Download Matching (2pts each)

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Economics Final – 150 points
True/False (2pts each)
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2.
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Entrepreneurs are people who start their own businesses.
Scarcity exists when demand is greater than supply.
In a command economy, economic decisions are made by individuals.
Economic equity refers to how rapidly an economy grows.
Disposable income is income that people spend on things they don’t really
need.
_____ 6. Durable goods are defined as goods that last a relatively long time.
_____ 7. People diversify their investments by investing in several different kinds of
investments.
_____ 8. Treasury bonds and bills are issued by the United States Treasury.
_____ 9. A debit card is a type of credit card.
_____ 10. When people’s income goes up, they usually consume less of a good or
service.
_____ 11. According to the law of demand, quantity and price move in the same
direction.
_____ 12. The substitution effect can decrease the quantity demanded of a good.
_____ 13. The purpose of antitrust legislation is to make sure that businesses do not take
advantage of their employees.
_____ 14. The minimum wage increases employment among teenagers and minorities.
_____ 15. The President of the United States can prevent workers from striking for a
period of 80 days.
_____ 16. The measurement of the national economy’s performance is called national
income accounting.
_____ 17. Aggregate demand is the total quantity of goods and services at all price levels.
_____ 18. The phase of the business cycle in which GDP begins to decline is know as a
recession.
_____ 19. M2 included checking accounts, travelers’ checks, savings deposits, time
deposits, and other types of accounts.
_____ 20. When the FED wants to loosen the money supply, it raises interest rates.
Multiple Choice (2 pts each)
Select the letter of the choice that best completes the statement or answers the question.
_____ 21 The value of the next best alternative that has to be given up for the action that is chosen is the:
a. factor of production.
c. opportunity cost
b. trade-off
d. productivity
_____ 22 A company’s office buildings are an example of:
a. capital
c. land
b. labor
d. entrepreneurship
_____ 23 A car used by a messenger service is a type of:
a. capital
c. land
b. labor
d. opportunity cost
_____ 24 Economics is primarily concerned with which of the following?
a. future costs of goods
c. use of resources
b. values and objectives of a society
d. methods of production
_____ 25 Entrepreneurship refers to the ability to:
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a.
manage other people
b. adapt technology efficiently
c. start new businesses, introduce new products and processes, and improve management
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techniques
d. borrow capital successfully and expand an existing business to meet customer demand.
26 According to Adam Smith:
a. the role of the government is to allocate resources
b. government should not interfere in the marketplace
c. a mixed economy combines all of the benefits of a command and a market economy
d. left to themselves, individuals would mishandle the economy
27. A major characteristic of a pure market economy is:
a. unrestricted competition
c. strong government planning
b. an oversupply of labor
d. regulated prices
28 In a capitalist system, most property is:
a. private property
c. regulated by the government
b. owned by the government
d. owned by banks
29 According to the law of demand, when the price of an item goes up, the quantity demanded:
a. stays at the same level
c. falls
b. rises
d. adjusts
30 According to the law of supply, higher prices prompt producers to:
a. increase demand
c. produce less
b. maintain current production
d. produce more
31 The quantity demanded of a product is affected by:
a. output v. input
c. price
b. surplus quantities
d. shortages
32 If the price of an item rises, quantity demanded usually
a. reflects the presence of new suppliers c. remains unchanged
b. rises
d. falls
33 Demand for one particular brand of coffee is probably:
a. elastic
b. inelastic
c. marginal utility
d. substitutable
_____ 34 A joint venture is a:
a. merger between two companies
b. temporary partnership set up for a specific purpose for a short period of time
c. partnership
d. conglomerate
_____ 35 All of the following are characteristics of a monopoly except
a. single seller
c. barriers to entry
b. complete control of market price
d. presence of many competing firms
_____ 36 Natural monopolies are businesses that:
a. deal with natural resources
b. compare against other monopolies
c. are unregulated
d. provide such things as utilities, public transportation, and cable tv
_____ 37. The producer price index measures:
a. changes in the prices producers charge for the goods they sell
b. changes in the prices producers pay for the goods they buy
c. changes in the prices producers pay for salary wages
d. changes in the volume of producer sales
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_____ 38. The Federal Reserve System was established to:
a. ensure a safe and uniform currency
b. regulate thrift institutions
c. establish a gold standard
d. control the amount of money in circulation
_____ 39 The Federal Reserve has the power to:
a. regulate national bank reserves
c. set interest rates for all banks
b. control deposits in member banks
d. tax member banks
_____ 40 Representative money is money that is:
a. backed by a valuable item, such as gold
b. sued in comparison for the values of goods and services
c. accepted in payment for private debts
d. coins and bills
_____ 41 Which of the following is not a function of money?
a. medium of exchange
c. interest-bearing instrument
b. unit of accounting
d. store of value
_____ 42 Near monies include:
a. stocks
c. time deposits
b. bonds
d. property
_____ 43 The Federal Reserve can affect the money supply by:
a. announcing a new prime rate
b. changing reserve requirements
c. issuing monthly money supply targets
d. working through the regional Federal Reserve banks
_____ 44 The number of regional Federal Reserve banks in the United States is:
a. 1
c. 25
b. 12
d. 2500
_____ 45 A reserve requirement of 20 percent means that:
a. banks charge each other 20% interest on funds they loan overnight
b. 20% of a bank’s deposits must be kept on reserve
c. only 20% of a bank’s deposits can be lent out
d. the federal funds rate is 20%
_____ 46 If the Federal Reserve adopts an expansionary monetary policy:
a. interest rates rise and credit is tight
b. interest rates rise and credit is abundant
c. interest rates fall and credit is tight
d. interest rates fall and credit is abundant
_____ 47 A federal program that provides monthly payments to people who are retired or unable to work
is called:
a. Medicare
b. Senior Citizen’s program
c. Social Security
d. worker’s compensation
_____ 48 Since the end of World War II, the size of the U.S. government:
a.
b.
has remained about the same
has grown proportionally to the increase in the population
c. has grown much faster than the population
d. has not kept up with the increase in the population
_____ 49 Which is the public good provided by only the federal government?
a. parks
c. Medicare
b. museums
d. national defense
_____ 50. A finance charge is:
a. amount of money originally borrowed in a loan
b. cost of credit expressed in dollars and cents
c. fee charged to a savings account
d. cost of credit expressed a s yearly percentage
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_____ 51 What determines the degree of demand elasticity of a product?
a. The price
b. The number and suitability of available substitutes
c. The cost of the product’s inputs
d. The profit margin of the product
e. The level at which the product is taxed
_____ 52 Suppose the government set a price ceiling on pizza that is below the equilibrium price of pizza.
What will result?
a. a shortage of pizza
b. a surplus of pizza
c. no shortage of pizza because the existing firms will expand their production to meet the
increased quantity demanded
d. no shortage of pizza because new firms will enter the market to meet the increase in the
quantity demanded
e. people will stop eating pizza
_____ 53 Which of the following would be included in the United States’ GDP?
a. The value of tires that will be placed on a new car
b. The value of marijuana crop grown in someone’s back yard
c. The value of a welfare check paid to an entitled recipient
d. The production of a car in a plant in Memphis, TN
Matching (2pts each)
Match each item with the correct statement below:
a. economics
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b. productivity
d. factors of production
c. scarcity
e. services
land, labor, capital, and entrepreneurship
activities done for a fee
the amount of out put that results from a given level of inputs
situation in which people do not have enough resources to satisfy every desire
a. market economy
b. command economy
d. economic equity
e. competition
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58 economic system that combines private enterprise with governmental controls
59 economic system in which the government minimizes its interference in the economy
60 economic fairness and justness
61 economic system in which economic decisions are made by the government
a. price ceiling
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c. mixed economy
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b. shortage
d. elasticity
c. equilibrium price
e. supply
legal maximum price that may be charge for a particular good or service
situation in which the quantity demanded is greater than the quantity supplied
economic concept dealing with consumers’ responsiveness to an increase or decrease in price
the price at which the amount producers are willing to supply is equal to the amount consumers
are willing to buy
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Name: ____________________________________
In the space below, draw and label the phases of a business cycle: (6 pts)
What caused the GDP to fall after the stock market crash of 1929? (8 pts)
List the 6 qualities of money: (6pts)
To be considered money it must be . . .
1.
2.
3.
4.
5.
6.
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