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DAILY BELLRINGER ECONOMICS END OF COURSE TEST PREPARATION Each day your should write down the question and the answer. Keep the questions at the front of your notebook. They will be periodically checked for a quiz grade. Please locate your desk based on your last name. We will have assigned seating until I get to know everyone. Thanks for your patience…it won’t be long. You will be grouped shortly. How do EACH of the following benefit you in your professional and personal life? Write down each word and with your team write one sentence answering the question. Use a specific job situation. 1.Self-Respect 2.Self-Control 3.Courtesy 4.Respect for others 5.Punctuality 6.Trustworthiness PERSONAL FINANCE What is the central problem with which the study of economics is concerned? a. Scarcity b. Excess c. Inflation d. Monetary policy The basic underlying premise of economics is: a. We need to conserve natural resources. b. We need to make sure everyone gets an education. c. We need to make sure everyone gets healthcare. d. We need to realize our wants are unlimited but our resources are not. Jaylyn wants to be a sound engineer but will have to attend an expensive school. He also wants a new car. He doesn’t have the money to do both. If he decides benefits of school will outweigh the satisfaction he gets driving a new car, then his BEST rational decision is to: a. Buy the car. b. Fix the car he has and invest in school. c. Avoid using the car as a trade-off. d. Buy lottery tickets hoping to win enough to do both. A good example of the effect of learning and education on income would be that: a. Employees who perform high risk jobs are more than those in low risk jobs. b. Workers who learn to make high demand products are paid more than those making low demand products. c. Job applicants with good high school grades are paid more than applicants with low high school grades. d. People with college degrees usually are paid more than those with less education. Which of the following BEST explains why surgeons are paid more than construction workers? a. Surgeons make more money for a hospital and are in shorter supply. b. Surgeons have less education than construction workers. c. Surgeons do specialized high demand work but construction workers do unskilled physical work. d. Surgeons work longer hours than construction workers. Net Worth • Is a measure of wealth • Includes assets and liabilities • Is a person’s total assets minus liabilities • All of the above Describe what “Economics” means to you. Give specific examples from your daily life? Use AT LEAST 5 vocabulary words from this class. Include definitions Which factor MOST often has the greatest role in determining the amount of money that workers earn during their careers? a. Their credit worthiness b. Their education level c. The location of the business for which they work d. The size of the business for which they work 5 in 5: SUMMARY Write a paragraph (at least 5 complete sentences) answering the following: “I understand the following about money and financial institutions..” On the island of Yap, large circular stones are used for money. The main reason why this type of money serves its function as a medium of exchange is because it is: A very portable B highly divisible C accepted as payment D prized in foreign transactions Eric received a $2,000 bonus from his employer. He deposited the entire amount in a one-year certificate of deposit with a simple interest rate of 5%. When the CD matured, how much interest had Eric earned? A $10 B $20 C $50 D $100 Which of the following is true about a shareholder in a corporation? A A shareholder is part owner of that business. B A shareholder may not share in the earnings of that corporation. C A shareholder may not transfer his share to another party without permission. D A shareholder is liable for any debts accumulated by that corporation. Which of the following will most likely have the greatest positive effect on standard of living? a. Starting work as soon as possible. b. Wisely investing in the stock market. c. Never going into debt to buy a house. d. Investing in higher education. Quick Write: SUMMARY 1. What are the 4 C’s of credit and what do they mean? 2. What do risk, return and liquidity and how do these terms relate to personal finance? 1. What type of insurance is MOST LIKELY classified into categories such as term, whole, and variable? Life insurance 2. While credit is all or part of an amount a borrower MAY use, debt is the amount of credit that IS used. 3. RETURN is the money an investor receives above the sum or money initially invested. 4. A BOND is debt that a government or business must repay an investor. 5. PRINCIPAL is the original amount of money borrowed or deposited. Fundamental Economic Concepts SUMMARY What is the problem that all countries rich and poor face and why? In economics, the term ‘scarcity’ is defined as a situation in which there A. Are limited resources but unlimited wants and needs B. Are fewer jobs than there are members of the labor force C. Is not enough money in a country’s treasury to pay off its foreign debt D. Are fewer skilled workers than there are high-level job openings Which of the following is a service? a. b. c. d. A pair of scissors A bottle of shampoo A haircut A stylist An assembly-line worker tightens a bolt on a truck in a truck factory. His action is an example of which Factor of Production? a. b. c. d. Land Labor Transportation capital Goods and services are limited. People’s wants are not. To an economist, this is A. a shortage B. a trade-off C. Capital D.Scarcity Factors of Production include: a.Land b.Labor c. Capital d.All of the above In the year 2000, Microsoft founder Bill Gates was the world’s richest person. The origins of Gates’ vast financial fortune stemmed from his A. Inherited wealth B. Entrepreneurial skills C. Experience in human relations D. Concern for the natural environment 1. What is allocation? 2. Why must some things be allocated? 3. Give an example of something that must be allocated. 4. List strategies (ways) in which scarce resources may be allocated. 5. What Economics standard is this? Mike and Ashley have a car wash business. Currently, they wash and wax each car by themselves. The best way to improve their productivity would be if a. Mike and Ashley wash and wax each of the cars together. b. Mike does all the work on even days and Ashley does the work on odd days. c. Mike washes the cars while Ashley waxes them. d. Mike works during the mornings while Ashley works in the afternoon. Entrepreneurship and labor interact in which of the following ways? A. Entrepreneurship makes decisions about the use of labor. B. Labor makes decisions about the use of entrepreneurship. C. Both entrepreneurship and labor receive payment in the form of interest. D. Both entrepreneurship and labor receive payments in the form of rent. All of the following are examples of capital EXCEPT: A.Buildings B.Machinery C.Cattle on a farm D.A hydroelectric power plant The opportunity cost of going to college might BEST be described as: A. The money that must be paid in order to attend college B. The lowest valued alternative use of the student’s time C. The highest valued alternative use of the student’s time D. The value that the student attaches to not working Which of the following is NOT scarce? A.Iron ore B.Labor C.Land D.Iphone 6 Human capital would include: A. An employee at Zaxby’s annual salary B. A civil engineer’s understanding of calculus C. The x-ray machine used in a doctor’s office D. The machinery used to weave cloth Which word BEST completes the following sentence? Improvements in ____________ allow an ecnomy to produce more output from the same or smaller quantity of inputs. A. GDP B. Free enterprise C. Technology D. Guns and butter Which example illustrates the result of non-fraudulent voluntary exchange? a. The government requires people to purchase insurance. b. A customer asks for 5 one dollar bills in exchange for 1 five dollar bill. c. A man purchased a used lawnmower, but the owner didn’t mention it was broken. d. A dentist gets paid for the root canal he performed on a patient. Chris has $50. He decides to spend it on a PS4 game instead of buying a new Polo shirt. What is the opportunity cost of Chris’ decision? a. b. c. d. The benefit of the new Polo shirt. The time it took to shop for the game. The benefit of having $50. The enjoyment of playing the game. When a nation produces consumer products, it cannot produce military goods. This is referred to as a. b. c. d. The ‘infant industry’ argument A ‘guns versus butter’ decision ‘War versus hawk’ mentality Opportunity cost An individual decides to pay $8.00 to see movie instead of buying an $8.00 meal. What is the opportunity cost of the movie? a. The satisfaction missed by not eating the meal b. The $8.00 paid to see the movie c. The time spent watching the movie d. The satisfaction received by going to the movie When a country decides to produce more military goods, it cannot produce as many consumer goods. Which term BEST describes this scenario? a. b. c. d. Efficiency Shortage Trade-off Capital According to the production possibilities information, the opportunity cost of moving from point B to point D may be expressed as a. b. c. d. 2 aircraft carriers. 8 submarines. 4 aircraft carriers. 20 submarines. Which of the following represents an investment in capital? a. Renting a booth at the Flea Market. b. Advertising on TV c. Hiring 2 new salespersons d. Buying new computers Which of the following is an example of an investment in human capital? • A company builds a new factory. • A state puts in a new highway. • A person goes to college. • A county builds a new school. Kim works on an automobile assembly line. Her job illustrates a production process that relies on: a. b. c. d. Autonomous work groups Team decision making Quality circles Division of labor The payments for land, labor, capital and entrepreneurial ability respectively are A. Rent, profits, wages, and interest B. Profits, wages, interest, and rent C. Rent, wages, interest, and profit D. Wages, rent, profit, and interest What can you tell about economics and countries from this photo? Which of the following economic systems is BEST at providing incentives to produce? a. Traditional b. Command c. Market d. Mercantilist In which economic system does the government own the means of production? A. Traditional B. Mixed C. Market D. Command The idea that producers make goods that consumers like and are willing to pay for is a principle of which of the following economic systems? A. Traditional B. Command C. Market D. Socialism Prices act as signals in the market because A. Prices indicate to sellers the types of goods and services to offer for sale. B. Prices can determine dividends for businesses. C. High prices for goods and services signal a healthy economy. D. Entrepreneurs become motivate as prices rise. Which statement reflects the role of prices in a market economy? a.They signal producers about how to use scarce resources. b.They are an obstacle to the efficient flow of resources. c.They are mostly determined by the government to serve public interests. d.They are generally ignored by consumers. QUIZ Answer the questions on a separate piece of paper. 1. Define demand. Are you part of the market demand for a football ticket tomorrow night? (10 pts.) 2. Quantity demanded indicates a change in _______. The effect it has on the demand curve is ________. (15 pts.) 3. What is elasticity? What 3 factors affect it? (15 pts.) 4. Define the 5 factors that change (shift) demand. Give an example of 3 of them. (60 pts.) What basic economic problem do both higher-income nations and lower-income nations have in common? A. Too many unskilled laborers B. Lack of capital goods C. Too much government D. Scarcity of resources In the United States, how are public goods paid for? A. Private firms collect fees from their employees. B. Non-Profit organizations collect charitable donations from people. C. The government collects tax revenues from individuals and firms. D. Corporations make profits from selling goods and services. In the American economy, the goal of economic equity is MOST connected with a. Giving participants a fair chance to succeed b. Restoring laissez-faire capitalism c. Creating limits on corporate profits d. Subsidizing businesses that would otherwise fail ECONOMIC GOALS AND VALUES October 2013 What role does the government fulfill in the economy when it forces a firm to clean up pollutants in the river? a. Providing public goods b. Protecting property rights c. Redistributing income d. Resolving market failures The market for labor would be considered the _________ market. a. Product b. Factor c. Wage d. Monopolistic When the U.S. government purchases a submarine from a company, the government has made a major transaction in the A. Factor market B. Public market C. Product market D. Foreign exchange market Decentralized decision-making resulting in buyers and sellers freely engaging in commerce is an example of a(n) A. mixed economy. B. command economy. C. voluntary exchange. D. involuntary exchange. Ashley would like to buy a reliable car for under $10,000. Jeremy has a reliable car that he would like to sell for $8,000 to buy a truck for his business. If Ashley buys Jeremy's car, the sale is an example of a(n) A. voluntary, fraudulent exchange. B. involuntary, fraudulent exchange. C. voluntary, non-fraudulent exchange. D. involuntary, non-fraudulent exchange. Microeconomic Concepts What is the unit of study in microeconomics? • • • • Individuals businesses and households Inflation and deflation National consumption and expenditures Imports and exports When economists refer to ‘demand,’ they mean which of the following? A. How much satisfaction buyers receive from a purchase. B. How much consumers will purchase at different prices. C. How much sellers will supply at a particular price. D. How much people want the product if it is free. Which of the following is an attempt by a firm to increase the demand for its product? A. The imposition of a price ceiling on the product. B. An advertising strategy designed to change consumer tastes and preferences. C. A marketing strategy to make the good scarce and therefore more expensive. D. A production strategy to flood the market with the good or service. If the price of peaches goes up at the grocery store, what will shoppers MOST LIKELY do? A. buy all the peaches the store has B. buy oranges and bananas instead C. buy more peaches than other kinds of fruit D. buy canned peaches Which of the following would NOT be a determinant of demand? a. the price of related goods b. income c. tastes d. the prices of the inputs used to produce the good An increase in the price of cars is MOST likely to have which of the following effects on the market for tires? A. It would increase the demand for tires and raise their price. B. It would decrease the demand for tires and lower their price. C. It would increase the demand for tires and lower their price. D. It would decrease the demand for tires and raise their price Which of the following is MOST important for economic growth? A.Efficient use of resources B.Ample tax revenues C. Availability of resources D.A large labor force Which of these represents an investment in capital? A. Hiring a waitress in your restaurant B. Advertising on Amazon C. Buying new computers for your office D. Renting land in Columbia County. Why do businesses and individuals specialize? a. To create less work for themselves b. In order to have trading opportunities c. To increase productivity d. In order to have more inputs Idaho grows potatoes while Georgia grows peaches. This production is an example of A. economic interdependence B. regional specialization C. cooperative markets D. joint production If the price of a substitute to good X increases, then a. the demand for good X will increase. b. the market price of good X will decrease. c. the demand for good X will decrease. d. the demand for good X will not change. What happens when demand for a good or service is elastic? a. If prices changes, demand will change. b. If price changes, demand will stay the same. c. If supply changes, demand will change. d. If supply changes, demand will stay the same. The price of corn went down. What might be a reason for this? A. More corn was produced. B. Bad weather ruined many corn crops. C. Advertising made more people want corn. D. Corn farmers wanted to make more money. Suppose you like banana cream pie made with vanilla pudding. Assuming all other things are constant, you notice that the price of bananas is higher. How would your demand for vanilla pudding be affected by this? a. It would decrease. b.It would increase. c. It would be unaffected. d.There is insufficient information given to answer the question. If the price of a good is too high in a market economy and more producers are attracted to the market, A. consumers will demand more of the product. B. the government steps in to regulate the price. C. sellers will compete to meet consumer demands. D. production rates will decrease to lower the price of a good. Of the following, which situation would cause the shift of the supply curve from S1 to S2? A. The government reduces subsidies to wheat farmers. B. New fertilizers increase wheat crop yields. C. Firms exit the wheat industry. D. Drought reduces industry output by 25% Because it did not rain very much in the Southeast, the peanut crop was destroyed. Which of the following would PROBABLY happen next? A. The price of peanut butter would go up. B. More peanuts would be harvested. C. The price of peanut butter would go down. D. More people would eat peanut butter. The price of peaches goes up at the grocery store, what will shoppers MOST LIKELY do? A. buy all the peaches the store has B. buy oranges and bananas instead C. buy more peaches than other kinds of fruit D. buy canned tuna A price floor can be characterized by: DRAW IT!!!! A. A price below equilibrium; creating a shortage. B. A price above equilibrium; creating a surplus. C. A price below equilibrium; creating a surplus. D. A price above equilibrium. Freezing weather in Florida ruined much of the orange crop one year. What happened to the price of orange juice? A. It went down a lot. B. It went down a little. C. It went up. D. It did not change. The minimum wage is a type of a.Price floor b.Comparable worth c. Price ceiling d.Marginal Price A market dominated by a single seller would be considered a(n) _________. a. Oligopoly b. Monopoly c. Perfect Competition d. Monopolistic Competition Which market structure is characterized by many firms with no control over price and identical products? a. Oligopoly b. Monopoly c. Monopolistic Competition d. Perfect Competition The overwhelming majority of American businesses are: a. Silent partnerships b. General partnerships c. Corporations d. Sole proprietorships Macroeconomic Concepts What is a primary macroeconomic goal? a.Full employment b.Low inflation c. Economic growth d.All of the above. Which of the following is a component of GDP? a. Tight money policy b.Reserve requirement c. Personal income tax d.Government expenditures GDP CAN BE CALCULATED BY ADDING TOGETHER CONSUMER SPENDING, INVESTMENT SPENDING, GOVERNMENT SPENDING, AND NET EXPORTS. IN THE PAST 25 YEARS, WHAT COMPONENT HAS CONSISTENTLYT BEEN A NEGATIVE NUMBER? a. b. c. d. Net Exports Consumer Expenditures Investment Expenditures Government Expenditures Why is low unemployment a macroeconomic goal? a. It means the price of good and services will be stable over the long term. b. It means all available resources are being used to fuel the economy. c. It means that stability is achieved by investing in human consumption. d. It means the government has to guarantee fair regulations on inflation. Which economic indicator describes a general increase in prices across the economy? a. Deflation b.Inflation c. Gross Domestic Product d.Unemployment Which of the following is MOST important for economic growth? a. efficient use of resources b.ample tax revenues c. availability of resources d.a large labor force The field of economics that studies government efforts to influence the national economy is best known as a. Microeconomics b. Monetary policy c. Macroeconomics d. Fiscal policy Aggregate supply is the relation between real production and a. Scarcity b.The price level c. Foreign trade d.The exchange rate A decrease in consumption and a leftward shift of the AD curve is most likely caused by: a. An increase in interest rates b. A reduced savings rate c. A decrease in taxes d. Expectations of rising inflation Which of the following is MOST likely to cause real GDP to increase in the United States? a. b. c. d. An increase in interest rates An increase in the value of the dollar An increase in worker productivity An increase in retirement rate among United States workers If inflation and fluctuations of economic activity are avoided, then the economy is better achieving the goal of: a. Full employment b. Stability c. Growth d. Efficiency Which is most likely to lead to inflation? a. An increase in the costs of production b. Reduced prices for goods and services c. An increase in the aggregate supply of goods and services d. The application of price ceilings When aggregate demand exceeds aggregate supply in an economy, the MOST immediate result is a. Inflation b. Deflation c. Unemployment d. A budgetary surplus A market basket of consumer goods purchased in 2010 cost $172. What is the cost of a market basket of consumer goods in the base year? a. b. c. d. $72 $100 $136 $152 Which of the following describes a period of slow economic growth that also has inflation? a. Scarcity b.Stagflation c. Monopoly d.Unemployment READ!!!! IMPORTANT INFORMATION •QUIZ on Friday - Chapter 16 AND EOCT Study Guide (orange book) Domain III (pages 40-50). •Bring your guided reading graphic organizer AND orange review book for the quiz. •No, you will not be allowed to go get it if it is not with you in class. •Less than 3 weeks until the EOCT…are you ready? If you are tardy or absent, you will NOT be prepared. •You will receive a progress report this week. Are YOU in danger of failing? •Tutoring after school Today and Tomorrow and next week Wednesday and Thursday. The recurring, but not necessarily periodic changes in aggregate economic activity are termed a. Annual trends b. Business cycles c. Consumer cycles d. Seasonal fluctuations Which phase of the business cycle is marked by increased production and rising employment? a. b. c. d. Depression Expansion Recession Contraction What is another term for expansion in the business cycle? a.Trough b.Recession c. Downturn d.recovery If 135 million of a labor force of 150 million are employed, the unemployment rate is a. 15% b. 1% c. 10% d. 5% The BEST example of structural unemployment in an economy is someone a. between jobs or entering the work force b. out of work due to a change in the business cycle c. out of work due to a seasonal downturn in business d. whose job skills do not match the economy’s needs Identify a fiscal policy designed to stimulate economic growth? A. Increasing government spending by Congress B. Increasing personal income taxes C. Decreasing government spending by Congress D. Selling government securities to taxpayers