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Goal 7 Monster Review
Competency Goal 7 The learner will investigate how and why individuals and groups make economic choices.
1. Needs are necessary for survival.
2. What problem does economics work to solve? Scarcity
3. Coal cannot be replaced once it is used. What kind of resource is coal? Nonrenewable resource
4. How would you describe our wants and needs? Wants are unlimited and nonessential and needs are essential for survival
and limited
5. How would you describe our available resources? Scarce
6. List the four factors of production. 1) Natural Resources (LAND), (2) Capital, (3) Labor, (4) Entrepreneur
7. Jan wants to go out to eat with her friends but she also needs to study for a test. Jan decides to stay home and study. The
sacrifice she is making is called a trade off and the value of the opportunity is the opportunity cost ($20.00 to eat out).
8. Why can a society not produce all of the guns and butter that it desires? All decisions require trade-offs and economics is
based on scarcity and limited resources.
9. What is the most desirable alternative given up as a result of a decision? Trade-off
10. If one thinks about the benefits of using one more unit, what is this called? Marginal benefit
11. What is the degree to which resources are being used efficiently to produce goods and services? Productivity
12. What term do we use to describe using fewer resources than an economy is capable of using? Surplus
13. What term describes a reward offered to try to persuade people to take certain economic actions? Incentive
14. Unskilled or Blue collar
workers are workers that perform manual labor.
15. Doctors and lawyers are examples of _skilled or white collar
workers.
16. An assembly line is an example of breaking down labor into smaller parts to increase productivity. What term does this
describe? Division of Labor
*What factor of production is each of the following? Also label each as a good or a service.
17. Office building
18. Water
Capital
Natural Resources (LAND)
19. Job training
20. Hammer
Capital
Capital
21. Worker that places goods in boxes
22. Roads Capital
Labor
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23. CEO of FedEx
Entrepreneur
24. What graph shows ways to use an economy’s resources? Circular Flow Model of Economic Activity
25. Growth in an economy can cause the frontier to shift to the _Right___.
26. Ben owns a pizza shop. He is trying to decide if he should open his store on Thursday evenings. Tell what kind of costs
each of the following will be.
a. Wages to pay workers
Variable
b. mortgage payment for the building
Fixed
c. the money earned by opening the pizza shop one additional day.
Variable (also Marginal Benefit)
d. the additional cost of opening the store on Thursday evenings. Variable (also Marginal Cost)
27. Who wrote Wealth of Nations and explained how a market economy works? Adam Smith
28. What concept was introduced in Wealth of Nations that depicts that depicts that the market will regulate itself? Invisible
Hand
29. What philosophy means that the government should generally not intervene in a market economy? “Laissez Faire”
30. What term describes that the consumer decides what goods are available in the market? Free Market-Consumer
Sovereignty
31. What characteristic of a market economy means that sellers work to gain consumer business by lowering prices or offering
advantages to buying their product? Law of Demand
32. When a company decides to manufacture only one product, so that they can make it faster, cheaper, and better they are
practicing Specialization. This is also the theory by having one worker only perform one task in an assembly line.
Goal 8 Monster Review
Goal 8: The learner will analyze features of the economic system of the United States earner will investigate how and why individuals and
groups make economic choices.
1.
What type of economy is based on ritual and custom? Traditional
2.
In what type of economy do individuals make all economic decisions? Pure Market
3.
Communism is associated with what type of economy? Command
4.
Capitalism is associated with what type of economy? Market
5.
What diagram shows the movement of goods and services and money from firms to households and from households to
firms? Circular Flow Model
6.
According to the Law of Demand, as price increases, demand _decrease_.
7.
According to the Law of Supply, as price increases, supply _increase_.
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8.
If a good has many substitutes, its demand is elastic/inelastic. (choose one)
9.
Consider the demand for pillowcases. If the cost of pillows increases to $200.00, what will happen to the demand for
pillowcases? Decrease (Law of Demand price and demand move in opposite directions)
10. Consider the demand for Skittles. If the cost of Starbursts drops to 10 cents, what will happen to the demand for Skittles?
Decrease, people will choose the lower priced substitute
11. What terms is used to describe the point at which supply and demand intersect? equilibrium
12. The demand for medicine is elastic/inelastic. (Choose one)
13. Minimum wage is an example of a _price floor_.
14. Rent control is an example of a __price ceiling__.
15. What economist believed that there are some occasions in which the government must step in and regulate the economy?
John Maynard Keynes
16. What economist wrote Communist Manifesto and explained the foundations of communism? Karl Marx and Fredrick
Engles
17. What type of market is controlled by a single seller? monopoly
18. What type of market is controlled by a few large firms? oligopoly
19. What type of business organization has limited liability? Corporation and LLC Partnerships
20. What type of business organization allows the owner to be the sole receiver of profits and make all business decisions?
Sole Proprietorship
21. McDonald’s and Bojangles are both examples of a _ Franchises and/or Corporations.
22. Microsoft is an example of a _Corporation_ type of business.
23. NC is a right to work state. What does “right to work” mean? No business can require an individual to join a union as a
condition of employment
24. What are the profits stockholders receive? dividends
25. _Fiat Money_ describes that our money has value simply because they say it is valuable.
26. What term describes an organization that works to improve wages and working conditions? Labor unions
27. Property used to secure a loan is called collateral_.
28. What do we call a low denomination of money that is lent to the government? Bonds (High Denominations=Treasury
Bills)
29. What type of fiscal policy should be used during inflation? Contractionary policy
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30. What type of fiscal policy should be used during deflation? Expansionary policy
31. Decreasing government spending is an example of using what kind of fiscal policy? Contractionary Policy
32. Decreasing taxes is an example of using what kind of fiscal policy? Expansionary Policy
33. Any point at which supply and demand is not at equilibrium is called _disequilibrium__.
34. The joining of two firms competing in the same market is called a _horizontal merger.
35. The joining of two firms in completing different markets is called a __vertical___ merger. (other steps in manufacturing
process)
36. What was created to insure customer deposits if the bank fails? FDIC: Federal Deposit Insurance Corporation from
$ 100,000 to $ 250,000 in 2008.
37. What was the law that centralized banking in 1913, to give low-interest loans to banks overnight, regulate the reserve
requirements, and as well create a universal currency for the United States? Federal Reserve ACT
Goal 9 Monster Review
The learner will analyze factors influencing the United States economy.
1.
GDP, Gross Domestic Product measures the value of products produced by a country’s citizens.
2.
GNP, Gross National Product_ measures products produced within a country’s borders.
3.
_REAL GDP is GDP measured in constant, unchanging prices.
4.
What measures the purchasing power of the dollar? CPI-Consumer Product Index, 400 items price is checked monthly to
measure inflation
5.
How could you determine the base year if you are examining a CPI Chart? 100
6.
Consider the business cycle, at what point does the business cycle stop contracting? trough
7.
Consider the business cycle, at what point does the business cycle stop expanding? peak
8.
What term means to exchange one good for another good? Barter, voluntary exchange
9.
What trade agreement exists between the US, Canada, and Mexico? NAFTA, North American Free Trade Agreement
10. What does the NAFTA agreement establish? Free trade between US, Canada, and Mexico—no tariffs on imports from
each other
11. What does it mean to have a favorable balance of trade? a country exports more than it imports
12. What kind of worker move from place to place looking for work? migrant
13. Tariffs_ are taxes on imports.
Name:____________________________________
14. Setting a _trade cap or quota_- places a limit on the amount of goods that are imported into a country.
15. What terms means removing government regulations from business? deregulation
16. Today, what term is used to describe a country that is primarily agricultural? Developing or transitional economy
17. Today, what terms is used to describe countries that are industrialized? Developed
18. In periods of inflation, the government would use a Contractionary_ policy.
19. In periods of recession, the government would use a _Expansionary_ policy.
20. Tell if each situation corresponds with an expansionary policy or contractionary policy:
a.
Government decreases taxes— Expansionary
b.
Government raises reserve requirement— Contractionary
c.
Government decreases spending— Contractionary
d.
Government decreases interest rates-- Expansionary
e.
Government increases the monetary supply—Expansionary
21. Embargo (Trade barrier) _ means to cutoff trade completely.
22. What executive agency would establish/enforce laws concerning affirmative action? Executive Branch – EEOC or
Equal Employment Opportunity Commission
23. Consider the GDP for the US… Would the goods produced by a German company in the US be included in the US GDP?
Yes, physically finished in the US
24. Consider the GNP for the US… Would the goods produced by a German company in the US be included in the US GNP?
No, company owned by company outside of US
25. How do you find a country’s per capita GDP? Divided Population by GDP
26. Why must nations trade with one another? Specialization and Scarcity
27. What is the primary measure for determining if a country is developed or developing? Per capita GDP
28. The amount of infrastructure in a country could help determine if it is a developed nation. What is infrastructure? Roads,
Buildings, Bridges…
29. What economist would support deregulation of businesses? Adam Smith
30. What economist would support government spending to alternate a downward business cycle? John Maynard Keynes
31. What is out-sourcing? Producing goods for a business in one country by a business in another country for lower wages,
natural resources, less business regulation
Name:____________________________________
9.04 Assess how current events impact decisions made by consumers, producers, and government policy makers.
a.
Bailout Bank bailout has been attempt to prevent national depression, bank closings would signal fear to
consumers and stop purchasing and people would remove money from bank…Bank loans encourage
entrepreneur and business to expand
b.
Layoff Because of inflation people reducing consumer spending and many products became a overstocked
(surplus) this caused businesses to cut back purchases from factories and factories began laying off workers
until consumer spending began rising….
c.
Terrorism the events of 9/11 and other events around the world has increased an ethnical distrust of Middle
Eastern and Muslim people. It has also increased our Military Spending which had reached its lowest point
since WWII. Increased Domestic Security and the USA PATRIOT Act has given the Executive Branch
extended power in regulating businesses and freezing assets of suspected terrorists. Increased military
spending has provided jobs for a sector of the workforce and possibly delayed the recession by a couple of
years.
d.
Fuel shortage 9/11 and OPEC seem to be linked to fuel shortages from the Middle East but also increased
usage worldwide of automobile fuels has also increased the scarcity. Deregulation of some natural preserves
and drilling off the coast of the US as well as experimenting with alternative fuels has reduced some of the
price hikes of 2008.
e.
Competition: competition allows consumer choice and voluntary exchange, this creates a monopolistic
competition because people diversify and differentiate their products/services to increase their market share
and try to get equilibrium price as high as possible
f.
Monopoly: only one business owns the industry and does not allow for differentiation or price competition,
some industries work better as monopoly and are allowed by the government: Natural MONOPOPLY
(Electricity) GOVERNMENT MONOPOLY (US Postal Service), GEOGRAPHIC MONOPOLY (NFL
Football), TECHNOLOGICAL MONOPOLY (Polaroid).
g.
Collective Bargaining: Employees of large industries like Steel, Automotive, and Textiles have begun joining
labor unions to gain representation in the company they work for in order to influence benefits and wages.
h.
Comparative Advantage: When a company or entrepreneur has a patent on a product they have an advantage
to create a monopoly for a period of time until another competitor can create a product similar but does not
Name:____________________________________
violate trademark, copyright, or patent laws. Sometimes an area has an advantage because of natural
resources or climate, for example, South America has a comparative advantage of coffee beans because of its
climate and soil.
32. Explain the impact on the United States economy of international trade and global products. As the US began offering
free trade to the other nations of the world and began a domino effect. One advantage is the countries could develop
comparative advantage by specialization rather than trying to make everything so lower prices was a natural side effect.
One disadvantage is the jobs moved out of the US because labor was cheaper in other countries and sometimes natural
resources were more plentiful with less regulation.
33. Investigate the ways that domestic and international economies are interdependent. See above.
34. Analyze the short- and long-term effects of fiscal and monetary policy on the United States economy. Fiscal policy is the
budget process of how to raise revenue (Taxes, tariffs…) and how to spend that revenue( Entitlement, Infrastructure,
Public Services ) Monetary Policy is the control of government agencies like the Federal Reserve to manipulate the
business cycle. These work together to create a transitioning business cycle which keeps prices and unemployment low.
35. Analyze the influence of environmental factors, economic conditions, and policy decisions on individual economic
activities. Environmental conferences
Sample EOC Questions Goal 7
1.
2.
3.
4.
Which term is used to describe the study of how people make decisions when resources are limited?
a. Scarcity
b. Decision-making modeling
c. Economics
d. Cost-benefit analysis
According to economic theory, when does scarcity occur?
a. When a society has more resources than it needs to produce goods and services
b. When there are not enough resources to produce all of the things a society would like to have
c. When inflation occurs and demand for goods and services decreases
d. When inflation occurs and demand for goods and services increases
When deciding between renovating a water treatment plant and building a new community pool, what is the
government most likely to consider?
This is also a
a. Scarcity vs. resources
good example of
b. Wages vs. prices
guns vs. butter
c. Wants vs. needs
d. Consumers vs. producers
What term do economists use to describe the alternative you face if you decide to do one thing instead of another?
a. Trade-off
b. Marginal cost
c. Marginal benefit
d. Measure of cost
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5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Which of the following best describes an opportunity cost?
a. The additional cost of producing one additional unit of output
b. An individual goes to the movies and decides to buy popcorn
c. The real price of items increases as the value of money decreases
d. An individual pays for a guitar lesson instead of going to the movies
Of the following scenarios, which is an example of immediate gratification?
a. An individual spends $100 on a pair of shoes instead of putting that money into his savings account
b. An individual puts money into his savings account to use to buy a car when he turns 16
c. An individual pays for a gym membership instead of going to the movies
d. An individual signs up for a credit card in order to begin building credit
An MP3 player manufacturer pays the same amount to produce each MP3 player no matter how many it produces in
total. Which term describes the type of cost for producing MP3 players?
a. Total cost
b. Variable cost
c. Fixed cost
d. Marginal cost
A car manufacturer can produce 5 cars for $10,000 each. After 5 cars are produced, the price to produce each
additional car decreases to $7,500. Which term describes the type of cost for producing cars?
a. Total cost
b. Variable cost
c. Fixed cost
d. Marginal cost
Which of the following terms refers to the extra or additional cost of producing one additional unit of output?
a. Total cost
b. Variable cost
c. Fixed cost
d. Marginal cost
Which of the following is a market economy primarily based on?
a. Capitalism and free enterprise
b. Traditionalism and command
c. Incentives and traditionalism
d. Socialism and command
Which term would economists use to describe a low initial interest rate on a credit card?
a. Obligation
b. Incentive
c. Voluntary exchange
d. Marginal benefit
Which of the following best defines informed judgment?
a. Choosing the next best alternative when choosing to do one thing rather than another
b. The attitudes that most people hold about the relationship between the government and the economy
c. Choosing an alternative that has the greatest value from among comparable products
d. Choosing to limit the amount of goods produced in order to increase prices
What are the factors of production?
a. Natural resources, labor, capital, and money
b. Natural resources, capital, goods, and services
c. Natural resources, labor, capital, and entrepreneurs
d. Natural resources, money, labor, and entrepreneurs
Which of the following is an example of a capital good?
a. A box of cereal
b. A pair of shoes
c. A television
d. A hammer
Name:____________________________________
15. Which of the following best defines Gross Domestic Product (GDP)?
a. The total value of any goods and services produced in a single year
b. The total value of all final goods and services produced in a single year
c. The total value of all capital good and services produced in a single year
d. The total value of all labor produced in a single year
16. Capitalism thrives on competition. What is the main benefit of competition?
a. Lower prices
b. Better decision making
c. A successful democracy
d. Marginal costs and benefits
17. What are the major characteristics of capitalism?
a. Competition, profit, and government ownership of resources
b. Government set prices and private property
c. Competition, profit, and production based on custom and tradition
d. Markets, private property, competition, and profits
18. Who wrote the book Wealth of Nations, which provides the basic philosophy for the capitalist system?
a. Karl Marx
b. Milton Friedman
c. Adam Smith
d. John Keynes
19. Which term describes the money left over after all costs of production have been paid?
a. Revenue
b. Marginal expense
c. Profit
d. Loss
Sample EOC Questions Goal 8
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