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Final Exam
Economics: Unit 5
Name: _________________________________
Part One: Multiple Choice
1. This theory states that education increases productivity and results in higher wages.
A. Social Darwinism
B. Demand-Pull Theory
C. Cost-Push Theory
D. Theory of Relativity
E. The Learning Effect
2. GDP measures all of these produced or provided in a given year.
A. New & Used Goods
B. Stocks & Bonds
C. Goods & Services
D. Subsistence Farming & Household Production
E. Mutual Funds
3. Which of the following is not measured by the GDP?
A. Used goods, such as cars or houses
B. Financial assets, such as stocks or bonds
C. Anything not produced within the country’s borders
D. Household production or subsistence farming
E. All the Above
4. The current dollar value for one year’s GDP.
A. Real GDP
B. Nominal GDP
5. GDP expressed in constant, or unchanging, prices.
A. Real GDP
B. Nominal GDP
6. A good used in the production of a final good is called
A. a Nondurable Good
B. a Monetary Cost
C. a Final Product
D. an Intermediate Good
E. a Durable Good
7. This GDP is the most useful because it is corrected for inflation.
A. Real GDP
B. Nominal GDP
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Score: ______/100
Final Exam
Economics: Unit 5
8. The term for the percentage of people who live in households with income below the official poverty threshold is
A. Downward Spiral Effect
B. Demand-Pull Theory
C. Income Distribution
D. Poverty Rate
E. Rate of Loss
9. All of the following are factored into the GDP except:
A. Consumer Spending
B. Business Investment
C. Federal Tax Rate
D. Government Investment
E. E. Net Exports (X-M)
10. Which of the following is not one of the four types of unemployment?
A. Temporary
B. Cyclical
C. Frictional
D. Seasonal
E. Structural
11. Unemployment that is temporary where a person may be looking for a better job or receiving a higher education.
A. Cyclical
B. Seasonal
C. Temporary
D. Structural
E. Frictional
12. Printing large amounts of money could cause this type of inflation
A. Hyperinflation
B. Purchase Power
C. Cost-Push Inflation
D. Demand-Pull Inflation
E. Controlled Inflation
13. The income level below which income is insufficient to support a family or household
A. Poverty Rate
B. Poverty Threshold
C. Social Security
D. Inflation
E. The Learning Effect
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Final Exam
Economics: Unit 5
14. The direct exchange of one set of goods and services for another.
A. Money
B. Greenbacks
C. Barter
D. Currency
E. The Benjamins
15. Which of the following is a function of money?
A. Medium of Exchange
B. Unit of Account
C. Store of Value
D. Above of the Above
E. None of the Above
16. Coins and paper bills used as money are called this.
A. Currency
B. Greenbacks
C. Silversides
D. Bonds
E. Treasury Notes
17. Which of the following is not a characteristic of money?
A. Durable
B. Aesthetic
C. Portable
D. Divisible
E. Limited Supply
18. The government agency that insures customer deposits if a bank fails up to $100,000 per account.
A. TVA
B. SEC
C. CCC
D. WPA
E. FDIC
19. Which of the following is not one of the Five Cs of Lending?
A. Capacity
B. Capital
C. Character
D. Collateral
E. Choice
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Final Exam
Economics: Unit 5
20. Which of the following is not a way to improve your credit score?
A. Pay your bills on time
B. Keep credit limits low
C. Buy more than you can afford to show your purchasing power
D. Keep active accounts active over a long period
E. Limit inquiries to your credit
21. The credit scores most lenders use to determine your credit risk.
A. FICO Scores
B. FICA Scores
C. FIFA Scores
D. FDIC Scores
E. FEMA Scores
22. Which of the following is a credit data source in a credit report?
A. Payment History
B. Amounts Owed
C. Length of Credit History
D. New Credit
E. All of the Above
23. Credit equals the ability to do this.
A. Spend Money
B. Borrow Money
C. Save Money
D. Raise Money
E. All of the Above
24. This was the most severe economic downturn in the history of industrial capitalism.
A. Panic of 1776
B. Panic of 1837
C. The Great Depression
D. Recession of 1979
E. Lend-Lease
25. This is the spreading out of investments to reduce risk.
A. Divisibility
B. Collateral
C. Diversification
D. Specification
E. Capacity
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Final Exam
Economics: Unit 5
26. This represents individual ownership in the corporation.
A. Shares
B. Stocks
C. Bonds
D. Treasury Notes
E. Currency
27. This is profit from selling stock.
A. Round Lots
B. Odd Lots
C. Cash Calls
D. Dividends
E. Capital Gains
28. This is quarterly profit paid to shareholders.
A. Round Lots
B. Odd Lots
C. Cash Calls
D. Dividends
E. Capital Gains
29. This is a market for buying and selling stock. Examples: Nasdaq & New York Stock Exchange
A. Stock Exchange
B. Securities and Exchange
C. Dow Jones Industrial Average
D. S&P 500
E. Bull & Bear Market
30. The purpose of this type of fiscal policy is to increase output.
A. Contractionary
B. Expansionary
31. Fiscal Policy involves these two things.
A. Taxing & Spending
B. Taxing & Saving
C. Spending & Saving
32. Decreasing government spending is an example of this type of fiscal policy
A. Contractionary
B. Expansionary
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Final Exam
Economics: Unit 5
33. To create money for the budget the federal government borrows money causing this
A. a Free Ride
B. a Capital Gain
C. a Recession
D. a Deficit
E. a Depression
34. The study of behavior and decision making of entire economies
A. Macroeconomics
B. Microeconomics
35. The study of the economic behavior and decision making of small units, such individuals, families, households, and
businesses.
A. Macroeconomics
B. Microeconomics
36. Which of the following is not a Factor of Production?
A. Land
B. Labor
C. Capital
D. Limited Supply
37. The phrase used by economists regarding whether a country decides to produce more military goods or more
consumer goods.
A. Guns or Butter
B. Rifles or Toast
C. Doughnuts or Tanks
38. Making a decision about how much or less to do. It allows people to evaluate options based on available resources.
A. Cost-Demand Theory
B. Demand-Pull Theory
C. Opportunity Buy
D. Think at the Margin
E. Opportunity Sale
39. In competitive markets, this is reached when the quantity demanded equals the quantity supplied.
A. Equilibrium
B. Shift Right
C. Shift Left
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Final Exam
Economics: Unit 5
40. This law states that if all things are equal, consumers will demand more of a product as its price decreases, and less
of a product as its price increases.
A. Law of Supply
B. Law of Demand
41. This law states that if all things are equal, producers will supply more of a product as its price increases, and less of a
product as its price decreases.
A. Law of Supply
B. Law of Demand
42. Items that are usually consumed or used together are called
A. Salt & Pepper Shakers
B. Proportional Services
C. Final Products
D. Intermediate Goods
E. Complementary Goods
43. This is what the Latin term ceteris paribus means.
A. Equal and Divisible
B. In money we trust
C. Save and Spend
D. All other things held constant
E. Out of Many One
44. Economists call an industry this if three or four firms dominate the market with at least 70-80% of the market share.
A. Perfect Competition
B. Monopolistic Competition
C. Oligopoly
D. Monopoly
45. This is the ability of a firm to alter the market price of a good or service.
A. Market Power
B. Barrier to Entry
C. Imperfect Competition
D. Start Up Costs
46. When firms sell their products below cost to drive competitors out of the market, they are practicing
A. Collusion
B. Predatory Pricing
C. Price War
D. Price Fixing
E. Perfect Competition
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Final Exam
Economics: Unit 5
47. This market structure is defined by the following conditions: many firms, few artificial barriers to entry, slight price
control over price, and differentiated products.
A. Perfect Competition
B. Monopolistic Competition
C. Oligopoly
D. Monopoly
48. This market structure, the simplest market structure, has a large number of firms all producing the same product.
A. Perfect Competition
B. Monopolistic Competition
C. Oligopoly
D. Monopoly
49. This market structure has only a single seller in a market—this firm controls the price of the product and is able to
produce less and charge more.
A. Perfect Competition
B. Monopolistic Competition
C. Oligopoly
D. Monopoly
50. What do Social Security taxes pay for?
A. benefits to federal workers and military personnel
B. benefits to those who are unemployed
C. transportation and training expenses for low-income people
D. benefits to older citizens, surviving family members of wage earners, and people with certain disabilities
Part Two: Matching
Work Bank: Durable Goods, Nondurable Goods, Intermediate Goods, Gross Domestic Product, Fixed Income, Savings
Rate, Purchasing Power , Real GDP Per Capita, Consumer Price Index, Poverty Threshold
51. ________________
A measure of all goods and services sold in a given year.
52. ________________
This income does not change from month-to-month or from year-to-year.
53. ________________
A consumers ability to purchase goods and services as it relates to changes in income
and changes in inflation rate.
54. ________________
These goods will not last long such as food or paper products.
55. ________________
A nation’s GDP divided by its population.
56. ________________
This is a market basket of goods used to measure inflation.
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Final Exam
Economics: Unit 5
57. ________________
The minimum level of income one can earn to be considered impoverished.
58. ________________
The portion of disposable income put into a savings account.
59. ________________
These goods will last more than 5 years such as automobiles and appliances.
60. ________________
A good used in the production of a final good.
Part Three: Matching
Word Bank: Cost-Push Theory, Demand-Pull Theory, Food Stamps, Wage-Price Spiral, Hyperinflation, Cyclical
Unemployment, Structural Unemployment, Frictional Unemployment, Underemployed
61. ________________
When a person works at a job for which he/she is overqualified, or he/she works parttime when a fulltime job is desired.
62. ________________
This unemployment occurs when workers’ skills do not match available jobs.
63. ________________
This unemployment mirrors the business cycle.
64. ________________
Inflation that is out of control and often leads to a total economic collapse.
65. ________________
This type of unemployment occurs when people take time to find a job.
66. ________________
Entitlement program designed to provide food aid to needy.
67. ________________
The process by which an increase in wages causes higher prices and higher prices cause
higher wages.
68. ________________
Theory that inflation occurs when producers raise prices in order to meet increased
costs.
69. ________________
The theory that too much money in the economy causes inflation.
70. ________________
Theory that inflation occurs when demands for goods and services exceeds existing
supplies.
Part Four: True or False
71. ______
Economics is the study of how people seek to satisfy their needs and wants.
72. ______
Scarcity implies unlimited quantities of resources to meet limited wants.
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Final Exam
Economics: Unit 5
73. ______
Economists call the most desirable alternative given up as the result of a decision an opportunity cost.
74. ______
Adam Smith believed that self-interest was the motivating force in the free market and he called for
restricting the role of government in the economy.
75. ______
A political system characterized by a centrally planned economy with all economic and political power
resting in the hands of the central government is a democracy.
76. ______
In a free enterprise, economic decisions are determined in a free market by private decision rather than
by state control.
77. ______
In the market equilibrium, prices adjust to make the quantity supplied equal to the quantity demanded.
78. ______
Collusion refers to an agreement among firms to divide the market, set prices, and and/or limit
production.
Part Five: Match the terms below with the appropriate position on the business cycle. (4points)
_____ Contraction
B.
_____ Expansion
_____ Trough
C.
D.
_____ Peak
A
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Final Exam
Economics: Unit 5
Part Six: Create a market graph with the title of the market (Market for Snowboards), price range on the vertical axis (YAxis), quantity on the horizontal axis (X-Axis). Plot the data points using the information provided below. (4 Points)
Part Seven: Buy a Car (2 Points)
Vehicle Make: Honda
Simple Interest Formula:
Factoring Monthly
I = PRT
Payments Formula:
I = Interest ($)
P = Principal ($)
MP = P+I
R = Rate (%)
N
T = Time (Years)
Loan 1: Find the monthly payment with the car financed
at the add-on interest rate of 3% for 5 Years.
(Show Work)
Price ($)
Quantity
$20
50
$30
75
$40
100
$50
125
Vehicle Model: Accord
Vehicle Price: $15,000.00
MP = monthly payment ($)
P = principal ($)
I = interest (P x R x T)
N = number of months the loan is for
Loan2: Find the monthly payment with the car financed
at the add-on interest rate of 6% for 3 Years.
(Show Work)
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Final Exam
Economics: Unit 5
Part Eight: Buy a House: (10 Points)
Things to Remember:
Property tax is 1.25 percent of the purchase price divided by 12, not the loan amount.
Homeowners Insurance will run approximately $12.00 per month per $100,000 appraised value.
To apply the 33% Rule multiply the monthly house payment x 3.
1.
2.
3.
4.
5.
6.
Purchase Price: $1,000,000.00
Loan Amount: (Assume a 20% Down Payment)
____________________
Term: 30 Years
Interest Rate: 4%
Principal & Interest: $3819.00
Tax: ____________________ & Insurance: ____________________
(Show Work Below)
7. HOA: $100.00
8. Monthly Payment:
(Show Work Below)
9. Total Mortgage Paid:
(Show Work Below)
____________________
____________________
10. Monthly income needed to afford the above house using the 33% Rule on a 30-Year Loan. ____________________
(Show Work Below)
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