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! Economics with Emphasis on the Free Enterprise System and Its Benefits Credit by Exam Study Guide This Credit by Exam Study Guide can help you prepare for the exam by giving you an idea of what you need to study, review, and learn. To succeed, you should be thoroughly familiar with the subject matter before you attempt to take the exam. Every question that appears on the Credit by Exam/Examination for Acceleration is grounded in the knowledge and skills statements and student expectations within the state-mandated standards, the Texas Essential Knowledge and Skills (TEKS). It should be noted that the exam will not test every student expectation. However, it is important that students study and know the entire scope of the TEKS so that they can develop a complete understanding of the content. The CBE/EAs are global exams grounded in the TEKS and are not designed to be a final exam for the University of Texas high school courses. You can view the TEKS for this exam online at http://www.tea.state.tx.us/teks/. Since questions are not taken from any one source, you can prepare by reviewing any of the state-adopted textbooks. About the Exam The Credit by Exam consists of 50 multiple choice questions that are worth two points each. You will be allowed 3 hours to take the exam. Concepts and Objectives The lists and sample questions below may not refer to all the material that will be on the exam. These lists only provide additional information for some of the student expectations tested in the Economics with Emphasis on the Free Enterprise System and Its Benefits. Ultimately, you should use the TEKS to guide your exam preparation. Know what is meant by each of the following concepts: Absolute Advantage Change in Demand Appreciated Dollar Change in Quantity Supplied Arbitration Change in Quantity Demanded Balance of Trade Change in Supply Bankruptcy Circular Flow Model Barriers to Entry Contractionary Fiscal Policy Barter Contractionary Monetary Policy Bear Market Collective Bargaining Bonds Collusion Bull Market Commodity Money Capital Flight Communism Capital Markets Comparative Advantage Capitalism Competition Categories of Labor Conglomerate The University of Texas at Austin, Continuing & Innovative Education K-16 Education Center 1 ECO FE 09246 Study Guide Consumer Cooperative Consumer Price Index Corporation Credit Cards Credit Score Currency Debit Cards Debt Deficit Demand Demand Curve Depreciated Dollar Developed Country Developing Country Discount Rate Double Counting Economics Economic Freedom Economic Goals Economic System Economies of Scale Effective Tax Effects of Trade Barriers Elasticity of Demand Elasticity of Supply Equilibrium Price Exchange Rates Expansionary Fiscal Policy Expansionary Monetary Policy Expenditures Approach to GDP Export Factors of Production Federal Reserve Federal Funds Rate Target Fiat Money Financial Markets Financial System Fiscal Policy Fixed Cost Formula for Inflation Franchise Free Banking Era Free Enterprise Free Market Free Trade Free Trade Agreements Full Employment GDP General Partnership Geographic Monopoly Gold Standard Gross Domestic Product Guns or Butter Horizontal Merger Import Incentives Income Approach to GDP Industrial Union Inflation Internal Financing International Monetary Fund (IMF) Invisible Hand Labor Union Law of Demand Law of Increasing Opportunity Costs Law of Supply Limited Partnership Market Equilibrium Marginal Cost Marginal Revenue Mediation Merger Minimum Wage Money Multiplier Monetary Policy Lags Monetary Policy Monopoly Monopolistic Competition Multinationals Mutual Fund Natural Rate of Population Increase Nominal Wages Nonprofit Organizations Opportunity Cost Oligopoly Open Market Operations Partnership Per Capita Real GDP Perfect Competition Pension Funds Poverty Rate Price Ceiling The University of Texas at Austin, Continuing & Innovative Education K-16 Education Center 2 ECO FE 09246 Study Guide Price Floor Private Property Rights Problems with Fiscal Policy Problems with Rationing Production Possibilities Curve Profit Motive Property Rights Pure Competition Real Wages Recession Representative Money Reserve Requirements Responsive Prices Retirement Plans Role of Government in Market Economy Shortage Six Characteristics of Money Sources of Federal Revenue Specialization Socialism Sole Proprietorship Stages of Development Stocks Strike Supply Surplus Technological Monopolies Theory of Production Three Basic Types of Taxes Three Functions of Money Tools of Monetary Policy Total Cost Total Expenditures (Revenue) Test Total Revenue Trade Agreements Trade Barriers Trade Deficit Trade-Offs Trade Surplus Two Basic Principles of Taxation Types of Unemployment Underutilizing Unemployment Rate Variable Cost Wildcat Bank World Bank Know the main ideas associated with each of these economic philosophers: Friedrich Hayek Milton Friedman John Maynard Keynes Adam Smith The University of Texas at Austin, Continuing & Innovative Education K-16 Education Center 3 ECO FE 09246 Study Guide Sample Questions These sample questions will give you a better idea of the types of questions you can expect on the Credit by Exam. These are provided to illustrate the format of the exam. They are not the actual exam. In order to be successful on the exam, you must study the TEKS and all of the concepts previously listed. Multiple Choice Questions 1. What do we call it when members of an oligopoly set prices and production levels? A. Collusion B. Pricing C. Targeting D. Coercion 2. What do we call a market that is used for buying and selling stocks? A. Brokerage market B. Stock exchange C. Stock store D. Bond exchange 3. What do we call a loan that is used to buy a house? A. B. C. D. Mortgage IOU Premium Tuition 4. What is another name for the free enterprise system? A. B. C. D. Communism Socialism Capitalism Liberalism Answer Key Item Number 1 2 3 4 Correct Answer A B A C TEKS expectation "# $%& '() 5D The University of Texas at Austin, Continuing & Innovative Education K-16 Education Center 4