Unit 5 – Flashcards

Which position would Ada Smith most likely support during a congressional debate on tax reform? A. Income taxes should be decreased to the same rate for everyone. B. Income taxes should be abolished and replaced with a national sales tax. C. Income taxes should be increased regardless of ability to pay. D. Income taxes should be reduced to a minimal level and be based on ability to pay.

Adam Smith would most likely oppose a plan for-? A. Reducing taxes on the largest corporations. B. Government bailouts for failing corporations. C. Eliminating barriers to trade with other countries. D. Decreased government involvement in wages.

Supply and demand determines prices levels for goods and services in a-? A. Market economy. B. Traditional economy. C. Demand economy. D. Command economy.

Which of the following describes a developing nation? A. A market economy with a high per capita income. B. A market economy with a trillion-dollar gross domestic product. C. A mixed economy with a very high Human Development Index. D. A traditional economy with a low Human Development Index.

A nation has a high Human Development Index and a high gross domestic product. Which of the following factors might result in classification of the nation as a developing rather then developed? A. A high per capita income. B. A command economy. C. Mechanization of farms. D. A full market economy.

Which of the following economic goals focuses on ensuring citizen's well-being even in a crisis? A. Efficiency. B. Equity. C. Freedom. D. Security.

Marcel takes out student loans and works part time to put himself through college. In time, he earns an advanced medical degree and goes to work in an understaffed city hospital. Marcel's economic decisions benefit the goal of efficiency by-? A. Making his own job-related decisions. B. Paying back loans to reduce the debt. C. Contributing to the nation's productivity. D. Taking advantage of equal opportunities.

Based on the data in the chart, which of the following scenarios present the most efficient use of resources? A. Country A produces yarn and fabric, and Country B imports both. B. Country A produces yarn, and Country B produces fabric. C. Country B produces yarn, and Country A produces fabric. D. Country B produces yarn and fabric, and Country A imports both.

According to the chart, which country has the comparative advantage in oil production? A. Brazil. B. Mexico. C. Argentina. D. United States.

The United States can manufacture books at a much more rapid pace than manufactures in Indonesia. Which of the following is a reason? A. Indonesia, as a developed country, has a highly paid and experienced workforce. B. Indonesia, as a developing country, has a less advanced manufacturing infrastructure. C. The United States, as a developing country, has a high comparative advantage in manufacturing. D. The United States, as a developed country, has a lower cost of living than Indonesia.

A group of nations establishes a free-trade zone. What is the most likely effect? A. Cost of trade increases. B. Exports decrease. C. Imports decrease. D. Trade increases.

Because the United States has an embargo on Cuba,-? A. The United States regularly increases the taxes on Cuban imports. B. Cuba exports the majority of Cuban products to American companies. C. Virtually no Cuban products are legally available in the United States. D. Cuba must sell products directly to state governments in the United State.

High inflation in the United States would most likely have-? A. A negative impact on the U.S dollar exchange rate. B. A positive impact on the U.S dollar exchange rate. C. A negative impact on the Gross National Product. D. A positive impact on the Gross National Product.

The United States increases the money supply, deflating the value of the dollar. As a result, people in other countries. A. Can purchase more U.S goods for less of their currency. B. Hoard the U.S dollar for its potential value increase. C. Cannot use their currencies to purchase U.S goods. D. Must exchange the U.S dollar for money of higher value.

Which of these would result from high inflation in the United States? A. U.S goods would be less expensive than before. B. Americans would demand higher wages. C. Income levels in the workforce would fall. D. The Consumer Price Index would be negative number.

A high inflation rate is most difficult for people-? A. With income dependent on stock ownership. B. Who wish to begin investing for the future. C. Working for financial companies. D. Living with fixed incomes.

Inflation is the -? A. General rise in prices over time. B. General reduction of prices over time. C. Decline phase of the business cycle. D. Decline in costs for a specific industry.

Look at the map showing the European Union (EU) and countries with which it has free-trade agreements (FTAs). Which is the reason the EU has free-trade agreements with almost every country on the Mediterranean Sea? A. Having a sea boarder between an FTA country and the EU is more secure than a land border. B. Having a shoreline makes shipment by sea possible, which is less expensive than over land. C. The countries in North Africa and the Middle East are potential members of the European Union. D. The countries in North Africa and the Middle East are less politically volatile than other countries.