Download District Review Test Online Extra Credit Test

District Review Test Online Extra Credit Test – answers are at the end of the test
Multiple Choice
Identify the choice that best completes the statement or answers the question.
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1. The resources used to make all goods and services are the
a. production possibilities.
c. production trade-offs.
b. factors of production.
d. opportunity costs.
2. The government of a country must make a decision between increasing military spending and subsidizing
wheat farmers. This kind of decision is a
a. guns or butter issue.
c. global trade-off.
b. decision at the margin.
d. basic economic decision.
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. What could cause a production possibilities curve to move down and to the left?
a. A nation loses land after being defeated in a war.
b. A baby boom 20 years ago resulted in a large number of young adults in the population
today.
c. An increase in the use of computer technology speeds up production.
d. Thousands of investors from overseas invest money in a nation’s economy.
5. What is the struggle among various producers for the consumer’s business called?
a. socialism
c. incentive
b. competition
d. self-regulation
6. What incentive do manufacturers have to sell their products?
a. making profits on sales
c. putting others out of business
b. pleasing the consumer
d. popularity of the product
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 the function of an economic system?
a. to make sure all people have equal access to goods
b. to produce and distribute goods and services
c. to give all producers the same access to consumers
d. to make sure people are paid for their labor
9. What is the motivating force behind the free market?
a. competition
c. self-interest
b. the invisible hand
d. specialization
10. A government prints and distributes posters to inspire workers to increase their productivity. In which kind of
economy does this most likely take place?
a. weak economy
c. market economy
b. traditional economy
d. centrally planned economy
11. Which of the following is NOT a weakness of centrally planned economies?
a. Most workers lack job security.
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b. Consumers’ needs are generally not met.
c. Workers lack incentives to be innovative.
d. Individual freedoms are sacrificed for societal goals.
What does the process of specialization do for an economy?
a. It eliminates unemployment.
c. It fosters competition.
b. It makes it more efficient.
d. It makes it easier to control.
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.
In what kind of an economy does the government make all the decisions?
a. socialist
c. centrally planned
b. laissez faire
d. free enterprise
A person who believed in the doctrine of laissez faire would disapprove of
a. the invisible hand of the marketplace.
b. consumer sovereignty.
c. self-interest as the motivating force in the free market.
d. government funding of education.
You are an entrepreneur with an innovative idea for a new business. In which kind of economy would you
have the most opportunity to try to achieve success?
a. market economy
c. traditional economy
b. command economy
d. economy of scale
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
In response to rising car traffic, demand for bicycles has increased. The new equilibrium point will show
a. more bicycles sold, but at a higher price.
b. fewer bicycles sold, but at a higher price.
c. more bicycles sold, but at a lower price.
d. fewer bicycles sold, but at a higher price.
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.
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.
When revenues exceed expenditures,
a. there is a budget surplus.
b. there is a budget deficit.
c. the government must create more money.
d. the government is forced to issue more bonds to raise money.
The purpose of expansionary fiscal policy is to
a. increase output.
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b. prevent hyperinflation.
c. slow the growth of the GDP.
d. increase the separation between government and private industry.
Which of these statements is a fundamental part of supply-side economics?
a. The federal government should have a balanced budget every year to protect economic
growth.
b. The economy will only reach equilibrium and prosperity through the self-regulation of the
free market.
c. The government can use deficit spending to increase aggregate demand and pull the
economy out of recession.
d. The government should reduce taxes to promote economic growth by increasing aggregate
supply.
Which of these is a contractionary fiscal policy?
a. The federal government builds a new medical research center at a prestigious state
university.
b. The President and Congress pass a new two-cent-per-gallon gasoline tax.
c. The federal government sends taxpayers up to $300 each in the form of an income tax
rebate.
d. The sales tax on clothing is lifted for one week before the school year begins.
Why does the Federal Reserve alter monetary policy?
a. to regulate the banking industry
b. to provide services to member banks
c. to enable banks to clear checks
d. to lessen the effect of natural business cycles
How could the Federal Reserve encourage banks to lend out more of their reserves?
a. reduce the discount rate
c. increase the prime rate
b. raise the required amount of reserve
d. reduce the money supply
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
b. tight money policy
d. policy lags
What is one possible short-term effect of an easy money policy?
a. decreasing inflation
c. a contracting money supply
b. higher interest rates
d. increased investment spending
What effect would an increase in the discount rate have on the money supply?
a. It would cause the money supply to contract.
b. It would increase the money multiplier.
c. It would cause the money supply to expand.
d. It would have no effect on the money supply.
What is the difference between seasonal unemployment and structural unemployment?
a. Seasonal unemployment occurs because of schedules, whereas structural occurs because
people lack skills.
b. Seasonal unemployment is rare in a modern society, whereas structural is not.
c. Seasonal unemployment occurs only in the summer, whereas structural can occur all year
round.
d. Seasonal unemployment is generally among low-paid workers, whereas structural is
among the highly paid.
When the economy is working properly, what is the unemployment rate?
a. 0 to 3 percent
c. 8 to 10 percent
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b. 4 to 6 percent
d. 10 to 12 percent
Which of the following is most likely to be worried about high inflation?
a. a factory worker
c. a doctor with a suburban practice
b. a shopkeeper
d. a retired couple on a fixed income
Due to a major chemical spill in a country’s largest fishing grounds, 40% of the countries fish supply has been
destroyed.
Which of the following would correctly describe the consequences of the above statement?
a. The sale of beef will decrease
c. The sale of chickens will increase
b. The sale of fishing supplies will remain
d. The sale of fishing boats will increase
the same
As the Phoenix Area has grown in population, land which was used in the production of oranges is now being
used for houses, apartments, shopping centers and parking lots.
Which of the following changes in the price and quantity of oranges will result from this action?
a. price increase, quantity increase
c. price decrease, quantity increase
b. price increase, quantity decrease
d. price decrease, quantity decrease
The President’s tax reform plan calls for a 1200 dollar tax rebate to all families.
Which of the following changes in the price and quantity of DVD players will result from this action?
a. price increase, quantity increase
c. price decrease, quantity increase
b. price increase, quantity decrease
d. price decrease, quantity decrease
A government set maximum price that can be charged for goods and services is:
a. rationing
c. surplus of the good
b. an equilibrium price
d. a price ceiling
Japan increased its tariff on U.S. made cars by 50%. The U.S. raised the tariffs on their products.
Which of the following would result from the change in tariffs on cars and cameras?
a. The standard of living would decrease.
c. The standard of living would remain the
same
b. The standard of living would increase.
d. The standard of living would be
unpredictable
The United States government raises the tariff on television sets to make the foreign sets sell for 10% more
than those produced in America.
Which of the following would result from change in tariff on these products?
a. Consumer’s standard of living will not be c. Consumer’s standard of living will
affected
decrease
b. Consumer’s standard of living will
d. Price of TV’s will decrease
increase.
The relationship between a nation’s imports and it’s exports would be best described as:
a. balance of trade
c. trade surplus
b. trade deficit
d. exchange rate
Which of the following would be a complimentary item to a ipod?
a. A new outfit
c. A second ipod
b. An MP3 player
d. An ipod charger
This governmental action would cause an artificial surplus.
a. price floor
b. price ceiling
____ 42. People begin to download books using Kindles and I pads. What will happen to the price and
quantity of paperback (printed) books?
a. price increase, quantity increase
b. price increase, quantity decrease
c. price decrease, quantity decrease
d. price decrease, quantity increase
____ 43. New robotics are invented which can run a UPS distribution facility with little or no human
supervision. What will happen to the price and quantity of the shipping products by UPS?
a. price increase, quantity increase
b. price increase, quantity decrease
c. price decrease, quantity decrease
d. price decrease, quantity increase
____ 44. Due to problems between the unions and the management during collective bargaining, the auto
workers go on strike.
Which of the following changes in price and quantity of cars will result for this action
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a. price increase, quantity increase
c. price decrease, quantity decrease
b. price increase, quantity decrease
d. price decrease, quantity increase
45. A strong auto worker’s union succeeded in obtaining a 20 percent raise in wages for all auto workers. Other
major unions succeeded in obtaining the same kind of benefits, resulting in inflation.
Which of the following actions by the government, in theory, would correct the above situation?
a. Increase in money supply
c. No change in government policy
b. Increase in government spending
d. Increase the tax rate
46. The consumer price index rose 11% last quarter.
Which of the following actions by the government, in theory, would correct the above situation?
a. increase in discount rate
c. increase in government spending
b. decrease in reserve rate
d. no government action
47. The government becomes concerned due to a dramatic rise in unemployment and a decrease in the GDP for
the third quarter. Which of the following government actions by the Federal Reserve would be the most
appropriate for this situation?
a. Raise income taxes
c. Raise the reserve rate
b. Decrease government spending
d. Decrease the discount rate
48. The U.S. enacted a new quota on foreign produced cars imported to the United States.
Which of the following would result from the change in the quota on foreign produced
cars?
a. Price of American cars will decrease c. Price of foreign cars will decrease
d. Quantity of foreign cars will decrease
b. Standard of living will increase
____ 49. Because of a new quota, all foreign countries stopped exporting watches to the United
States. Which of the following would result from the change in the quota for watched?
a. The price of watches sold in the U.S. c. The price of watches sold outside the
will decrease
U.S. will increase
b. The price of watches sold in the U.S. d. The price of watches sold in the U.S.
will not change
will increase
____ 50. Canada had long been a producer of cheap wheat, but the U.S. had a high tariff on it to
protect American farmers. Recently a trade agreement was concluded which lowered
the tariff. Which of the following would result from the change in the tariff for natural
resources?
c. The standard of living will decrease
a. The quantity of wheat will increase
d. The price of wheat will increase
b. The quantity of wheat will decrease
District Review Test Online Extra Credit Test
Answer Section
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demand down
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