Download Which statement reflects the role of prices in a market economy?

To economists, the increased productivity from me doing what I do best while you
do what you do best is the result of
A voluntary exchange
B specialization
C scarcity
D opportunity cost
For every decision, there is always
A a price to be paid
B a cost to be borne
C someone who will benefit
D an opportunity cost
Economists use the term TINSTAAFL to explain which of the following?
A There is no such thing as absolute failure
B There is nobody as tight as a failed lawyer.
C here is no supposed thing as absolutely fair law.
D There is no such thing as a free lunch.
Which of the following is not a public good?
A public library
B interstate highway
C hospital
D state university
Which of the following accounts for the greatest amount of federal revenue?
A taxes on corporate profits
B personal income taxes
C payroll taxes
D sales taxes
Which is not considered to be a economic role of government?
A national defense
B regulation of trade
C to protect intellectual property rights
D to provide free health care for its citizens
Which of the following controls the nation’s money supply?
A the President and his Cabinet
B the United States Congress
C The Federal Reserve System
D individual citizens
Which of the following is responsible for federal fiscal policy?
A the United States Congress
B the Federal Reserve System
C the Administration
D the Congress and the Administration
Which of the following is not a macroeconomic issue?
A scheduling work shifts
B high teenage unemployment rates
C stagflation
D the increasing trade deficit
Which of the following statements about the Federal Reserve is true?
A It is the nation’s central bank
B It is the “banker’s bank”
C It includes 12 regional banks and 25 branch banks
D all of the above
Which of the following macroeconomic measures is used to best understand annual
national growth?
A Consumer Price Index (CPI)
B Per Capita Gross Domestic Product (PCGDP)
C Real Gross Domestic Product (Real GDP)
D Unemployment Rate (UR)
All of the following are macroeconomic measures EXCEPT
A FC+VC=TC
B C+I+G+X(n)
C Consumer Price Index
D the number of unemployed divided by the labor force
When the Federal Reserve lowers the reserve requirement
A investors will purchase "open market" bonds.
B banks must hold more money.
C people will deposit more money.
D banks will create more money
Which of the following is primarily responsible for the control of the money supply?
A the United States Treasury
B the Federal Reserve System
C the Federal Deposit Insurance Corporation
D the Comptroller of the Currency
The Federal Reserve conducts open-market operations when it
A changes the reserve requirement for banks
B raises or lowers the discount rate
C buys or sells government securities
D changes the prime interest rate
All of the following are part of the M1 measure of money EXCEPT
A personal checking accounts
B coins
C certificates of deposit
D paper currency
The Gross Domestic Product (GDP) of the United States is nearly the same as
A the GDP of Hong Kong and China combined
B the GDP of Great Britain, Italy, France and Germany combined
C the GDP of India, S. Korea, Indonesia, and Africa combined
D the combined GDP of the European Union (EU)
The fiscal year used by governments and businesses runs from
A January 1 to December 31
B December 31 to January 1
C October 1 to 30 September
D April 15 to the following April 14
Which of the following is not included in calculating GDP?
A dental services
B restaurant meals
C automobile sales
D existing home sales
Economists consider ___ as the best indicator of standard of living.
A Gross Domestic Product
B Per Capita Real GDP
C Real GDP divided by UR
D whether a nation engages in free trade and has a surplus
If deficit spending increases the national debt from $4000 billion in 1980 to $7
trillion in 2005, the debt has increased ___.
A 3% over 25 years
B three-quarters over a quarter of a century
C nearly $300 billion in half of a century
D nearly 2 trillion dollars in 25 years
Currency, demand deposits and savings accounts < 100 K comprise the majority of
the ____ supply.
A M1
B M2
C M3
D national
Money serves as a
A store of value
B unit of account
C medium of exchange
D all of the above
When prices go up after a natural disaster, it is due primarily to
A illegal price-gouging
B the Law of Diminishing Utility
C decreased supply as a result of increased demand
D lack of timely government effort and assistance
All states require drivers to have
A collision insurance
B liability insurance
C comprehensive insurance
D full coverage
If the bank in which Deon has $90K is robbed, should Deon worry?
A No, the Feds always catch those guys and will get Deon’smoney back
B Yes, Deon had more than the $50K the bank is insured for.
C No, Deon is covered for the whole $90K by the Federal Deposit Insurance Corporation
D Yes, people invest in banks at their own risk.
If Sheryl invests $3000 in a 12-month CD at 4.75% in Jan 2008, how much money
can she expect from her investment in Jan 2009?
A less than $100
B more than $200
C $150
D just under $145
In economics, market structure refers to
A the shape of the buildings corporations build
B the pricing strategy used by small businesses
C the types of organizations in the market
D competition
The Dow Jones Industrial Average refers to what?
A all of the industrial stocks listed on the NYSE
B the top performers on the NYSE.
C 30 stocks, evenly split between the NYSE and the NASDAQ
D 30 stocks, all but two of which are on traded on the NYSE
If Jasmine has a choice between a credit card with a 15% APR and an annual fee of
$35 and one with a 21% APR and no annual fee, which should she choose?
A the one with the lowest interest rate
B neither, she does not need a credit card
C it depends on how she plans to use the card
D it depends on her credit rating
When economists refer to the equilibrium point, they mean
A the price at which sellers and buyers agree
B the point at which sellers and buyers agree on price and quantity needed
C the lowest price at which buyers can buy what they want
D where quantity demanded and quantity supplied meet
The vast majority of profits in American business are made by
A small business
B limited partnerships
C corporations
D sole proprietorships
The vast majority of businesses are
A sole proprietorships
B corporations
C partnerships
D franchises
What do fruits and vegetables, gold, wheat and pork bellies have in common?
A all of them are subject to perfect competition
B all of them are traded on the NYSE
C their producers use price discrimination
D they all can be used for money in Saudi Arabia
Why don’t economists agree with the statement , “its worth it if it saves just one
life”?
A economists are hard-hearted. That’s why economics is called the “the dismal science”
B economists make their calculations based on opportunity cost and marginal analysis
C they see the value of life as relatively cheap
D most economists believe that the above statement is a positive one and do agree with it
in principle
When prices are too high, whose actions are responsible for lowering them?
A producers, if they want to sell their products
B the government because they are responsible for price stability
C consumers because of the law of demand
D nobody can bring down prices when they are too high
Which of the following is more likely to be found in a command economy than a
market economy?
A private property rights
B job security
C incentives for individual entrepreneurship
D a competitive price structure
Which of the following economic systems is also called free enterprise?
A market economy
B traditional economy
C mixed economy
D command economy
The NAFTA signed by President Clinton
A immediately eliminated all tariffs between the United States and its trading partners.
B gradually eliminated trade barriers between the United States, Canada and Mexico.
C was passed to make it easier for Americans to by Canadian goods
D eliminated trade barriers between the US and the European Union
At the end of 2013, the United States had a national debt of ___ and each citizen’s
share was____.
A $9 trillion, $30,000
B $248 trillion, $770,000
C $17 trillion, $55,000
D $6 thousand billion, $16,000
With the advent of the European Union, which of the following currencies were
replaced by the Euro?
A the French Franc
B the German Mark
C the Italian Lira
D all of the above
Which of the following nations is a member of the EU but has kept its own currency?
A Belgium
B United Kingdom
C Spain
D Portugal
When speaking of a company’s revenue, economists mean
A its sales income
B its costs
C its profits
D none of the above
Many economists argue that a government-mandated minimum wage
A is necessary for the working poor to get ahead
B will cause unemployment
C will result in greater productivity of workers
D will have a positive impact on microeconomic decision-makers
Identify the proper resource payment to owners of land.
A rent
B wages and salaries
C interest
D profit
Which of the following is not considered a factor of production?
A land
B labor
C Capital
D none of the above
Which of the following would be considered as the factor of production “labor”?
A a lawyer who works for himself
B a self-employed carpenter
C a silent partner in a clothing store
D a corporate Chief Executive Officer (CEO)
Which of the following is not considered an entrepreneur?
A a self-employed seamstress
B a piano teacher
C an elected official
D a Certified Public Accountant who works for herself
Although not categorized as a productive resource, production is rarely
possible without this factor of production
A leadership
B entrepreneurship
C capital goods
D human capital
Some power plants burn coal to produce electricity. The furnace of a coal-burning
power plant would be classified as
A. entrepreneurship
B. labor
C. Capital
D. land
In a market economy, how are the basic economic questions of what, how, and for whom to
produce answered?
A. by using a nation's social customs and traditions
B. by using a combination of traditional and command economies
C. by the individuals and firms in the nation's marketplace
D. by the nation's federal and/or local governments
An increase in the price of cars is MOST likely to have which of the following effects
on the market for tires?
A. It would increase the demand for tires and raise their price.
B. It would decrease the demand for tires and lower their price.
C. It would increase the demand for tires and lower their price.
D. It would decrease the demand for tires and raise their price.
When Nancy chooses to visit her grandmother instead of going to the movies with
her friends, her opportunity cost is
A. The price of the movie ticket
B. The joy of being with her grandmother
C. The cost of the bus ticket to go cross-town
D. The pleasure of seeing the movie with friends
Economics is considered
A a theory
B mathematics
C a social science
D a humanity
Economics is based upon
A the notion that governments should provide for people’s wants and needs
B the idea that societies must use their abundant resources to best meet their political
needs
C the fact that there is not enough for the poor
D the central assumption that scarcity dictates that individuals, businesses and
governments must make choices to meet unlimited wants
Which statement reflects the role of prices in a market economy?
A They signal producers about how to use scarce resources.
B They are an obstacle to the efficient flow of resources.
C They are mostly determined by the government to serve public interests.
D They are generally ignored by consumers.
If the cost of sugar rises and sugar is a major ingredient in jelly beans, then the jelly
bean
A demand curve shifts to the left.
B supply curve shifts to the left.
C supply curve shifts to the right.
D demand and supply curves both shift to the right.
The concept that BEST explains why nations trade is
A absolute advantage
B comparative advantage
C triangular trade
D derived advantage
The American Federation of Labor (AFL), led by Samuel Gompers, called for the
union to negotiate for workers. This idea is called
A affiliated servicing
B unified negotiating
C collective bargaining
D joint contracting
Jamie purchased her new cell phone for $150 plus 7% sales tax. How much did she
pay for her new phone? Show your work.
A $255
B $161
C $160.50
D $162
Darnell’s Appliances sold 2700 microwave ovens @ $60 apiece. If Darnell’s unit cost
was $40, what was his profit from microwave ovens? Show your work.
A $162,000
B $108,000
C $ 16,200
D $ 54,000
Which best describes the Law of Demand?
A positive relationship between supply and demand, upward sloping
B inverse relationship between quantity supplied and quantity demanded, negative slope
C inverse relationship between quantity and price, downward sloping
D none of the above
A corporate bond is BEST described
A as a loan to the government to subsidize corporate growth
B as a share of corporate ownership
C as money loaned to the community to pay businesses to relocate to that area.
D as an IOU from a corporation
Which is NOT a characteristic of perfect competition?
A many sellers, many buyers
B no control over price
C product differentiation
D no barriers to entry
A maximum price results in (price ceiling)
A excesses in quantity supplied
B more demanded than supplied
C more supplied than demanded
D a shift in both the quantity demanded and quantity supplied
Marginal benefit is
A the benefit received from automating the production process
B what results from specialization
C achieved when business posts a profit
D the benefit received from adding one more unit of input
Profit is calculated by
A subtracting revenue from costs
B subtracting variable costs from total sales revenue
C subtracting costs from revenue
D multiplying price by quantity
In return for their labor, households receive _____.
A free goods and services
B wages
C salaries
D wages and salaries
Money best accepted as payment for goods and services should be
A divisible
B portable
C durable
D all of the above
The federal agency MOST responsible for regulating financial transactions is the
A Securities and Exchange Commission (SEC)
B Federal Trade Commission (FTC)
C Federal Reserve Board (BOG)
D US Banking Commission (USBC)
In which of the following economic systems does the government make most of the
economic decisions?
A a free enterprise economy
B a market economy like Japan
C a traditional economy like Mali
D a command economy like Cuba
The pollution created by a chemical plant is an example of
A the cost of doing business
B a shared cost
C a negative externality
D a necessary tradeoff for quality pesticides
The Lorenz curve is a graphic way of demonstrating
A the equitable distribution of income throughout society.
B wealth transfer.
C income distribution.
D income redistribution.
Productivity is calculated by
A dividing units produced by time taken to produce them
B dividing time taken to produce units by units produced
C multiplying price and quantity
D combining all units produced
The Law of Supply is reflected in
A the positive relationship of price and quantity
B the slope of the supply curve
C the data in a supply schedule
D all of the above
In microeconomics, the price at which both buyers and sellers agree is depicted as
A the equilibrium price
B a point on the supply curve
C a point on the demand curve
D all of the above
A typical example of a price ceiling is
A setting a maximum rent
B a mandatory wage hike
C requiring a minimum wage
D all of the above
Microeconomic decisions are made primarily by _______.
A Households
B Businesses
C Individuals
D All of the above
To calculate revenue, a business owner uses the formula
A
TC = FC + VC
B
TR = FC + VC
C
TR = AMC + AVC
D
TR = P x Q