question

Which of the following best describes the way economists view people's gasoline purchases? a. People need gasoline b. There are no substitutes for gasoline, so people will pay any price c. Both of the above d. None of the above

answer

D

question

Jami's demand for tacos a. depends on the price he must pay b. is 7 tacos per month c. is shown by the entire demand curve d. is 15 tacos per month (the largest quantity he will buy)

answer

C

question

The demand for a good is elastic when a. Total revenue increases with each decrease in price b. Total revenue decreases with each decrease in price c. Price changes have no effect on total revenue d. The demand curve shifts to the right

answer

A

question

What has the most inelastic demand? a. Salt b. Chocolate-covered doughnuts c. Home computers d. Bath soap

answer

A

question

When something is produced, there is always a. A buyer b. an opportunity cost c. An elastic supply d. A profit

answer

B

question

Producers usually sell more at higher prices than at lower prices because a. Their marginal costs usually drop as production increases b. They don't have to worry about marginal production costs c. Their marginal costs usually rise as they increase production d. They want the excess profit that comes from producing additional quantities at lower costs

answer

C

question

Company A can produce a product at a constant marginal cost. This means that a. The company's total cost doesn't rise as it increases production b. The company's total cost rises by the same amount every time it increases c. The company can earn a profit no matter what price it charges. d. None of the above

answer

B

question

If the price of beef rises and remains at the higher level, then over time the supply of beef a. Becomes more inelastic because producers get used to the higher prices b. Shifts to the left c. Becomes more elastic because ranchers have more time to bring resources into cattle production d. Remains unchanged

answer

C

question

Which of the following would not shift the supply line of car-washing services to the right? a. More efficient washing and drying equipment b. Workers become more efficient at washing cars c. The price of water goes up d. The number of car-washing businesses increases

answer

C

question

A supply line shows that, in a market economy, consumers get more of a product by a. Paying lower prices until producers give them more of what they want b. Having government force businesses to produce more c. Writing letters to convince businesses to increase production d. Offering producers more money in exchange for the product

answer

D

question

A higher price for a product a. Encourages sellers to sell less of it b. Causes shortages c. Shifts both the demand and supply curves d. Cause buyers to buy less of it

answer

C

question

A market-clearing price is important because a. It clears away scarcity b. It balances the amounts demanded and supplied c. It shifts both the demand and supply curves d. It causes buyers to disappear from the market

answer

B

question

If the demand for a product increases faster than its supply, what probably would happen to the product's market-clearing price? a. It would fall b. It would rise c. It would remain unchanged d. There is not enough information to answer the question

answer

B

question

Which of the following is not true about small businesses in the U.S. economy? a. Small businesses have a higher failure rate than larger businesses b. Smaller businesses have been providing most of the nation's new jobs c. Most small businesses start out with sufficient financing but still end up failing Small businesses typically have a greater ability to adapt to change than do large companies

answer

C

question

Sole proprietorships are a. Difficult and costly to organize b. The most numerous kind of business organization c. Businesses with more than one owner d. Mostly used by large business organizations

answer

B

question

One advantage of a partnership is that a. Adding partners bring more funds to the business for startup or expansion b. Each partner is subject to unlimited liability c. Partners are likely to agree on all business decisions d. The business continues even if one partner dies.

answer

A

question

Pa Thao recently bought a store that carries the name of a well-known national ice cream company. Pa will buy her equipment and supplies from the company and pay for using its name. Her business illustrates a a. Cooperative b. Franchise c. Not-for-profit corporation d. None of the above

answer

B

question

In a large corporation a. Stockholders run the company b. The directors are the owners c. Ownership and management are separated d. There are no shares of stock

answer

C

question

Perfect competition a. Has many sellers b. is dominated by a few large firms c. Is regulated by the government d. Includes monopolies and oligopolies

answer

A

question

Competition is important because it a. Limits the effects of supply and demand b. Eliminates the profit motive c. Gives producers the incentive to be efficient d. Provides a market where producers can control prices

answer

C

question

Lare firms often spend great sums on advertising while keeping their retail prices similar to their competitors' prices. This strategy is a characteristic of a. Monopolistic competition b. Pure market competition c. Monopoly d. Oligopoly

answer

D

question

If International Calculating Machines (ICM) purchased MiniMicroships Inc., a producer of computer chips, it would be a a. Horizontal merger b. Vertical merger c. Conglomerate merger d. Leveraged buyout

answer

B

question

Storing, transporting, and insuring goods are all considered part of a. Promoting a good or service b. The competitive process c. A horizontal merger d. The marketing function of a business

answer

D

question

State and local governments spend the most money on a. Roads and highways b. Education c. Public welfare d. Police and fire protection

answer

B

question

Sometimes government decreases taxes to encourage consumer spending. What responsibility does this illustrate? a. The need to balance the budget b. The need to protect selected industries c. The responsibility for stabilizing the economy d. The responsibility for regulating certain industries

answer

C

question

Which statement is an opinion, and not necessarily a fact? a. Government spending on all levels has increased since WWII b. The federal government should balance its budget c. Social Security is the largest single item in the federal budget d. Taxes are the most important source of income for the federal government

answer

B

question

Gasoline taxes are used for highway improvement. This is an example of a. An ability-to-pay tax b. A benefits-received tax c. A progressive tax d. A value-added tax

answer

B

question

Last year, John earned $100,000, Mary earned $75,000, and Joe earned $50,000. Each was required to pay a special tax of $500. Which of the following terms best describes this tax? a. Progressive b. Proportional c. Regressive d. Unfair

answer

C

question

The economist Paul Samuelson is most likely to favor a. A laissez-faire policy in which government keeps it hands off business b. Government goals for the economy and the power to achieve them c. A negative income tax in place of specific programs to aid the poor d. The elimination of minimum wage legislation

answer

B

question

One reason for concern about the persistent deficits in the national budget is that a. When compares to the nation's productive power, our deficits have been greater than they were during WWII b. Deficits can be used to stimulate the economy c. Deficits divert savings from investments in capital resources d. High deficits lead to very low interest rates

answer

C

question

Of the following, which is the largest component of the money circulation? a. Paper money b. Coins c. Checking accounts d. Savings accounts

answer

C

question

In a money economy, money serves as a a. Medium of exchange b. Measure of value c. Store of value d. All of the above

answer

D

question

Which of the following groups will be hurt most by rising prices or inflation? a. People on fixed incomes b. Bondholders c. Borrowers d. Lenders

answer

A

question

Which of the following groups will benefit most from rising prices? a. People on fixed incomes b. Bondholders c. Borrowers d. Lenders

answer

C

question

Bank reserves are a. Funds banks lend to other banks b. Funds set aside for future investment c. The sum total of customers' deposits d. A percentage of deposits a bank must set aside

answer

D

question

The maximum amount of money that commercial banks can create depends upon the demand for loans and a. The amount of cash on hand b. The amount of its reserves c. The gold and silver in its vault d. The supply of Federal Reserve notes issued

answer

B

question

Assuming that prices are rising while production remains unchanged. In these circumstances, the GDP, measured in current dollars, will a. Increase b. Remain the same c. Decrease d. Cause prices to fall

answer

A

question

Assuming a period of recession, which of the following would most likely stimulate expansion? a. Reduced profits b. Reduced purchasing power c. Inreased investment d. Increased unemployment

answer

C

question

Which policy would tend to stimulate the economy? a. The Fed buys securities in the open market b. Congress increase tax rates c. Congress reduces federal spending programs d. The Fed raises the serve ratio

answer

A

question

Which policy would tend to slow the economy? a. The Fed raises the discount rate b. Congress raises the debt ceiling c. Congress appropriates an additional $50 billion for defense d. The Fed reduces the reserve ratio

answer

A

question

Which of the following is not a built-in stabilizer in our economy? a. Medicare b. Federal income taxes c. Unemployment benefits d. Welfare payments

answer

A

question

Which policy is likely to reduce unemployment? a. Higher taxes b. Reduce government spending for military hardware c. Lower taxes d. Reduce spending for new roads and highways

answer

C

question

What would most likely happen if government spending increased at a time of full employment? a. Prices would fall b. Prices would rise c. Unemployment would increase d. The national debt would increase

answer

B

question

Full employment refers to a period when a. Anyone looking can find a job b. Unemployment equals or is less than the sum of the frictional and structural unemployment rates c. The actual unemployment rate and cyclical unemployment rates are identical d. Everyone in the labor force is employed

answer

B

question

Which of the following statements would be made by a Keynesian economist? a. "The Fed needs to spend more time monitoring the money supply" b. "The key to fine-tuning the economy is properly adjusting interest rates" c. "The battle against recession should be fought with fiscal weapons" d. "If the Open Market Committee and the Board of Governors did their jobs properly, Congress could stop worrying about the economy"

answer

C

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