question

A way to measure the economy's performance is to measure categories of national...

answer

income. Economists use GDP and national income to show the performance of the economy

question

Which of these ULTIMATELY controls the money supply in the United States?

answer

Federal Reserve ultimately controls the money supply in the United States.

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What is one way the government CANNOT influence income redistribution?

answer

Open Market Policy is a monetary policy of the Federal Reserve, and is therefore not a function of the government's fiscal policy for income redistribution

question

In a free-enterprise economy, the LEAST LIKELY effect of economic growth would be...

answer

increase in poverty levels

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The economy is experiencing negative GDP growth and high unemployment. Which fiscal policy action should the government implement in an attempt to fix this problem?

answer

increase spending

question

Inflation is expected to be high for the foreseeable future, you expect to have stable employment, and you would like to borrow money to buy a house. All else equal, a savvy economics student would

answer

borrow the money, knowing that the payments would be made with increasingly cheaper dollars.

question

State governments often decide to place a "sin tax" on specific products or goods, like alcohol and tobacco. Which rationale is LEAST LIKELY to encourage governments to adopt a "sin tax"?

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While it is true that "sin taxes" disproportionally affect lower income groups, this is not a reason that governments would want to adopt them.

question

In which situation might GDP (gross domestic product) NOT be an accurate indicator of the health of a country's economy?

answer

The country has suffered a disaster and is receiving financial aid from overseas. In this situation, the availability of money for purchasing goods and services may not accurately reflect economic growth in the country.

question

What would MOST LIKELY happen if the Federal Reserve decided to increase the reserve requirement in banks?

answer

The amount of money circulating in the economy would decrease.

question

In the graph, the year with the highest unemployment rate is 1983. What was the approximate unemployment rate in that year?

answer

10.2%

question

Under which economic system would factors of production MOST LIKELY be owned by the government?

answer

command economy. Committees and departments decide what will be made, how it will be made, how much it will cost, and all of the other decisions that are usually made by private firms in a market economy.

question

How does this map relate to the distribution of natural resources for countries such as South Africa?

answer

South Africa is rich in gold, and they need to learn to mine gold effectively in order to trade for other resources from other African countries.

question

An opportunity cost is

answer

the next-best alternative you give up in order to do something else.

question

In a market economy, prices are established by

answer

the interaction of supply and demand

question

Increased education and training within a nation will most likely result in

answer

an increase in Gross Domestic Product (GDP)

question

As one of the factors of production, capital can be defined as

answer

the equipment and factories needed to produce goods

question

Which statement describes an opportunity cost that could result from the government regulating businesses?

answer

Government regulations can lead to an increase in production costs.

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Mr. Green is opening a new bakery. He has purchased an industrial oven which can accommodate twenty loaves of bread at a time. This oven represents which factor of production?

answer

capital

question

In order to decrease fuel consumption in the US, the EPA (Environmental Protection Agency) has raised standards for fuel efficiency on cars sold here. One economic assumption made by the EPA is that, since our economic system is mostly market based,

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The EPA can assume that consumers will shop for more fuel-efficient cars, which means that the car makers will have a market for the newer, more efficient, vehicles.

question

Which of these terms is the BEST synonym for the word "entrepreneur"?

answer

"business owner", a person who undertakes the responsibility of owning a business.

question

If the government decided to subsidize the production of bobble-head dolls

answer

the supply curve will shift to the right. A government subsidy will reduce production costs. Because of this, suppliers would be willing to produce more items.

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In the product market,

answer

producers sell goods and services to consumers.

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What would be the situation if the price was moved from p2 to p3?

answer

there would be a shortage of widgets

question

Demand for orange juice increases at the same time that the supply decreases. Which of these could explain that scenario?

answer

Consumers hear of the benefits of vitamin C contained in oranges, while citrus farmers suffer from a severe frost.

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− Cost of inputs increases − Number of sellers decreases These changes would MOST LIKELY have which impact on the market?

answer

supply would decrease

question

What is the name of the point at which supply and demand intersect?

answer

equilibrium

question

Which of these is MOST LIKELY a result of apartment rent controls?

answer

shortage of apartments

question

One of the BEST measures of success for businesses and their entrepreneurs is

answer

profit

question

The diagram shows the circular flow of goods and resources. What is the primary purpose of this chart?

answer

It shows how households and businesses interact in a market economy.

question

Which type of market typically produces the highest level of output at the lowest price to consumers?

answer

perfect competition

question

Which effect of high inflation might make it difficult for students to pay for college?

answer

High interest rates

question

In this passage, what would make Gary's transaction non-beneficial?

answer

if the car had actually been in a wreck

question

Who benefits the MOST during periods of unexpected inflation?

answer

banks who are collecting on loans with adjustable interest rates. Adjustable rate loans have an interest rate that will rise with inflation; therefore, the banks collecting those loans will be able to keep the interest rate rising with the rate of inflation.

question

The Federal Reserve institutes a tight monetary policy in order to reign in inflation. What is a likely consequence of such action?

answer

The unemployment rate will rise Tight monetary policies aim to fight inflation. These policies restrict the amount of money in circulation. A consequence of not having as much money available would mean that some businesses would not have access to loans that would help them pay workers.

question

Andre creates a budget for himself. He would like to buy a new video game each month, but doesn't have enough money to do so in his current budget. Which parts of Andre's budget could he increase to have enough money for the new video game each month?

answer

income

question

In the business cycle model, a recession is MOST LIKELY

answer

a recession is MOST LIKELY a period during which the real GDP decreases for two quarters in a row. A prolonged recession is called a "depression."

question

Overall levels of income, employment, and prices are determined by the spending and production decisions of all of the following EXCEPT

answer

net imports. Overall levels of income, employment, and prices are determined by the spending and production decisions of all of the following EXCEPT net imports. Net exports are included with businesses, households, and government.

question

The United States increases its imports from Europe. What will be the effects on relative value of the Dollar and the Euro on the currency exchange market?

answer

The relative value of the dollar will depreciate and the euro will appreciate. The US will demand more European products, will drive the demand of the euro up and the demand of the dollar down.

question

Fiscal policy affects which two parts of aggregate demand directly?

answer

Government spending and consumption affect aggregate demand directly. Aggregate demand is the same as GDP. The components of GDP that are affected directly are government spending and consumption.

question

When a person agrees to a regular, fixed payment of wages over a period of time, he/she agrees to earn a

answer

A salary is an income that is paid out regularly over an agreed-upon time. It differs from a wage in that a wage is usually given based on hours worked. Salaries are most always fixed, regardless of the amount of time the employee works.

question

Which statement would MOST LIKELY be claimed by the author of this passage?

answer

Based on the discussion of high trade costs, the presence of numerous tariffs, and problems with customs procedures and duties it is clear that the author feels that man-made trade barriers are the biggest challenge facing Africa's international trade success.

question

What would be reasonable monetary policy during a period of high inflation?

answer

reduce the money supply. put downward pressure on prices as investment and spending slows.

question

The European Union was created specifically for what purpose?

answer

to encourage free trade. The elimination of trade barriers- such as quotas and tariffs- was key to making sure European nations could trade easily with on another.

question

Which item is NOT a means to finance government spending?

answer

Government subsidies

question

A technology company needs 10 workers experienced in a newly developed programming language. Plenty of applicants express interest in the job; however, only three have the necessary education and experience to complete the work. The remaining unemployed individuals are an example of ___ unemployment.

answer

structural unemployment because there is a mismatch between the good (qualified) workers looking for jobs and the vacancies available.

question

How does the Federal Reserve achieve these goals?

answer

Raising and lowering short-term interest rates is one of the monetary policies that the Federal Reserve can use to help stimulate the economy. Taxation and government spending are fiscal policies that the government can use. Minimum wage is a price floor to raise the standard of living.

question

The federal government decides to offset a $50 billion decline in business spending. The government could spend $50 billion directly on projects, or it could reduce tax rates by the same amount. Whether the action taken by the federal government is direct or indirect, the result is MOST LIKELY

answer

a higher federal deficit.

question

Taxes are a form of government revenue. Which of these is a tax source?

answer

personal income is a tax source.

question

Input costs (Rising costs and technology) Subsidies Taxes and Regulations Future expectation of prices These would change WHAT part of the market?

answer

supply

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