Name / Block: _____________________________________
Mr. Huesken
12th Grade Principles of Democracy / Econ.
Econ Exam: What Do I Need to Know?
(40 points)
DIRECTIONS – Please circle the letter of the most appropriate response for each of the
following question. (30 questions @ 1 point apiece = 30 points)
1) Though the study of economics has been around since the dawn of man, what event in
world history really got governments and citizens interested in it in the late-1700’s and
early 1800’s?
a. The Renaissance
b. The Industrial Revolution
c. The Reformation
d. The Cold War
2) The idea of “free enterprise” economics has become very popular across the world since
the end of the Cold War. Which of the following is NOT a basic idea behind this system
of economics?
a. The right to choose your economic involvement
b. The right to produce what you want or like
c. The right to government involvement in an economic setting
d. The right to maximize profits
3) What is the name given to an area where buyers and settlers meet to exchange goods,
service, or economic ideas?
a. A market
b. A union
c. A culture
d. A business
4) In the 1700’s this leader of the Capitalist movement wrote a famous book called The
Wealth of Nations. Today, he is considered the “Father of Modern Economics”. Who
was he?
a. David Ricardo
b. Karl Marx
c. Charles Fourier
d. Adam Smith
5) In the 1970’s, due to the Middle East’s embargo on the importation of foreign oil, what
tactic did the government take to try and keep prices from going too high?
a. Price Floor
b. Excess Supply
c. Price Ceiling
d. Equilibrium
6) This type of tax is an annual tax that is paid at both the state and national levels on
things that a taxpayer owns, like a house or boat. What type of tax is it?
a. Estate tax
b. Property tax
c. Gift tax
d. Excise tax
7) Unions are a continued part of the US economic system. What is the name of the
Federal law that protects workers’ rights to form a union?
a. The Blunt Amendment
b. The Wagner Act
c. The Kansas-Nebraska Act
d. The Patriot Act
8) When government raises and spends money, there are often imbalances between the
amount of money coming in and the amount of money going out. What is this
imbalance called when the amount of money going out is greater?
a. A deficit
b. A surplus
c. A debt
d. A recession
9) Over the course of our history, the American “free enterprise” system has developed a
number of popular freedoms that all economic participants enjoy. Which of the
following is NOT one of those freedoms?
a. The right to open opportunity
b. The right to legal equality
c. The right to private ownership of property
d. The right to tax
10) Which of the following is NOT a factor that determines where an economics denotes a
demand curve?
a. The price of other goods
b. The public’s taste
c. The income of their customers
d. Technology
11) Heavy taxes placed on such luxury items as tobacco, alcohol, and (possibly soon) soda
are often found at the national, state, and local levels to help communities raise money.
Nicknamed “sin taxes”, what type of tax is it?
a. Estate tax
b. Property tax
c. Gift tax
d. Excise tax
12) In a “free enterprise” economy, who controls the movement of resources and goods?
a. The government
b. The individual
c. The economy
d. The market
13) When negotiating a new contract, union members will use this method of negotiating a
group contract on behalf of all their members. What is this method called?
a. Fact Finding
b. Arbitration
c. Striking
d. Collective Bargaining
14) When studying economics, what is the main problem that all economists are trying to
address?
a. What goods or services should be produced?
b. The issue of scarcity
c. The issue of natural resources
d. How will goods and services be produced?
15) Communities constantly struggle with making sure their decisions were the best
possible ones for their economic situation. What is it called when an economist
considers what they “could have” bought?
a. Opportunity costs
b. Product analysis
c. Opportunity analysis
d. Budget and revenue review
16) We, as American citizens, like the services provided to us by our government. What is it
called when the government promises a service or benefit for its citizens in the future
without a viable way of paying for it?
a. A debt
b. An unfunded liability
c. A “pay-go”
d. A crisis
17) Prohibition in the 1920’s and the system of “bootleggers” and “rum runners” that grew
out of it was an example of what economic phenomenon?
a. Excess Demand
b. Equilibrium
c. Price Gouging
d. Excess Supply
18) What country is America’s largest holder of debt and our largest creditor? (At least at
this point in history…)
a. China
b. Japan
c. Canada
d. The United Kingdom
19) Typically, non-unionized companies attempt to discourage unionization among their
workers. Why?
a. The company is anti-worker rights
b. The company wants to avoid higher costs
c. The company is corrupt
d. The company believes the workers are violent
20) Often when negotiations break down between a company and a union, what action
does the union take that includes a complete work stoppage by union members?
a. A strike
b. A suspension
c. A lockout
d. A breakthrough
21) In the late-1800’s, this German philosopher co-wrote an influential book called The
Communist Manifesto, that called for a “civil war between the working classes” and
creation of a worker’s utopia where the government controls the economy. Who was
he?
a. David Ricardo
b. Karl Marx
c. Charles Fourier
d. Adam Smith
22) What is the name given to the accumulation of multiple deficits that the US government
has had since the American Revolution?
a. The Great Recession
b. The National Debt
c. The Spending Freeze
d. The National Deficit
23) Which of the following elements is a factor that helps an economist determine where to
denote a demand curve?
a. Government actions
b. The number of potential customers
c. Productivity
d. A business’ outlook on the future or expectations
24) This controversial tax has been around since the American Civil War and taxes an
individual or family based on how much money they make. What type of tax is this?
a. Estate tax
b. Property tax
c. Income tax
d. Sin tax
25) Economists characterize a society’s valuable resources (such as land, labor, capital, etc.)
under what title?
a. Natural resources
b. Economic factors
c. Factors of Production
d. Productivity incentives
26) This economic resource is often made up of the risk takers in a society; those individuals
like the business owners and managers who see an economic want and come up with a
plan to provide for it. What are these titans of industry called? (Hint: Think Michael
Scott…)
a. Economic leaders
b. Managers
c. Positive economists
d. Entrepreneurs
27) Which of the following is NOT an assumption that the US government considers when
developing a budget?
a. Natural Resources
b. Population trends
c. Tax / Spending policies
d. Economic growth
28) In the late 1800’s, French philosopher Charles Fourier developed a style of economics
where government controls the major aspects of the economy as a way to cut down on
greed and abuse of workers. What was his economic system called?
a. Command economics
b. Marxism
c. Laissze-Faire Capitalism
d. Socialism
29) Which of the following is NOT a major issue that unions fight for when dealing with
contract negotiations?
a. Better working conditions
b. “Workplace justice”
c. Workplace rules
d. Quality of worker materials
30) Graphically speaking, when the amount of goods supplied is exactly the right amount
demanded from a given population, what is this phenomenon called?
a. Excess Demand
b. Equilibrium
c. Price Ceiling
d. Excess Supply
Matching SectionDIRECTIONS - Using the options provided, (1) pick which answer works the best with each
question, (2) place the correct letter in front of it, and (3) sketch out the movement of the
supply or demand curve. (5 questions @ 5 points)
A = Shift to the left
B = Shift to the right
C = No movement
____A______ 21) There is 25% increase in the price of the Big Macs’ Special Sauce (Supply)
_____B_____ 22) The price of games for the Xbox 360 increases (Demand)
_____B_____ 23) A new assembly line system is brought in to help in production (Supply)
_____A_____ 24) The middle buns in the Big Macs are now taxed 2¢ more (Supply)
_____A_____ 25) Due to a series of lawsuits, consumers start buying less (Demand)
Short Answer QuestionDIRECTIONS - Please answer the following short answer question using complete sentences
and background supports from class. (1 questions @ 5 points)
1) The National Debt is a major looming crisis for the United States. Create a paragraph
that address the following points:
a. How was the National Debt started?
b. What are two (2) of the major issues that have allowed the Debt to get larger
and larger over the years?
c. What does a growing national debt mean for your generation if it is not dealt
with?
d. In your opinion, what should be done to correct this major issue?