Apex Economics Final Exam Review – Flashcards
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When the government runs a budget deficit, what must it eventually do in order to pay back its debt?
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have a budget surplus
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What does enforcing consumer-protection regulations involve?
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government oversight of the production process
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Match each company, organization, or agency with the correct label. A)Consumer Reports B)FDA C)FTC
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A)Consumer advocacy publication B)Consumer protection agency C)Competition regulator
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Which of these inspires consumer confidence, increases purchases, and speeds up the flow of investment and wages in the circular flow of the free-market system?
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consumer-protection regulations
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Which of these gives companies an anticompetitive impulse?
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the profit motive
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What unfair business practice do cartels use?
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price fixing
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Match each unfair business practice with an example of its use. A)Predatory pricing B)Making misleading statements C)Price fixing
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C) A group of music companies agrees to charge $20 for CDs A)A large furniture maker charges a price below production cost in order to eliminate small competitors. B)A coffee maker falsely claims that its drinks reduce the incidence of heart attacks.
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What is one benefit of consumer-protection regulations?
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greater consumer confidence
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What is one way that consumer-advocacy groups help protect consumers?
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by providing product information
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Match each type of restriction with one of its effects. A)Trade restrictions B)Labor laws C)Banking regulations
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C)Stability B)Regulation of union activities A)Higher prices for consumers
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What is one economic effect of environmental- protection laws?
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higher prices for consumers
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Which of these is an example of a land-use law?
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a town zones an area for residental buildings only
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Compulsory education restricts whose freedom?
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parents
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Freedom of expression is limited by what?
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censorship
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Country A would have absolute advantage over Country B in the production of computers under what circumstance?
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companies in Country A can produce computers at a lower cost
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Why don't many developing countries benefit from the spread of free trade?
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they have weak domestic industries
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Why do central banks play an important role in the global economy?
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they set each country's monetary policies
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Why do protective tariffs lead to reduced international trade?
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protective tariffs increase the price of goods and limit the sale of those goods
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How does the WTO promote global free trade?
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by creating multilateral trade agreements
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Why has globalization led to some job loss in the US?
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labor costs are lower in other countries
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Match each international organization with its purpose. A)Bank for international settlements (BIS) B)International Monetary Fund (IMF) C)World Bank D)World Trade Organization(WTO) Reduce poverty Promote free trade Create financial stability Prevent economic crises
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C,D,A,B
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Match each practice with an example of its use. A)Offshoring B)Boycott C)Trade Sanctions D)Conditionality The IMF requires a loan recipient to privatize its oil industry. Japan imposes a 100% tariff on cars coming from Europe and the US Consumers refuse to buy goods from companies that use child labor A US car company begins making certain car parts in Bangladesh
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D,C,B,A
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How has globalization contributed to the recent increase of international terrorism?
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the downsides of globalization affect many people who often feel they have nowhere to turn other than violence
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What does the World Bank hope will result from loans it makes to developing countries?
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an improved climate for foreign investment
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The global economy can have specialized production because of what?
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the international division of labor
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Match each type of country with one of its central features. A)Developed B)Developing C)Underdeveloped D)New Globalizer High level of productive capacity Low levels of industrial capacity High levels of foreign investment Low standard of living
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A,C,D,B
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Why has globalization led to an increasing income gap between rich and poor countries?
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countries with well-established infrastructure and productive capacities have more competitive industries
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What is the PRIMARY reason that globalization leads to greater global pollution?
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environmental protection is expensive, and reduces a company's competitiveness in the global market
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Country X would have a comparative advantage in the production of cotton under what circumstance?
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Country X didn't have to give up a more profitable form of production in order to grow cotton
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What is one reason why some people are critical of globalization?
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it leads to increased damage to the environment
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How has globalization helped work against human rights violations around the world?
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Improved global communications brings these abuses to the world's attention
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Why does interdependence bring economic growth?
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interdependence enables specialized production, which is more efficient
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What was the result of developed countries extracting resources from their colonies?
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there was a one-way flow of wealth favoring the colonizers
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Why does globalization give countries an incentive to reduce wages for their workers?
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lower production costs help lure foreign investment
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What has been the main drawback of globalization in the US?
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wage reductions
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Why does the IMF impose conditions on its loans?
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to help manage the economies of struggling countries
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When an insurance policy covers replacement value, a loss results in a settlement that pays for what?
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brand new items to replace the items lost
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What does liability insurance cover?
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the medical and car repair bills for anyone else involved in an accident you caused
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Economists measure the personal satisfaction someone gets from consuming goods and services with the concept of what?
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utility
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Which of the following are techniques that companies use to influence consumer demand for their goods and services? Check all that apply.
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creating images of consumption on popular TV shows, getting people in movies to use their products, turning luxuries into necessities
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Which of the following best states the purpose of branding?
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to associate a specific product with quality and popularity
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Which of the following describes a situation in which the price of a good would fall?
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a new technology allows producers to increase supply very quickly
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Which of the following is the best example of a fungible good?
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potatoes
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Which of the following best explains why goals are necessary for making allocation decisions?
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the available resources cannot be used to pursue every goal that each individual has
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Economics is about allocating resources to produce and distribute which of the following?
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goods and services
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Which of the following is an example of an allocation decision?
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coal is set aside to burn as heating fuel
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The internet enables people to make better economic decision because they can do which of the following?
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get the information that is necessary for making good choices
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Which of the following goals does the government pursue in a socialist economic system?
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equity
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Which of the following must be a feature of an activity for it to be a game?
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a set of rules
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Which of the following economic indicators would be useful for figuring out whether the economy is growing quickly or slowly?
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GDP
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Which of the following best explains why resources need to be allocated in the game of economics?
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there aren't enough resources to produce all of the goods and services that everyone wants
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Which of the following is another term for a planned economy?
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socialist system
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Which of the following is one of the benefits e-commerce brings to consumers?
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shipping gifts is easy
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Because calculations of cost and benefit are subjective, they can be described as which of the following?
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vary from one person to another
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Which of the following describes a situation where the goal of security is being pursued?
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the government establishes a retirement program for its citizens
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Which of the following is not an economic goal?
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victory
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Which of the following describes the purpose of doing a cost-benefit analysis?
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to make a decision that maximizes benefits
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Which of the following results from the fact that costs and benefits are based on personal preferences?
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both monetary and non-monetary factors are taken into account
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Which of the following best explains why the government makes and enforces laws in a free-market system?
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laws against theft, fraud, and coercion are needed to protect free choice
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The gross domestic product would increase significantly if which of the following occurred?
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consumption doubled
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Which of the following questions must be answered in order to turn resources into products?
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how should production be organized
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A country's economy is stagnating when the GDP is doing which of the following?
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neither rising nor falling
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Technological advancement can come from improved devices or new what?
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method
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Match the technological improvement with the benefit it brings. A)Hub-and-spoke network B)Mobile telephone C)Airplane _____more efficient distribution _____improved communication _____faster transportation
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A,B,C
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E-commerce is an online form of which of the following?
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retail sales
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Consumers directly benefit from greater productivity because of which of the following?
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goods and services are produced faster and can be sold more cheaply
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Because the choices of consumers influence producers and the choices of producers also influence consumers, the free-market system has which of the following?
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a circular flow of influences
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Match the descriptions of different economic systems with their correct name. A)an economic system run by the government B)an economic system that uses both free-market and command principles C)an economic system where decisions are made by producers and consumers ____mixed economy ____free-market economy ____planned economy
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B,C,A
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Which of the following is a reason why peer pressure influences consumers?
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people often compare themselves to others
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Which of the following best describes how consumers let producers know what they want to buy and how much they're willing to pay?
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the purchases consumers make indicate their desires to producers
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In the game of economics,which player has the role of providing goods and services?
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producers
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Which of the following statements best explains why producers conduct market research?
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knowing what consumers want helps producers make more money
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Which of the following helps producers figure out what consumers want?
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market research
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Match the role and the example. A)Consumer B)Producer C)Worker ____factory owner ____auto mechanic ____car owner
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B,C,A
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Which of the following is necessary for hiring workers and organizing production?
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businesses
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Match. A)peer pressure B)cultural C)price ____choosing a red/black sweater because they're school colors ____buying a sweater after winter is over because of a clearance sale ____wearing a Santa Claus sweater because Christmas is approaching
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A,C,B
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In Economics,workers are both producers and which of the following?
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consumers
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In the game of economics, producers get the information they need to determine how much people are willing to pay for a good or service from which of the following?
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consumers
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Which of the following best describes the main purpose of a budget?
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to plan income and expenses
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Which of the following best explains the main purpose of short-term planning?
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to meet fixed expenses and allow for discretionary spending
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Which of the following does culture contribute to the preferences and behaviors of consumers?
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values and beliefs
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Which of the following best explains why considering opportunity costs is a rational thing for consumers to do?
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what you sacrifice for a decision is one of the non-monetary costs of many choices
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Which of the following best describes the purpose of a budget?
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to plan income and expenses
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Which of the following is an essential part of making a rational choice?
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doing cost-benefit analysis
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Advertising is the main source of revenue for which of the following?
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media companies
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Consumers influence the decisions of producers in which of the following ways?
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through the purchasing decisions they make
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Which of the following is the market structure of the media industry?
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oligopoly
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Which of the following best demonstrates how successful Google has been at establishing a well-known brand?
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the word google has been added to the dictionary
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Which of the following is measured by utility?
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the satisfaction a person gets from consumption
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Budgeting helps consumers reach their financial goals by helping them to do which of the following?
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keeps their expenses below their income
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Which of the following business types is most likely to use the bricks and clicks business model?
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clothing sellers
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Which of the following statements best explains why some people get life insurance and others don't?
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different people are willing to face different kinds of risks
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Which of the following best states the main difference between a monopoly and an oligopoly?
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oligopolies involve more than one company while monopolies involve only one
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Which of the following statements best exaplins the purpose of market research?
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market research helps producers earn more profits
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The purpose of branding is to do which of the following?
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create a positive association
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Which of the following generates revenue for google?
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sale of advertisements
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Which of the following explains why companies spend money on advertising?
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companies want to influence consumer behavior through advertising
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A corporation gives out its profits as dividends paid to its ________.
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stockholders
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Google's business model is the most similar to that used by companies in which industry?
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media
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Which of the following best states the main difference between a monopoly and pure competition?
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a monopoly involves no competition at all while pure competition involves a high level of competition
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In a free-market system, the profit motive motivates producers to do which of the following?
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minimize cost and maximize revenue
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Which of the following best explains why some people consider it foolish to gamble while other people like to gamble?
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gambling involves too much risk for some people
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Which of the following best explains why the media is characterized by an oligopolistic market structure?
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centralization of ownership has led to an industry controlled by a few large companies
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Which of the following actions provides the most help for making a rational choice?
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engaging in finacial planning
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Which of the following is one important difference between a general partnership and a limited partnership?
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every partner in a general partnership is fully responsible for the business debts
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Which of the following is an advantage corporations enjoy over partnerships?
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the owners of a corporation don't have to work together to make all of the business decisions
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Because of the unlimited liability of all partners, a general partnership most closely resembles which other business type?
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sole proprietorship
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Match each business model with the advantage it brings. A)subscription B)bait and hook C)cutting out the middleman ____attractive prices for basic product ____steady revenue and predictable profits ____reduction in transaction costs and processing time
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B,A,C
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The way a company does business is driven by which of the following?
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its business model
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Which of the following is an advantage of partnerships over sole proprietorships?
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partnerships generally have more money to invest in starting or expanding a business
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Which of the following distinguishes Google's business model from most other businesses?
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its relaxed corporate culture
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The business decisions of a corporation are made by whom?
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a board of directors
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Match each type of business with its purpose A)Sole proprietorship B)Public corporation C)Non-profit corporation ____to benefit a special cause ____to make dividends for its stockholders ____to make profit for its owner
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C,B,A
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The Google business model is driven by the sale of which of the following?
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advertisements
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The owner of a sole proprietorship has _______ liability.
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unlimited
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Country A would hve absolute advantage over Country B in the production of computers under what circumstance?
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companies in Country A can produce computers at a lower cost
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What is the purpose of a checkbook register?
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to keep track of the amount of money in your checking account
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Banks pay their customers interest on the money in their accounts or what reason?
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that money earns interest when the bank loans it out
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Put the steps in the corrct order to show how a budget is made.
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1)calculate income 2)total up spending 3)categorize expenses 4)determine if spending is below income 5)reduce expenses in flexible categories to save or increase savings
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Why is a checking account more convenient than a savings account?
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it's easier to spend the money in a checking account
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How do flexible expenses differ from fixed expenses?
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flexible expenses vary over time
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The purpose of a budget is to do what?
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make sure expenses are below income
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Match each of the fees associated with a checking account with the way to avoid paying them. a)minimum balance fee b)ATM fee c)teller fee d)n.s.f. fee ____don't use bank machines at banks other than your own ____make sure your checking account has enough money in it to avoid falling below a certain level ____don't go into a bank and get personal service from a bank employee ____make sure there's enough money in the account to cover all checks written
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B,A,C,D
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Which of these can most easily be removed from a budget if spending is higher than income?
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discretionary spending
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How are credit unions similar to banks?
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they both give out loans
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Once all necessary expenses have been removed from your budget, what can you do if your expenses still exceed your income?
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work overtime or get another job
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Match each of these credit card terms with its correct description. a)annual percentage rate b)grace period c)balance transfer d)credit report _____number of days to run a balance before fees or interest are charged ____the amount of interest charged on unpaid balances ____a listing of a person's financial information and history ____the movement of money owed on one credit card to another credit card
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B,A,D,C
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Match each fee below with the situation where a credit card would get charged. a)balance transfer fee b)cash advance fee c)late payment fee d)overlimit fee ____you use a new credit card to pay off the $2,000 you owe on another credit card ____you charged $800 on a credit card that has a $500 spending cap ____you use your credit card to take out $200 in cash from an ATM ____you forget to send in your minimum monthly payment one month
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A,D,B,C
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Which of these describes how a fixed-rate mortgage works?
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the monthly payment on a fixed-rate mortgage never changes
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What is one of the advantages of getting a government-sponsored mortgage instead of a conventional mortgage?
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government mortgages charge lower interest rates than conventional mortgages
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Why is it important to maintain a good credit history?
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so that they have an easier time getting loans and credit cards
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Which of these credit card features would be best for customers who think they might not be able to pay their balance at the end of each month?
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a low annual percentage rate
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Which of these provides a bank with collateral on a car loan?
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the car itself
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Which of these makes a student loan different from other tyeps of loans?
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students don't have to provide any collateral to get a student loan
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What does leasing a car involve?
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renting the car for a specific period of time and paying for its depreciation
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What is one advantage of using a credit card to make purchases?
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you can buy something now and pay for it later
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Small-claims court is a place for which of the following?
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people to resolve financial differences
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Match each retail term with the correct definition. a)store credit b)brand name c)warranty d)commission ____money that can be used to make purchases only at a particular store ____particular company associated with a product ____pay earned by salespeople for making sales ____a guarantee of return or service
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A,B,D,C
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Why should consumers look for products that have a warranty?
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it protects them in case the product is defective
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How has the internet helped boycotters?
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it enables boycotters to organize and publicize their activities more easily
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How can the government promote socially responsible production?
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by passing environmental-protection regulations
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Which of these is a renewable resource?
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trees
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Consumers can use lobbying to accomplish what?
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to get the government to pass new laws
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Which of these is a procedure that quantifies the personal value of a purchase?
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the purchase price is calculated as a certain number of working hours
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Socially responsible consumers prefer to buy from companies that use what?
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renewable resources
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How can the news media help protect consumers?
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by investigating and exposing bad products and business practices
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Why do some auto insurance customers want medical coverage for their policies?
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to avoid having to pay for hospital bills resulting from an accident they cause
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Which of these describes the costs and benefits of getting a mortgage?
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mortgages enable people to buy houses but result in large interest payments
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Why does attending college involve an opportunity cost?
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the money spent on tuition cannot be invested in another way
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Why do consumers have influence over politicians?
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politicians rely on the votes of consumers to keep them in office
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Which of these is an example of luxury spending?
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travel
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Because subjective decisions are based on a person's unique values and beliefs, economic decisions ________________________.
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vary from person to person
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Which of these credit card features would be best for customers who want to pay off the balance on a high- interest credit card?
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low fees for balance transfers
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What do banks pay to their savings account customers?
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interest
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What makes a checking account more convenient than a savings account?
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you can spend your money without having to withdraw cash first
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A boycott would not be successful under what circumstance?
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most consumers didn't stay away from the company
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What makes a credit card more convenient than a debit card?
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it can be used to buy things without immediate payment
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What does a lease outline?
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obligations of renters and landlords
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Match each type of insurance with a situation in which it would be useful. a)life insurance b)renter's insurance c)disability insurance d)liability insurance ____when you cause a car accident that injures other people ____when you have to take a month off from work because of an injury or illness ____when your personal possessions are stolen from your apartment ____when you want to provide for your family after you die
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D,C,B,A
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What provides collateral to receive a car loan?
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the car
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Which of these shows how a loan is paid by listing the principle and interest associated with each payment?
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an amortization table
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What's the main reason to use a personal budget?
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to stay out of debt
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What is the grace period on a credit card?
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the number of days the customer can wait to pay for purchases without being charged interest
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Under what circumstances do people have to make a co-pay?
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when they go to a doctor because of an illness
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Which of these makes it easier for a person to get a credit card?
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a good credit history
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Which of the following does not protect consumers?
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a boycott
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What is most similar to a brand-name product?
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a generic product
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Why might a company respond to a letter-writing campaign launched by a group of concerned consumers?
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the letters contain a veiled threat that economic pressure could follow
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Which of these would a socially responsible company use?
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renewable resources
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Match each fee or payment with the type of account or insurance it's associated with. a)non-sufficient funds fee b)cash advance fee c)co-pay d)interest payment ____mortgage ____health insurance ____credit card ____checking account
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D,C,B,A
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Put the steps in order to show how budget is made.
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1)calculate income 2)write down expenses 3)compare expenses and income 4)reduce expenses if necessary
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Match each company, organization, or agency with the correct label. a)consumer reports b)FDA c)FTC ____consumer advocacy publication ____consumer protection agency ____competition regulator
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A,B,C
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Which of these gives companies an anti competitive impulse?
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the profit motive
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What does the enforcement of antitrust laws do?
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speeds up the flow of capital and wages
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Match each good with the type of goods it represents. a)health care b)clean air c)stock investments ____individual good ____merit good ____public good
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C,A,B
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Why does the free-market system require government regulation?
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producers are driven by the profit motive to work against competition
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What does price fixing involve?
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a group of companies agreeing on a particular price to charge for their products
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The government might enact a price floor in order to accomplish what?
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protect producers
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Match each role with the action performed by people playing that role. a)consumer b)producer c)government ____provide individual goods ____provide public goods ____provide labor and investment
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B,C,A
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Sort the statements below into the correct order in which the federal budget is prepared.
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1)the president writes a preliminary budget proposal 2)congress decides on the details of the budget 3)the president signs spending bills into law
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What is the purpose of freezing someone's assets?
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to reduce crime
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Why does the government need to collect taxes?
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to ensure competition and protect consumers
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Match each type of restriction with an example of its use. A)sales tax B)excise tax C)property tax ____requiring that money laundering be reported ____charging a 70% tariff on imported steel ____requiring unions to give 60 days notice before going on strike
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C,A,B
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Match each type of tax with an example of its use. A)sales tax B)excise tax C)property tax ____7% charged on the purpose of all non-necessary goods ____1% charged on the value of all residential houses ____$2.00 tax charged on each pack of cigarettes
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A,C,B
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Which merit good does the US government provide through a payroll tax?
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health care
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Government corporations can be described as which of the following?
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independently run
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Which of these is an example of a trade restriction?
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a tariff on imported cars
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Environmental-protection laws limit what?
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the exploitation of natural resources
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Environmental-protection laws can be bad for the economy because they may do what?
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increase unemployment
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Politicians approve pork barrel spending for what purpose?
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to win political support
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Why do government regulations lead to higher prices for consumers?
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producers pass along the costs of compliance
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Match each current trend with one of its economic effects. A)improved communication B)trade liberalization C)infrastructure development D)industrialization ____facilitates less expensive international trade ____provides an incentive for countries to export more goods ____increases productivity and lowers prices ____makes it easier for international businesses to operate efficiently
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C,B,D,A
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Choose the pair of phrases that correctly completes this sentence: taxes are charged ________ while tariffs are charged _______.
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internally;on imports
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What is the reasoning behind forcing people to pay taxes in a free-market economy?
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to provide revenues for government programs needed to protect the free market
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What is the difference between an income tax and a payroll tax?
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income taxes are used for a wide variety of government activities while payroll taxes pay for specific programs
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What is the effect of an import tariff charged on a particular good?
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the price paid by consumers is increased
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Which of the following best explains why Amazon can sell books more cheaply than local bookstores?
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amazon is able to buy all or most of the books printed by a publisher
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Which of the following comes after a period of recovery in the business cycle?
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a boom
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Which of the following is one of the main factors driving prices for goods and services upward?
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production costs increase so that producers need to charge more to make a profit
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Which of the following best explains why a large company can undersell small retailers?
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large companies can negotiate better prices with wholesalers
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Which of the following best explains the standard of living?
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how much an average person can afford to buy
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Which of the following is an exogenous factor that affects the business cycle?
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natural disasters
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Which of the following best describes the economic effect that results when the government increases interest rates and restricts the lending of money?
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borrowing money becomes more expensive and there is less investment in production
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Which of the following best explains how trade enables greater specialization among producers?
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trade allows people to focus on on kind of production and trade for their other needs
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Which of the following best explains the purpose of protectionist trade policies such as tariffs and subsidies?
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they allow producers to sell their products more cheaply than foreign competitors
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Match effect with cause A)resources can be moved where they're needed B)workers have an incentive to improve their skills C)wasted movements are eliminated ____ specialization ____ trade ____competition
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C,A,B
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Which of the following is one of the major factors determining the level of wages?
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the law of supply and demand
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Which of the following was not an economic effect of colonization?
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global economic development
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When does one country have a comparative advantage over another country?
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when the opportunity cost of its production is lower
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Match each of the items below with its definition. A)absolute advantage B)comparative advantage C)Specialization D)protectionism ____ the ability to produce more cheaply ____ the existence of lower opportunity costs than competitors ____the performance of a particular productive task within an economic system ____ the existence of barriers to free-flowing trade
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A,B,C,D
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Which of the following does not promote increased international trade and economic growth?
answer
high tariffs
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Match each current trend with the advantage it provides for the global economy. A)improved communication B)reduction of trade barriers C)development of infrastructure D)industrialization ____ facilitates international business and trade ____ allows for a greater mobility of goods and labor ____ enables economic growth in developing countries ____ reduces production and transportation costs
answer
A,B,D,C
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Which of these is required for specialization to take place?
answer
a division of labor
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What limits specialization in the global economy?
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trade barriers
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The increasing interconnectedness of peoples and countries around the world is known as what?
answer
globalization
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What is one of the downsides of increasing economic interdependence?
answer
loss of control over the national economy
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Which of the following accurately describes a shortage?
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consumer demand for a certain car is greater than the number of cars that can be produced
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Which of the following gives people access to both high-paying jobs and more living space?
answer
the suburbs
question
Which of the following results from the fact that housing is expensive and time-consuming to build?
answer
the supply of housing is inelastic
question
Immigration can result in a general decrease in wages because it does which of the following?
answer
increases the supply of labor
question
Which of the following is a trait of public goods?
answer
non-excludability
question
Which of the following housing decisions provides a person with both housing and an investment?
answer
buying a single-family home
question
Which of the following is the cause of demand-pull inflation?
answer
consumers want more and more goods and services
question
Which of the following actions can a union take to get an employer to submit to collective bargaining?
answer
call a strike
question
Which of the following best explains why unions give workers more power in contract negotiations?
answer
employers can't fine an entire union because of the difficulty of replacing every worker
question
What happens when unemployment increases during a recession?
answer
the recession worsens into a depression
question
When either prices go down or income goes up, there is an increase in which of the following?
answer
the standard of living
question
Match each type of policy with the example that best fits its definition. A)protectionist policy B)fiscal policy C)monetary policy ____ a high tax on cars imported from other countries ____ reduced taxes on corporate profits ____ increased interest rates on loans
answer
A,B,C
question
Which of the following is located at the point where the supply and demand curves intersect?
answer
the equilibrium price
question
A factory laying off a lot of workers in a town is most likely to lead to which of the following?
answer
a buyer's market
question
The selling price of houses would be most likely to decrease if there were first a decrease in which of the following?
answer
construction worker's wages
question
Which of the following best describes the effect of a tariff on the import of cars from a foreign country?
answer
foreign cars become more expensive
question
In which of the following situations would the price of a good be most likely to increase?
answer
an increase in production costs results from a rise in wages
question
Which of the following results from a large company's ability to take advantage of economies of scale?
answer
the company can offer goods more cheaply than smaller retailers
question
What is the most direct result of free trade supplying productive resources to areas where they're most needed?
answer
enhanced efficiency
question
Which of the following occurs when someone buys a third winter coat?
answer
decreasing marginal utility
question
Which of the following accurately describes a situation in which consumers have elastic demand?
answer
people give up eating pasta and bread because they want to lose weight
question
Which of the following best explains one of the restrictions on producers that keeps the labor market from being a completely free market?
answer
workers don't always have the education required to perform certain jobs
question
Which of the following is an example of a fiscal policy?
answer
raising taxes in order to cover a budget deficit
question
Which of the following results of globalization has led to wage cuts for workers in the U.S.?
answer
outsourcing
question
Which of the following best explains what happens when a currency is pegged to the U.S. dollar?
answer
the value of the pegged currency goes up and down depending on the exchange rate of the U.S. dollar
question
Order the bond types below from lowest to highest risk of default Corporate bonds Junk Bonds US treasury bonds
answer
US treasury bonds, corporate bonds, junk bonds
question
Which of the following best explains what happens in the currency exchange market?
answer
money is bought and sold using other types of money
question
Which of the following best explains what happens when currency traders buy on margin?
answer
they borrow money from their broker in order to make a larger currency purchase
question
When a market is volatile, it is described by which of the following?
answer
changes quickly and to great extremes
question
Which of the following is not a commodity?
answer
corn dogs
question
Which of the following best explains what a forward contract is?
answer
a contract to deliver a particular commodity to a buyer sometime in the future
question
Which of the following best explains why a bondholder is similar to a bank?
answer
bondholders loan money to bond issuers just as banks loan money to customers
question
Which of the following best describes why banks aren't allowed to loan out all of their deposits at once?
answer
if banks loaned out all of their deposits, it would be impossible to meet customer's demands for withdrawals
question
Which of the following most accurately explains why fiat money has no value in itself?
answer
fiat money has only a single use as a medium of exchange
question
Which of the following accurately describes how lowering the required reserve ratio increases the money supply?
answer
when the required reserve ratio is lowered, banks can loan out more money
question
Which of the following best explains why the money supply is decreased when the government issues bonds?
answer
the purchase of bonds reduces the bond buyer's bank accounts
question
Which of the following accurately explains what an exchange rate of 1:20 between the Canadian dollar and Japanese yen means?
answer
it takes only one Canadian dollar to buy twenty Japanese yen
question
Which of the following best describes the most likely effect of the Fed lowering the discount rate on overnight loans?
answer
an increase in the money supply
question
A company that wanted to increase its capital through debt financing could trade in which of the following markets?
answer
bond market
question
Which of the following accurately describes socially responsible investing?
answer
when investors buy into companies with ethical practices they support
question
Technical analysis of the stock market focuses on which of the following?
answer
overall trends in the market
question
A business is unlikely to be able to secure a bank loan to fund its operations without which of the following?
answer
a stable operating history
question
Because venture capitalists (VCs) are usually looking for high returns in a short period of time, startup companies that wish to secure venture capital funding need to do which of the following?
answer
present the VC with an exit strategy
question
Which of the following best explains how bondholders and banks serve a similar function?
answer
they are both holders of someone else's debt
question
Which of the following accurately explains the difference between the stock market and the commodity market?
answer
Ownership in companies is traded in the stock market while ownership of raw, unprocessed goods is traded in the commodity market
question
Before the development of money as a medium, goods and services were exchanged through a ________ system.
answer
barter
question
Buying on margin involves what?
answer
traders borrowing money from their brokers
question
Which of the following describes a condition that is least favorable for conducting an IPO?
answer
a recession
question
Which of the following is an example of a businessman making an investment?
answer
he contributes money to a partnership
question
Put the items below into the correct order to show the process by which individuals have their federal income tax collected. 1)tax return filing 2)tax payment or refund 3)paycheck withholding
answer
paycheck withholding, tax return filing, tax payment or refund
question
Which of these is an example of tax on wealth?
answer
real estate tax
question
What are Normal Trade Relations?
answer
a treaty to create favorable trade terms between two nations
question
What's the purpose of income tax brackets?
answer
to enable the progressive taxation of income
question
Taxes are charged __________ while tariffs are charged ________ ____________.
answer
internally; on imports
question
Why must public goods be provided by the government instead of the free market?
answer
public goods are non-excludable, so they suffer from a free-rider problem
question
What does "pork barrel" spending achieve?
answer
it helps politicians win support from their voters
question
What does a budget reveal about a government?
answer
its financial priorities and goals
question
What makes government contracts unique?
answer
they create obligations normally applied to government agencies
question
What is one way that the government cannot prevent a budget deficit?
answer
selling stocks
question
Who has to approve the budget of the U.S. government?
answer
congress
question
What is one difference between government agencies and government contractors?
answer
government agencies are in the public sector while government contractors are in the private sector
question
Match each sample good with the type of good it represents. A)education B)infrastructure C)food ____individual good ____ merit good ____ public good
answer
C,A,B
question
Match each organization with its correct relationship to the government. A)securities and exchange commission (SEC) B)Amtrak C)Lockheed Martin ____ government corporation ____ government contractor ____ government agency
answer
B,C,A
question
Put the following steps into the correct order, from start to finish, to show how the budget of the federal government is created. 1)Congress decides on the overall level of spending and taxation and passes specific spending bills. 2)The president signs the spending bill into law 3)The Office Of Management (OMB) prepares a preliminary budget proposal for the president 4)The president finalizes the budget proposal and submits it to Congress
answer
3,4,1,2
question
What is done with the costs of complying with consumer- protection regulations?
answer
eventually passed on to consumers in the form of higher prices
question
Match each type of government action with its purpose. A)taxation B)antitrust laws C)censorship ____ to control the population ____ to collect revenue ____to protect competition
answer
C,A,B
