shown, 9 out of 10 eligible students were enrolled in school.
D) South Korea’s social indicators taken alone would have ranked it higher than the United States
Which of the following would be an example of foreign direct investment?
A) The Chinese government finances a new highway in Sudan.
B) An American mutual fund buys shares of a corporation in Indonesia.
C) A wealthy Russian investor builds an oil refinery in northern Russia.
D) A French company builds a factory in Costa Rica.
A) The global economy endangers jobs and housing first.
B) The global economy directly affects people’s finances
C) The global economy is on the verge of explosive growth.
D) The global economy depends on oil prices.
The population of less developed countries is expected to double in 40 years. Which of these is the most likely result?
A) Nearby nations will bear the burden of the migrating population
B) These countries will keep up with the demand for a higher living standard.
C) These countries’ per capita GDP will not increase faster than population.
D) These nations will have a high number of elders requiring more healthcare.
A less developed country is having difficulty repaying a foreign debt The International Monetary Fund (IMF) arranges for the lending nation to forgive part of the debt and give the debtor nation more time to repay the loan. What does the IMF expect in return from the debtor nation?
A) In must increase its imports.
B) It must accept a stabilization program.
C) It must encourage its citizens to spend more.
D) It must repay the debt in U.S. dollars.
In 1999, India did not have shopping malls. It now has more than 100 malls. Which of the following explains this rapid development?
A) The largest economic growth has taken place in construction.
B) The gap between rich and poor is shrinking.
C) The middle class is increasing demand for consumer goods.
D) Uneducated people in rural areas are demanding malls.
Increasing jobs in which of the following areas has most helped Mexico’s economy grow?
A) manufacturing and service industries
B) agriculture and natural resources
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