Flashcards and Answers – Final Exam Review
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A popular model used to illustrate the concept of opportunity cost is Select one: a. entrepreneurship. b. the production possibilities frontier. c. the factors of production. d. the paradox of value.
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the production possibilities frontier.
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An economy at its production possibilities frontier is operating Select one: a. at full potential. b. as a free enterprise economy. c. with slow economic growth. d. without division of labor.
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at full potential.
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Manufactured goods needed to produce other goods and services are called Select one: a. Gross Domestic Product (GDP). b. nondurable goods. c. consumer goods. d. capital goods.
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capital goods
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The dollar value of all final goods and services and the most comprehensive measure of a country"s total production output is Select one: a. a cost-benefit analysis. b. its standard of living. c. Gross Domestic Product (GDP). d. financial capital.
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Gross Domestic Product (GDP).
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The money used to buy the tools and equipment needed for production is known as Select one: a. capital goods. b. wealth. c. the factors of production. d. financial capital.
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financial capital.
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The study of economics is important because it enables us to Select one: a. increase our consumption of consumer goods. b. determine what goods ought to be produced. c. describe our standard of living. d. become better decision makers.
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become better decision makers.
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A market economy Select one: a. permits extensive government intervention. b. does not provide for everyone's basic needs. c. offers a high degree of certainty for its workers. d. limits the choices of goods and services available.
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does not provide for everyone's basic needs.
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The concept of voluntary exchange means Select one: a. neither buyer nor seller has made a profit. b. that no money was exchanged. c. people freely and willingly engage in market transactions. d. only workers will benefit from the exchange.
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people freely and willingly engage in market transactions.
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The minimum wage is an example of a federal law that supports Select one: a. economic efficiency. b. economic equity. c. economic growth. d. full employment.
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economic equity.
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The United States can best be described as having a Select one: a. pure free enterprise system. b. modified private enterprise system. c. command economy. d. traditional system.
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modified private enterprise system.
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An advantage of a corporation is that Select one: a. owners have limited liability for debt. b. owners pay fewer taxes than owners of other forms of business. c. the business is subject to little government regulation. d. owners have direct and immediate control over daily management of the business.
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owners have limited liability for debt.
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In a general partnership, Select one: a. partners usually draw up legal papers called articles of partnership. b. partners are only liable for the business's debt up to the amount of their investment. c. partners must pay specific business taxes. d. the business continues even if one partner dies.
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partners usually draw up legal papers called articles of partnership.
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Non-profit organizations may Select one: a. pay income taxes. b. pay dividends. c. provide goods and services to members. d. issue stock.
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provide goods and services to members.
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The local chamber of commerce works to Select one: a. earn dividends for members. b. aid member companies in negotiating with labor unions. c. promote the welfare of its members and the community. d. protect its members from consumer complaints.
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promote the welfare of its members and the community.
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A demand schedule shows Select one: a. an upward-sloping curve that illustrates the positive relationship between price and quantity demanded. b. a listing of the various quantities demanded of a particular product at all prices that might prevail in the market. c. the fluctuations in demand that occurred over a specified period of time. d. the fluctuations in demand scheduled to occur over the following year.
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a listing of the various quantities demanded of a particular product at all prices that might prevail in the market.
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Advertising, fashion trends, and new product introductions serve to Select one: a. create consumer needs. b. create consumer demand. c. increase income effectiveness. d. minimize the income effect.
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create consumer demand.
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The supply of a product normally decreases if Select one: a. the price of the product increases. b. more producers enter the market. c. taxes on the product increase. d. the cost of inputs goes down.
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taxes on the product increase.
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Total cost is the sum of the Select one: a. fixed and marginal costs. b. fixed costs and overhead. c. fixed and variable costs. d. all variable costs.
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fixed and variable costs.
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All of the following are characteristics of allocation by rationing EXCEPT Select one: a. high administrative cost. b. efficiency. c. lack of fairness. d. diminished incentive for workers.
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efficiency
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In a market economy, a high price is a signal for Select one: a. government to intervene to protect consumers. b. producers to supply more and consumers to buy less. c. producers to supply less and consumers to buy less. d. producers to supply less and consumers to buy more.
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producers to supply more and consumers to buy less.
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When economic or political conditions are unstable, Select one: a. the price of gold rises to $850 per ounce. b. the demand for gold increases. c. the supply of gold decreases. d. the price of gold decreases.
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the demand for gold increases.
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A decrease in competition within an industry can result in Select one: a. increased output. b. more efficient resource allocation. c. lower prices. d. a firm wielding economic and political power.
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a firm wielding economic and political power.
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A monopoly that is based on the ownership or control of a manufacturing method, process, or other scientific advance is a Select one: a. natural monopoly. b. geographic monopoly. c. government monopoly. d. technological monopoly.
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technological monopoly.
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Perfect competition is characterized by all of the following EXCEPT Select one: a. well-informed buyers and sellers. b. a large number of buyers and sellers. c. identical products. d. sellers acting together to set prices.
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sellers acting together to set prices.
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All of the following can be used to establish more equal pay between men and women EXCEPT the Select one: a. Fair Labor Standards Act. b. set-aside contracts. c. Civil Rights Act of 1964. d. Equal Pay Act of 1963.
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Fair Labor Standards Act.
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Workers who have the skills to operate machines and who require a minimum amount of training are Select one: a. skilled labor. b. semiskilled labor. c. unskilled labor. d. professional labor.
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semiskilled labor.
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Workers with knowledge-based education and managerial skills are Select one: a. professional labor. b. semiskilled labor. c. unskilled labor. d. skilled labor.
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professional labor.
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FICA includes taxes to pay for Select one: a. unemployment and medicare. b. Social Security and medicare. c. medicare and worker's compensation. d. Social Security and unemployment.
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Social Security and medicare.
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Intergovernmental revenues are generally intended for Select one: a. environmental cleanup. b. parks and recreation. c. education and public welfare. d. public transportation.
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education and public welfare.
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The "incidence of a tax" Select one: a. is a special tax on individuals with high income. b. is a benefit tax. c. refers to those who bear the final burden of taxation. d. is a tax paid by self-employed workers.
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refers to those who bear the final burden of taxation.
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The authority to levy a federal income tax comes from Select one: a. an act of Congress. b. the Sixteenth Amendment. c. the Bill of Rights. d. the Fifth Amendment.
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the Sixteenth Amendment.
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The flat tax Select one: a. includes incentives that promote positive economic behavior. b. would increase the need for individuals to hire tax accountants. c. allows too many loopholes. d. simplifies the tax process.
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simplifies the tax process.
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All levels of government combined consume about Select one: a. one-half of the nation's output. b. one-tenth of the nation's output. c. three-fourths of the nation's output. d. one-third of the nation's output.
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one-third of the nation's output.
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The largest category of spending for most local governments is Select one: a. public welfare. b. police protection. c. elementary and secondary education. d. hospitals.
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elementary and secondary education.
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The United States government accumulated huge deficits during the 1980s due to Select one: a. huge, annual increases in welfare. b. environmental cleanup. c. a shift in the incidence of taxes to corporations. d. a doubling of spending on national defense.
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a doubling of spending on national defense.
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In order for money to have value, it must have all of the following characteristics EXCEPT Select one: a. portability. b. plentiful availability. c. durability. d. divisibility.
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plentiful availability.
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Money loses its value when it Select one: a. becomes too portable. b. becomes too plentiful. c. is divisible. d. is durable.
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becomes too plentiful.
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The FDIC was established to Select one: a. create a government banking monopoly. b. federalize the banking system. c. protect the savings of the American people. d. help with the financing of World War II.
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protect the savings of the American people.
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The Federal Reserve System was established in Select one: a. 1799. b. 1881. c. 1863. d. 1913.
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1913
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When a bank is about to collapse, Select one: a. the FDIC must publicly seize the bank. b. the FDIC may secretly seize the bank. c. up to $10,000 can be paid to depositors. d. up to $10,000 can be paid to shareholders.
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the FDIC may secretly seize the bank.
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A stock transaction that is made immediately at the market price is made in the Select one: a. spot market. b. options market. c. futures market. d. futures options market.
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spot market.
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Bonds Select one: a. are rated according to risk from A through G. b. are a consistently low-risk investment choice. c. pay a fixed interest rate over a specified period of time. d. are insured by the federal government.
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pay a fixed interest rate over a specified period of time.
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Junk bonds Select one: a. carry a low rate of return. b. are exceptionally risky. c. are usually tax-exempt. d. are issued by municipalities.
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are exceptionally risky.
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Most stocks in the United States are traded on the Select one: a. over-the-counter market. b. New York Stock Exchange. c. regional stock exchanges. d. American Stock Exchange.
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over-the-counter market.
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Baby boomers are those people born between Select one: a. 1955 and 1965. b. 1965 and 1975. c. 1946 and 1964. d. 1935 and 1945.
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1946 and 1964.
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The benefits of long-term economic growth include all of the following EXCEPT Select one: a. an increase in the availability of land. b. an increase in the standard of living. c. an increase in employment. d. a boost in economic growth of other nations.
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an increase in the availability of land.
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The census is taken every Select one: a. eight years. b. ten years. c. two years. d. four years.
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ten years.
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To determine Gross National Product, Select one: a. multiply all final goods and services by their prices. b. add to GDP all payments received by Americans outside the U.S. and subtract payments made to foreign-owned resources in the U.S. c. add to GDP all payments made to foreign-owned resources in the U.S.and subtract payments received by Americans outside the U.S. d. divide all final products and services by their prices.
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add to GDP all payments received by Americans outside the U.S. and subtract payments made to foreign-owned resources in the U.S.
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According to the cost-push theory, inflation is caused by Select one: a. producers. b. workers. c. government. d. consumers.
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workers
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According to the demand-pull theory, inflation is caused by Select one: a. consumers. b. government. c. producers. d. workers.
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consumers
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The business cycle since World War II has been characterized by Select one: a. uninterrupted expansion. b. uninterrupted recession. c. extended expansions alternating with brief recessions. d. brief expansions alternating with lengthy recessions.
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extended expansions alternating with brief recessions.
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This marked the beginning of the Great Depression in 1929: Select one: a. declaration of a "bank holiday" b. end of World War I c. beginning of World War II d. stock market crash
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stock market crash
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Assets are Select one: a. cash a bank owes to depositors. b. the same as net worth. c. legal reserves. d. properties, possessions, and claims on others.
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properties, possessions, and claims on others.
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Liabilities are Select one: a. debts and obligations. b. reserves a bank must set aside. c. cash a bank can use for making loans. d. the same as net worth.
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debts and obligations.
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Why will the Fed's action in the passage cause the result described? Select one: a. Banks will have to meet a higher reserve requirement. b. Banks will raise their loan interest rates. c. Inflation will increase. d. Sellers of expensive items will raise their prices.
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Banks will raise their loan interest rates.
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The Fed's Federal Open Market Committee Select one: a. advises the Fed on the overall health of the economy. b. advises the Fed on consumer credit laws. c. is the Fed's primary monetary policymaking body. d. regulates savings and loan associations, savings banks, and credit unions.
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is the Fed's primary monetary policymaking body.
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The Federal Reserve Select one: a. is made up of 12 district banks and 25 branch banks. b. is made up of district banks that operate independently from one another. c. is managed by a 12-member board of directors. d. was established in 1930s.
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is made up of 12 district banks and 25 branch banks.
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Aggregate demand will increase Select one: a. when productivity is low. b. if consumers save less and spend more. c. if the dollar declines in value. d. if consumers save more and spend less.
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if consumers save less and spend more.
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Deregulation is most closely associated with Select one: a. laissez-faire economics. b. Keynesian economics. c. supply-side economics. d. demand-side economics.
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supply-side economics.
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Unlike demand-side economics, supply-side economics Select one: a. advocates increased government involvement in business. b. emphasizes increasing consumer purchasing power. c. urges higher taxes to increase spending on government programs. d. advocates reduced government involvement in business.
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advocates reduced government involvement in business.
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A persistent trade deficit causes Select one: a. unemployment to increase in import industries. b. lower prices on imported goods. c. unemployment to increase in export industries. d. the dollar to grow stronger.
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unemployment to increase in import industries.
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A protective tariff is used to Select one: a. expand trade. b. gain a comparative advantage. c. give inefficient domestic industries an advantage. d. increase revenue.
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give inefficient domestic industries an advantage.
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The United States trade deficit causes Select one: a. worldwide recessions. b. the value of the dollar to strengthen in foreign exchange markets. c. the value of the dollar to fall in foreign exchange markets. d. increased employment opportunities for Americans in import industries.
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the value of the dollar to fall in foreign exchange markets.
