question

Economic decisions involve doing what with resources to produce goods and services for people to consume? A. Allocating B. Marginalizing C. Renewing D. Satisfying

answer

A. Allocating

question

Economics is about the production of goods and services, which requires the allocation of what? A. Benefits B. Consumption C. Resources D. Utility

answer

C. Resources

question

In an economic system, decisions need to be made about productive resources and which of the following? A. Allocation B. Growth C. Protection D. Sustainability

answer

A. Allocation

question

Which of these government policies pursues the economic goal of equity? A. Protecting consumers from fraud B. Providing welfare benefits C. Preventing monopolies D. Ending a recession

answer

B. Providing welfare benefits

question

Which of these government policies pursues the economic goal of growth? A. Keeping taxes low B. Increasing the money supply C. Borrowing money using bonds D. Protecting consumers from fraud

answer

B. Increasing the money supply

question

Which of these government policies pursues the economic goal of freedom? A. Ending a recession B. Avoiding a budget deficit C. Increasing the money supply D. Protecting consumers from fraud

answer

D. Protecting consumers from fraud

question

What is the purpose of a free-market system? A. To protect the conditions that enable specialization B. To stimulate the growth of the gross domestic product C. To raise the standard of living for everyone in the country D. To allow consumers and producers to make their own decisions

answer

D. To allow consumers and producers to make their decisions

question

Which of these is one of the principles of a free-market system? A. The gross domestic product must be as large as possible. B. The government must prevent consumers from being coerced. C. Productive resources must be protected against overexploitation. D. Public goods must be provided to secure a high standard of living.

answer

B. The government must prevent consumers from being coerced

question

Which of these is required to have a free-market system? A. Laws against theft, fraud, and coercion B. Government provision of public goods C. Tight control over the money supply D. Sustainable development

answer

A. Laws against theft, fraud, and coercion

question

Why do economists measure the gross domestic product? A. To see how much economic activity there is in a particular country B. To estimate how much the government must tax to avoid a budget deficit C. To enable the Fed to decide whether to increase or decrease the money supply D. To determine whether consumers and producers are making free choices

answer

A. To see how much economic activity there is in a particular country

question

What does the inflation rate indicate? A. How far in debt the government is B. How much the minimum wage has increased C. How quickly prices are rising D. How much interest is being charged on mortgages

answer

C. How quickly prices are rising

question

Which of these economic indicators is most likely to be high during a recession? A. Retail sales B. Gross domestic product C. Unemployment rate D. Per capita personal income

answer

C. Unemployment rate

question

How does the assembly line benefit the economy? A. It enables low taxation. B. It provides maximum utility. C. It keeps distribution costs low. D. It increases productivity.

answer

D. It increases productivity

question

How does use of cargo containers benefit the economy? A. By decreasing pollution B. By keeping distribution costs low C. By preventing protective tariffs D. By generating renewable energy

answer

B. By keeping distribution costs low

question

How has the Internet benefited the economy? A. By making it difficult for repressive governments to censor their citizens B. By lowering overhead costs for retailers and driving prices to all-time lows C. By providing the government with a more efficient means of collecting taxes D. By improving communication and allowing greater trade and specialization

answer

D. By improving communication and allowing greater trade and specialization

question

In a free-market system, consumers let producers know what they want to buy and how much they're willing to pay through what? A. Boycotts B. Their credit reports C. Collective bargaining D. Their purchases

answer

D. Their purchases

question

In order to know what people want to buy and how much they're willing to pay, producers pay attention to what? A. The size of the money supply B. Interest rates set by the Fed C. Consumers' purchases D. Economic indicators

answer

C. Consumers' purchases

question

Producers use market research in order to do what? A. Find out what consumers want to buy B. Drive other companies out of business C. Make better investment decisions D. Keep the costs of production low

answer

Find out what consumers want to buy

question

Utility is a measure of what? A. Value B. Money C. Usefulness D. Satisfaction

answer

D. Satisfaction

question

The satisfaction that consumers get from their purchases is known as what? A. Utility B. Marginalism C. Subjectivity D. Materialism

answer

A. Utility

question

Consumers use cost-benefit analysis in order to maximize what? A. Productivity B. Rationality C. Utility D. Value

answer

C. Utility

question

The purpose of advertising is to do what? A. Keep prices low B. Create a monopoly C. Influence consumer behavior D. Conduct market research

answer

C. Influence consumer behavior

question

A consumer who is reluctant to take chances has a high level of what? A. Income B. Profitability C. Risk aversion D. Marginal utility

answer

C. Risk aversion

question

The non-monetary considerations that affect consumers' decisions are often based on what? A. Advertising B. Values and beliefs C. Government planning D. Decreasing marginal utility

answer

B. Values and beliefs

question

Match each type of market structure with an example of an industry that fits that type of competition. A. Pure competition Fast food B. Monopoly Cable television C. Monopolistic competition Online auctioning D. Oligopoly Airlines

answer

A. Pure competition C. Fast food B. Monopoly B. Cable television C. Monopolistic competition A. Online auctioning D. Oligopoly. D. Airlines

question

Match each type of market structure with its corresponding example. A. Pure competition Digital cameras B. Monopoly Online auctioning C. Monopolistic competition Video rental D. Oligopoly Sewer service

answer

A. Pure competition D. Digital cameras B. Monopoly A. Online auctioning C. Monopolistic competition C. Video rental D. Oligopoly B. Sewer service

question

Match each type of market structure with its corresponding example. A. Pure competition Fast food B. Near monopoly Computer operating systems C. Monopolistic competition Online auctioning D. Oligopoly Automobiles

answer

A. Pure competition C. Fast food B. Near monopoly B. Computer operating systems C. Monopolistic competition A. Online auctioning D. Oligopoly D. Automobiles

question

Match each type of business with one of its features. A. Sole proprietorship Board of directors B. Partnership Limited liability C. Public corporation Unlimited liability D. Nonprofit corporation A goal to benefit its members

answer

A. Sole proprietorship C. Board of directors B. Partnership B. Limited liability C. Public corporation A. Unlimited liability D. Nonprofit corporation D. A goal to benefit its members

question

Match each type of business with one of its features. A. Sole proprietorship Unlimited liability B. General partnership Public regulation C. Public corporation Stockholder control D. Government corporation Collective decision making

answer

A. Sole proprietorship A. Unlimited liability B. General partnership D. Public regulation C. Public corporation C. Stockholder control D. Government corporation B. Collective decision making

question

Match each type of business with one of its features. A. Sole proprietorship Profits paid out as dividends B. Partnership Sharing of profits C. Corporation No profits made D. Government corporation All profits retained

answer

A. Sole proprietorship C. Profits paid out as dividends B. Partnership B. Sharing of profits C. Corporation D. No profits made D. Government corporation A. All profits retained

question

According to the law of supply and demand, when supply increases what else happens? A. Demand will decrease. B. Productivity will decrease. C. Quantity supplied will decrease. D. Prices will decrease.

answer

D. Prices will decrease

question

Which of these is most likely to lead to a decrease in the price of a good? A. Demand decreases and supply remains the same. B. Demand increases and supply decreases. C. Demand increases as fast as supply increases. D. Demand decreases and supply decreases the same amount.

answer

A. Demand decreases and supply remains the same

question

What happens when demand for a good increases but its supply decreases? A. The level of profit increases. B. The price for the good increases. C. Government rationing takes place. D. Competition among producers decreases.

answer

B. The price for the good increases.

question

Match each of the terms below with an example that fits the term. A. Fungibility The provision of a public good B. Elasticity The demand for jewelry C. Non-excludability The switch from white bread to wheat bread D. Substitution The production of potatoes

answer

A. Fungibility C. The provision of a public good B. Elasticity B. The demand for jewelry C. Non-excludability D. The switch from white bread to wheat bread D. Substitution A. The production of potatoes

question

Match each of the terms below with an example that fits the term. A. Fungibility The production of gasoline B. Inelasticity The switch from coffee to tea C. Non-excludability The provision of national defense D. Substitution The demand for cigarettes

answer

A. Fungibility A. The production of gasoline B. Inelasticity D. The switch from coffee to tea C. Non-excludability C. The provision of national defense D. Substitution B. The demand for cigarettes

question

Match each of the terms below with an example that fits the term. A. Fungibility Production of rice B. Inelasticity Demand for food and shelter C. Non-excludability Environmental protection D. Substitution Switching from butter to margarine

answer

A. Fungibility A. Production of rice B. Inelasticity B. Demand for food and shelter C. Non-excludability C. Environmental protection D. Substitution D. Switching from butter to margarine

question

Which of these is most likely to lead to an increase in wages? A. Outsourcing and offshoring B. The use of an assembly line C. The formation of a labor union D. A government with a budget surplus

answer

C. The formation of a labor union

question

What is likely to happen if the size of the labor pool suddenly increases? A. Prices will go up. B. Profits will decrease. C. The minimum wage will rise. D. Wages will go down.

answer

D. Wages will go down

question

A high level of what is most likely to lead to a higher wage? A. Education B. Immigration C. Market concentration D. Government regulation

answer

A. Education

question

Put the phases of the business cycle in the correct order in which they follow a depression. Recession, Boom, Recovery, Depression

answer

1. Recovery 2. Boom 3. Recession 4. Depression

question

Put the phases of the business cycle in the correct order in which they follow a recession. Depression, Boom, Recession, Recovery

answer

1. Depression 2. Recovery 3. Boom 4. Recession

question

Put the phases of the business cycle in the correct order in which they follow a boom. Boom, Recovery, Recession, Depression

answer

1. Recession 2. Depression 3. Recovery 4. Boom

question

Why is a fractional reserve banking system necessary? A. To enable the government to charge lower taxes B. To provide the regulation of the global economy C. To enable banks to loan out money to make a profit D. To prevent the money supply from growing too quickly

answer

C. To enable banks to loan out money to make a profit

question

What is the purpose of the required reserve ratio? A. To keep central banks from having too much influence over currency exchange rates B. To provide government planners with accurate information about economic indicators C. To make sure banks have enough money on hand to meet customers' withdrawal requests D. To prevent the government from getting so far into debt that the economy is weakened

answer

C. To make sure banks have enough money on hand to meet customers' withdrawal requests

question

Under a fractional reserve banking system, the amount of money loaned out can only increase if what happens? A. Taxes are reduced. B. The money supply increases. C. There are more government bonds for sale. D. The required reserve ratio is lowered.

answer

D. The required reserve ratio is lowered.

question

Which is not a policy tool used by the Fed? A. Setting the discount rate B. Buying and selling bonds C. Making tax cuts D. Setting the required reserve ratio

answer

C. Making tax cuts

question

What is not a way that the Fed can generate an increase in the money supply? A. Buying bonds B. Lowering the discount rate C. Reducing the required reserve ratio D. Cutting taxes

answer

D. Cutting taxes

question

Which of these is the Fed not able to do? A. Prevent a budget deficit B. Regulate private banks C. Sell government bonds D. Increase the money supply

answer

A. Prevent a budget deficit

question

Which of these is most likely to lead to an increase in the price of a company's stock? A. Its dividends are reduced. B. Its outstanding shares are sold. C. Its profits increase. D. Its market capitalization declines.

answer

C. Its profits increase.

question

What is most likely to push the price of a company's stock higher? A. An increase in demand for the company's stock B. An increase in demand for the company's products C. An increase in the exchange rate for the U.S. dollar D. An increase in tariffs paid by the company's competitors

answer

A. An increase in demand for the company's stock

question

Which of these is most likely to lead to a decrease in the price of a company's stock? A. Its annual profits decrease. B. Its outstanding shares are sold. C. Its suppliers decrease their prices. D. Its competitors go out of business

answer

A. Its annual profits decrease.

question

Why is it possible to make money in the currency exchange market? A. Inflation always drives up the value of money. B. Governments always buy their own currencies. C. Exchange rates are always fluctuating. D. Some currencies are minted with precious metals

answer

C. Exchange rates are always fluctuating.

question

Buying a bond is similar to which of the following? A. Paying a dividend B. Giving a loan C. Getting a mortgage D. Going into credit card debt

answer

B. Giving a loan

question

What kind of goods are sold in the commodity market? A. Normal B. Monetary C. Substitution D. Unprocessed

answer

D. Unprocessed

question

When a company goes public, it begins doing what? A. Issuing government bonds B. Offering new products for sale C. Paying corporate income taxes D. Selling shares of stock

answer

D. Selling shares of stock

question

An initial public offering (IPO) is when a company does what? A. Enters into a new partnership B. Offers a new line of products C. Begins selling stock to the public D. Gets taken over by the government

answer

C. Begins selling stock to the public

question

The purpose of an initial public offering (IPO) is to do what? A. Get unlimited liability B. Break into a monopoly market C. Comply with government regulations D. Raise money

answer

D. Raise money

question

Match each type of tax with an example of its use. A. Capital gains tax 9% tax on all sales B. Consumption tax 10% tax on gambling winnings C. Excise tax $0.30 tax on a gallon gasoline D. Sin tax 15% on profits from stock sales

answer

A. Capital gains tax B. 9% tax on all sales B. Consumption tax D. 10% tax on gambling winnings C. Excise tax C. $0.30 tax on a gallon gasoline D. Sin tax A. 15% on profits from stock sales

question

Match each type of tax with an example of its use. A. Capital gains tax 10% on profits from the sale of a house B. Consumption tax 15% tax to pay for Social Security C. Excise tax $5 tax on a cable television line D. Payroll tax 6% tax on all sales

answer

A. Capital gains tax A. 10% on profits from the sale of a house B. Consumption tax D. 15% tax to pay for Social Security C. Excise tax C. $5 tax on a cable television line D. Payroll tax B. 6% tax on all sales

question

Match each type of tax with an example of its use. A. Consumption tax 10% tax on gambling winnings B. Income tax 20% tax on wages earned C. Excise tax $0.30 tax on a gallon gasoline D. Sin tax 9% tax on the sale of luxuries

answer

A. Consumption tax D. 10% tax on gambling winnings B. Income tax B. 20% tax on wages earned C. Excise tax C. $0.30 tax on a gallon gasoline D. Sin tax A. 9% tax on the sale of luxuries

question

The government needs to provide public goods for what reason? A. Private companies cannot profit by providing them. B. They are necessary for raising the standard of living. C. The government can reduce taxes by profiting from public goods. D. Citizens demand government regulation to protect their freedom.

answer

A. Private companies cannot profit by providing them.

question

Why are private companies unlikely to provide public goods? A. Public goods are inferior goods that can never be sold for a very high price. B. Private companies are prevented by the government from producing public goods. C. The fungibility of public goods makes it easy for consumers to substitute merit goods. D. The non-excludability of public goods makes it difficult to profit from them.

answer

D. The non-excludability of public goods makes it difficult to profit from them.

question

Which of these prevents private companies from deciding to produce public goods? A. Government regulations B. Protective tariffs C. Decreasing marginal utility D. The profit motive

answer

D. The profit motive

question

Which of these promotes greater efficiency and lower prices by protecting competition? A. Antitrust laws B. Small-claims courts C. Government contractors D. Environmental-protection laws

answer

A. Antitrust laws

question

Antitrust laws promote greater efficiency and lower prices by protecting what? A. Workers B. Consumers C. Competition D. Infant industries

answer

C. Competition

question

Antitrust laws protect competition and bring about lower what? A. Efficiency B. Wages C. Taxes D. Prices

answer

D. Prices

question

Match each unfair business practice with an example of its use. A. Predatory pricing Local pizza delivery companies agree to charge $20 for a large cheese pizza. B. Making misleading statements A large auto maker charges a price below production cost in order to eliminate small competitors. C. Price fixing A juice company falsely claims that its drinks reduce the incidence of heart attacks.

answer

A. Predatory pricing C. Local pizza delivery companies agree to charge $20 for a large cheese pizza. B. Making misleading statements A. A large auto maker charges a price below production cost in order to eliminate small competitors. C. Price fixing B. A juice company falsely claims that its drinks reduce the incidence of heart attacks.

question

Match each action with the unfair business practice it represents. A. Bid rigging A defense contractor gets its competitors to agree to enter low bids. B. Production limitation Local coffee shops agree to charge $3 for a cup of coffee. C. Price fixing A group of oil companies agrees to reduce the amount of oil each member produces.

answer

A. Bid rigging A. A defense contractor gets its competitors to agree to enter low bids. B. Production limitation C. Local coffee shops agree to charge $3 for a cup of coffee. C. Price fixing B. A group of oil companies agrees to reduce the amount of oil each member produces.

question

Match each type of unfair business practice with its description. A. Vendor lock-in A large company charges a price below production cost in order to eliminate small competitors. B. Price fixing A group of companies agrees that all of them will charge the same price. C. Predatory pricing A company says that a wide range of products can be used with its product but this is not true.

answer

A. Vendor lock-in C. A large company charges a price below production cost in order to eliminate small competitors. B. Price fixing B. A group of companies agrees that all of them will charge the same price. C. Predatory pricing A. A company says that a wide range of products can be used with its product but this is not true.

question

Rationing is an attempt to limit shortages that naturally result from what? A. Boycott B. Price ceiling C. Trade embargo D. Protective tariff

answer

B. Price ceiling

question

In order to limit the shortages that naturally result from a price ceiling, the government can do what to certain goods? A. Tax B. Produce C. Ration D. Subsidize

answer

C. Ration

question

The government sets a price floor in order to protect what? A. Domestic workers B. A vulnerable industry C. International trade D. Low-income consumers

answer

B. A vulnerable industry

question

When does Country A have a comparative advantage over Country B in the production of televisions? A. Country A can produce televisions more cheaply. B. Country B charges higher prices for its televisions. C. Country B experiences decreasing marginal utility in its production of televisions. D. Country A has a lower opportunity cost for producing televisions.

answer

D. Country A has a lower opportunity cost for producing televisions.

question

When does County X have a comparative advantage in the production of coffee? A. Country X allows coffee growers to pay very low wages to their workers. B. Country X has a higher protective tariff on coffee than any other country. C. Country X has the right climate and geography to grow a lot of coffee for export. D. Country X doesn't give up a more efficient form of production in order to grow coffee.

answer

D. Country X doesn't give up a more efficient form of production in order to grow coffee.

question

When does Country X have an absolute advantage over Country Y in the production of corn? A. Country X can grow corn more cheaply than Country Y. B. Country Y has high opportunity costs for growing corn. C. The population of Country X consumes less corn than is grown. D. The global demand for corn is higher than the supply from Country Y. G

answer

A. Country X can grow corn more cheaply than Country Y.

question

Which of these results from the mobility of production that characterizes the current global economy? A. Outsourcing B. Protectionism C. Immigration D. Terrorism

answer

A. Outsourcing

question

Companies use offshoring in order to do what? A. Lobby the government B. Increase market share C. Reduce labor costs D. Protect infant industries

answer

C. Reduce labor costs

question

Low wages in the underdeveloped world give U.S. companies an incentive to do what? A. Lobby B. Boycott C. Colonize D. Outsource

answer

D. Outsource

question

Why is renting an apartment usually cheaper than buying a house? A. Apartments are usually smaller than houses. B. Leases have lower interest rates than mortgages. C. Renting involves hidden costs like the security deposit. D. Buying a house is an investment that pays off in the long run.

answer

D. Buying a house is an investment that pays off in the long run.

question

Why is buying a house a better investment than renting an apartment? A. Mortgage payments increase the homeowner's equity. B. Housing prices increase faster than rents. C. Leases have higher interest than mortgages. D. Houses are generally larger than apartments.

answer

A. Mortgage payments increase the homeowner's equity.

question

Which of these is a disadvantage of buying a house instead of renting? A. Homeowners have to get liability insurance. B. Homeowners must pay for all repairs themselves. C. Homeowners are in a higher income tax bracket. D. Homeowners are not allowed to move out when they want.

answer

B. Homeowners must pay for all repairs themselves.

question

Match each type of insurance with an example of what it would pay for. A. Auto insurance Funeral expenses B. Renter's insurance A trip to the emergency room C. Life insurance Repair on a car involved in an accident D. Health insurance Replacement of a computer stolen from an apartment

answer

A. Auto insurance C. Funeral expenses B. Renter's insurance D. A trip to the emergency room C. Life insurance A. Repair on a car involved in an accident D. Health insurance B. Replacement of a computer stolen from an apartment

question

Match each type of insurance with an example of when the insurance company would make a payment. A. Liability coverage You cause an accident that damages someone else's car. B. Disability insurance You go to the emergency room after a car accident. C. Renter's insurance Your stereo and computer are stolen from your apartment. D. Health insurance You have to take a month off from work because of a broken leg.

answer

A. Liability coverage A. You cause an accident that damages someone else's car. B. Disability insurance D. You go to the emergency room after a car accident. C. Renter's insurance C. Your stereo and computer are stolen from your apartment. D. Health insurance B. You have to take a month off from work because of a broken leg.

question

Match each type of insurance with an example of when the insurance company would make a payment. A. Collision coverage You cause an accident that damages your vehicle. B. Disability insurance You go to the emergency room after a car accident. C. Homeowner's insurance You have a fire in your house that damages your furniture. D. Health insurance You lose your job because of a sports injury.

answer

A. Collision coverage A. You cause an accident that damages your vehicle. B. Disability insurance D. You go to the emergency room after a car accident. C. Homeowner's insurance C. You have a fire in your house that damages your furniture. D. Health insurance B. You lose your job because of a sports injury.

question

What is the purpose of a budget? A. To pay as few taxes as possible B. To avoid the costs of compliance C. To keep expenses below income D. To promote personal values and beliefs

answer

C. To keep expenses below income

question

What is the goal of using a personal budget? A. To reduce your tax burden B. To eliminate your fixed expenses C. To maximize the return on your investments D. To save for your future financial goals

answer

D. To save for your future financial goals

question

What does a budget help you do? A. Get companies to change their behavior B. Keep your expenses below your income C. Avoid being manipulated by salespeople D. Maximize the return on your investments

answer

B. Keep your expenses below your income

question

Why are student loans usually guaranteed by the government? A. Banks charge low interest rates for student loans. B. Banks are required to maintain a certain reserve ratio. C. Banks don't have any collateral for student loans. D. Banks would give students credit cards they can't

answer

C. Banks don't have any collateral for student loans.

question

Which of these is a form of self-help financial aid? A. Liability coverage B. Scholarships C. Tuition fees D. Student loans

answer

D. Student loans

question

What is one of the features of most student loans? A. Students don't have to begin repaying until they're done with school. B. Collateral is provided through the purchase of a leased automobile. C. Loan insurance is required in case the student suffers an injury or illness. D. Interest rates are high to cover the risk of students defaulting on their loans.

answer

A. Students don't have to begin repaying until they're done with school.

question

What is one of the features of most student loans? A. Students don't have to begin repaying until they're done with school. B. Collateral is provided through the purchase of a leased automobile. C. Loan insurance is required in case the student suffers an injury or illness. D. Interest rates are high to cover the risk of students defaulting on their loans.

answer

A. Students don't have to begin repaying until they're done with school.

question

What is one of the features of most student loans? A. Students don't have to begin repaying until they're done with school. B. Collateral is provided through the purchase of a leased automobile. C. Loan insurance is required in case the student suffers an injury or illness. D. Interest rates are high to cover the risk of students defaulting on their loans.

answer

A. Students don't have to begin repaying until they're done with school.

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