Study Guide for EPF Exam
Directions: Answer problems assigned to you by your teacher as correctly and clearly as possible.
Format: Exam will be a cumulative and consist of 100 questions (multiple choice & True/False format)
Unit 1: Basic Economics and Economic Decisions (Modules 1-23 notes)
1. Define Macro- and Micro-Economics. State whether the following scenarios are an example of
Macro- or Micro-Economics.
a. Studying the trend in US Unemployment rate over the past year
b. Studying the sale of video games Black Ops and Halo4 during the Christmas 2014 season
c. Studying the demand for the new iPad Mini versus the iPad
d. Studying the consumer confidence level and misery index leading up to and following the
2012 Presidental election results.
2. List the 4 factors of production and state which factor describes the following lists that relate to
ACHS.
a. Water, air, sunlight, trees and shrubs on the ACHS school property
b. Money, books, desks, computers, copy paper, wet-floor signs used in the hallway
c. the lunchroom ladies, the school secretary, your teacher
d. the state of Virginia, the Department of Education, the local school board in Amelia
3. Define Scarcity
4. Define Opportunity cost. List what the opportunity cost is for each of the following scenarios.
a. You have $5 and can either buy a drink and snack at school or spend it at the store after
school. You choose to save it for after school and spend it at the store.
b. You want both a new pair of Nike shoes and the Black Ops video game for Christmas. Mom
says you must pick one. You pick the video game.
c. You go out to eat at McDonald’s. Out of all the menu items, you pick a Big Mac.
5. Make sure you understand a production possibilities curve, the frontier line, what it means to
produce at a point on the frontier line versus a point inside the graph and not on the line. Define
all parts.
6. Define what an Unintended consequence is and then explain what the unintended consequences
would be for the following scenarios.
a. You choose to babysit your little cousin on Friday. You will earn $20, but will miss going to
the football game. As a result of that experience, you decide you don’t want kids until at
least 30!
b. You are flipping through the channels and watch a show on the US Civil War. You learned
what a huge role the state of Virginia played in that war because you never really paid
attention to your history teacher when you were going over the subject in class.
7. Define Margin, marginal cost, marginal benefit and how it relates to a business like McDonalds.
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8. List the three basic economic questions and answer them for how they apply to MHS and answer
them while thinking about MHS and what is produced at the school.
9. Compare Market, Mixed, and Command economic systems. Be sure to include an example of each
system and positive and negative aspects of each.
10. What is the US minimum wage?
11. Who was Adam Smith? What were his four theories related to Economics?
12. Define the Law of Demand and the 6 factors that affect demand.
13. Be able to recognize a demand graph and interpret what it means.
14. Define Human Capital and list at least 3 ways we invest in human capital in this country (see
Module 10 notes).
15. Define the Law of Supply and list the 7 factors that affect supply.
16. Which is the view from the consumer’s side? Which is the view from the business side of things?
Demand or supply?
17. Define the three Stages of production Function and what stage all businesses aim to be in. How
busy a business, like a grocery store is in during each of the three stages and how often they can
change.
18. Be able to label the Circular Flow of Economic Activity and explain the significance of each.
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19. Compare trade surplus versus trade deficit.
20. Define consumer sovereignty and its role in our economic system.
21. Define absolute and comparative advantage. Answer the following:
a. The USA and Russia trade corn and wheat. The USA can produce 100 barrels of corn in a
day, while Russia can produce 80. For wheat, the USA can produce 40 barrels in the same
time Russia can produce 80. Who has the absolute advantage for: corn? wheat? For
comparative advantage of: corn? wheat?
22. Compare sole proprietorship, partnership, Corporation, Cooperative, and Franchise.
23. Explain what a stock is and how you can make money on them or lose money on them.
24. Be able to read a stock report. Therefore, use the following and explain: the stock exchange it is
traded on, the last trading price, the volume, the market capital, and dividend / yield.
a. Carnival Corporation (CCL)
b. -NYSE
c. 35.18 Aug 29, 4:00PM EDT
d. Prev Close: 35.18
e. Open: N/A
f. Bid: 35.02 x 500
g. Ask: 35.14 x 1500
h. 1y Target Est: 37.84
i. Next Earnings Date:
j. 17-Sep-12
k. Day's Range: N/A - N/A
l. 52wk Range: 28.52 - 37.31
m. Volume: 0
n. Avg Vol (3m): 3,905,060
o. Market Cap: 27.41B
p. Div & Yield: 1.00 (2.90%)
q. Source: Yahoo Finance
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r.
25. Compare the 4 market structures of: Monopoly, Oligopoly, Monopolistic Competition, and Perfect
Competition. Be sure to tell which of the 4 doesn’t really exist in the real world and an example of
each by filling in the chart below:
No. of
Buyers
No. of
Sellers
Seller
entry
barriers
Size of
typical
firm
Product
differentiation
Market
share
Examples
Perfect
Competition
Monopolistic
competition
Oligopoly
Monopoly
26. Compare the 4 legal monopolies and give 1 example of each.
27. List the 6 reasons why a business fails (see Module 20 notes).
Unit 2: Basice Economics Part II (Modules 24-34 notes)
28. Compare a change in Quantity demand curve versus a change in demand curve. Find an example
by Googling or within a module. Share the example with others if you post the answer to this
question within the discussion module.
29. Compare a change in Quantity supply curve versus a change in supply curve. Find an example by
Googling or within a module. Share the example with others if you post the answer to this
question within the discussion module.
30. Explain where the market equilibrium, surplus, & shortage exist on a supply and demand chart
(when graphed together like in Module 28 & 29 notes). Google “demand and supply equilibrium
graph” and find an example. Share the example with others if you post the answer to this question
within the discussion module.
31. Define price floor v. price ceiling and give an example of each.
32. Compare elastic v. inelastic demand (need v. want), list the 3 determinant questions. Decide if the
following is elastic or inelastic (demand) using the answers to the 3 determinant questions.
a. Haircut
b. Electricity for your home
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c. Bicycle
d. Soda
e. Medicine for diabetes
33. Define positive v. negative incentives and unintended consequences. List 1 positive, 1 negative,
and 1 unintended consequence of each scenario:
a. A NASCAR track in your town
b. A New movie theater in town
c. A new plasma TV for your bedroom
Unit 3: MicroEconomics
34. What is a positive and negative externality? What is an example for each of the following:
a. A NASCAR track in your town
b. A New movie theater in town
c. A new plasma TV for your bedroom
35. What are the largest types of revenue and expenditures for each level of govt?
36. What are the 4 roles of the government (in the markets- see M38 notes).
37. What is the difference between an entitlement and a transfer payment? List what each of the
following are:
a. Social Security payment to an elderly lady
b. Disability payment to a disabled 53 year old man
c. Welfare money to help pay for subsidized housing
d. Food stamps
e. Pay to a retired Army veteran who served 22 years in service
f. Medicare
g. Medicaid
h. Unemployment pay
38. Define eminent domain.
39. What is the difference between real, personal, and intellectual property? List what each are:
a. A song you wrote
b. Yourself
c. Your clothing
d. An idea you have for a glow in the dark dry erase board marker so you can see it when the
teacher has the lights out
e. Land you own
40. What does the Consumer Product Safety Commission do?
41. What does the Food and Drug Administration oversee?
42. Who does the Truth in Lending Act protect? Borrower, lender, or both?
43. How many days of advance notice will you get before a credit card company can raise your
interest rates as a result of the Credit CARD Act of 2009?
44. What is the name of the 1st anti-trust legislation passed in the USA?
45. What is price fixing? Is it legal?
46. What does the Federal Trade Commission oversee in our society?
Unit 4: MacroEconomics / Unit 5: Fiscal and Monetary Policy
47. What are the 3 goals of ANY nation in the world?
48. Compare a weak v. strong economy.
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49. What are the phases and parts of a business cycle diagram? Be able to label and explain what a
business cycle means.
50. Define: Inflation, depression, & recession. Know the link between housing market and the Great
Recession of 2008 ( look it up)
51. What does Gross Domestic Product (GDP) mean? What 5 things are excluded from it? What was
the most recent report that came out in Oct for July-Sept or the 3rd quarter of 2012?
52. Compare Fiscal v. Monetary policy and who is primary government agency/ group responsible for
implementing.
53. What is the current US debt v. deficit for Fiscal Year 2012 (FY 2012)? (Google “debt clock” to find
both)
54. What are economic indicators used to determine if we are in a strong or weak economy? (see M50
notes).
55. Compare the 4 types of unemployment and list the type for each:
a. “Santa” in July
b. Mrs. MacDonald- last July I had resigned from my teaching job in GA and was waiting to
begin my job in VA in August.
c. Car salesman during the Great Recession
d. Companies that made answering machines and VCRs
56. What does C+I+ G+ X mean and what does it calculate?
57. What are the major differences between a developing and a developed nation? Which one is the
USA?
58. What is the major role of each and is the USA members:
a. United Nations
b. Peace Corps
c. World Bank and International Monetary Fund
59. What is outsourcing v. offshoring. Label each scenario:
a. When you call McDonald’s customer service, you get a foreigner on the line with a thick
accent
b. Brooms that were made in the USA are now being made in Mexico
60. Know full employment rate and the current unemployment rate (for Oct. 2012- look it up!)
61. What are the 7 major groups of people in our society that are NOT considered unemployed, even
though they do not work?
62. What is the base year of the Consumer Price Index and what does that mean?
63. What are 3 effects of inflation? (See M57 notes)
64. What is a major effect of deflation? Is it healthy for an economy?
65. Who is the only group that would benefit from inflation? (See M59 notes).
66. What does it mean when an economy expands v. contracts?
67. What was the largest contraction in our economy named? What was the 2nd largest? When did
they occur?
Unit 5: Fiscal and Monetary Role of Government (M65-70)
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68. How many regional FED banks are there? Where is your nearest one (for VA)?
69. What part of the FED controls monetary policy?
70. What does “monetary policy” mean?
71. What is the FDIC? How much do they secure against loss?
72. What does fiscal policy mean?
73. What are 3 tools used in fiscal policy to control / expand aggregate spending by our nation?
74. What would a Balanced Budget Amendment to our US Constitution mean to the US budget and
economy?
75. Explain the difference between a debt and deficit.
76. Creating more money out of thin air creates ________________ and is the reason why we cannot simply
print more currency notes to pay off our debt as a nation.
Unit 6: Global Economics
77. Be able to solve for an exchange rate problem. Try below based on this table:
a. Each $1 USD =£ .50 Euro and upon your return from France, you have £100 left over. When
you convert back to $, you will get $_______USD
b. Each $1 USD = $10 MEX Peso. If your friend Jesus’ told you he sent his grandmother $20
USD for Christmas and that she lived in Mexico City, Mexico; how many Mexican Pesos will
$20 USD convert to for Jesus’ grandmother? $_____MEX
c. Each $1 USD = ¥ 300 JAP Yen. If you are traveling to Japan for the New Year and you take
$400 USD in spending money, how many Yen will you get when you convert the money to
Yen? ¥_______JAP
78. List the 3 functions of money
79. List the effect a weak dollar has on the price of imports versus exports.
80. List the effect a strong dollar has on the price of imports versus exports.
81. What is stored at Fort Knox, Kentucky?
82. Define: Tariff, Quota, Embargo, and License requirements
83. Explain the goal of a protectionist v. a free trader
84. Compare the free trade agreements of NAFTA, EU, ASEAN, and WTO. Which is the USA a member
of?
85. Define Globalization
86. Compare the good and bad of a Multinational Company (see M 81 notes)
Unit 7: Career Decision and Investing in Human Capital
87. Explain how supply and demand for a job will predict the wages (high or low).
88. State whether the following are Work or Personality values:
a. Respect
b. Organized
c. Reliable
d. Honesty
e. Loyalty
f. Responsible
g. Expertise
h. Financial Reward
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89. List the 3 ways to establish credit
90. How long is the length of time when thinking of a short-term v. long-term goal?
91. Explain the following retirement planning concepts:
a. Job pension
b. 401(k)
c. Social Security
d. IRA (Individual Retirement Account)
92. Explain why compound interest is the best way to invest for retirement and long-term monetary
goals v. simple interest.
93. List what happens to consumer spending and saving when unemployment falls v. rises.
94. Define the 3 types of taxes:
a. Progressive
b. Regressive
c. Proportional
95. Define the role of the IRS (Internal Revenue Service).
96. Explain why “working under the table” and not paying income taxes is illegal.
97. Compare gross v. net income or pay.
Unit 8: Taxes
98. What is the difference in:
a. 401(k)
b. 403(b)
c. 457(b)
d. IRA
99. What are “employer matching” programs?
100.
What is an “IRA roll over”?
101.
When do you pay taxes on a Roth IRA?
102.
What is a W-2 and a W-4 form?
103.
What is a “dependent” when you are filing taxes?
104.
What is the tax deadline day each year?
105.
In the USA, we pay between 10-35% in income taxes based on our pay, what type of tax is
this? Progressive, Regressive, or Proportional
106.
When a teen begins to file taxes, which form will they MOST likely use? 1040, 1040A, or
1040EZ…Why? List 3 conditions that will allow you to use this form.
107.
List 4 expenditures at each level:
a. Local
b. State
c. Federal
108.
What two things are funded via FICA (Federal Income Contribution Act) or payroll taxes?
109. List 4 things that have excise taxes imposed on them? (see M94 notes)
110. What are 4 tax deductions and 4 tax credits that you can claim on a tax return?
111. What is the difference between a tax return and tax refund?
112. The Federal budget is a reflection of whose priorities? President, Congress, or Supreme Court
113. Who write the budget and who passes it?
114. What are the 5 top expenditures in our budget? (over 80% goes to these 5 things)
115. What are 4 examples of “safety net programs” aimed at stabilizing a society during weak economic
times?
116. If the Government is operating in a deficit, what does that mean? How can they fix it? Raise taxes,
cut spending, or both
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Unit 9: Money Management
117. What are the costs v. benefits of buying (with cash or a loan) v. leasing a car?
118. Explain each component of Auto Insurance:
a. Property damage liability and bodily injury liability
b. Uninsured motorist
c. Collision
d. Comprehensive
119. Explain what the following types of education payments are:
a. Grant / scholarship
b. Work-study
c. Student loans
d. 529 plan
120. Know the correct order of higher-level education from Diploma to Doctorate.
121. What is the normal amount (in %) down you are expected to put down when you buy a house?
122. What are the major costs and benefits associated with owning a home?
123. What is the typical amount of time people take to pay off a mortgage?
124. Define discretionary consumer spending.
125. What is the formula for calculating one’s net worth?
126. Explain what should happen to one’s net worth as they age and get closer to retirement.
127. What type of interest do you earn (simple v. compound) when you put your money in:
a. A savings account
b. An IRA
c. A 401 (k)
d. Mutual fund
128. What is the “Rule of 72”?
129. Explain the difference and give an example of the following types of assets:
a. Liquid
b. Restricted
c. Fixed
d. Tangible
130. What does “FIAT” money mean v. a “gold-backed” money system?
131.Know who and what is on your notes and coins.
132.Know what is made at the Mint v. Bureau of Engraving and Imprinting
133.When was the famous stock market crash?
134.How much does the FDIC protect your money for in banks?
135.Why does the FDIC now protect your money in banks?
136.What is unbanked v. under banked?
137.What are 2 benefits of having a bank account?
138.What are 3 negatives to not having a bank account?
139.Explain the difference in these lenders (and who uses them? Good credit or poor credit score)
a. Bank
b. Finance company
c. Pawnshop
d. Title loan and payday lenders
e. Credit card
140.What is the difference in revolving v. installment credit?
141.What is secured v. unsecured credit?
142.What is on a credit report and what is not?
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143.What does each of the 5 C’s of credit worthiness mean?
a. Character
b. Capacity
c. Capital
d. Conditions
e. Collateral
144.When is the only time you should use or be a co-signer on a loan? Why?
145.What is conspicuous consumption?
146.What are Ch. 7 and 13 bankruptcies? Compare.
147.Companies advertise because they want your ____ (mandatory or discretionary) funds?
Unit 10: Banking Essentials
148. What is electronic banking and using an ATM?
Unit 11: The Bottom Line on Borrowing
149. What is a good debt v. bad debt? Which is good or bad?
a. Borrowing for education
b. Borrowing for a new TV
c. Borrowing for a house
d. Borrowing for a 4 wheeler
Unit 12: Smart Spending
150. Advertising used to appeal to
a. Emotions of consumers
151. Pros and cons of
a. Leasing a car
b. Buying a car
152. Leasing v. buying a car:
a. costs involved
b. Which is likely to have a cheaper payment?
Unit 13: Consumer Skills
153. List 5 ways to stay safe online in regards to your personal information.
Unit 14: Financial Planning
154. Explain how checking and savings are considered liquid investments / assets.
155.Explain the difference in a regular savings account, Certificate of Deposit, and a Money market
account.
156.Explain the difference in a stock, bond, and mutual fund.
157.Explain the difference in a bear v. bull market and when is the best time to invest.
158.A constant bear market becomes a ________ type of economy.
159.A bubble is what occurs when stocks are consistently (over or under) priced.
160.What does a stock broker do?
161. When you invest you must consider 4 things. List them.
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162.As profit potential goes up in an investment, risk goes (up or down).
163.Investing means you use money in hopes of _______ money, but it (is or is not) a guarantee.
164.What is a Ponzi scheme?
a. Who was Bernie Madoff in regards to a Ponzi?
165. In planning for retirement, you need roughly ____% of your pre-retirement income x the number
of years you estimate you will live.
166. An annuity is a way to invest via a ____ company.
167. Define: “Power of attorney” and “Living Will”
Unit 15: The Stock Market
168. An Initial Public Offering (IPO) means that a company sells ____ for the 1st time.
169. List the oldest and largest stock exchange in our nation.
170.Define Capital Gains.
171. Stock prices fluctuate based on ______ & ______.
172.E-trading allows members of the general public to buy and sell stock. How do they do it?
a. What are the effects of e-trading? (list 4 pros and cons)
173.Why should an investor diversify his or her stocks and bonds owned?
174.What is a portfolio?
Unit 16: Insurance
175. Define the following insurance terms:
a. co-payment
b. deductible
c. premiums
176. Explain how much life insurance one should get and explain why the following need or do not
need it:
a. 12 year old child
b. 32 year old stay-at-home mom with 2 kids and a husband that works
c. 41 year old man who has a wife who also works. They have no kids.
d. 98 year old lady with no debt, only assets and a high net worth
177. Explain 1 pro and 1 con for term life v. permanent life insurance.
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