Economics: EOCT
Practice Game
Economics may best be defined
as a
a) study of efforts to satisfy seemingly
unlimited wants with scarce resources
b) branch of sociology
c) scientific study of supply and demand
d) limited description of economic activities
Three basic economic
questions are
a) What?, How?, and When?
b) What?, How?, and For Whom?
c) What?, Where?, and When?
d) Why?, What?, and How?
A popular model used to
illustrate the concept of
opportunity cost is called
a) entrepreneurship
b) factors of production
c) laissez-faire
d) the production possibilities frontier
A basic requirement for
survival is a
a) need
b) opportunity cost
c) want
d) factors of production
Land, labor, capital, and
entrepreneurship are the
a) results of supply and demand
b) basis of employment
c) results of production
d) factors of production
An economy operating at its
production possibility frontier
is operating
a) with high unemployment
b) with minimum growth
c) at full potential
d) on quota-filling production
A risk-taker in search of profits
is called a(n)
a) economist
b) conspicuous consumer
c) entrepreneur
d) capitalist
A great variety of goods and
services is characteristic of
a) a market economy
b) traditional economy
c) all economic systems
d) a command economy
The American economic
system can be described as
having a
a) command economy
b) traditional system
c) quota system
d) free enterprise system
In a modified free enterprise
economy
a) entrepreneurship is prohibited
b) there is no government intervention
c) there is some government intervention
d) no one can hold private property
Choices in a command
economy are made by
a) private business
b) government agencies
c) assembly line workers
d) competition
An organized way of providing
for the wants and needs of
people is known as
a) an economic system
b) economic interdependence
c) a fixed income
d) the profit motive
Which of the following is NOT
an economic social goal?
a) entrepreneurship
b) economic efficiency
c) economic growth
d) price stability
Which of the following is NOT
an economic social goal?
a) entrepreneurship
b) economic efficiency
c) economic growth
d) price stability
Which group of people
ultimately determines the
products that a free enterprise
economy produces?
a) property owners
b) consumers
c) local officials
d) Congress
The most common form of
business organization in the
United States is the
a) corporation
b) sole proprietorship
c) partnership
d) cooperative
Voting shareholders in a
company hold
a) preferred stock
b) common stock
c) corporate bonds
d) dividends
The price paid to use
another’s money is called
a) interest
b) principal
c) dividends
d) stocks
When corporations are
chartered, they must register
with the
a) county officials
b) Board of Directors
c) state of incorporation
d) shareholders
An advantage of a merger
between two companies is
a) improved production and efficiency
b) establishing a voluntary transaction
c) establishing a legal monopoly
d) increasing cost
Diversification is an advantage
of
a) all corporations
b) private ownership
c) conglomerates
d) cooperatives
One weakness of the sole
proprietorship is that the
a) business depends solely on the owner
b) owner has no control
c) owner has too many partners
d) business is in constant danger of
bankruptcy
Which of the following is NOT
an economic social goal?
a) entrepreneurship
b) economic efficiency
c) economic growth
d) price stability
Churches and schools are
considered to be
a) service organizations
b) nonprofit organizations
c) service co-ops
d) horizontal mergers
As a consumer, if the price of
apples double and your salary
remains the same, you would
probably
a) buy more complementary goods
b) buy more apples
c) buy fewer apples
d) buy the same number of apples
If the price of a product
decreases and consumers
buy more of the product,
a) the product is a complementary good
b) a change in demand has taken place
c) there has been an increase in demand
d) a change in quantity demanded has
taken place
The satisfaction a consumer
enjoys by purchasing one
more unit of a product is
called
a) marginal utility
b) trade-offs
c) personal satisfaction
d) cause and effect
The statement “the demand
for an economic product
varies inversely with its price”
is a definition of
a) the Law of Supply and Demand
b) the Law of consumption
c) the Law of Demand
d) laissez faire
Demand is based on
consumer purchase, whereas
supply is based on
a) producers offering products for sale
b) the ability to purchase
c) the willingness to purchase
d) offering a wide range of prices
If the price of a product falls,
producers will generally
a) increase input
b) offer more for sale
c) hold a clearance sale
d) offer less for sale
In a market economy, a high
price is a signal for
a) producers to offer less and consumers
to buy more
b) producers to supply more and
consumers to buy less
c) producers to buy more
d) government to step in and protect
consumers
How do you know when a
market is at equilibrium?
a) demand equals supply
b) supply is greater than demand
c) demand is greater than supply
d) the government has set price ceilings
Price competition is a
characteristic of a
a) corporate state
b) market economy
c) command economy
d) traditional economy
In pure competition,
a) buyers and sellers act together.
b) buyers and sellers deal in a variety of
products.
c) buyers and sellers have little
knowledge of the items for sale.
d) a large number of buyers and sellers
exist.
Mergers and acquisitions
might result in
a) increases in consumer demand
b) smaller companies
c) inadequate competition
d) more competition
In an oligopoly,
a) prices are kept artificially low
b) advertising is limited
c) pure competition decides success
d) there are few suppliers
To be counted in the civilian
labor force, a person must be
a) a member of the military
b) already employed and between the
ages of 16 and 65
c) employed or looking for work, and
between the ages of 16 and 65
d) male and more than 18 years old
A meeting of representatives
for labor and management to
negotiate contracts is called
a) macroeconomics
b) collective bargaining
c) arbitration
d) seizure
What type of union is made up
of all workers, regardless of
the job each person performs?
a) industrial union
b) company union
c) craft union
d) trade union
Since World War II, union
membership in the United
States has been
a) declining
b) at an all-time high
c) remaining constant
d) increasing
The President may intervene
in labor disputes
a) whenever management is involved
b) only when federal workers are involved
c) if national security is affected
d) only on an interstate level
The use of a third party to
make suggestions and advice
in labor-management disputes
is called
a) closed shop
b) mediation
c) featherbedding
d) open shop
John earns $10,000 annually and
pays $1000. Mary earns $60,000
during the same period and pays
taxes of $20,000. The tax they both
paid was a _________ tax.
a) regressive
b) marginal
c) progressive
d) proportional
FICA includes taxes to pay for
a) Social Security and unemployment
b) Social Security and Medicare
c) private schools
d) highways and welfare
The largest source of tax
revenue for state governments
is the
a) real estate tax
b) license fees
c) entertainment tax
d) sales tax
What are the three buying principles?
a) comparing prices, using
advertisements, reading consumer
reports
b) reading product literature, using
discount stores, watching for sales
c) gathering information, using
advertising, comparison shopping
d) watching for sales, comparing prices,
making decisions
The larges source of income
for city governments is the
a) sales tax
b) income tax
c) property tax
d) intergovernmental revenues
In recent years, the fastest
growing portion of the federal
budget is the category of
a) entitlements
b) agriculture
c) national defense
d) international affairs
The federal budget is first
prepared by the
a) President
b) Secretary of the Treasury
c) House Appropriations Committee
d) Congress
A law that reserves federal
money for a specific purpose
is called a(n)
a) congressional resolution
b) appropriations bill
c) excise tax
d) executive order
The sequence of approval of the
federal budget is
a) President to Congress back to President
b) President to Congress to Supreme Court
c) Supreme Court to Congress to President
d) Congress to Supreme Court to President
A monetary standard is used
a) to control government spending
b) to determine tax tables
c) only for international trade
d) to maintain the value of a money
supply
When it comes to modern
money, all of the following
apply EXCEPT
a) it is very durable
b) it is very stable
c) it is very portable
d) it is very divisible
Federal Reserve notes are
a) backed by gold
b) special payments
c) NOW accounts
d) inconvertible flat money
The FDIC was established to
a) create a government monopoly
b) help with the financing of World War II
c) federalize the banking system
d) protect the savings of the American
people
A moneyless society that
relies on trade is an economy
based on
a) socialism
b) self-sufficient families
c) command economics
d) the barter system
Money that has an alternative
use is
a) paper currency
b) commodity money
c) flat money
d) bullion
A dual banking system is one
in which banks
a) get their insurance from the FDIC
b) are regulated by the Fed or the FDIC
c) can make loans in the form of cash or
demand deposits
d) can obtain their charter from either the
state of the federal government
The Truth-in-Lending Act is
designed to
a) disclose all credit terms to borrowers
b) prohibit discrimination in granting credit
c) protect individual credit reports
d) prevent abuses to collection agencies
The Federal Reserve System
is
a) the nation’s central bank
b) a branch of Congress
c) the primary regulator of all commercial
banks
d) a private bank for savings
Banks that belong to the
Federal Reserve System
a) are owned by the federal government
b) hold stock in the Fed and, therefore,
own it
c) are independent of any regulations
d) receive no dividends
The seven-member Federal
Reserve Board of Governors
is appointed by
a) the Supreme Court
b) Congress
c) the President
d) state governors
Coins, currency, and deposits
used to fulfill the Fed’s reserve
requirement are called
a) legal reserves
b) monetary policy
c) the fractional reserve system
d) the reserve requirement
To make a profit, a bank must
a) pay depositors more interest than is
charged on loans
b) have less deposits than loans
c) change more for the loans that it makes
than it pays on deposits
d) buy up home mortgages in the area
A tight money policy
a) increases bank notes
b) encourage economic growth
c) restricts the growth of the money
supply
d) causes interest rates to decline
To decrease the money
supply, the fed can
a) sell government bonds to securities
dealers
b) lower the discount rate
c) buy government securities from bond
dealers
d) stop printing money
Low interest rates
a) raise the cost of borrowing
b) decrease automobile sales
c) increase consumer borrowing
d) discourage home building
GDP is
a) total amount of income going to
consumers before individual income taxes
are subtracted
b) illegal activities that are not counted as
part of the economy
c) total output of all final goods produced
in a country in one year
d) none of the above
The best guide for comparing
costs of credit is
a) the annual membership fee
b) the amount of the monthly installment
payments
c) the repayment period required
d) the annual percentage rate
Generally, Americans want
GDP to
a) shrink
b) fluctuate
c) remain stable
d) grow
To help consumers compare
food brands, most states
require stores to provide
a) unit pricing on products
b) weekly advertising
c) scanners at checkout counters
d) private-label brands
When was the worst downturn of the business cycle in
the United States?
a) during the Great Depression of the
1930’s
b) during the postwar period of the 1950’s
c) during the Vietnam War in the 1960’s
d) during World War II in the 1940’s
A construction worker cannot
work because of a winter
snowstorm. He is
a) seasonally unemployed
b) frictionally unemployed
c) cyclically unemployed
d) structurally unemployed
All of the following types of
unemployment might be
considered relatively
temporary EXCEPT
a) frictionally unemployment
b) cyclical unemployment
c) structurally unemployment
d) seasonal unemployment
The theory that inflation is caused
by all sectors of the economy trying
to buy m ore than the economy can
produce is called the
a) cost-push theory of inflation
b) demand-pull theory of inflation
c) excessive monetary growth theory of
inflation
d) wage-price spiral theory of inflation
An economist who attributes
inflation to the increasing prices
of producer inputs is holding to
the
a) excessive monetary growth theory of
inflation
b) demand-pull theory of inflation
c) wage-price spiral theory of inflation
d) cost-push theory of inflation
Under Communism
a) the government has a laissez-faire
attitude toward the economy
b) the government allows for capitalism
c) only the major industries are owned by
the government
d) all means of production are owned by
the government
Those who favor supply-side
policies would tend to support
the government playing
a) an expanding role in the economy
b) no role in the economy
c) a reduced role in the economy
d) a role in monetary policies only
The key to trade is
a) flexibility
b) versatility
c) specialization
d) bartering
The ability of a country to
produce more of a given
product is
a) international trade
b) comparative advantage
c) absolute advantage
d) specialization
The ability of a country to
produce relatively more
efficiently is
a) comparative advantage
b) international trade
c) specialization
d) absolute advantage
Keogh and IRA plans allow
people to do all of the
following EXCEPT
a) receive dividend payments once a year
b) save money each year for retirement
c) deduct the amount saved from taxable
income
d) establish their own pension plans
The most frequent argument
used to support trade barriers
is that they
a) protect domestic jobs
b) promote national defense
c) shield infant industries
d) raise government revenue
Today, international trade
operates
a) with the fixed exchange rate system
b) with floating exchange rates
c) with a foreign exchange market
d) on a gold standard
The largest stock exchange in
the USA is the
a) New York Stock Exchange
b) Over the Counter Exchange
c) NASDAQ
d) The New York Mercantile Market
The demand for lumber
increases, so does the demand
for nails. Economists would then
say that lumber and nails are
a) unrelated products
b) substitutes
c) independents
d) complements
All the following are currency
except
a) quarters
b) one dollar bills
c) twenty dollar bills
d) ten dollar bills
All the following are
considered professional
EXCEPT
a) teacher
b) lawyer
c) truck driver
d) a member of Congress
Women in the American
workforce,
a) generally do not work as many hours
as men
b) are more likely to be President of a
company than a man
c) are generally paid more than men
d) earn about 70% of what men earn for
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