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- 1. Multiple Choice
The clothing shown in the photograph is BEST described as an example of
a need
a want
physical capital
entrepreneurial risk-taking
- 2. Multiple Choice
What traded-off is shown in this cartoon?
size of the car vs price of the car
price of the car vs fuel efficiency
size of the car vs fuel efficiency
speed of the car vs the price of the car
- 3. Multiple Choice
What is the opportunity cost of not going to college?
no student loan debt
high employment
low employment
significant student loan debt
- 4. Multiple Choice
To conduct a cost/benefit analysis, a sensible person would MOST LIKELY
compare previous costs to previous benefits.
compare marginal costs to marginal benefits.
compare known costs to unknown benefits.
compare unknown costs to known benefits.
- 5. Multiple Choice
Which of the following conclusions is compatible with this graph?
The United States has an oversupply of petroleum.
The United States has a scarcity of petroleum.
The United States exports more oil today than it did in the past.
The United States imports more oil today than it did in the past.
- 6. Multiple Choice
In a cost/benefit analysis, what would be the benefit of taking the Dallas North Tollway instead of Routes 75 and 380?
That route would cost less in tolls.
That route would cost more in tolls.
That route would require more travel time.
That route would require less travel time.
- 7. Multiple Choice
What is Bob’s opportunity cost if he decides to go out to eat with friends?
the money spent on the dinner
the money saved by not going out
getting exercise
having fun with friends
- 8. Multiple Choice
Which of the following is true about the photo shown here?
This man is improving his human capital by learning a skill.
This man is using up his physical capital by working hard.
This man is improving the physical capital at the hospital.
This man is gaining financial capital by working.
- 9. Multiple Choice
Why are more technology companies based in the San Francisco Bay Area than in any other part of the country?
The production possibilities frontier has shifted to the left elsewhere.
Other areas are underutilizing their resources.
Its resources are best suited to produce high-tech goods.
The economy is weaker in other areas of the country.
- 10. Multiple Choice
What explains the reason that only one extra hour of study time is needed to increase a grade from a C to a B, but three extra hours of study time are needed to increase a grade from a B to an A?
the law of increasing costs
the law of decreasing costs
the law of under-utilization
the law of efficiency
- 11. Multiple Choice
To save money, Taylor decided not to go to a concert where her favorite musician was performing. What was the opportunity cost of that decision?
having fun at the concert
spending time at home
having time to study
having extra money
- 12. Multiple Choice
What is the most basic economic issue for all societies?
Taxation
Scarcity
Inflation
Recession
- 13. Multiple Choice
What is the main idea behind the study of economics?
Monetary policy
Efficiency of production
Allocation of scarce resources
Business decisions
- 14. Multiple Choice
Which of the following is an opportunity cost of building a new public high school?
Cost of hiring teachers for all the subjects at the new school
Change in the annual tax rate to pay for the new school
Cost of constructing the new school at a later date
Other goods and services given up in order to build the school
- 15. Multiple Choice
People who decide how to combine resources to create new goods and services are called ________________.
human capital
producers
entrepreneurs
laborers
- 16. Multiple Choice
The term _________________ refers to any human-made resource that is used to produce other goods and services.
labor
scarcity
opportunity cost
capital
- 17. Multiple Choice
It takes you half an hour to do a Math assignment and two hours to do an English assignment. What is the opportunity cost of you doing two Math assignments?
1/2 of an English assignment
1 English assignment
2 English assignments
1/4th of an English assignment
- 18. Multiple Choice
Which of the following is a function of households in the market economy?
They supply firms with the factors of production.
They supply firms with goods and services.
They send land, labor, and capital to firms through the product market.
They send money to firms through the factor market.
- 19. Multiple Choice
Why is private ownership an important source of economic prosperity?
It eliminates the opportunity cost of using a resource.
It provides owners with a strong incentive to develop and use assets in ways that others value highly.
It allows owners to do anything they want with their property.
It makes it possible for owners to ignore the desires of others without having to bear the cost.
- 20. Multiple Choice
Which of the following BEST describes the U.S. free enterprise system?
individual or corporate ownership of capital goods
very heavy government regulation of businesses
government provision of free services to those in need
free trade, with markets open without restriction to foreign goods
- 21. Multiple Choice
"Government regulations impose an enormous burden on large and small businesses in America, discourage productivity, and contribute substantially to our current economic woes."
—President Ronald Reagan, January 22, 1981
What would President Reagan's economic policy MOST LIKELY be concerning regulations?
to propose many new regulations
to encourage private regulation of business
to cut back on the number of regulations
to preserve the existing level of government regulation
- 22. Multiple Choice
Which mean household income level saw the greatest change relative to the others during this period?
Highest 20%
Fourth 20%
Second 20%
Lowest 20%
- 23. Multiple Choice
Which economic goal does this exchange at an outdoor food stand BEST represent?
economic stability
economic freedom
economic equity
economic security
- 24. Multiple Choice
In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.
command economy
market-oriented economy
centrally planned economy
microeconomy
- 25. Multiple Choice
Why do U.S. economic policies seek to achieve the goal of maximum employment?
High employment is a signal to producers to lower prices on goods and services.
The Constitution guarantees a job to Americans who are willing and able to work.
When more people work, the economy is more productive and the standard of living rises.
The more people who are employed, the more secure the financial markets will be.
- 26. Multiple Choice
"Whether we're talking about roads or bridges or mass transit, whether we're talking about canals and waterways, sewage and water facilities, whether we're talking about broadband, or we're talking about the grid to transmit electricity, whether we're talking about schools, an investment in infrastructure that serves the needs of our children and their education, . . . these infrastructure investments offer our nation job-creating opportunities to reinvigorate the American economy."
—Nancy Pelosi, Speaker of the House, Press Release, March 11, 2008
Government-built infrastructure is a public good. Which of the following BEST paraphrases the intent of this press release by a government official?
to inform people about the various types of infrastructure
to warn people that the nation's infrastructure needs to be repaired
to alert people to the large investment needed to repair infrastructure
to persuade people that the benefits of repairing infrastructure outweigh the costs
- 27. Multiple Choice
In economic terms, what is a "stock"?
A share, or part ownership of a company
Pieces of paper that represent money
Ownership of an entire company
A place where individuals raise money
- 28. Multiple Choice
In a free enterprise economy, what is the government's role?
Decides what goods are manufactured
Owns and operates major industries
Encourage competition among businesses
Sets prices on goods and services
- 29. Multiple Choice
There is a country in which the government owns all the industries, businesses, and farms. The government sets production and wages. The government provides all education, childcare, and medical care for all the people. What type of economy does this describe?
Market
Traditional
Command
Transitional
- 30. Multiple Choice
What is the benefit of competition in a free market system?
Make sure everyone gets an equal share of resources
Create a variety of new and cheaper products
Cause producers to try to put each other out of business
Follow the traditional methods of production
- 31. Multiple Choice
Which term describes the amount of money a business receives in excess of its expenses?
profit
capital
equity
loss
- 32. Multiple Choice
Which of the following is NOT a component of a free-market economy?
individuals choose what gets made
individuals choose how things are made
customs and ritual dictate what people can purchase
individuals determine how much to consume of the goods and services produced
- 33. Multiple Choice
A(n) ______________________ is the hope of reward or fear of penalty that encourages a person to behave in a certian way.
specialization
incentive
standard of living
cost-benefit analysis
- 34. Multiple Choice
Which of the following would result in a decrease in consumer spending?
Increasing income taxes
Decreasing the reserve requirement
Increasing government spending
Decreasing interest rate
- 35. Multiple Choice
The difference between the national debt and a federal budget deficit is
nothing; the national debt and the budget deficit are the same thing.
the national debt is financed primarily through government bonds, while the deficit is financed through taxes.
the federal budget deficit represents the total amount of outstanding government debt while the national debt includes only the increase in the debt during the current year.
the national debt represents the cumulative effect of all previous budget deficits and surpluses, while the federal budget deficit reflects only the additions to the debt during the current year.
- 36. Multiple Choice
Which of the following best describes a proportional tax?
a tax for which the percentage of income paid in taxes increases as income increases.
a tax for which the percentage of income paid in taxes remains the same at all income levels
a tax for which the percentage of income paid in taxes decreased as income increases
a tax levied on the sale of a good or service
- 37. Multiple Choice
Amounts of money that you can subtract from your gross income like mortgage interest or large medical expenses and thus lower your overall taxes are called __________________________________________.
tax credits
tax returns
tax deductions
gift taxes
- 38. Multiple Choice
Which type of tax takes a higher percentage of income from poorer people than from wealthier people?
progressive
excise
proportional
regressive
- 39. Multiple Choice
Which of the following has likely contributed most to the change over time displayed in the graph?
an excise tax
a progressive tax
a payroll tax
tax withholding
- 40. Multiple Choice
What point is this cartoon trying to make about Social Security?
Social Security has grown too larger
The retirement needs of the Baby Boomer generation will be very difficult for Social Security to support.
Keeping Social Security fully funded is a dangerous balancing act.
Social Security is capable of supporting the Baby Boomer generation
- 41. Multiple Choice
"For the Social Security system to function properly, there must be enough workers paying in to support all the retired workers receiving benefits. Although the system has worked well, changes in the U.S. population threaten to undermine it. "
Which "changes in the U.S. population" is this passage referring to?
a sharper increase in the Hispanic American population
eroding popular support for entitlement programs
the growing share of the population made up of retirees
the growing number of workers who do not have Taxes withheld from their paychecks
- 42. Multiple Choice
How are Social Security, Medicaid, and the unemployment insurance program related?
All are mandatory spending programs.
All provide benefits to retired persons.
All represent forms of insurance.
All provide some kind of healthcare.
- 43. Multiple Choice
Which of the following would be paid for MAINLY by local taxes?
the building of a new army recruiting office in a town
the maintenance of a town’s sewer and water systems
the construction of an interstate highway that passes through a city
the formation of a new national park
- 44. Multiple Choice
__________________________________ are benefits, mostly healthcare that help people over the age of 65, while ________________________ are benefits, mostly healthcare that help low income and people with disabilities.
Medicaid; Medicare
Mandatory Spending; Discretionary Spending
Medicare; Medicaid
deductions; withholdings
- 45. Multiple Choice
Which of the following is a tax on an imported good?
tariff
excise tax
estate tax
gift tax
- 46. Multiple Choice
If the government decides to reduce the payroll taxes on the wages and salaries of workers, then there will most likely be
a decrease in personal savings
a decrease in personal investment
an increase in personal consumption
an increase in unemployment
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