Flashcards and Answers – Economics Multiple Choice

question

We are forced to make choices because a. not everything is limited. b. shortages are a constant situation. c. we live in a democracy. d. all resources are limited.
answer

all resources are limited
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The four factors of production are the resources of land, labor, capital, and a. services. b. entrepreneurship. c. technology. d. goods.
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entrepreneurship
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A truck used by a plumber is a type of a. capital. b. labor. c. raw good. d. modus transportius.
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capital
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The value of the next best alternative that had to be given up to do the action that was chosen is the a. sale price. b. trade-off. c. opportunity cost. d. capital.
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opportunity cost
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All the combinations of goods and services that can be produced in a given time with a fixed amount of resources are called a. costs. b. production possibilities. c. factors of production. d. trade-offs.
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production possibilites
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When Adam Smith coined the term “invisible hand,” he was referring to a. the government. b. the market. c. slave labor. d. entrepreneurship.
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the market
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Pure capitalism is also known as a a. mixed economy. b. laissez-faire system. c. quota system. d. command economy.
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laissez-faire System
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The desire to make money that motivates people to produce goods and services is called a. entrepreneurship. b. the profit incentive. c. laissez-faire. d. greed.
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the profit incentive
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hich country best follows the ideas of Adam Smith? a. Cuba b. North Korea c. China d. Singapore
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singapore
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Productivity refers to a. using the four factors of production. b. creating goods and services. c. measuring sales. d. producing goods and services in better and faster ways.
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producing goods and services in better and faster ways
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Which of the following is a strength of a market economy? a. It gives producers and consumers a great deal of freedom. b. It provides centralized planning. c. It offers guaranteed lifetime employment. d. No one is allowed to live in poverty.
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it givers producers and consumers a great deal of freedom
question

Today most economic systems are a. command. b. traditional. c. capitalist. d. mixed.
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mixed
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The goal of economic freedom is to a. ensure that businesses don’t fail. b. give government a large role in the economy. c. allow people to make choices. d. limit competition.
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allow people to make choices
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Unemployment compensation helps provide economic a. growth. b. freedom. c. stability. d. equity.
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stability
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Since the founding of the United States, the role of government in the economy has a. had no impact on individual economic choices. b. been eliminated. c. increased. d. decreased.
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increased
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Zoning regulations are an example of a. the lack of government involvement in economic activities. b. the role of government in regulating economic activities. c. a traditional economy. d. a pure market economy.
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the role of government in regulating economic activities
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When analyzing an economic problem, economists do not consider a. government regulations. b. resources. c. choices. d. values.
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values
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A free enterprise system involves trade-offs between a. state and federal government. b. businesses in the same industry. c. individual gain and social equity. d. customs and beliefs.
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individual gain and social equity
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Which of the following is an example of a good? a. an oil change b. a car wash c. a tune-up d. a car
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a car
question

“Bait and switch” is an example of __________ advertising. a. generic b. informative c. deceptive d. competitive
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deceptive
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Generic products a. have no name brand. b. have lifetime warranties. c. are sold only in major department stores. d. are the most expensive.
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have no name brand
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Which federal agency has the responsibility of making sure that food production is sanitary? a. Consumer Product Safety Commission b. U.S. Department of Agriculture c. U.S. Office of Food Production d. Federal Trade Commission
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US department of agriculture
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The federal agency that protects consumers from unsafe drugs, foods, and cosmetics is the a. U.S. Department of Agriculture. b. Food and Drug Administration. c. Federal Trade Commission. d. Consumer Product Safety Commission.
answer

Food and Drug Administration
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On average, which of the following people can expect to earn the most money? a. a high school dropout b. someone with a college degree c. someone with an advanced degree d. someone with a high school diploma
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someone with an advanced degree
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When an individual saves, a. it deprives others of money to invest. b. the whole economy benefits. c. the individual benefits. d. it deprives businesses of money to expand.
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the whole economy benefits
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A promise by the manufacturer to replace or repair a faulty product is a. a warranty. b. a liability. c. required by federal law. d. bait and switch.
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a warranty
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A financial institution that is owned and operated by its members to provide savings and low-interest loans to those members is a a. commercial bank. b. savings bank. c. savings and loan association. d. credit union.
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credit union
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The benefit of borrowing is a. the interest the borrower has to pay on the loan. b. increasing your debt. c. being able to buy and enjoy the item now. d. the opportunity cost.
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being able to buy and enjoy the item now
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Something of value that is used to secure a loan is a. collateral. b. chattel. c. principal. d. a mortgage.
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collateral
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The Truth in Lending Act was created to a. reduce paperwork. b. reveal all the credit terms to the borrower. c. make it easier for collection agencies to collect. d. protect a person’s credit record.
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reveal all the credit terms to the borrower
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When deciding between two sources of credit, you should compare the a. credit limits. b. annual percentage rates. c. monthly payments. d. finance charges.
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annual percentage rates
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Your credit rating affects your ability to a. get a job. b. get a loan. c. save money. d. get an education.
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get a loan
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The passage of the Equal Credit Opportunity Act means that it is illegal to deny credit based on a. religion. b. race. c. gender. d. All choices are correct.
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all choices
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A usury law a. regulates how borrowed money may be used. b. awards credit based on need. c. sets the maximum interest rates consumers can be charged. d. limits the amount of credit that a bank can offer.
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sets the maximum interest rates consumers can be charged
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Declaring bankruptcy will stay on your credit record a. for ten years. b. for two years. c. forever. d. for seven years.
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for ten years
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The opportunity cost for using store coupons when food shopping is a. less money. b. less time. c. lower quality. d. less food.
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less time
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To help consumers compare food brands, most states require stores to provide a. generic brands. b. checkout scanners. c. unit pricing on products. d. advertising.
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unit pricing on products
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Consumers who can store large quantities of bulk food items can save money by shopping at a. discount stores. b. warehouse stores. c. convenience stores. d. large supermarkets.
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warehouse stores
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The advantage of home ownership is a. lower maintenance. b. increased mobility. c. creation of equity. d. higher price.
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creation of equity
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The Dow Jones Industrial Average is a. a mutual fund. b. a stock index. c. the same thing as the S&P 500. d. a measure of industrial output.
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stock index
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The work-time cost of a pair of shoes that cost $150 is the a. number of payments a buyer must make. b. number of hours a buyer must work to earn $150. c. value of time spent comparison shopping for the shoes. d. amount of time the buyer gets to use the shoes and the value placed on them.
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number of hours a buyer must work to earn $150
question

Monthly mortgage payments should be no more than a. 50 percent of monthly take-home pay. b. one third of monthly take-home pay. c. monthly rental payments. d. monthly food bills.
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one third of monthly take-home pay
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Which group of people pays the highest automobile insurance rates? a. married women, ages 25-45 b. drivers with a good safety record c. single males, ages 16-25 d. people who live in a small town
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single males, ages 16-25
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Service flow is a. how sales are routed in a store. b. the speed of a checker. c. the product lasting a long time. d. the amount of time someone gets to use a product and the value placed on its use.
answer

the amount of time someone gets to use a product and the value placed on its use
question

A lease describes a. rights and responsibilities of both the landlord and tenant. b. all conditions related to the mortgage. c. rights and responsibilities of the landlord. d. rights and responsibilities of the tenant.
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rights and responsibilities of both the landlord and tenant
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The decline in value over time that occurs with vehicles is called a. appreciation. b. retrovalues. c. depreciation. d. liability.
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depreciation
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A savings account is insured by a. private insurance corporations and agencies. b. individual banks and financial institutions. c. state agencies. d. an agency of the federal government.
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an agency of the federal government
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The trade-off for the easy withdrawal of cash from savings accounts is a. penalties for early withdrawal. b. a waiting period before cash is received. c. lower interest rates. d. higher transaction costs.
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lower interest rates
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A certificate issued by a government or firm in exchange for borrowed money is a/an a. IRA. b. asset. c. stock. d. bond.
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bond
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The money earned from shares of stock is called a. interest. b. dividends. c. capital. d. equity.
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dividends
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Which of the following investments has the greatest risk? a. savings bond b. stock market c. mutual fund d. Treasury note
answer

stock market
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The law of __________ states that as a person consumes additional units of a good, eventually the satisfaction gained from each additional unit of the good decreases. a. supply and demand b. quantity demanded c. demand d. diminishing marginal utility
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diminishing marginal utility
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When the demand curve shifts to the right, it indicates that buyers are willing and able to purchase __________ of a good at the original price and at all other prices. a. more b. none c. less d. all
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more
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When demand is __________, the price change will not result in a substantial change in the quantity demanded. a. inelastic b. static c. elastic d. neutral
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inelastic
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Important factors that can affect the elasticity of demand include the availability of substitutes, the percentage of income spent on a good, and a. season. b. time given to adjust to price change. c. the size of the good. d. competition.
answer

time given to adjust to price change
question

According to the law of supply, the quantity supplied of a good rises when the __________ of that good rises. a. price b. elasticity c. substitute d. quality
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price
question

A leftward shift in a supply curve means that supply has a. increased. b. remained stable. c. neither decreased nor increased. d. decreased.
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increased
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Important factors that can cause supply curves to shift include input prices, technology, and a. imports. b. demand. c. taxes. d. consumer preferences.
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taxes
question

Price is determined a. by outside factors. b. primarily by demand. c. by supply and demand together. d. primarily by supply.
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by supply and demand together
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A surplus will cause prices to a. remain constant. b. fall. c. rise gradually. d. rise suddenly.
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fall
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A shortage will cause prices to a. fluctuate. b. rise. c. fall. d. remain constant.
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rise
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An equilibrium price a. will reduce supply. b. rises with falling demand. c. should remain relatively stable. d. rises with rising demand.
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rises with falling demand
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If nothing else changes, and the supply of a good rises, the price of that good will a. remain constant. b. rise. c. fluctuate. d. fall.
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fall
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If nothing else changes, and the supply of a good decreases, the price of that good will a. rise. b. fall. c. remain constant. d. fluctuate.
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rise
question

Demand for one particular type of automobile is probably a. substitutable. b. inelastic. c. elastic. d. marginal utility.
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elastic
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When the price of a product is below its equilibrium, the result is a. shortage. b. surplus. c. demand. d. black market.
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shortage
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Typically, a good that has no substitutes will have a. very inelastic demand. b. no value. c. no demand. d. very elastic demand.
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very inelastic demand
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Which of the following agencies enforces standards for air, water, and toxic waste? a. Federal Trade Commission b. Environmental Protection Agency c. Occupational Safety and Health Administration d. Food and Drug Administration
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environmental protection agency
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All corporations must a. register with the state. b. All choices are correct. c. sell stock. d. elect a board of governors.
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all choices are correct
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To determine a business’s profits, you would a. subtract taxes from expenses. b. subtract total expenses from receipts. c. subtract wages from receipts. d. subtract costs of equipment from income.
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subtract total expenses from receipts
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Risk is a part of a. any business venture. b. only large businesses. c. joint ventures. d. most partnerships.
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any business venture
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The most common type of business is a. corporation. b. limited partnership. c. sole proprietorship. d. partnership.
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sole proprietorship
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A sole proprietor has __________, which means that his or her personal assets may be used to pay off the debts of the business. a. unlimited liability b. unlimited life c. limited life d. limited liability
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unlimited liability
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In a partnership, you would a. share the profits or losses with your partner. b. have no say in how the business is run. c. share only the profits with your partner. d. have no responsibility for the debts of the partnership.
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share the profits or losses with your partner
question

Which of the following is an example of a franchise business operation? a. Kmart b. The Gap c. JC Penny d. Burger King
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Burger King
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Which of the following agencies regulates the workplace environment? a. Environmental Protection Agency b. Food and Drug Administration c. Federal Trade Commission d. Occupational Safety and Health Administration
answer

Occupation Safety and Health Administration
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About the closest you can find to perfect competition is in a. agriculture. b. the Cuban economy. c. the airline industry. d. the computer industry.
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agriculture
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Of the four market structures, __________ gives sellers the most control over prices. a. perfect competition b. oligopoly c. monopoly d. monopolistic competition
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monopoly
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Perfectly competitive markets yield a. equal distribution of wealth. b. social discord. c. economic efficiency. d. growth.
answer

economic efficiency
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A goal of the United States has been to a. encourage competition in the economy. b. protect monopolies. c. not interfere with the economy in any way. d. promote mergers.
answer

encourage competition in the economy
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In perfectly competitive markets, all firms sell __________ goods. a. perfect b. nearly identical c. differentiated d. high-quality
answer

nearly identical
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Mergers tend to a. improve product quality. b. have no effect on competitiveness in the marketplace. c. reduce competition in the marketplace. d. increase competition in the marketplace.
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reduce competition in the marketplace
question

When deciding whether to expand a business, you should a. sell bonds. b. make a cost-benefit analysis. c. ask friends for loans. d. sell stock.
answer

make a cost benefit analysis
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A loan that is backed by collateral is called a. a secured loan. b. a line of credit. c. trade credit. d. an unsecured loan
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secured loan
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A loan that will be repaid in 1 to 10 years is a. long-term financing. b. intermediate-term financing. c. short-term financing. d. a grant.
answer

intermediate-term financing
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A business would seek long-term financing to a. make payroll. b. build a new plant. c. lease cars. d. reinvest in the stock market.
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build a new plant
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Before obtaining capital, financial managers should consider market climate and a. interest rates. b. government regulations. c. production history. d. company reputation.
answer

intrest rates
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Economists estimate that __________ percent of the price people pay for an item is the cost of marketing. a. 30 b. 50 c. 10 d. 20
answer

50
question

Marketing aimed at creating demand, or convincing consumers that a product is a necessity, began in a. the early 1900s. b. the 1950s. c. the 1990s. d. the 1920s.
answer

1950s
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A gas station on a busy corner is an example of a. ownership utility. b. place utility. c. time utility. d. form utility.
answer

place utility
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Selling a new product at a low price to try to attract customers away from an established product is called a. price leadership. b. penetration pricing. c. promotional pricing. d. direct pricing.
answer

penetration pricing
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A business that buys large quantities of goods to resell to other businesses is called a/an a. e-mailer. b. wholesaler. c. distributor. d. retailer.
answer

wholesaler
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Sam’s Club is an example of a/an a. direct marketer. b. club warehouse. c. wholesaler. d. Internet marketer.
answer

club warehouse
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Which of the following is an unskilled worker? a. architect b. delivery person c. physician d. bricklayer
answer

delivery person
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The minimum wage law has the most impact for a. unskilled workers. b. professionals. c. skilled workers. d. white-collar workers.
answer

unskilled workers
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Wages are determined by a. skill. b. location of job. c. All choices are correct. d. type of job.
answer

all choices are correct
question

This law allows the President to delay a strike if it threatens the nation’s health and safety. a. Landrum-Griffin Act b. Norris Act c. Taft-Hartley Act d. Wagner Act
answer

Taft-Hartley Act
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Which of the following is a right-to-work state? a. Texas b. California c. Colorado d. New Mexico
answer

Texas
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Workers who replace striking workers are called __________ by the strikers. a. “whiners” b. “traitors” c. “losers” d. “scabs”
answer

scabs
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When management prevents workers from returning to work, it is called a a. sick-out. b. boycott. c. strike. d. lockout.
answer

lockout
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Since the 1940s, union membership has a. stayed the same. b. increased. c. not been tracked. d. decreased.
answer

decreased
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When determining GDP, a. homes are counted two times for every car included. b. quality of goods is considered. c. both new and used goods are counted. d. the dollar is used as the common measure.
answer

the dollar is used as the common measure
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A tight money policy would cause a. businesses to cut back on production. b. businesses to borrow money to expand capacity. c. people to borrow more money. d. home sales to increase.
answer

business to cut back on production
question

A car produced by General Motors in a plant in Ontario, Canada, a. would run better in the snow. b. would count in GNP. c. would count in GDP. d. would not count in GDP or GNP.
answer

would count in GNP
question

Welfare payments made to individuals are called a. wages. b. discretionary income. c. transfer payments. d. national income.
answer

transfer payments
question

When inflation occurs, the purchasing power of the dollar a. decreases. b. initially increases, then decreases. c. remains the same. d. increases.
answer

decreases
question

Gross domestic product that has been adjusted for inflation is called a. national income. b. CPI. c. real GDP. d. GDP.
answer

Real GDP
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If current GDP was $10,000 and the price deflator was 110, then real GDP would be a. $9,090. b. $11,000. c. $9,352. d. $10,000.
answer

9,090
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If the CPI was 115 in 2000 and rose to 124 in 2003, what was the total increase in prices as a percentage? a. 3% b. 9% c. 21.1% d. 7.8%
answer

7.8%
question

The interest rate that a bank charges its best business customers is called the a. prime rate. b. federal funds rate. c. discount rate. d. business rate.
answer

prime rate
question

Which of the following would cause the aggregate demand curve to shift to the right? a. an increase in taxes b. a decrease in taxes c. oil prices increase d. oil prices decrease
answer

decrease in taxes
question

The Fed could reduce, or contract, the money supply by a. lowering the reserve requirement. b. All choices are correct. c. raising the federal funds rate. d. buying bonds on the open market.
answer

raising the federal funds rate
question

The highest point in the business cycle is the a. peak. b. contraction. c. expansion. d. trough.
answer

peak
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Any period of at least 6 months in which real GDP does not grow is a. an expansion. b. a recession. c. a depression. d. two quarters.
answer

recession
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Which of the following is not a main force behind business fluctuations? a. leading indicators b. external factors c. government activity d. business investment
answer

leading indicators
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The number of building permits issued for private housing is a/an a. inflationary indicator. b. coincident indicator. c. leading indicator. d. lagging indicator.
answer

leading indicators
question

Which of the following is a commodity money? a. coins b. paper currency c. a negotiable bond d. cattle
answer

cattle
question

If you put money in a certificate of deposit, you are using it as a a. medium of exchange. b. unit of accounting. c. store of value. d. commodity.
answer

store of value
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United States currency is a. representative money. b. gold reserve money. c. fiat money. d. commodity money.
answer

fiat money
question

An ATM can receive deposits, give out funds, accept payments, and Choose one answer. a. cash checks. b. make loans. c. transfer funds between accounts. d. provide credit ratings.
answer

transfer funds between accounts
question

The measure of money called M1 consists of all currency, all checkable deposits, and Choose one answer. a. mortgages. b. certificates of deposit. c. savings bonds. d. traveler’s checks.
answer

travelers checks
question

The Federal Reserve bank was created in 1913 to Choose one answer. a. manipulate the money supply. b. end financial panics. c. insure bank deposits. d. collect taxes.
answer

end financial panics
question

The body of the Fed that determines monetary policy is the Choose one answer. a. Federal Open Market Committee. b. Federal Advisory Council. c. Board of Governors. d. Monetary Advisory Board.
answer

Federal Open Market Committee
question

If the economy were in a recession, the Fed would probably Choose one answer. a. follow a tight money policy. b. seek the advice of the President and his administration. c. follow a loose money policy. d. do nothing.
answer

follow a loose money policy
question

Monetarism is linked with the economist a. John Maynard Keynes. b. Milton Friedman. c. Karl Marx. d. Adam Smith.
answer

Milton Friedman
question

Monetarists believe that a. the Fed should increase the supply of money 3 to 5 percent per year. b. All choices are correct. c. the government should not operate with deficits each year. d. fiscal policy is not effective.
answer

all choices are correct
question

The Federal Reserve followed strict monetarist policy a. in the early 1980s. b. in the late 1990s. c. in the 1960s. d. at its inception in 1913.
answer

1980’s
question

Which of the following is not a goal of the federal government? a. protect individual rights b. promote a stable, legal environment for economic activity c. control prices d. promote the general well-being of all citizens
answer

control prices
question

Which of the following is a public good that only the federal government provides? a. roads b. education c. national defense d. law enforcement
answer

national defense
question

A museum is an example of a a. merit good. b. demerit good. c. social insurance program. d. public-assistance program.
answer

merit good
question

The theories of John Maynard Keynes were developed during, and influenced by, a. World War I. b. the Great Depression. c. the presidency of Ronald Reagan. d. the presidency of John F. Kennedy.
answer

the Great Depression
question

Which program pays for health care for low-income or disabled people? a. Social Security b. Medicare c. Medicaid d. Supplement Medical Pay
answer

Medicaid
question

The largest expenditure for the federal government is a. income security, Social Security, and Medicare. b. education. c. transportation. d. national defense.
answer

income security, Social Security and Medicare
question

The largest expenditure for state and local governments is a. education. b. public welfare. c. health and hospitals. d. housing.
answer

education
question

When the leakages and injections of the economy are balanced, it is called a. fiscal policy. b. equilibrium. c. circular regularity. d. a balanced budget.
answer

equilibrium
question

The gas tax is an example of the taxation principle of a. proportional taxation. b. ability-to-pay. c. progressive taxation. d. benefits-received.
answer

benefits-received
question

The cigarette tax is an example of a __________ tax. a. progressive b. regressive c. proportional d. sales
answer

regressive
question

Supporters of fiscal policy believe that unemployment can be reduced by a. increasing trade. b. increasing taxes or reducing government spending. c. decreasing taxes or increasing government spending. d. decreasing trade.
answer

decreasing taxes or increasing government spending.
question

John Maynard Keynes believed that a. the supply of money should not be adjusted by the government. b. manipulating the economy would encourage economically weak businesses. c. the love of money was the root of all evil. d. the government should intervene in the economy by adjusting the amounts that it taxes and spends.
answer

the government should intervene in the economy by adjusting the amounts that it taxes and spends.
question

The percentage of civilian labor force that is without jobs but actively looking for work is called a. the full employment rate. b. underground employees. c. the frictionally unemployed. d. the unemployment rate.
answer

unemployment rate
question

A person between jobs because of a firing, layoff, or voluntary search for a new job is __________ unemployed. a. cyclically b. structurally c. seasonally d. frictionally
answer

frictionally
question

When prices rise due excessive business and consumer demand, it is called a. deflation. b. cost-push inflation. c. stagflation. d. demand-pull inflation.
answer

demand-pull inflation
question

When prices rise due to wage demands and excessive profit motives, it is called a. stagflation. b. deflation. c. cost-push inflation. d. demand-pull inflation.
answer

cost-push inflation
question

When rising prices occur simultaneously with high unemployment, it is called a. stagflation. b. demand-pull inflation. c. hyper-inflation. d. inflated unemployment.
answer

stagflation
question

Money that is removed from the circular flow of income through either saving or taxation is referred to as a a. transfer. b. leakage. c. injection. d. loss of flow.
answer

leakage
question

Supporters of fiscal policy believe that inflation can be reduced by a. increasing trade. b. decreasing trade. c. decreasing taxes or increasing government spending. d. increasing taxes or reducing government spending
answer

increasing taxes or reducing government spending
question

International trade occurs because nations differ in the a. amount and type of labor that is available. b. amount of capital available. c. availability of natural resources. d. All choices are correct.
answer

all choices are correct
question

When a country can produce a product at less cost than another country with the same amount of resources, we say it has a. a comparative advantage. b. a smarter labor force. c. an absolute advantage. d. better technology.
answer

absolute advantage
question

When a country can produce a product at a lower opportunity cost than another country, we say it has a. a comparative advantage. b. a smarter labor force. c. an absolute advantage. d. better technology.
answer

comparative advantage
question

Which of the following is a product that Guatemala has a comparative advantage at producing when compared with the United States? a. computers b. nuclear power plants c. airplanes d. bananas
answer

bananas
question

International trade affects a. only non-skilled workers. b. only people that export goods. c. everyone. d. only people that import goods.
answer

everyone
question

The price of a currency in terms of another currency is called the a. balance of trade. b. dollar valuation. c. balance of exchange. d. exchange rate.
answer

exchange rate
question

The difficulty with a fixed rate of exchange is that a. it caused a gold shortage. b. the economic climate was constantly changing. c. no one knew the value of their currency. d. it caused depreciation.
answer

the economic climate was constantly changing
question

If a country’s imports exceed its exports, it has a. a trade deficit. b. a trade surplus. c. an exchange rate problem. d. good importers.
answer

trade deficit
question

For several decades, the United States has had a. a trade surplus. b. a trade deficit. c. balanced trade. d. very little trade.
answer

trade deficit
question

If the value of the dollar drops versus the British pound, a. Americans will import more British goods and export more to Britain. b. Americans will import fewer British goods and export less to Britain. c. Americans will import more British goods and export less to Britain. d. Americans will import fewer British goods and export more to Britain.
answer

Americans will import fewer British goods and export more to Britain
question

If American exporters want more British pounds than the supply of pounds provided by British who want American goods, a. the American dollar will become more expensive in relation to the British pound. b. the American dollar will become less expensive in relation to the British pound. c. it will have no bearing on the value of the American dollar but will increase the value of the British pound. d. it will have no bearing on the value of the British pound but will increase the value of the American dollar.
answer

the American dollar will become less expensive in relation to the British pound.
question

Completely restricting the trade of a particular item is a/an a. quota. b. embargo. c. GATT. d. tariff.
answer

embargo
question

Which of the following is not an argument for free trade? a. protecting national security b. more goods at lower prices c. increasing exports d. improved products
answer

protecting national security
question

Someone who is in the proletariat is a a. worker. b. government official. c. business owner. d. banker.
answer

worker
question

In Karl Marx’s vision of communism, a. the free market would reign. b. government would make all decisions. c. the world would have already ended by now. d. there would be no need for government.
answer

there would be no need for government.
question

Which of the following is a characteristic of pure capitalism? a. the basic economic questions are answered by individuals in a decentralized way b. the state owns the means of production c. prices are set by the state d. economic questions are answered by centralized planners
answer

the basic economic questions are answered by individuals in a decentralized way
question

Which of the following is a characteristic of pure socialism? a. taxation is used to redistribute income b. the basic economic questions are answered by individuals in a decentralized way c. prices seek their own level as determined by supply and demand d. private property rights exist and are enforced by law
answer

taxation is used to redistribute income
question

The lack of property right protections and the rule of law have a. had little effect on China’s economy. b. helped China’s transition to capitalism. c. hindered China’s transition to capitalism. d. encouraged foreign investment.
answer

hindered China’s transition to capitalism
question

China’s slow move toward a capitalist system began a. when the government sold off all its state-owned enterprises. b. with the government leasing land to farmers. c. when the government declared that communism had failed. d. with democratic elections.
answer

with the government leasing land to farmers.
question

China made a big step toward capitalism when in 1999 they joined the a. World Trade Organization. b. General Agreement on Trade and Tariffs. c. United Nations. d. North American Free Trade Agreement.
answer

World Trade Organization.
question

One of the problems of privatization of businesses in Russia was that a. there were not enough workers to fill the demand for labor. b. no one wanted any of the businesses. c. they were sold at bargain-basement prices to insiders. d. western countries took them over and retained the profits
answer

they were sold at bargain-basement prices to insiders.
question

Recently Sweden has drifted toward being more a. socialist. b. fascist. c. capitalist. d. authoritarian socialist.
answer

capitalist
question

The trend in Latin America in the last two decades has been a. more centralized planning. b. more privatization. c. the rise of more authoritarian governments. d. more government acquisition of private businesses.
answer

more privatization.
question

Of all the over 135 nations of the world, how many are considered developed? a. 74 b. 25 c. 125 d. 35
answer

35
question

About what percentage of the world’s population lives at a subsistence level? a. 25% b. 5% c. 60% d. 50%
answer

50%
question

According to the graph on page 519 of your textbook, which developing country has the lowest per capita GDP? a. Haiti b. Malaysia c. Italy d. Pakistan
answer

Haiti
question

Which of the following is not a characteristic of a developing nation? a. high literacy rate b. rapid population growth c. poor health conditions d. an agricultural economy
answer

high literacy rate
question

The three stages of economic development occur in what order? a. agricultural stage, manufacturing stage, service stage b. agricultural stage, manufacturing stage, computer stage c. agricultural stage, service stage, manufacturing stage d. manufacturing stage, service stage, agricultural stage
answer

agricultural stage, manufacturing stage, service stage
question

When a nation takes over an industry and forces the firm’s owners out of the country, it is called a. privatization. b. nationalization. c. foreign aid. d. economic exile
answer

nationalization
question

Aid given to developing nations that comes in the form of engineers, teachers, and technicians to teach skills is a. technical assistance. b. military assistance. c. economic assistance. d. educational assistance.
answer

technical assistance
question

The United States has given developing nations monetary assistance a. to increase our own national security. b. to expand our markets for exports. c. to enhance the appeal of democracy and prevent Communism from coming to power. d. All choices are correct.
answer

all choices are correct
question

When trade restrictions are used by a developing nation, it a. lowers taxes. b. increases growth. c. retards growth. d. increases trade.
answer

retards growth
question

A vicious cycle of poverty is a a. country that has a high crime rate because it is poor. b. theory that poverty can only be overcome by state planning. c. theory that poverty exists because people are greedy. d. theory that poor nations are poor because they don’t invest and save, and that they can’t invest and save because they are poor.
answer

theory that poor nations are poor because they don’t invest and save, and that they can’t invest and save because they are poor.
question

Globalization began when a. NAFTA was enacted. b. the World Trade Organization was created. c. corporations began to enter foreign countries. d. U.S. banks developed worldwide branch networks for loans and foreign exchange trading.
answer

U.S. banks developed worldwide branch networks for loans and foreign exchange trading.
question

When the U.S. stock market falters, other nations’ stock markets a. are unaffected. b. also falter. c. benefit. d. are closed as a precaution
answer

also falter
question

The total share of foreign ownership of American industries is about a. 2%. b. 6%. c. 25%. d. 10%.
answer

6%
question

The United States’ share of worldwide direct investment is about a. 25%. b. 40%. c. 60%. d. 10%.
answer

40%
question

When firms from different countries work together in a joint venture, it is referred to as a/an a. multinational firm. b. alliance. c. blended deal. d. global venture.
answer

alliance
question

What invention brought about the digital age? a. computers b. the microchip c. television d. the World Wide Web
answer

the microchip
question

E-commerce shifts the balance of power to a. the government. b. Internet providers. c. the customer. d. the business.
answer

the customer
question

The economist Joseph Schumpeter suggested that business cycles are triggered by a. government policy. b. labor strikes. c. innovations. d. capital accumulation.
answer

innovations
question

An example of the difficulty of protecting intellectual property on the Internet would be a. web cams. b. day trading. c. the copying of music from file-sharing services. d. the proliferation of plagiarized papers.
answer

the copying of music from file-sharing services

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