Name:____________________________________Date:_____________________
Period:______
Honors Economics Final Exam, Part II
11. The next best alternative to a choice you make
is called _______________:
a. Scarcity
b. Opportunity Cost
c. CPI
d. Business Cycle
Use the Production Possibilities Curve Below for
question #2.
13. _____ You are part of a Space Colony that
settles on Mars. There are 300 survivors,
including you. The government does not
regulate the economy. The colony does not use
barter, but instead uses a currency similar to the
dollar. What type of economy does your colony
have?
a. Traditional Economy
b. Market Economy
c. Command Economy
d. Mixed Economy
14. _____ You want to start a business by yourself.
Which business type would you use?
a. Sole Proprietorship
b. Partnership
c. Corporation
d. None of the above
12. Letter A is _________________.
a. Inefficient
b. Efficient
c. Unattainable
d. None of the Above
Use the PACED Decision-Making Grid below to answer question #5
James is thinking about buying a car. Based on the PACED decision grid below, which car should he buy?
(Assume that he values all of the criteria equally)
Used Station Wagon
2006 Hyundai Elantra
2012 Ford F150
2013 Chevy Camero
Cost
+
+
-
Reliability
+
+
+
Gas mileage
+
-
Style
+
+
15. Which car should James buy?
a. Used Station Wagon
b. 2006 Hyundai Elantra
c. 2012 Ford F150
d. 2013 Chevy Camero
16. Which type of business would require you to
draw up Articles of Partnership?
a. Sole Proprietorship
b. Partnership
c. Corporation
d. None of the above
Name:____________________________________Date:_____________________
17. Which of the following would be a COST?
a. Enjoying a pizza that you chose to
eat for dinner
b. Leaving Wisconsin’s cold weather
for Florida
c. Factories polluting the atmosphere
because the companies chose to
produce goods for profit.
d. Earning money because you have a
job.
18. The concept of voluntary exchange means that
______________.
a. No money was exchanged
b. People freely and willingly engage in
market transactions
c. Only workers will benefit from the
exchange
d. Neither the buyer nor seller profits
Period:______
20. _____ Which of the following is FALSE about
financial institutions?
a. They provide a place for households
to save money and receive interest
b. They allow businesses to borrow
money from one location instead of
gathering individual investors
c. They provide various opportunities
for investment
d. They allow investors to invest any
amount of money with no risk of
losing any of it.
21. _____ The price of ketchup goes down.
What would be the effect on mustard?
a. Demand moves left
b. Demand moves right
c. Supply moves left
d. Supply moves right
19. _____ You take out a loan to buy a car. The
bank requires you to pay the original amount
back plus additional money. What is the
additional money called?
a. Interest
b. Principle
c. Allocation
d. Savings
__________________________________________________________________________________________
Use Figure 3 to answer question 12:
22. Based on the information from Figure 1, the arc
Figure 3:
price elasticity of demand when the price
Cups of Coffee Demanded per Week
changes from $1 to $2 is
Price
Quantity
a. .01
(per cup)
Demanded
b. .18
$6
80
c. .25
5
100
d. 1.01
4
120
3
140
2
160
1
180
0
200
Use Figure 4 to answer question 13:
Name:____________________________________Date:_____________________
23. What does Figure 4 show?
a. Supply
b. Demand
c. Change in quantity supplied
d. Change in demand
Use Figure 5 for question 14:
Figure 5:
Period:______
25. Which of the following is a definition of
elasticity as related to economics?
a. The ability of an object or material to
resume its normal shape after being
stretched or compressed;
stretchiness.
b. A measure that examines the
weighted average of prices of a
basket of consumer goods and
services, such as transportation, food
and medical care.
c. A balance achieved between two
desirable but incompatible features
d. The degree to which a demand or
supply is sensitive to changes in
price or income.
26. Which of the following is NOT a Factor that
shifts the Demand Curve?
a. Income
b. New Technology
c. Preferences
d. Number of Buyers
27. Which of the following is a Factor that shifts the
Supply Curve?
a. Income
b. Time
c. Taxes
d. Substitutes
24. What is the equilibrium Price of Figure 5?
a. $1
b. $2
c. $3
d. $4
28. A machine that produces a product for a business is an example of a ______ good.
a. Consumer
b. Capital
c. Durable
d. Non-durable
True/False (Answer A for True or B for False)
Name:____________________________________Date:_____________________
Period:______
29. ____ Opportunity Cost is the state of being scarce or in short supply
30. ____ As price goes up, supply goes up.
31. ____ As price goes up, demand goes up.
32. ____ Which of the following is NOT one of the Federal Government’s goals for the economy (as
established by the Employment Act of 1946)?
a. Full Employment
b. Economic Growth
c. No inflation
d. Price Stability
Use the Table below to complete question 23.
Year
Civilian
Noninstitutional
population over
age 16
150
163
172
200
220
1830
1840
1850
1860
1870
Civilian Labor Force
Employed Unemployed Total
70
77
88
110
125
Unemployment Labor Force
Rate
Participation
Rate
6
8
10
8
12
33. ____ The Unemployment Rate in 1860 is approximately ___________________.
a. 5%
b. 6%
c. 7%
d. 8%
Use the following paragraph to answer questions 24 and 25.
Last year consumption expenditure was $50 billion, investment was $20 billion, government purchases of goods
and services were $12 billion, exports were $3 billion and imports were $8 billion.
34. ____ What does last year’s GDP equal?
a. $77 billion
b. $82 billion
c. $97 billion
d. $107 billion
35. Which of the following is NOT a stage of the
business cycle
a. Contraction
b. Peak
c. Inflation
d. Trough
e. Expansion
Name:____________________________________Date:_____________________
36. Assume the U.S. population in 300 million. If
the working age population is 240 million, 150
million are employed, and 6 million are
unemployed, what is the size of the labor force?
a. 300 million
b. 240 million
c. 156 million
d. 150 million
37. If a country has a CPI of 105.0 last year and a
CPI of 102.0 this year, then
a. The average prices of goods and services
increased between last year and this
year.
b. The average prices of goods and services
decreased between last year and this
year.
c. The average quality of goods and
services decreased between last year and
this year.
d. The quantity of consumer goods and
services produced decreased between
last year and this year
38. Suppose a basket of consumer goods and
services costs $180 using the base period prices,
and the same basket of goods and services costs
$300 using the current period prices. The CPI
for the current year period equals
a. 166.7
b. 66.7
c. 160.0
d. 60.0
Period:______
39. A standard definition of a recession is a
decrease in real GDP that lasts for at least two
a. Years
b. Quarters
c. Months
d. Weeks
40. A business cycle is
a. A regular up and down movement in
production and jobs.
b. An irregular up and down movement in
production and jobs.
c. A regular movement in price changes
d. An irregular movement in price changes
41. Olga was trained to repair VCRs. The repair
shop she worked at let her go because no one
was bringing in VCRs to be repaired.
Customers wanted DVD and Blu-ray players
repaired, which Olga could not do. What type
of unemployment does Olga now find herself
in?
a. Cyclical Unemployment
b. Seasonal Unemployment
c. Structural Unemployment
d. Frictional Unemployment
42. Which of the following is NOT an entitlement?
a. Medicare
b. Medicaid
c. Social Security
d. Military Expenditures
43. Which of the following Tax Reform proposals would change Federal Taxation from income to a national
sales tax?
a. FairTax
b. Flat Tax
c. 9-9-9
d. Higher taxes for the rich.
Name:____________________________________Date:_____________________
Period:______
44. A ________ in the federal budget year after year will lead to ___________ in the national debt.
a. surplus; an increase
b. surplus; no change
c. deficit; an increase
d. deficit; a decrease
Use the chart below to answer questions 35 and 36.
45. Which year saw the highest decrease in Total Revenue over the previous year?
a. 1997
b. 2001
c. 2003
d. 2009
46. Which 5 year period saw the greatest increase in the National Debt?
a. 1993-1997
b. 1998-2002
c. 2003-2007
d. 2008-2012
47. Which of the following is an example of Expansionary Fiscal Policy?
a. A balanced budget
b. Decreasing federal spending
c. Increasing federal spending
d. Increase in federal taxes
Name:____________________________________Date:_____________________
Period:______
48. Which of the following Economists would advocate for a Command Economy to be implemented in the
United States?
a. Adam Smith
b. F.A. Hayek
c. John Maynard Keynes
d. Karl Marx
49. Regulating the amount of money in the United
States is one of the most important
responsibilities of the
a. State Department
b. Treasury Department
c. Federal Reserve
d. U.S. Mint
50. The Fed’s policy tools include
a. Required reserve ratios, the discount
rate, and open market operations
b. Holding deposits for the U.S.
government, reserve requirements,
and the discount rate
c. Supervision of the banking system
and buying and selling commercial
banks
d. Required reserve ratios, income tax
rates, and open market operations
51. If Federal Reserve notes and coins are $765
billion, and banks’ reserves at the Fed are $8
billion, the gold stock is $11 billion, and the Fed
owns $725 billion of government securities,
what does the monetary base equal?
a. $765 billion
b. $773 billion
c. $776 billion
d. $1,509 billion
52. If the Federal Reserve _____ the required
reserve ratio, the quantity of money _____.
a. Lowers; increases
b. Lowers; decreases
c. Raises; does not change
d. Raises; increases
53. A bank has checkable deposits of $500,000,
loans of $300,000, and government securities of
$200,000. If the required reserve ratio is 10
percent, the amount of required reserves is
a. $20,000
b. $30,000
c. $50,000
d. $500,000
54. The Fed increases the interest rate when it
a. Fears recession
b. Wants to increase the quantity of
money
c. Fears inflation
d. Wants to encourage bank lending
55. An advantage monetary policy has over fiscal
policy is that monetary policy
a. Can be quickly changed and
implemented
b. Is coordinated with fiscal policy
c. Is approved by the president of the
united states
d. Affects consumption expenditure
and investment without impacting
international trade
Name:____________________________________Date:_____________________
Key:
11. B
12. A
13. B
14. A
15. B
16. C
17. C
18. B
19. A
20. D
21. A
22. B
23. B
24. C
25. D
26. B
27. C
28. B
29. B
30. A
31. B
32. D
33. C
34. A
35. C
36. C
37. B
38. A
39. B
40. B
41. C
42. D
43. A
44. C
45. D
46. D
47. C
48. D
49. C
50. A
51. B
52. A
53. C
54. C
55. A
Period:______