Economic Semester Practice Extra Credit Test
Test # _____ Test ID A
1 EC point for every 5 questions you get correct 16 total possible
1. What can cause a production possibilities curve to move to the right?
a. Thousands of people move out of the country.
b. A new invention lowers the cost of production.
c. An epidemic kills thousands of young men and women.
d. The population is growing increasingly old.
2. You are an entrepreneur would have better success in which type of economy?
a. market economy
c. traditional economy
b. command economy
d. economy of scale
3. Any resources that are made by humans and used to create other goods and services are called
a. services.
c. capital.
b. production.
d. labor.
4. In what kind of an economy does the government make all the decisions?
a. socialist
c. centrally planned
b. laissez faire
d. free enterprise
5. Which of the following is the best example of the law of supply?
a. A sandwich shop increases the number of sandwiches they supply every day when the price is increased.
b. A food producer increases the number of acres of wheat he grows to supply a milling company.
c. A catering company buys a new dishwasher to make their work easier.
d. A milling company builds a new factory to process flour to export.
6. When the selling price of a good goes up, what is the relationship to the quantity supplied?
a. The cost of production goes down.
b. The profit made on each item goes down.
c. It becomes practical to produce more goods.
d. There is no relationship between the two.
7. What is the struggle among various producers for the consumer’s business called?
a. socialism
c. incentive
b. competition
d. self-regulation
8. When prices rise, which of the following happens to income?
a. It goes down.
c. It rises to meet prices.
b. It buys less.
d. It is used to buy different things.
9. What determines the price and the quantity produced of most goods?
a. the consumer’s perception of necessity
b. the interaction of supply and demand
c. the availability of substitutes for the goods
d. the quality of the goods that are produced
10. What happens when wages are set above the equilibrium level by law?
a. Firms tend to try to break the law and hire people at the equilibrium level.
b. Firms employ more workers than they would at the equilibrium wage.
c. Firms employ fewer workers than they would at the equilibrium wage.
d. Firms hire more workers but for fewer hours than they would at the equilibrium wage.
11. What is the major difference between a corporation and other kinds of businesses?
a. A corporation is much larger than other kinds of businesses.
b. A corporation is not responsible for its debts if it fails.
c. A corporation has a separate entity apart from that of the owners and workers.
d. A corporation has officers who are responsible for the business.
12. When a consumer is able and willing to buy a good or service, he or she creates which of the following?
a. consumption
c. elasticity
b. demand
d. allocation
13. According to Figure 6.2, at the equilibrium price, how many slices of pizza will be sold?
a. 150
c. 250
b. 200
d. 300
14. According to Figure 6.2, in this market, a price of $1.50 would be
a. the equilibrium price.
c. a price ceiling.
b. a price floor.
d. a subsidy.
15. According to Figure 6.2, in this market, a price of $1.00 would be
a. the equilibrium price.
c. a price ceiling.
b. a price floor.
d. a subsidy.
16. Which of the following is an example of scarcity, rather than shortage?
a. A popular toy is sold out during the busy holiday season.
b. You have spent your last penny and payday is a week away.
c. A person wants an endless supply of everything but cannot have it.
d. Gasoline was rationed in America during World War II.
17. According to Figure 4.4, how many slices of pizza will Ashley buy if the price is $1.00 per slice?
a. one
b. two
c. three
d. four
18. According to Figure 4.4, at what price will Ashley’s quantity demanded of pizza be three slices?
a. $ .50
b. $1.00
c. $1.50
d. $3.00
19. How is future price related to current demand?
a. If the price is expected to rise, current demand will drop.
b. If the price is expected to fall, current demand will rise.
c. If the price is expected to rise, current demand will rise.
d. Future price is not related to current demand.
20. Human capital includes
a. the salary paid to an accountant.
b. a taxi driver’s knowledge of the city streets.
c. the machinery used to weave cloth.
d. the equipment used by a doctor to cure a patient.
21. What happens to the market for tuna if sushi bars became more popular?
a. the demand of tuna would increase, the price of tuna would increase, the quantity of tuna would increase
b. the demand of tuna would increase, the price of tuna would decrease, the quantity of tuna would decrease
c. the demand of tuna would decrease, the price of tuna would decrease, the quantity of tuna would increase
d. the demand of tuna would decrease, the price of tuna would increase, the quantity of tuna would increase
22. What shows the quantities of products demanded at each price by all consumers in a market?
a. an elasticity and consumption list
c. a market pricing list
b. a schedule of consumer prices
d. a market demand schedule
23. What is the name of the smallest amount that can legally be paid to most workers for an hour of work?
a. equilibrium price
c. price floor
b. supply cost
d. minimum wage
24. What are inferior goods?
a. goods that are not well produced
b. goods that no one wants to buy
c. goods for which the demand falls when income falls
d. goods for which the demand falls when income rises
25. An example of a shortage is limited amounts of
a. water available for irrigating a crop because it is used for other crops.
b. labor available because the workers have other jobs.
c. food available because the trucks carrying it are on strike.
d. food available because few people want to buy it.
26. Assume that Top Raman is an inferior good, what happens to the market for Top Raman when there is a sudden increase of
consumers income?
a. the demand for Top Raman decreases, price of Top Raman increases, quantity of Top Raman decreases
b. the demand for Top Raman increases, price of Top Raman decreases, quantity of Top Raman increases
c. the demand for Top Raman increases, price of Top Raman increases, quantity of Top Raman decreases
d. the demand for Top Raman decreases, price of Top Raman decreases, quantity of Top Raman decreases
27. The value of a choice that is given up
a. trade-off
b. opportunity cost
c. frontier
d. return
28. What is a factory building an example of?
a. human capital
c. an economic trade-off
b. physical capital
d. technology
29. What incentive motivates a manufacturer to sell a product?
a. making profits on sales
c. pleasing the consumer
b. putting others out of business
d. popularity of the product
30. When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached?
a. supply and demand
c. equilibrium
b. excess demand
d. price floor
31. If the market price for pizza is $2.00 a slice, how many slices will be supplied by all producers in the market, according to Figure
5.4?
a. 200
c. 250
b. 2,000
d. 2,500
32. According to Figure 5.4, what term describes elasticity of supply in this market as the price increases from $1.00 to $2.00 a slice?
a. Elastic
c. Unitary elastic
b. Inelastic
d. Extremely elastic
33. According to Figure 5.4, how many slices of pizza will one pizzeria be willing to supply at a market price of $1.50 a slice?
a. 100
c. 300
b. 200
d. 1,000
34. The government of a country must make a decision between increasing military spending and subsidizing wheat farmers. This
kind of decision is a
a. guns or butter issue.
c. global trade-off.
b. decision at the margin.
d. basic economic decision.
35. In a publicly held corporation
a. stockholders rarely trade their stocks.
b. a large number of stockholders can buy and sell stock.
c. stocks are not usually traded at stock exchanges.
d. family members are excluded from holding stock.
36. What is monopolistic competition?
a. one company selling the identical product under different names
b. one company selling several different products under different names
c. a very few companies selling identical products
d. many companies selling similar but not identical products
37. Which is FALSE about a sole proprietorship?
a. easy to form
b. flexible in decision making
c. no corporation tax
d. have little or no liability
38. What does it mean when the demand for a product is inelastic?
a. People will not buy any of the product when the price goes up.
b. A price increase does not have a significant impact on buying habits.
c. Customers are sensitive to the price of the product.
d. There are very few satisfactory substitutes for the product.
39. If a general partnership fails, who is responsible for the debts?
a. anyone who works for the partnership
b. all of the partners
c. only the most senior general partner
d. no one
40. What would happen to the orange juice market if there was a destructive hurricane in Florida during the growing season?
a. the demand of orange juice would decrease, the price of orange juice would increase, the quantity of orange juice would decrease
b. the demand of orange juice would increase, the price of orange juice would decrease, the quantity of orange juice would increase
c. the supply of orange juice would increase, the price of orange juice would decrease, the quantity of orange juice would increase
d. the supply of orange juice would decrease, the price of orange juice would increase, the quantity of orange juice would
decrease
41. Which of the following lists would an economist consider to be land?
a. factories, office buildings, assembly lines, workers
b. farm fields, tractors, pesticides, fertilizers
c. dams, bridges, rock quarries, oil wells
d. iron ore, natural gas, fertile soil, water
42. What could cause a production possibilities curve to move down and to the left?
a. A nation loses land after being defeated in a war.
b. A baby boom 20 years ago resulted in a large number of young adults in the population today.
c. An increase in the use of computer technology speeds up production.
d. Thousands of investors from overseas invest money in a nation’s economy.
43. Which of the following makes someone an entrepreneur?
a. earning a lot of money as a computer programmer
b. becoming a highly paid dancer
c. running a service that hires people to install sprinkler systems in lawns
d. inventing and selling the rights to manufacture a computer game
44. Who was the leader that introduced communism and central planning to the former Soviet Union?
a. Karl Marx
c. Vladimir Lenin
b. Joseph Stalin
d. Friedrich Engels
45. Which of the following was a free market philosopher?
a. Karl Marx
c. Vladimir Lenin
b. Adam Smith
d. Friedrich Engels
46. Which of the following is NOT characteristic of a centrally planned economy?
a. The central government owns all land and capital.
b. The central government makes all economic decisions.
c. Each collective or factory sets its own goals.
d. Each person is assigned a job.
47. What is the opportunity cost of a decision?
a. the series of alternative decisions that could have been made
b. the best possible way the question could have been decided
c. the different ways that a different person might have made the decision
d. the most desirable alternative given up for the decision
48. The natural guide in the market economy “the market will right itself”
a. invisible hand
c. supply
b. demand
d. equilibrium
49. Which of the following is a good that might not be bought when prices rise?
a. complement
c. inferior good
b. substitute
d. luxury
50. What is the effect of import restrictions on prices?
a. They cause prices to drop.
b. They cause prices to rise.
c. They often cause prices to rise steeply and then drop.
d. They usually do not have any lasting effect on price.
51. Which of the following is a fixed cost for a store?
a. short-term workers
c. advertising
b. rent
d. inventory
52. Technological process has reduced the cost of manufacturing MP3 players. If demand is unchanged,
a. more MP3 players will be sold at a higher price.
b. fewer MP3 players will be sold at a higher price.
c. more MP3 players will be sold at a lower price.
d. fewer MP3 players will be sold at a lower price.
53. An efficient economy is one that
a. has very few people who do not work for a living.
b. makes the best use of all its goods and services.
c. uses its resources to make the most goods and services.
d. makes the least costly use of its resources.
54. What is a basic principle of the law of demand?
a. The higher the price, the more people will want the good.
b. Everyone has a limited income that they will spend.
c. When a good’s price is lower, people will buy more of it.
d. Services are of interest in the same way that goods are.
55. Which of the following is TRUE about scarcity?
a. Some goods cost more than others.
b. All resources are scarce.
c. Some things are needs and others are wants.
d. Some people want to have more goods than others.
56. The resources used to make all goods and services are the
a. production possibilities.
c. production trade-offs.
b. factors of production.
d. opportunity costs.
57. Government actions and policies that restrict or restrain international trade.
a. supply and demand
c. protectionism
b. tarrifs
d. factors of production.
58. An agreement between the United States, Canada and Mexico that will eliminate all trade barriers
a. CUSI
c. NCIS
b. EU
d. NAFTA
59. A tax on imported goods
a. progressive
c. tariff
b. flat
d. regressive
60. A good that is sent to another country for sale
a. export
b. import
c. inferior
d. substitute
61. The types of financial institutions are commercial banks, savings and loans and
a. united banks
b. unions
c. credit unions
d. financial unions
62. The two functions of a bank are making loans and
a. providing ATMs
b. keeping deposits
c. buying stocks
d. making budgets
63. The price for the use of borrowed money or money earned from deposited funds is called
a. collateral
b. profit
c. interest
d. a tariff
64. Property used to secure a loan is called
a. interest
b. profit
c. tax
d. collateral
65. A plan for saving and spending
a. CIG plan
c. IRS plan
b. budget
d. spending chart
66.Which of the following pools the savings of many individuals and invests this money in a variety of stocks, bonds and other
financial assets.
a. mutual funds
b. union funds
c. credit funds
d. dividends
67. Consumers buying more of a good when its price decreases and less when increases is the law of
a. supply
b. demand
c. dividends
d. sherrer
68.The tendency of firms offering more of a good at a higher price is called the law of
a. supply and demand
b. sherrer
c. supply
d. demand
69. Laissez faire refers to which type of economy
a. Mixed
b. Command
c. Market
d. Unitary
70. Which of the following regulates banking institutions.
a. WAC
b. FED
c. SCC
d. SEC
71. Banks make their money by
a. charging interest on deposits
c. paying interest on loans
b. paying interest on deposits
d. charging interest on loans.
72. A Bear Market occurs when the business cycle
a. A market condition in which the prices of securities are falling
b. A market condition in which the prices of securities are rising
c. A market condition in which the prices of securities are at their lowest
d. A market condition in which the prices of securities are at their highest
73. Which of the following is NOT a function of money
a. unit of account
b. medium of exchange
c. store of value
d. supply security of collateral
74. Which is NOT a characteristic of money.
a. scarcity
b. acceptability
c. portability
d. exchange
75. Money that has value because the government says it is an acceptable way to pay debts.
a. reserved
b. fiat
c. regulated
d. representative
76. The 3 tools that the FED uses to regulate the money supply are, setting the discount rate, setting the reserve requirements and
a. charging interest
b. state taxes
c. open-market operations
d. federal taxes
77. The body the regulates the stock market is
a. FTC
c. SEC
b.PAC
d. NFL
Interpreting a Circular Flow Diagram
Circular Flow Diagram
Figure 2.1
78. What does Figure 2.1 as a whole represent?
a. a circular flow in a command economy
b. a circular flow in a mixed market economy
c. a circular flow in a free market economy
d. a circular flow in a black market economy
79. According to Figure 2.1, what does the lower line of monetary flow, marked “2,” show?
a. Households pay firms for goods and services
b. Households supply firms with land, labor, and capital
c. Firms pay households for goods and services
d. Firms pay households for land, labor, and capital
80. What does the upper half of Figure 2.1, marked “1,” represent?
a. Factor Market
b. Product Market
c. Command Market
d. Mixed Market
Economic Semester Practice Extra Credit Test
Test # _____ Test ID B
1 EC point for every 5 questions you get correct 16 total possible
1. How is future price related to current demand?
a. If the price is expected to rise, current demand will drop.
b. If the price is expected to fall, current demand will rise.
c. If the price is expected to rise, current demand will rise.
d. Future price is not related to current demand.
2. Human capital includes
a. the salary paid to an accountant.
b. a taxi driver’s knowledge of the city streets.
c. the machinery used to weave cloth.
d. the equipment used by a doctor to cure a patient.
3. What happens to the market for tuna if sushi bars became more popular?
a. the demand of tuna would increase, the price of tuna would increase, the quantity of tuna would increase
b. the demand of tuna would increase, the price of tuna would decrease, the quantity of tuna would decrease
c. the demand of tuna would decrease, the price of tuna would decrease, the quantity of tuna would increase
d. the demand of tuna would decrease, the price of tuna would increase, the quantity of tuna would increase
4. What shows the quantities of products demanded at each price by all consumers in a market?
a. an elasticity and consumption list
c. a market pricing list
b. a schedule of consumer prices
d. a market demand schedule
5. What is the name of the smallest amount that can legally be paid to most workers for an hour of work?
a. equilibrium price
c. price floor
b. supply cost
d. minimum wage
6. When the selling price of a good goes up, what is the relationship to the quantity supplied?
a. The cost of production goes down.
b. The profit made on each item goes down.
c. It becomes practical to produce more goods.
d. There is no relationship between the two.
7. What is the struggle among various producers for the consumer’s business called?
a. socialism
c. incentive
b. competition
d. self-regulation
8. When prices rise, which of the following happens to income?
a. It goes down.
c. It rises to meet prices.
b. It buys less.
d. It is used to buy different things.
9. Government actions and policies that restrict or restrain international trade.
a. supply and demand
c. protectionism
b. tarrifs
d. factors of production.
10. An agreement between the United States, Canada and Mexico that will eliminate all trade barriers
a. CUSI
c. NCIS
b. EU
d. NAFTA
11. A tax on imported goods
a. progressive
c. tariff
b. flat
d. regressive
12. The types of financial institutions are commercial banks, savings and loans and
a. united banks
b. unions
c. credit unions
d. financial unions
13. The two functions of a bank are making loans and
a. providing ATMs
b. keeping deposits
c. buying stocks
d. making budgets
14. What determines the price and the quantity produced of most goods?
a. the consumer’s perception of necessity
b. the interaction of supply and demand
c. the availability of substitutes for the goods
d. the quality of the goods that are produced
15. What happens when wages are set above the equilibrium level by law?
a. Firms tend to try to break the law and hire people at the equilibrium level.
b. Firms employ more workers than they would at the equilibrium wage.
c. Firms employ fewer workers than they would at the equilibrium wage.
d. Firms hire more workers but for fewer hours than they would at the equilibrium wage.
16. What is the major difference between a corporation and other kinds of businesses?
a. A corporation is much larger than other kinds of businesses.
b. A corporation is not responsible for its debts if it fails.
c. A corporation has a separate entity apart from that of the owners and workers.
d. A corporation has officers who are responsible for the business.
17. A good that is sent to another country for sale
a. export
b. import
c. inferior
d. substitute
18. When a consumer is able and willing to buy a good or service, he or she creates which of the following?
a. consumption
c. elasticity
b. demand
d. allocation
19. According to Figure 6.2, at the equilibrium price, how many slices of pizza will be sold?
a. 150
c. 250
b. 200
d. 300
20. According to Figure 6.2, in this market, a price of $1.50 would be
a. the equilibrium price.
c. a price ceiling.
b. a price floor.
d. a subsidy.
21. According to Figure 6.2, in this market, a price of $1.00 would be
a. the equilibrium price.
c. a price ceiling.
b. a price floor.
d. a subsidy.
22. Which of the following is an example of scarcity, rather than shortage?
a. A popular toy is sold out during the busy holiday season.
b. You have spent your last penny and payday is a week away.
c. A person wants an endless supply of everything but cannot have it.
d. Gasoline was rationed in America during World War II.
23. According to Figure 4.4, how many slices of pizza will Ashley buy if the price is $1.00 per slice?
a. one
b. two
c. three
d. four
24. According to Figure 4.4, at what price will Ashley’s quantity demanded of pizza be three slices?
a. $ .50
b. $1.00
c. $1.50
d. $3.00
25. What can cause a production possibilities curve to move to the right?
a. Thousands of people move out of the country.
b. A new invention lowers the cost of production.
c. An epidemic kills thousands of young men and women.
d. The population is growing increasingly old.
26. You are an entrepreneur would have better success in which type of economy?
a. market economy
c. traditional economy
b. command economy
d. economy of scale
27. Any resources that are made by humans and used to create other goods and services are called
a. services.
c. capital.
b. production.
d. labor.
28. In what kind of an economy does the government make all the decisions?
a. socialist
c. centrally planned
b. laissez faire
d. free enterprise
29. Which of the following is the best example of the law of supply?
a. A sandwich shop increases the number of sandwiches they supply every day when the price is increased.
b. A food producer increases the number of acres of wheat he grows to supply a milling company.
c. A catering company buys a new dishwasher to make their work easier.
d. A milling company builds a new factory to process flour to export.
30. What are inferior goods?
a. goods that are not well produced
b. goods that no one wants to buy
c. goods for which the demand falls when income falls
d. goods for which the demand falls when income rises
31. Which of the following is NOT a function of money
a. unit of account
b. medium of exchange
c. store of value
d. supply security of collateral
32. An example of a shortage is limited amounts of
a. water available for irrigating a crop because it is used for other crops.
b. labor available because the workers have other jobs.
c. food available because the trucks carrying it are on strike.
d. food available because few people want to buy it.
33. Assume that Top Raman is an inferior good, what happens to the market for Top Raman when there is a sudden increase of
consumers income?
a. the demand for Top Raman decreases, price of Top Raman increases, quantity of Top Raman decreases
b. the demand for Top Raman increases, price of Top Raman decreases, quantity of Top Raman increases
c. the demand for Top Raman increases, price of Top Raman increases, quantity of Top Raman decreases
d. the demand for Top Raman decreases, price of Top Raman decreases, quantity of Top Raman decreases
34. According to Figure 5.4, what term describes elasticity of supply in this market as the price increases from $1.00 to $2.00 a slice?
a. Elastic
c. Unitary elastic
b. Inelastic
d. Extremely elastic
35. If the market price for pizza is $2.00 a slice, how many slices will be supplied by all producers in the market, according to Figure
5.4?
a. 200
c. 250
b. 2,000
d. 2,500
36. According to Figure 5.4, how many slices of pizza will one pizzeria be willing to supply at a market price of $1.50 a slice?
a. 100
c. 300
b. 200
d. 1,000
37. The government of a country must make a decision between increasing military spending and subsidizing wheat farmers. This
kind of decision is a
a. guns or butter issue.
c. global trade-off.
b. decision at the margin.
d. basic economic decision.
38. In a publicly held corporation
a. stockholders rarely trade their stocks.
b. a large number of stockholders can buy and sell stock.
c. stocks are not usually traded at stock exchanges.
d. family members are excluded from holding stock.
39. What is monopolistic competition?
a. one company selling the identical product under different names
b. one company selling several different products under different names
c. a very few companies selling identical products
d. many companies selling similar but not identical products
40. The value of a choice that is given up
a. trade-off
b. opportunity cost
c. frontier
d. return
41. What is a factory building an example of?
a. human capital
c. an economic trade-off
b. physical capital
d. technology
42. What incentive motivates a manufacturer to sell a product?
a. making profits on sales
c. pleasing the consumer
b. putting others out of business
d. popularity of the product
43. When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached?
a. supply and demand
c. equilibrium
b. excess demand
d. price floor
44. Which is FALSE about a sole proprietorship?
a. easy to form
b. flexible in decision making
c. no corporation tax
d. have little or no liability
45. What does it mean when the demand for a product is inelastic?
a. People will not buy any of the product when the price goes up.
b. A price increase does not have a significant impact on buying habits.
c. Customers are sensitive to the price of the product.
d. There are very few satisfactory substitutes for the product.
46. If a general partnership fails, who is responsible for the debts?
a. anyone who works for the partnership
b. all of the partners
c. only the most senior general partner
d. no one
47. What would happen to the orange juice market if there was a destructive hurricane in Florida during the growing season?
a. the demand of orange juice would decrease, the price of orange juice would increase, the quantity of orange juice would decrease
b. the demand of orange juice would increase, the price of orange juice would decrease, the quantity of orange juice would increase
c. the supply of orange juice would increase, the price of orange juice would decrease, the quantity of orange juice would increase
d. the supply of orange juice would decrease, the price of orange juice would increase, the quantity of orange juice would
decrease
48. Which of the following lists would an economist consider to be land?
a. factories, office buildings, assembly lines, workers
b. farm fields, tractors, pesticides, fertilizers
c. dams, bridges, rock quarries, oil wells
d. iron ore, natural gas, fertile soil, water
49. What could cause a production possibilities curve to move down and to the left?
a. A nation loses land after being defeated in a war.
b. A baby boom 20 years ago resulted in a large number of young adults in the population today.
c. An increase in the use of computer technology speeds up production.
d. Thousands of investors from overseas invest money in a nation’s economy.
50. Which of the following makes someone an entrepreneur?
a. earning a lot of money as a computer programmer
b. becoming a highly paid dancer
c. running a service that hires people to install sprinkler systems in lawns
d. inventing and selling the rights to manufacture a computer game
51. Who was the leader that introduced communism and central planning to the former Soviet Union?
a. Karl Marx
c. Vladimir Lenin
b. Joseph Stalin
d. Friedrich Engels
52. Which of the following was a free market philosopher?
a. Karl Marx
c. Vladimir Lenin
b. Adam Smith
d. Friedrich Engels
53. The natural guide in the market economy “the market will right itself”
a. invisible hand
c. supply
b. demand
d. equilibrium
54. Which of the following is a good that might not be bought when prices rise?
a. complement
c. inferior good
b. substitute
d. luxury
55. Which of the following is NOT characteristic of a centrally planned economy?
a. The central government owns all land and capital.
b. The central government makes all economic decisions.
c. Each collective or factory sets its own goals.
d. Each person is assigned a job.
56. What is the opportunity cost of a decision?
a. the series of alternative decisions that could have been made
b. the best possible way the question could have been decided
c. the different ways that a different person might have made the decision
d. the most desirable alternative given up for the decision
57. What is the effect of import restrictions on prices?
a. They cause prices to drop.
b. They cause prices to rise.
c. They often cause prices to rise steeply and then drop.
d. They usually do not have any lasting effect on price.
58. Which of the following is a fixed cost for a store?
a. short-term workers
c. advertising
b. rent
d. inventory
59. Technological process has reduced the cost of manufacturing MP3 players. If demand is unchanged,
a. more MP3 players will be sold at a higher price.
b. fewer MP3 players will be sold at a higher price.
c. more MP3 players will be sold at a lower price.
d. fewer MP3 players will be sold at a lower price.
60. What is a basic principle of the law of demand?
a. The higher the price, the more people will want the good.
b. Everyone has a limited income that they will spend.
c. When a good’s price is lower, people will buy more of it.
d. Services are of interest in the same way that goods are.
61. Which of the following is TRUE about scarcity
a. Some goods cost more than others.
b. All resources are scarce.
c. Some things are needs and others are wants.
d. Some people want to have more goods than others.
62. The resources used to make all goods and services are the
a. production possibilities.
c. production trade-offs.
b. factors of production.
d. opportunity costs.
63. The price for the use of borrowed money or money earned from deposited funds is called
a. collateral
b. profit
c. interest
d. a tariff
64. Property used to secure a loan is called
a. interest
b. profit
c. tax
d. collateral
65.The tendency of firms offering more of a good at a higher price is called the law of
a. supply and demand
b. sherrer
c. supply
d. demand
66. Laissez faire refers to which type of economy
a. Mixed
b. Command
c. Market
d. Unitary
67. Which of the following regulates banking institutions.
a. WAC
b. FED
c. SCC
d. SEC
68. A plan for saving and spending
a. CIG plan
c. IRS plan
b. budget
d. spending chart
69.Which of the following pools the savings of many individuals and invests this money in a variety of stocks, bonds and other
financial assets.
a. mutual funds
b. union funds
c. credit funds
d. dividends
70. Consumers buying more of a good when its price decreases and less when increases is the law of
a. supply
b. demand
c. dividends
d. sherrer
71. Which is NOT a characteristic of money.
a. scarcity
b. acceptability
c. portability
d. exchange
72. Money that has value because the government says it is an acceptable way to pay debts.
a. reserved
b. fiat
c. regulated
d. representative
73. The 3 tools that the FED uses to regulate the money supply are, setting the discount rate, setting the reserve requirements and
a. charging interest
b. state taxes
c. open-market operations
d. federal taxes
74. The body the regulates the stock market is
a. FTC
c. SEC
75. Banks make their money by
a. charging interest on deposits
c. paying interest on loans
b.PAC
d. NFL
b. paying interest on deposits
d. charging interest on loans.
76. A Bear Market occurs when the business cycle
a. A market condition in which the prices of securities are falling
b. A market condition in which the prices of securities are rising
c. A market condition in which the prices of securities are at their lowest
d. A market condition in which the prices of securities are at their highest
77. An efficient economy is one that
a. has very few people who do not work for a living.
b. makes the best use of all its goods and services.
c. uses its resources to make the most goods and services.
d. makes the least costly use of its resources.
Interpreting a Circular Flow Diagram
Circular Flow Diagram
Figure 2.1
78. According to Figure 2.1, what does the lower line of monetary flow, marked “2,” show?
a. Households pay firms for goods and services
b. Households supply firms with land, labor, and capital
c. Firms pay households for goods and services
d. Firms pay households for land, labor, and capital
79. What does the upper half of Figure 2.1, marked “1,” represent?
a. Factor Market
b. Product Market
c. Command Market
d. Mixed Market
80. What does Figure 2.1 as a whole represent?
a. a circular flow in a command economy
b. a circular flow in a mixed market economy
c. a circular flow in a free market economy
d. a circular flow in a black market economy