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- 1. Multiple ChoiceWhat is the difference between a scarcity and a shortage?A scarcity occurs when producers will not or cannot offer goods or services at the current prices, and a shortage occurs when there are limited quantities to meet unlimited wants.Scarcity is the effort that people devote to a task that meets unlimited wants, and a shortage occurs when supplies of goods or services run low.A scarcity occurs when supplies of goods and services are suddenly attainable, and a shortage occurs when producers will not or cannot offer goods or services at the current prices.A scarcity occurs when there are limited quantities to meet unlimited wants, and a shortage occurs when a good or service is unavailable.
- 2. Multiple ChoiceBy the end of the summer, Jason had saved enough money for college from his job as a waiter. He even had some money left over. Although he wanted both, he decided to buy a DVD player rather than a digital camera. Which of the following is the opportunity cost in this scenario?the DVD playerthe digital cameracollegethe job
- 3. Multiple ChoiceIn a free market economy, the factor market involves which type of exchange?
The goods and services that households produce are purchased by firms.Firms purchase factors of production from households.Households purchase factors of production from firms.Firms loan money to households to purchase capital. - 4. Multiple ChoiceThe purpose of the free enterprise system is togive consumers goods and services free of chargeeliminate economic choices.give consumers freedom to make economic choicescreate political campaign slogans
- 5. Multiple ChoiceWhat are some of the basic principles of free enterprise?research institutions, government restriction, and stock qualificationsprofit motive, legal equality, private property rights, free contract, and competitioninterest groups, disclosure laws, public interest, and negative regulationabsolute organizations, low prices, and quality control indexes
- 6. Multiple ChoiceWhich word BEST completes the following sentence? Improvements in _____ allow an economy to produce more output from the same or a smaller quantity of inputs.GDPfree enterprisetechnology
communication - 7. Multiple ChoiceWhich of the following is NOT a key economic question?What goods and services should be produced?How should these goods and services be produced?Who consumes these goods and services?How should it be ensured that goods and services are paid for?
- 8. Multiple ChoiceWhich of the following is NOT a weakness of centrally planned/command economies?Most workers lack job security.Consumers’ needs are generally not met.Workers lack incentives to be innovative.Individual freedoms are sacrificed for societal goals.
- 9. Multiple ChoiceAny resources that are made by humans and used to create other goods and services are called ____________.services.production.captiallabor
- 10. Multiple ChoiceResources used to make all goods and services are the _________________.production possibilitiesfactors of productionproduction trade offsopportunity costs
- 11. Multiple ChoiceWhich of the following is NOT a factor affecting elasticity?availability of subsitutesthe good's relative importancewhether the good is a necessity or a luxurythe good's price range
- 12. Multiple ChoiceAccording to the law of supply, the higher the price,the more consumers are willing to paythe larger the quantity producedthe smaller the quantity producedthe more the availability of a good is reduced
- 13. Multiple ChoiceWhat is an oligopoly?an agreement by a formal organization of producers to coordinate prices and productiona market structure in which a few large firms dominate the marketa market structure is which two firms have a price wara market structure in which a single firm dominates the market
- 14. Multiple ChoiceWhat is a basic principle of the law of demand?
The higher the price, the more people will want the good.Everyone has a limited income that they will spend.When a good’s price is lower, people will buy more of it.Services are of interest in the same way that goods are. - 15. Multiple ChoiceWhat is monopolistic competition?one company selling the identical product under different namesone company selling several different products under different namesa very few companies selling identical productsmany companies selling similar but not identical products
- 16. Multiple ChoiceWhich of the following is NOT a condition for perfect competition?Many buyers and sellers participate in the market.Sellers offer a wide variety of products.Buyers and sellers are well informed about products.Sellers are able to enter and exit the market freely.
- 17. Multiple ChoiceWhich of the following is an advantage of a sole proprietorship?No one is responsible if it fails.It is the least-regulated form of business organization.It is an easy way to make a lot of money.It is easy to get financing to start one.
- 18. Multiple ChoiceIf a general partnership fails, who is responsible for the debts?anyone who works for the partnershipall of the partnersonly the most senior general partnerno one
- 19. Multiple ChoiceWhat is the major difference between a corporation and other kinds of businesses?A corporation is much larger than other kinds of businesses.A corporation is not responsible for its debts if it fails.A corporation has a separate entity apart from that of the owners and workers.A corporation has officers who are responsible for the business.
- 20. Multiple ChoiceWhich of the following is a disadvantage of a sole proprietorship?lack of permanencehigh taxeslegal constraintsdifficult to start up
- 21. Multiple ChoiceThe price ceiling that was used to control the price of housing in New York City and other cities was called which of the following?rent controlrent abatementhousing controlequilibrium price
- 22. Multiple ChoiceWhy is Real GDP a better and more accurate measure of output than Nominal GDP?Real GDP is adjusted for inflationReal GDP is inflatedNominal GDP is adjusted for inflationNominal GDP is in constant dollars
- 23. Multiple ChoiceWhat is the dollar value of all final goods and services produced within a country’s borders in a given year called?Gross National ProductGross International ProductGross Deported ProductGross Domestic Product
- 24. Multiple ChoiceWhat is a general rise in prices over time called?StagflationInflationRecessionDepression
- 25. Multiple ChoiceA worker that has given up looking for a job is a:unemployed persondiscouraged workerloserfailure to society
- 26. Multiple ChoiceWhen the economy is working properly, what is the unemployment rate?0 to 3 percent4 to 6 percent8 to 10 percent10 to 12 percent
- 27. Multiple ChoiceThe sales tax on a $20.00 hammer is 7%, or $1.40. Why is this tax a bigger burden for Josh when he has a $15,000 income, than for Aaron, who has a $150,000 income?Josh will have to pay a greater property tax on the hammer than will AaronThe tax rate is higher for Josh than for AaronThe burden is the same for for both Josh and AaronThe tax represents a larger portion of Josh's income
- 28. Multiple ChoiceSuppose your total taxable income this year is $75,000. You are taxed at a rate of 10% on the first $25,000, 20% on the next $25,000, and 30% on the final $25,000. What form of income tax is this?RegressiveNone of the aboveProgressiveProportional
- 29. Multiple ChoiceAn example of expansionary fiscal policy would becutting taxescutting government spendingcutting production of consumer goodscutting prices of consumer goods
- 30. Multiple ChoiceAn example of contractionary fiscal policy would becutting taxes.decreasing government spending.increasing production of consumer goods.expanding the government’s role in regulating private industry.
- 31. Multiple ChoiceThe purpose of expansionary fiscal policy is toincrease output.prevent hyperinflation.slow the growth of the GDP.increase the separation between government and private industry.
- 32. Multiple ChoiceWhich of the following instruments is NOT used by the Federal Reserve to change the money supply?the discount ratethe reserve requirementthe federal tax codeopen market operations
- 33. Multiple ChoiceThe most-used instrument for controlling week-to-week changes in the money supplyis the required reserve ratio.the money multiplier.open market operations.the discount rate.
- 34. Multiple ChoiceWhich of these tools in an example of monetary policy?reducing income taxeschanging reserve requirementsincreasing government spendingborrowing money through deficit spending
- 35. Multiple ChoiceWhat happens when a nation’s currency depreciates?Its products become more expensive to other nationsIts trade increases.Its products become cheaper to other nations.Its trade decreases.
- 36. Multiple ChoiceThe United States placed a limit on the number of cars that can be brought into the country for sale. This is an example ofan import quota.a tariff.a customs duty.a voluntary export restraint.
- 37. Multiple ChoiceEcuador has a comparative advantage in the production of bananas over the United States. Which of the following statements is true?Ecuador also has an absolute advantage in the production of bananas.The United States has an absolute advantage in the production of bananas.Ecuador can produce bananas at a lower opportunity cost than the United States.The United States cannot produce bananas.
- 38. Multiple ChoiceThose in favor of protectionist trade policies would most likelysupport a reduction in tariffscall for fewer import restrictionscite the need to preserve domestic industriesbelieve that restrictions harm consumers
- 39. Multiple ChoiceA tariff placed on foreign steel imports representsa barrier to tradea balance of payment deficita subsidy to domestic producersan increase in domestic production
- 40. Multiple ChoiceSuppose the United States decreases the tariff on imported tuna steaks. What would the consequences be?There would be a decrease in the number of imported tuna steaks and the number of tuna steaks produced in the United States.There would be an increase in the number of imported tuna steaks and the number of tuna steaks produced in the United States.There would be a decrease in the number of imported tuna steaks and an increase in the number of tuna steaks produced in the United States.There would be an increase in the number of imported tuna steaks and a decrease in the number of tuna steaks produced in the United States.
- 41. Multiple ChoiceWhat is a mortgage used to purchase?carreal estatecollege tuitionbusiness expenses
- 42. Multiple ChoiceWhich of the following would offer the LOWEST risk of investment?investing in a friend’s businessa government bondstock in a new companyinvesting in oil futures
- 43. Multiple ChoiceWhich of the following is NOT a factor in determining credit worthiness?how nice you areincomecredit history/scoreamount of debt
- 44. Multiple ChoiceA loan consists of the __________, which is the amount borrowed...AND the _________, which is the amount the bank charges for use of the money.interest/principalprincipal/interestdebt/interestdeficit/debt
- 45. Multiple ChoiceSince bonds are considered among the safest investments, you would expect that they wouldmature quicklyhave high interest ratesbe very riskyhave low interest rates
- 46. Multiple ChoiceThe money paid out to stockholders by the company is called:interestdividendprincipalmortgage
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