Download District Review Day Four - Moon Valley High School

District Review Day Four
Multiple Choice
Identify the choice that best completes the statement or answers the question.
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1. All of the following are types of decisions that can be made at the margin EXCEPT
a. whether to grow beans or corn on a large farm.
b. whether or not to hire 100 new workers.
c. whether to leave early in the morning or late in the day for a trip.
d. whether or not to go on a vacation.
2. 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.
3. 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
4. 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.
5. Why does even a free market economy need some government intervention?
a. to provide for things that the marketplace does not address
b. to ensure that the government has the freedom to tax as necessary
c. to make sure that the government can fulfill its needs for military personnel
d. so that the government has some control over factor resources
6. Which of the following is characteristic of a traditional economy?
a. Communities tend to be fast-growing.
b. They are usually based on light industrial production.
c. They have a high standard of living.
d. Children tend to have the same jobs as their parents did.
7. What is the purpose of competition?
a. to act as a regulating force in the marketplace
b. to cause producers to attempt to put each other out of business
c. to cause buyers to have to be careful about spending their money
d. to act as a motivating force behind the free market
8. What is an important advantage of a free market?
a. It does not change unless the government directs it.
b. It offers a wide variety of goods and services.
c. It is easy to regulate.
d. It protects the less fortunate.
9. What is the motivating force behind the free market?
a. competition
c. self-interest
b. the invisible hand
d. specialization
____ 10. The federal budget is put together
a. every other year.
b. by Congress and the White House.
c. to report to Congress on the preceding year’s expenditures.
d. in order to reimburse state governments for costs of federally funded programs.
____ 11. An example of expansionary fiscal policy would be
a. cutting taxes.
b. cutting government spending.
c. cutting production of consumer goods.
d. cutting prices of consumer goods.
____ 12. When you buy a United States Savings Bond, you
a. loan money to the government.
b. borrow money from a savings and loan association.
c. donate money for special government projects.
d. pay for your child’s college education.
____ 13. The purpose of expansionary fiscal policy is to
a. increase output.
b. prevent hyperinflation.
c. slow the growth of the GDP.
d. increase the separation between government and private industry.
____ 14. What type of policy does the Federal Reserve use to counteract an expansion that is causing high interest
rates?
a. fiscal policy
c. easy money policy
d. policy lags
b. tight money policy
____ 15. What is one possible short-term effect of an easy money policy?
a. decreasing inflation
c. a contracting money supply
d. increased investment spending
b. higher interest rates
____ 16. Which of the following instruments is NOT used by the Federal Reserve to change the money supply?
a. the discount rate
c. the federal tax code
b. the required reserve ratio
d. open market operations
____ 17. When a nation imports more than it exports, economists say it has which of the following?
a. a trade surplus
c. a trade deficit
b. a balance of trade
d. a national difference
____ 18. What does it mean when an economist says that an area specializes in producing certain products?
a. They use their resources to produce a limited range of goods.
b. They produce only certain goods rather than everything they need.
c. They produce only goods for which they have an export market.
d. They use the money from their exports to buy food and fuel.
____ 19. When the exchange rates are allowed to be determined by supply and demand, they are called which of the
following?
c. direct
a. flexible
b. fixed
d. indirect
____ 20. Specialization in a nation leads to
a. absolute advantage.
c. international trade.
b. self-sufficiency.
d. comparative advantage.
____ 21. According to the law of comparative advantage, a country should
a. specialize and export goods with the highest opportunity cost.
b. specialize and export goods with the lowest production cost.
c. specialize and export goods with the lowest opportunity cost.
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d. specialize and export goods with the lowest average cost.
Market structure describes:
a. profitability of a business
c. ownership of a business
b. structure of a company's board of directors d. amount of competition a business faces
Which type of economic system uses a combination of the laws of supply and demand and government
intervention to determine it’s answer to economic questions?
a. Market
c. Command
d. Traditional
b. Mixed
When Alison, a college math professor, leaves her job at a small rural college and starts looking for a job at
large urban university, she is
c. cyclically unemployed.
a. frictionally unemployed.
b. structurally unemployed.
d. a discouraged worker.
Tim works as an activities coordinator at a children’s summer camp, in September the camp shuts down and
he is:
a. frictionally unemployed.
c. cyclically unemployed.
b. structurally unemployed.
d. seasonally unemployed
A knitting factory worker who loses her job because the company has relocated the plant to another country is
an example of
a. frictional unemployment.
c. cyclical unemployment.
d. seasonal unemployment.
b. structural unemployment.
Which one of the following is a treaty to eliminate all trade barriers between Canada, Mexico and the United
States?
a. APEC
c. NAFTA
b. CARICOM
d. OPEC
The branch of economics which deals with the economy as a whole and decision making by large units such
as government.
a. Microeconomics
c. Economics
d. Scarcity
b. Macroeconomics
All countries today use this type of economic system.
a. Traditional
c. Pure Command
b. Pure Market
d. Mixed
One example of an entrepreneur is
a. a writer who is hired by a film studio to adapt a novel into a screenplay.
b. a lawyer in a high-profile law firm that specializes in business law.
c. an Olympic ice skater who later decides to join a professional ice show.
d. an artist who runs a business painting murals in office buildings and restaurants.
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.
____ 32. Several people throughout the United States suddenly die after drinking diet mango Pepsi.
Which of the following changes in the price and quantity of Pepsi products will result from this
action?
a. price increase, quantity increase
c. price decrease, quantity decrease
b. price increase, quantity decrease
d. price decrease, quantity increase
____ 33. A new video game is developed which allows for the player to compete against holograms and to
become an actual part of the action. This new technology becomes very popular.
Which of the following changes in the price and quantity of the new game cartridges will result from
this action?
c. price decrease, quantity decrease
a. price increase, quantity increase
b. price increase, quantity decrease
d. price decrease, quantity increase
____ 34. New technology is developed which allows automobile producers to produce automobiles 58%
faster than before.
Which of the following changes in the price and quantity of the new automobiles will result from
this action?
a. price increase, quantity increase
c. price decrease, quantity decrease
b. price increase, quantity decrease
d. price decrease, quantity increase
____ 35. The cost of oil has increased dramatically. Plastic is a major component in the production of toys.
Which of the following changes in the price and quantity of the new toys will result from this action?
a. price increase, quantity increase
c. price decrease, quantity decrease
d. price decrease, quantity increase
b. price increase, quantity decrease
____ 36. 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
____ 37. A shortage will develop when
a. the quantity supplied of a good is greater than the quantity demanded of that good.
b. the equilibrium quantity supplied is lower than the actual quantity supplied.
c. the government provides subsidies to producers.
d. the market price is below the equilibrium price.
____ 38. 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.
____ 39. According to Figure 6.2, in this market, a price of $1.50 would be
c. a price ceiling.
a. the equilibrium price.
b. a price floor.
d. a subsidy.
____ 40. Suppose the exchange rate between the United States and Japan changes from $1 = 100 yen to $1 = 110 yen.
What would happen to the prices of American goods in Japan?
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a. They could increase or decrease.
b. They will decrease.
c. They will remain the same.
d. They will increase.
After a sever hurricane damages several oil wells off the coast of Texas the cost of crude oil increases
dramatically. This causes a rise in the price of almost all major products produced for sale in this country.
Which of the following terms would best describe this situation.
a. Demand pull inflation
c. Easy money policy
d. Tight money policy
b. Cost push inflation
After the destruction of several oil wells off the coast of Texas the U.S. sees a rise in inflation.
Which of the following actions by the government, in theory, would correct the above situation?
a. decrease the discount rate
c. decrease the reserve requirement
d. decrease in job fairs
b. decrease government spending
People not looking for bargains and being willing to purchase products at very high prices can lead to this
type of inflation.
a. cost push
c. frictional
d. cyclical
b. demand pull
What type of policy does the Federal Reserve use to counteract an increase in unemployment?
a. fiscal policy
c. easy money policy
b. tight money policy
d. policy lags
____ 45. A recession is beginning as orders for goods decline and inventories increase. Which of the
following actions by the government, in theory, would correct the situation above?
a. Increase the tax rate.
c. Decrease the reserve rate.
d. Increase the discount rate.
b. Decrease government spending.
____ 46. Robotics is invading the American workplace. A surplus of factory workers is matched by a shortage
of skilled electronics technical personnel. Which of the following actions by the government, in
theory, would correct the situation above?
c. Decrease the reserve rate.
a. Increase the tax rate.
b. Increase government spending.
d. Increase job training programs.
____ 47. Nearly everyone is employed. Most families have a number of people working. Families have more
spending money than ever before and are buying many large consumer items. Many retailers have
found that they can raise prices and people will still buy. Which of the following actions by the
government, in theory, would correct the situation above?
c. Decrease the reserve rate.
a. Increase the tax rate.
d. Decrease the discount rate.
b. Increase government spending.
____ 48. Why does the Federal Reserve alter monetary policy?
c. to enable banks to clear checks
a. to regulate the banking industry
b. to provide services to mentor banks
d. to lessen the effect of natural
business cycles
____ 49. According to Figure 4.4, how many slices of pizza will Ashley buy if the price is $1.00 per slice?
a. one
c. three
b. two
d. four
____ 50. 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