Chapter 1-11 Economics Final Exam
Name:_____________________________
100 Questions, 100 Points
Chapter 1, 2 & 3
1. What is the basic problem that Economics strives to solve:
A. entrepreneurship
B. efficiency
C. satisfaction
D. scarcity
2. All resources are scarce because:
A. our needs are always satisfied
B. we have limited wants and needs
C. we have unlimited wants and needs
D. resource justification
3. The three factors of production are:
A. supply, demand, capital
B. land, labor and capital
C. land, hourly, capital
D. resources, labor, capital
4. Who decides how to combine the factors of production to create new goods and services?
A. Washington D. C.
B. Federal Government
C. entrepreneurs
D. central authority
5. In order for opportunity cost to have meaning, the trade-off must be:
A. a desirable alternative
B. be between an undesirable and desirable alternative
C. be between scarcity and abundance
D. entrepreneurship and choice
6. Production possibilities curve shows:
A. efficiency
B. growth
C. cost
D. all of the above
7. A nation’s production possibilities frontier depends upon
A. resources
B. technology
C. available resources and technology
D. all of the above
8. The way a society decides the three economic questions of what to produce, how to produce and for whom
determines:
A. the type of economic system
B. free market economy
C. traditional economy
D. mixed economy
9. Why do markets exist?
A. They exist for entrepreneurs
B. They exist because no one is self-sufficient
C. It is where factor payments are made
D. for taxation
10. It is said that the marketplace is self-regulating due to:
A. factor payments (land, labor, capital)
B. entrepreneurship and profit (the profit motive)
C. competition and self-interest (the invisible hand)
D. freewill and choice
11. Private property rights, free contract and freedom from unfair taxation are guaranteed by
A. State laws
B. the Federal Constitution
C. local laws
D. none of the above
12. Gross Domestic Product (GDP) provides a means of analyzing economic growth by:
A. measuring and comparing the minimal output of the economy
B. by measuring and comparing the sum of all finished goods in an economy
C. by measuring and comparing the sum of all finished goods and services in an economy
D. by measuring and comparing the sum of all finished services in an economy
13. Why is a free rider a type of market failure?
A. due to the byproduct of negative externalities
B. Because the cost is too great
C. The government taxes a portion of citizens’ income and redistributes it to the elderly and disabled
D. involves people consuming public goods and services for which they have not paid
14. How is Social Security an example of income redistribution?
A. the government has to follow the Constitution
B. involves people consuming public goods and services for which they have not paid
C. The government taxes a portion of citizens’ income and redistributes it to the elderly and disabled
D. it is not an example of income redistribution
15. The four parts of the business cycle are:
A. trough, peak, contraction, expansion
B. trough, peak , recession, expansion
C. trough, peak, GDP, recession
D. trough, peak, GDP, expansion
16. The result of unlimited wants and needs in a world of limited resources is called:
A. scarcity
B. shortage
C. economics
D. unlimited resources
17. Land, labor and capital are called:
A. tools of production
B. metric of production
C. factors of production
D. factor of construction
18. The knowledge and know-how used in creating goods & services is called:
A. entrepreneurship
B. human capital
C. physical capital
D. labor
19. The risk taker that combines the factors of production to provide goods and services is called:
A. land
B. entrepreneur
C. labor
D. capital
20. The line on a production possibilities graph that shows the maximum possible output is called:
A. production possibilities frontier
B. alternative theory
C. opportunity cost
D. production possibilities curve
21. The method used by a society to produce and distribute goods and services:
A. safety net
B. patriotism
C. economic system
D. factor payments
22. Term economists use to describe the self-regulating nature of the marketplace:
A. socialism
B. consumer sovereignty
C. communism
D. invisible hand
23. A political system characterized by a centrally planned economy with all economic and political power
resting in the hands of the central government:
A. invisible hand
B. consumer sovereignty
C. socialism
D. communism
24. Industry that requires a large capital investment and that produces items used in other industries:
A. collective
B. authoritarian
C. heavy industry
d. laissez faire
25. The doctrine that states that government generally should not intervene in the marketplace:
A. collective
B. laissez faire
C. authoritarian
D. heavy industry
Chapter 4-7
26. If you have demand for something then you:
A. are willing to pay for the item in the short term
B. are buying the item as a result of ceteris paribus
C. are able to pay for the item in the short term
D. are willing and able to pay for the item
27. The law of demand states that:
A. as price increases consumers will buy less
B. as price decreases consumers will buy more
C. as price fluctuates there is inelastic demand
D. both A & B
28. Ceteris paribus, if you normally purchase chicken but the price increases:
A. you will purchase more at all prices
B. you will purchase an alternative protein at a higher price
C. you will purchase an alternative protein at a lower price
D. none of the above
29. Ceteris paribus, if you normally buy pizza and the price of pizza increases but you do not substitute another
item:
A. you feel poorer and that is the substitution effect
B. you feel poorer and that is the income effect
C. you feel elastic
D. you feel inelastic
30. A change in quantity demanded:
A. is represented by movement of price along the same demand curve
B. is represented by movement of price along a new demand curve
C. is represented by movement of price along the same supply curve
D. is represented by movement of price along a new supply curve
31. A change in demand:
A. is represented by movement of price along the same demand curve
B. is represented by movement of price along a new demand curve
C. is represented by movement of price along the same supply curve
D. is represented by movement of price along a new supply curve
32. What causes a shift of the demand curve?
A. income
B. consumer expectations & population
C. consumer tastes and advertising
D. all of the above
33. The demand curve for one good can be affected by a change in the demand for another good. The two types
of related goods that interact in this manner are:
A. complements and substitutes
B. income and substitution effect
C. elastic & inelastic
D. none of the above
34. If the price on movie tickets increases and I stop going to the movies, my demand for movie tickets is:
A. purchase more related goods
B. substitution effect
C. inelastic
D. elastic
35. If the price of gasoline increases and I continue to buy the same amount of gasoline, my demand for gas is:
A. purchase more related goods
B. substitution effect
C. inelastic
D. elastic
36. The factors affecting elasticity are:
A. complements and substitutes, income and substitution effect, necessity versus luxury, relative time
period
B. availability of substitutes, relative importance in budget, necessity versus luxury, relative time period
C. complements and substitutes, relative importance in budget, necessity versus luxury
D. none of the above
37. The law of supply states that:
A. Demand increases as supply increases
B. the higher the price, the larger the quantity produced
C. the lower the price, the smaller the quantity produced
D. both B & C
38. A firm’s elasticity in the short run is inelastic because:
A. firms need time to make changes in production
B. firms need time to make changes in the supply factor
C. firms need time to make changes in the demand factor
D. both A & C
39. How does marginal product of labor (MPL) change as more workers are hired?
A. MPL increases to a point then decreases as the amount of labor decreases
B. MPL increases to a point then decreases as the amount of labor increases
C. MPL decreases to a point then increases as the amount of labor increases
D. MPL decreases to a point then increases as the amount of labor decreases
40. What is the impact of diminishing marginal returns on labor?
A. Typically a negative impact as output decreases with each new worker
B. Typically a positive impact as output decreases with each new worker
C. Typically a negative impact as output increases with each new worker
D. Typically a positive impact as output increases with each new worker
41. The following is a fixed cost associated with running a bakery:
A. price of wheat
B. price of yeast
C. price of flour
D. rent
42. The following is a variable cost associated with running a bakery:
A. price of wheat
B. cost of labor
C. mortgage rate
D. rent
43. How does an increase in input costs affect supply?
A. All price levels will increase
B. Supply will increase at all price levels
C. Supply will fall at all price levels
D. All price levels will decrease
44. Raw materials, machinery and labor:
A. are input costs that affect supply at all price levels
B. are variable costs that affect supply at all price levels
C. are fixed costs that affect supply at all price levels
D. none of the above
45. How does a decrease in input costs affect supply?
A. All price levels will increase
B. Supply will increase at all price levels
C. Supply will fall at all price levels
D. All price levels will decrease
46. How does a subsidy affect supply?
A. A subsidy lowers marginal cost and thus increases supply
B. A subsidy increases marginal cost and thus increases supply
C. A subsidy lowers marginal cost and thus decreases supply
D. A subsidy increases marginal cost and thus decreases supply
47. When S = D the market is in:
A. flux
B. disequilibrium
C. equilibrium
D. recession
48. Excess demand is characterized by :
A. a market price below equilibrium
B. a market price above equilibrium
C. QD > QS
D. both A & C
49. Excess supply is characterized by:
A. a market price below equilibrium
B. a market price above equilibrium
C. QD < QS
D. both B & C
50. A price ceiling is a maximum price that can be charged and is below equilibrium:
A. True
B. False
Chapter 8 & 9 Exam
51. A business owned and managed by a single individual:
A. sole proprietorship
B. partnership
C. liability
D. limited liability partnership
52. The legal obligation to pay debts:
A. sole proprietorship
B. liability
C. partnership
D. limited liability partnership
53. A business license:
A. removes liability
B. grants permission to undertake and carry out business
C. influence where businesses may be located
D. none of the above
54. Zoning laws
A. add liability to business
B. grants permission to undertake and carry out business
C. influence where businesses may be located
D. none of the above
55. A business organization owned by two or more persons:
A. sole proprietorship
B. liability
C. limited liability partnership
D. partnership
56. Money and other valuables belonging to an individual or business
A. bank account
B. liability
C. assets
D. limited liability partnership
57. Partnership where in which all partners are limited in liability:
A. limited liability partnership
B. liability
C. sole proprietorship
D. general partnership
58. Partnership in which partners share equally in responsibility and liability:
A. limited liability partnership
B. sole proprietorship
C. general partnership
D. conglomerate
59. A legal entity owned by individual stock holders:
A. general partnership
B. corporation
C. sole proprietorship
D. limited liability partnership
60. A certificate of ownership in a corporation:
A. bonds
B. liabilities
C. assets
D. stock
61. A formal contract to repay borrowed money with interest at fixed intervals:
A. bond
B. liabilities
C. assets
D. stock
62. The portion of corporate profits paid out to stockholders:
A. bond
B. dividends
C. assets
D. stock
63. The combination of two or more firms competing in the same market with the same good or service:
A. conglomerate
B. vertical merger
C. horizontal merger
D. monopoly
64. The combination of two or more firms involved in different stages of producing the same good or service:
A. horizontal merger
B. conglomerate
C. vertical merger
D. monopoly
15. Business combination merging more than three businesses that make unrelated products:
A. oligopoly
B. horizontal merger
C. vertical merger
D. conglomerate
66. A semi-independent business that pays fees to a parent company in return for the exclusive right to sell a
certain product or service in a given area:
A. zoning license
B. business license
C. franchise license
D. business franchise
67. All nonmilitary people who are employed or unemployed:
A. persons
B. labor pool
C. labor force
D. none of the above
68. A temporary or part-time job:
A. contingent employment
B. franchise employment
C. seasonal workers
D. all of the above
69. I am not working nor am I looking for work. I am unemployed.
A. True
B. False
70. The United States economy in the last 150 years has moved from an unskilled labor force to a skilled labor
force:
A. True
B. False
71. Demand that is determined by demand for another good or service:
A. derived demand
B. unintended demand
C. equal demand of supply
D. determinants of demand
72. The value of your output is called:
A. total value output
B. productivity
C. energy of activity
D. supply quotient of value
73. When the supply of labor is equal to the demand for labor you have:
A. derived demand
B. supply quotient model of the demand for employment
C. equilibrium wage
D. none of the above
74. Wage typically increases the higher your skill and education level:
A. true
B. false
75. The act that required that females and males should earn equal wages for doing the same jobs is called:
A. Title VII of the Civil Rights Act
B. the Equal Rights Amendment
C. Wage Earner Act of 1963
D. The Equal Pay Act of 1963
Chapter 10 & 11
76. anything that serves as a medium of exchange, a unit of account, and a store of value
A. money
B. medium of exchange
C. unit of account
D. barter
77. anything that is used to determine value during the exchange of goods and services
A. money
B. medium of exchange
C. unit of account
D. barter
78. the direct exchange of one set of goods or services for another
A. money
B. medium of exchange
C. unit of account
D. barter
79. a means for comparing the values of goods and services
A. money
B. medium of exchange
C. barter
D. unit of account
80. something that keeps its value if it is stored rather than used
A. representative money
B. commodity money
C. store of value
D. currency
81. coins and paper bills used as money
A. representative money
B. currency
C. commodity money
D. store of value
82. objects that have value in themselves and that are also used as money
A. commodity money
B. representative money
C. currency
D. store of value
83. objects that have value because the holder can exchange them for something else of value
A. representative money
B. commodity money
C. currency
D. store of value
84. money that has value because the government has ordered that it is an acceptable means to pay debts
A. gold standard
B. fiat money
C. bank run
D. national bank
85. a bank chartered, or licensed, by the national government
A. gold standard
B. bank run
C. national bank
D. fiat money
86. widespread panic in which great numbers of people try to redeem their paper money
A. gold standard
B. fiat money
C. bank run
D. national bank
87. a monetary system in which paper money and coins are equal to the value of a certain amount of gold
A. gold standard
B. fiat money
C. bank run
D. national bank
88. the nations central banking system
A. Federal Reserve System
B. central bank
C. member bank
D. Federal Reserve note
89. bank that can lend to other banks in times of need
A. Federal Reserve System
B. member bank
C. central bank
D. Federal Reserve note
90. bank that belongs to the Federal Reserve System
A. Federal Reserve System
B. central bank
C. member bank
D. Federal Reserve note
91. the national currency we use today in the United States
A. Federal Reserve System
B. member bank
C. Federal Reserve note
D. central bank
92. the government agency that insures customers' deposits if a bank fails
A. money supply
B. money market mutual fund
C. FDIC
D. demand deposit
93. all the money available in the United States economy
A. FDIC
B. money market mutual fund
C. demand deposit
D. money supply
94. the money in checking accounts
A. money supply
B. demand deposit
C. money market mutual fund
D. FDIC
95. a fund that pools money from small savers to purchase short-term government and corporate securities
A. money supply
B. money market mutual fund
C. demand deposit
D. FDIC
96. a banking system that keeps only a fraction of funds on hand and lends out the remainder
A. fractional reserve banking
B. default
C. mortgage
D. interest
97. failure to pay back a loan
A. fractional reserve banking
B. mortgage
C. default
D. interest
98. a specific type of loan that is used to buy real estate
A. fractional reserve banking
B. default
C. interest
D. mortgage
99. the price paid for the use of borrowed money
A. fractional reserve banking
B. default
C. mortgage
D. interest
100. the amount of money borrowed
A. Investment
B. principal
C. debit card
D. Hedge Fund