Download Economics Final Exam Review NAME: 1. A significant increase to

Economics Final Exam Review
1. A significant increase to the minimum
wage is likely to
A. decrease worker productivity levels.
B. improve job stability.
C. increase prices of consumer products.
D. decrease the unemployment rate.
2. When representatives of both union and
management meet to discuss goals, offer
solutions and compromises, and work
toward a contract settlement, the two sides
are engaging in
A. mediation.
B. collective bargaining.
C. arbitration.
D. coordinated campaigning.
3. Based on this excerpt, what is one goal of
promoting international free trade?
The agricultural provisions of the U.S.-Canada
Free Trade Agreement, in effect since 1989,
were incorporated into the NAFTA North
American Free Trade Agreement . Under these
provisions, all tariffs affecting agricultural
trade between the United States and Canada,
with a few exceptions for items covered by
tariff rate quotas, were removed by January 1,
1998.
—United States Agriculture Department, 2011
A. decreasing the need for political allies
among nonmember countries
B. increasing specialization among member
countries
C. decreasing dependence on foreign products
D. increasing revenue for governments
generated by Taxes
4. How is the standard of living affected
when inflation occurs rapidly?
A. The standard of living declines because
wages fail to keep up with rising prices.
B. The standard of living improves because
the value of the currency rapidly increases.
C. The standard of living declines because the
rising deficit results in higher tax rates.
D. The standard of living improves because
rising returns on investments increase wealth.
5. What was one purpose of the North
American Free
Trade Agreement (NAFTA)?
A. the elimination of trade barriers in former
communist countries
B. the reduction of tariffs on goods traded
NAME:______________________________________
between adjoining countries
C. the creation of a single currency for a
number of countries
D. the improvement of financial
infrastructures in developing countries
6. The GDP (gross domestic product) is
A. a system that collects macroeconomic
statistics on production, income, investment,
and savings
B. the annual income earned by United States
owned firms and U.S. residents
C. the total amount of goods and services in
the economy available at all possible price
levels
D. the dollar value of all final goods and
services produced within a country's borders
in a given year
7. Supporters of protectionism argue for
trade barriers on imports for all of the
following reasons
EXCEPT
A. trade barriers protect local industries from
the competition of international firms.
B. trade barriers protect infant industries
from the competition of older firms until they
can get established.
C. trade barriers protect against the
“dumping” of lower-priced foreign goods in
the domestic markets.
D. trade barriers protect against the effects of
specialization in the global marketplace.
8. The changes brought on by the fall of the
Soviet Union affected the global economy
by
A. restricting access to finished products.
B. increasing prices for natural resources.
C. creating new participants in the world
market.
D. limiting the expansion of foreign
manufacturing.
9. Which trend is BEST illustrated by these
characteristics? Characteristics of
Multinational Corporations
• Offices and factories are located in more
than one country
• Operating costs and profits can be greater
than those of small countries
A. decreasing significance of territorial
borders
B. increasing importance of national
sovereignty
Economics Final Exam Review
C. decline in economic interdependence
D. increase in foreign trade barriers
10. Use the information below to answer
the question.
The government of Poland announced
on February 17, 2010, that four lignite
coal mines will be privatized. Shares in
the mines were sold to private investors.
Which statement BEST explains the
economic reason for this decision?
A. Producers are more likely to conserve
resources if future profits are affected.
B. Producers are less likely to use resources
inefficiently if there are available substitutes.
C. Producers are more likely to make changes
if consumers voice strong opinions.
D. Producers are less likely to increase output
if business competition declines.
11. When the resource allocation decisions
are made by the government but property
is typically owned by individuals, this type
of economy is MOST likely
A. market capitalism.
B. market socialism.
C. command capitalism.
D. authoritarian socialism.
12. Use the newspaper headline to answer
the question. The government’s action
stated in this newspaper headline is an
example of which type of economy?
A. command
B. socialist
C. mixed
D. traditional
13. Which statement regarding the
competition between buyers and sellers in
the marketplace is TRUE?
A. Firms in a market attempt to maximize
profit by adjusting their levels of production.
B. Competitive markets usually have an equal
number of buyers and sellers.
C. Sellers typically cooperate within a
competitive market to set an industry price
for a product.
D. Buyers in the marketplace are more
concerned with acquiring the product than
maximizing utility.
NAME:______________________________________
14. What is the MOST likely result of
imposing a price ceiling on a particular
product?
A. Supply exceeds demand and results in a
surplus.
B. Sellers decide to produce more of that
product.
C. Demand exceeds supply and results in a
shortage.
D. Buyers lose interest in purchasing that
product.
15. A monopolistic market structure exists
A. when a market is dominated by a single
seller
B. when a few entities dominate an industry
C. when the market is dominated by two
sellers
D. under perfect competition
16. In a market economy, the strongest
incentive for
entrepreneurship is the opportunity to
A. support projects for the public good.
B. gain personal prestige and fame.
C. determine regulatory and tax policies.
D. earn a profit on investments.
17. In 1980 President Ronald Reagan
presented a new plan for government that
called for less government involvement in
the business sector and lower taxes. This
plan was based on which economic theory?
A. mercantilism
B. supply-side
C. monetarism
D. classical liberalism
18. Why was the Federal Reserve System
established in 1913?
A. to monitor the use of personal credit
B. to promote the stability of banks
C. to control investment in the stock market
D. to regulate real estate speculation