Multiple Choice (3 points each)
Identify the choice that best completes the statement or answers the question on your scantron..
____ 1. a. jackets b. CD players c. gasoline d. all of the above
____ 2. An increase in the price of milk causes a decrease in demand for cereal. The two products are a. substitutes c. unrelated b. complements d. Demand elastic
____ 3. Which of the following are considered to be natural resources? a. TV announcers c. fish b. bankers d. farmers
____ 4. Land, labor, capital, and entrepreneurship are a. Results of supply and demand b. Basis of employment c. Result of production d. Factors of production
____ 5. People might not be able to afford the things they want because of an economic factor called ____. a. the basic economic problem b. the family economic problem c. multiple greed d. human desires
____ 6. Which of the following describes a situation in which scarcity can be a problem? a. A city wants to give fire fighters a large increase in pay. b. A business wants to enlarge its plant. c. A family wants to go on an extended vacation. d. all of the above
____ 7. The basic policy-making body in the Federal Reserve is the: a. Federal Open Market Committee c. Federal Monetary Authority b. Fed Board of Governors d. Council of Economic Advisors
____ 8. The group that sets the Fed policy on buying and selling securities is the a. FDIC c. CEA b. FBSA d. FOMC
____ 9. When a customer’s need for a product is not urgent, demand tends to be a. inelastic c. complementary b. elastic d. Unit elastic
____ 10. The employees who work in an automobile assembly plant are that company's ____. a. natural resources c. human resources b. capital resources d. capital gains
____ 11. The dollar value of all final goods, services, and structures produced in one year with labor and property supplied by United States residents is called ___________. a. Gross National Product b. Gross Labor Product c. Average National Product d. Average Labor Product
____ 12. The Federal Reserve Banks are: a. Privately owned, but publicly managed c. Deal only with non-profit banks b. Deal only with foreign banks d. Publicly owned and privately managed
____ 13. If the economy encountered a recession, monetary and fiscal policy would call for a. Selling bonds, raising the reserve requirement, lowering the discount rate, increase taxes b. Buying bonds, reducing the reserve requirement and discount rate, decrease taxes c. Buying bonds, raising the reserve requirement and discount rate, increase taxes d. Buying bonds, lowering the reserve requirement, raising the discount rate, decrease taxes

____ 14. Money loses its value when it a. Becomes to portable b. Is divisible c. Is durable d. Becomes to plentiful
____ 15. As a result of the financial institution crisis of the 1980’s, banks are now insured by the a. FSLIC c. Fed b. FDIC d. National Banking System
____ 16. One advantage of monetary policy over fiscal policy is that monetary policy a. Can be implemented faster c. Does not produce a net export effect b. Is subject to closer political scrutiny d. Takes longer to effect GDP
____ 17. A market economy a. Does not provide for basic needs b. Limits choices of goods and services c. Permits extensive gov’t intervention d. Provides stable employment
____ 18. When a business obtains funds to expand or develop new products, it is ____. a. generating ideas c. marketing b. using human resources d. raising capital
____ 19. The purpose of government in a command economy is to a. Ensure availability of consumer products c. Make major economic decisions b. Encourage entrepreneurs d. Promote economic freedom
____ 20. Economics is best defined as: a. Scientific study of supply and demand b. Study of efforts to satisfy seemingly unlimited wants with scarce resources. c. Limited description of economic activities d. Extended application of cost-benefit analysis
____ 21. Of natural resources, such as petroleum, metals, clean air, and clean water, our world has ____. a. only a limited supply b. an unlimited supply c. the ability to produce all we want d. the ability to buy all we want
____ 22. A popular model used to illustrate the concept of opportunity cost is a. The production possibilities frontier c. Paradox of value b. entrepreneurship d. Factors of production
____ 23. The Federal Reserve is responsible for all of the following EXCEPT a. Acting as a sales agent for gov’t bonds c. Issuing currency b. Setting fiscal policy d. Regulating credit unions
____ 24. In a healthy economy all of the following exist EXCEPT a. Buyers and sellers are well informed c. Adequate competition exists b. Resources move freely between industries d. Low prices eliminate profit motive
____ 25. What are the 4 phases of the business cycle? a. Expansion, Contraction, peak, trough b. Price, product, place, promotion c. Introduction, growth, maturity, decline d. Introduction, growth, prosperity, decline
____ 26. For most products and services, increased price results in: a. Demand for fewer products c. Demand for more products b. Reduced demand for substitutes d. Increased demand for complements
____ 27. The supply of a product normally decreases if a. The cost of inputs goes down b. More producers enter the market c. The price of the product increases d. Taxes on the product increase

____ 28. Because a modest price increase has little or no effect, the demand for the product is: a. complementary c. elastic b. inelastic d. Unit elastic
____ 29. Consumers’ willingness to replace a costly item with a less costly item is an example of: b. The income effect d. complements
____ 30. Which of the following shows the changes in the average prices of goods and services bought by consumers over a period of time? a. Better Business Bureau b. Good Housekeeping c. Consumer Price Index d. Customer Price Index
____ 31. An example of a deposit-type financial institution is ____. a. an investment company b. a credit union c. a consumer finance company d. a life insurance company
____ 32. The study of economic behavior of individuals and firms is called a. Supply-side economics b. macroeconomics c. microeconomics d. Keynesian economics
____ 33. The business cycle from World War II to 2000 has been characterized by a. Extended expansions alternating with brief recessions b. Brief expansions alternating with lengthy recessions c. Uninterrupted expansion d. Uninterrupted recession
____ 34. When Juan deposits $5,000 into his savings account for one year at 5% interest, what is the total amount at the end of the year? a. $25 b. $250 c. $5,025 d. $5,250
____ 35. Which of the following agencies was created by the federal government to supervise and regulate member banks so they serve the public efficiently? a. Federal Reserve Bank b. Federal Deposit Insurance Corporation c. National Credit Union Administration d. all of the above
____ 36. Which of the following is a benefit of credit? a. establishing a credit rating b. buying larger quantities of things you want c. not having to shop around d. getting lower prices for merchandise
____ 37. Which of the following is NOT an advantage of credit? a. customers will buy more and the businesses will profit b. customers can shop without carrying cash c. customers can shop too frequently and spend too much d. customers can have immediate possession of the item
____ 38. The supply of a product normally increases if a. The cost of inputs goes up b. Less producers enter the market c. The price of the product decreases d. Taxes on the product decrease

____ 39. Rent payments and property taxes of a small business would be counted as a. Total cost c. Fixed cost b. Variable cost d. Marginal cost
____ 40. The Sherman Antitrust Act a. Outlawed monopolies that hindered trade c. Established the FDA b. Nationalized railroads d. Regulated the banking industry
____ 41. A negative externality resulting from building a commuter rail system might be a. Increased business along the route c. Additional employment opportunities b. An opportunity cost d. Noise pollution along the route
____ 42 A decrease in competition within an industry can result in a. More efficient resource allocation b. Lower prices c. A firm wielding economic and political power. d. Increased output
____ 43. Deregulation is most closely associated with a. Laissez-faire economics b. Demand-side economics c. Keynesian economics d. Supply-side economics
____ 44. Which of the following is true about a cosigner of a note? a. The cosigner is responsible for the payment of the note. b. The cosigner must be a friend or relative. c. The credit rating of the cosigner is unimportant. d. all of the above
____ 45. The five C’s of credit are used to: a. Determine credit ratings b. Evaluate a loan applicant c. Determine a FICO score d. Evaluate character of applicant
____ 46. A FICO Score is: a. Not used for credit application b. Your insurance rating c. A range between 200 and 500 d. Your credit rating
____ 47. Which of the following interest rates does the Federal Reserve directly control? a. The prime rate b. The discount rate c. Savings rates d. Investment rates
____ 48. Fiscal policy is defined as: a. The use of command economy quotas in a free enterprise system b. A policy of limited government involvement in the economy c. A commitment to deregulation and low taxes d. The use of government spending and taxing to influence economic activity
____ 49. Which of the following is NOT a factor in determining your FICO score a. Late payments c. Amount of Debt b. Length of credit history d. appearance
____ 50.
a. investment b. foreign trade c. government d. consumer