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ECONOMICS EXAM REVIEW Choices are made because resources a. b. c. d. may run out have alternate uses are limited can only be used once Choices are made because resources a. b. c. d. may run out have alternate uses are limited can only be used once Because of scarcity a. people are forced to make choices b. opportunity costs exist c. People face trade-offs d. All of the above Because of scarcity a. people are forced to make choices b. opportunity costs exist c. People face trade-offs d. All of the above All the combinations of goods and services that can be produced in a given period of time with a fixed amount of resources are called a. opportunity costs b. production possibilities c. factors of production d. trade-offs All the combinations of goods and services that can be produced in a given period of time with a fixed amount of resources are called a. opportunity costs b. production possibilities c. factors of production d. trade-offs Which of the following will cause the production possibilities curve to shift outward? a. a reduction in the size of the labor force b. an increase in the quantity of labor c. an inefficiency that is corrected d. a decrease in the amount of capital Which of the following will cause the production possibilities curve to shift outward? a. a reduction in the size of the labor force b. an increase in the quantity of labor c. an inefficiency that is corrected d. a decrease in the amount of capital When a nation increases its number of capital goods, it is usually true that a. it must do without some consumer goods in the present b. labor must decline c. fewer consumer goods will be available in the future d. no opportunity costs exist for doing so When a nation increases its number of capital goods, it is usually true that a. it must do without some consumer goods in the present b. labor must decline c. fewer consumer goods will be available in the future d. no opportunity costs exist for doing so The opportunity cost of growing corn is a. no wheat b. no dairy products c. no soybeans d. whatever is valued as the next most important to growing corn The opportunity cost of growing corn is a. no wheat b. no dairy products c. no soybeans d. whatever is valued as the next most important to growing corn Because specialized resources are more suited to specific tasks, the extra cost of producing additional units will rise. This is due to a. production possibilities b. scarcity c. law of increasing relative costs d. opportunity costs Because specialized resources are more suited to specific tasks, the extra cost of producing additional units will rise. This is due to a. production possibilities b. scarcity c. law of increasing relative costs d. opportunity costs TRUE OR FALSE The major purpose of economics is to understand choices. TRUE OR FALSE The major purpose of economics is to understand choices. TRUE TRUE OR FALSE Because resources are scarce, the goods they produce are also scarce. TRUE OR FALSE Because resources are scarce, the goods they produce are also scarce. TRUE Which of the groups below best represent the factors of production? a. teachers, lawyers, factory workers b. trucks, factory workers, water c. factory workers, trucks, hammers d. iron ore, water, trees Which of the groups below best represent the factors of production? a. teachers, lawyers, factory workers b. trucks, factory workers, water c. factory workers, trucks, hammers d. iron ore, water, trees TRUE OR FALSE For most choices, there is no opportunity cost. TRUE OR FALSE For most choices, there is no opportunity cost. FALSE Modern technology is resulting in a. better quality goods b. inefficient use of resouces c. less leisure time d. higher prices Modern technology is resulting in a. better quality goods b. inefficient use of resouces c. less leisure time d. higher prices Specialization results in a. increased number of goods b. greater efficiency c. economic interdependence d. all of the above Specialization results in a. increased number of goods b. greater efficiency c. economic interdependence d. all of the above If price rises a. buyers will buy less b. buyers will buy more c. buyers will buy the same amount d. none of the above If price rises a. buyers will buy less b. buyers will buy more c. buyers will buy the same amount d. none of the above A pure market economy would not have a. government control b. competition c. private property d. freedom of choice A pure market economy would not have a. government control b. competition c. private property d. freedom of choice The American economy can best be described as a. socialism b. capitalism c. communism d. a command economy The American economy can best be described as a. socialism b. capitalism c. communism d. a command economy Analogy: The price system is to a market economy as ______is to a command economy. a. income redistribution b. customs and traditions c. government planning d. human capital Analogy: The price system is to a market economy as ______is to a command economy. a. income redistribution b. customs and traditions c. government planning d. human capital In a capitalist economic system, the factors of production are usually controlled by a. the government b. large monopolies c. individuals d. corporations In a capitalist economic system, the factors of production are usually controlled by a. the government b. large monopolies c. individuals d. corporations TRUE OR FALSE In a command economic system, the individual has a say in the way the three basic economic questions are answered. TRUE OR FALSE In a command economic system, the individual has a say in the way the three basic economic questions are answered. FALSE TRUE OR FALSE A mixed economic system contains elements of the three other economic systems. TRUE OR FALSE A mixed economic system contains elements of the three other economic systems. TRUE TRUE OR FALSE Entrepreneurship is encouraged by freedom of choice and competition. TRUE OR FALSE Entrepreneurship is encouraged by freedom of choice and competition. TRUE TRUE OR FALSE A traditional economy is based on how things have been done before. TRUE OR FALSE A traditional economy is based on how things have been done before. TRUE TRUE OR FALSE Most countries have mixed economic systems. TRUE OR FALSE Most countries have mixed economic systems. TRUE One criticism of Capitalism is that a. it prevents economic growth b. its income distribution is unequal c. its living standards are lower than in socialist economies d. its individuals own very little One criticism of Capitalism is that a. it prevents economic growth b. its income distribution is unequal c. its living standards are lower than in socialist economies d. its individuals own very little The way goods and services are produced in a market economy is a. determined by government standards b. with the least-cost combination of resources c. inefficient d. no different than in a command economy The way goods and services are produced in a market economy is a. determined by government standards b. with the least-cost combination of resources c. inefficient d. no different than in a command economy A demand schedule a. relates price to quantity demanded b. is a demand curve when it is graphed c. cannot change d. shows a direct relationship between price and quantity demanded A demand schedule a. relates price to quantity demanded b. is a demand curve when it is graphed c. cannot change d. shows a direct relationship between price and quantity demanded If the price of good A rises and the demand for good B rises, then A and B are a. substitutes b. complements c. not related goods d. not scarce goods If the price of good A rises and the demand for good B rises, then A and B are a. substitutes b. complements c. not related goods d. not scarce goods Recently some cities in Alabama passed a law that limited showers to 4 minutes, with a possible 30-day jail sentence for violators. Which of the following is probably true? a. a surplus of water existed b. the price of water was too high c. a shortage of water existed no matter how high the price d. the price of water was below the equilibrium price Recently some cities in Alabama passed a law that limited showers to 4 minutes, with a possible 30-day jail sentence for violators. Which of the following is probably true? a. a surplus of water existed b. the price of water was too high c. a shortage of water existed no matter how high the price d. the price of water was below the equilibrium price If the supply of gasoline rises and demand does not change, then a. the relative price of gasoline will rise b. the equilibrium price of gasoline will increase c. the equilibrium quantity of gasoline will increase d. the equilibrium price and equilibrium quantity of gasoline will increase If the supply of gasoline rises and demand does not change, then a. the relative price of gasoline will rise b. the equilibrium price of gasoline will increase c. the equilibrium quantity of gasoline will increase d. the equilibrium price and equilibrium quantity of gasoline will increase Which of the following will lead to an increase in supply? a. an increase in the price of a good b. a technological improvement in the production of the good c. an increase in the price of labor d. all of the above Which of the following will lead to an increase in supply? a. an increase in the price of a good b. a technological improvement in the production of the good c. an increase in the price of labor d. all of the above Prolonged shortages may come about if a. demand increases relative to supply b. price floors are set by government c. prices are not allowed to rise to equilibrium d. buyers are allowed to compete for goods Prolonged shortages may come about if a. demand increases relative to supply b. price floors are set by government c. prices are not allowed to rise to equilibrium d. buyers are allowed to compete for goods Which of the following goods probably has the most elastic demand? a. salt b. food c. alcoholic beverages d. private school education Which of the following goods probably has the most elastic demand? a. salt b. food c. alcoholic beverages d. private school education Which of the following is not true concerning a proprietorship? a. most U.S. firms are proprietorships b. they are easy to form and dissolve c. they offer limited liability d. profits are only taxed once Which of the following is not true concerning a proprietorship? a. most U.S. firms are proprietorships b. they are easy to form and dissolve c. they offer limited liability d. profits are only taxed once A corporation a. is a legal entity that conducts business in its own name b. permits unlimited liability to shareholders c. must be dissolved if a majority stockholder dies d. has severely limited abilities to attract financial resources A corporation a. is a legal entity that conducts business in its own name b. permits unlimited liability to shareholders c. must be dissolved if a majority stockholder dies d. has severely limited abilities to attract financial resources Shareholders a. are the owners of corporations b. are less at risk than are bondholders c. are subject to unlimited risk d. have less control over firm decisions than do bondholders Shareholders a. are the owners of corporations b. are less at risk than are bondholders c. are subject to unlimited risk d. have less control over firm decisions than do bondholders Which of the following is not a characteristic of the monopoly market structure? a. one seller b. unique product c. restricted entry d. price taker Which of the following is not a characteristic of the monopoly market structure? a. one seller b. unique product c. restricted entry d. price taker Which firm has the least control over price? a. perfect competitor b. monopolistic competitor c. oligopolist d. monopolist Which firm has the least control over price? a. perfect competitor b. monopolistic competitor c. oligopolist d. monopolist Nonprice competition or advertising a. attempts to increase demand for one’s product b. helps to differentiate one’s product c. can lead to more information to buyers d. all of the above Nonprice competition or advertising a. attempts to increase demand for one’s product b. helps to differentiate one’s product c. can lead to more information to buyers d. all of the above Corporations obtain most of the funds they need for expansion from a. the sale of stock b. the sale of bonds c. short-term borrowing d. undistributed profits Corporations obtain most of the funds they need for expansion from a. the sale of stock b. the sale of bonds c. short-term borrowing d. undistributed profits Which of the following is least likely to result in increased productivity? a. efficient use of natural resources b. employee training programs c. improved machinery d. working overtime Which of the following is least likely to result in increased productivity? a. efficient use of natural resources b. employee training programs c. improved machinery d. working overtime The most significant impact of technology on production has been a. lower wages b. higher consumer prices c. poor-quality goods d. increased productivity The most significant impact of technology on production has been a. lower wages b. higher consumer prices c. poor-quality goods d. increased productivity In the last twenty years in the United States, there has been a sizable increase in the number of a. laborers b. service workers c. farm workers d. manufacturing workers In the last twenty years in the United States, there has been a sizable increase in the number of a. laborers b. service workers c. farm workers d. manufacturing workers The most important reason some people are paid more than others is a. dirty or dull and repetitive work b. talent and skill level differences c. geographic location of the job d. discrimination against minorities The most important reason some people are paid more than others is a. dirty or dull and repetitive work b. talent and skill level differences c. geographic location of the job d. discrimination against minorities Training, experience, and education are all considered a. investment in human capital b. capital c. economic inequalities d. economic equalities Training, experience, and education are all considered a. investment in human capital b. capital c. economic inequalities d. economic equalities Most of the nation’s output of goods and services is purchased by a. consumers b. business firms c. government d. foreign countries Most of the nation’s output of goods and services is purchased by a. consumers b. business firms c. government d. foreign countries Income left over after taxes have been paid is called a. discretionary family income b. disposable family income c. real family income d. money family income Income left over after taxes have been paid is called a. discretionary family income b. disposable family income c. real family income d. money family income The only three ways a person can dispose of income is through a. taxes, necessities, and luxuries b. necessities, luxuries, and savings c. taxes, consumption, expenditures, and recreation d. consumption expenditures, taxes and savings The only three ways a person can dispose of income is through a. taxes, necessities, and luxuries b. necessities, luxuries, and savings c. taxes, consumption, expenditures, and recreation d. consumption expenditures, taxes and savings The profit made on a sale of stock is known as a. interest b. brokerage fee c. equity d. capital gain The profit made on a sale of stock is known as a. interest b. brokerage fee c. equity d. capital gain A transaction that has an effect on a third party is called a (n) a. merit good b. public good c. externality d. private good A transaction that has an effect on a third party is called a (n) a. merit good b. public good c. externality d. private good The amount of return possible on an investment increases directly with the a. amount of risk b. amount of insurance c. financial advice d. mutual fund The amount of return possible on an investment increases directly with the a. amount of risk b. amount of insurance c. financial advice d. mutual fund A taxation system in which tax rates fall as income increases is a. regressive b. proportional c. progressive d. all of the above A taxation system in which tax rates fall as income increases is a. regressive b. proportional c. progressive d. all of the above TRUE OR FALSE In a market system, the consumer “votes” for the goods and services he wants to see produced. TRUE OR FALSE In a market system, the consumer “votes” for the goods and services he wants to see produced. TRUE TRUE OR FALSE If the quality of labor decreases, the production possibilities curve will shift outward. TRUE OR FALSE If the quality of labor decreases, the production possibilities curve will shift outward. FALSE TRUE OR FALSE It is impossible for a nation to operate at a point inside its production possibilities curve. TRUE OR FALSE It is impossible for a nation to operate at a point inside its production possibilities curve. FALSE TRUE OR FALSE Economic growth shifts the production possibilities curve outward from the origin. TRUE OR FALSE Economic growth shifts the production possibilities curve outward from the origin. TRUE TRUE OR FALSE The market system does not adequately provide for the needs of all people. TRUE OR FALSE The market system does not adequately provide for the needs of all people. TRUE TRUE OR FALSE Capitalism is another name for the free enterprise system. TRUE OR FALSE Capitalism is another name for the free enterprise system. TRUE TRUE OR FALSE Competition has a negative effect on the U.S. consumer in the long run. TRUE OR FALSE Competition has a negative effect on the U.S. consumer in the long run. false A proportional tax system a. is unfair b. cannot be consistent with the ability to pay system c. means that upper income people pay a smaller percentage of their income in taxes d. requires upper income people to pay more tax dollars than lower income people A proportional tax system a. is unfair b. cannot be consistent with the ability to pay system c. means that upper income people pay a smaller percentage of their income in taxes d. requires upper income people to pay more tax dollars than lower income people All of the following are considered benefits of economic growth except a. higher employment levels b. higher living standards c. inflation d. income security All of the following are considered benefits of economic growth except a. higher employment levels b. higher living standards c. inflation d. income security The idea that GDP should increase only enough to accommodate population growth is called a. sustainable growth b. unlimited economic growth c. zero economic growth d. productive capacity The idea that GDP should increase only enough to accommodate population growth is called a. sustainable growth b. unlimited economic growth c. zero economic growth d. productive capacity Which of the following would not be a characteristic of a period of economic growth? a. declining investment b. declining unemployment c. expanding credit d. rising productivity Which of the following would not be a characteristic of a period of economic growth? a. declining investment b. declining unemployment c. expanding credit d. rising productivity Which of the following is a function of money? a. medium of exchange b. unit of accounting c. store of value d. all of the above Which of the following is a function of money? a. medium of exchange b. unit of accounting c. store of value d. all of the above Which is not considered money? a. checking account balances b. Federal Reserve notes c. credit cards d. coins Which is not considered money? a. checking account balances b. Federal Reserve notes c. credit cards d. coins Which of the following is an advantage of money over barter? a. permits more specialization of labor b. does not require a double coincidence of wants c. makes exchange faster d. all of the above Which of the following is an advantage of money over barter? a. permits more specialization of labor b. does not require a double coincidence of wants c. makes exchange faster d. all of the above Which of the following is probably the least liquid? a. savings account balances b. shares of stock in a major corporation c. washing machines d. automobiles Which of the following is probably the least liquid? a. savings account balances b. shares of stock in a major corporation c. washing machines d. automobiles Which of the following is not a part of M1? a. savings account balances b. traveler’s checks c. currency d. unused credit card balances Which of the following is not a part of M1? a. savings account balances b. traveler’s checks c. currency d. unused credit card balances Which of the following is the most important function of the FED? a. regulate the money supply b. supervise member banks c. supply the economy with currency d. hold member bank’s deposits Which of the following is the most important function of the FED? a. regulate the money supply b. supervise member banks c. supply the economy with currency d. hold member bank’s deposits Under a fiat monetary standard, money is backed by a. gold b. public faith that money can be exchanged for goods and services c. precious metals that can be exchanged for goods and services d. the Treasury’s assets Under a fiat monetary standard, money is backed by a. gold b. public faith that money can be exchanged for goods and services c. precious metals that can be exchanged for goods and services d. the Treasury’s assets Legal reserves include a. b. c. d. Vault cash and deposits at the FED US government securities Gold All of the above Legal reserves include a. b. c. d. Vault cash and deposits at the FED US government securities Gold All of the above The goal of sound monetary policy is to a. shrink the money supply b. Balance tight and loose policy c. Control banks d. Increase the money supply The goal of sound monetary policy is to a. shrink the money supply b. Balance tight and loose policy c. Control banks d. Increase the money supply If the FED wanted to reduce the money supply, it would a. cut discount rates b. buy government securities c. increase the reserve requirement d. eliminate the reserve requirement If the FED wanted to reduce the money supply, it would a. cut discount rates b. buy government securities c. increase the reserve requirement d. eliminate the reserve requirement When the government sells securities on the open market, money is a. put into the economy b. increased in value c. taken out of the economy d. the same supply When the government sells securities on the open market, money is a. put into the economy b. increased in value c. taken out of the economy d. the same supply To regulate the supply of money, the FED may use all of the following tools EXCEPT a. discount rate b. reserve requirements c. open-market operations d. prime rates To regulate the supply of money, the FED may use all of the following tools EXCEPT a. discount rate b. reserve requirements c. open-market operations d. prime rates During a period of inflation, the average consumer a. looses purchasing power b. gains credit easily c. raises his standard of living d. borrows more During a period of inflation, the average consumer a. looses purchasing power b. gains credit easily c. raises his standard of living d. borrows more Which of the following best represents a nation’s standard of living? a. nominal GDP b. real GDP c. per capita real GDP d. per capita nominal GDP Which of the following best represents a nation’s standard of living? a. nominal GDP b. real GDP c. per capita real GDP d. per capita nominal GDP Which of the following is not a cause of cost-push inflation? a. An increase in demand at full employment b. An increase in the price of a raw material c. Wage increases due to union activity d. Price increases to increase profits Which of the following is not a cause of cost-push inflation? a. An increase in demand at full employment b. An increase in the price of a raw material c. Wage increases due to union activity d. Price increases to increase profits The use of taxation and spending policies to regulate the economy is called a. Fiscal policy b. Normative manipulation c. spillover d. monetary policy The use of taxation and spending policies to regulate the economy is called a. Fiscal policy b. Normative manipulation c. spillover d. monetary policy The control of the money supply and credit to regulate the economy is called a. Fiscal policy b. Normative manipulation c. spillover d. monetary policy The control of the money supply and credit to regulate the economy is called a. Fiscal policy b. Normative manipulation c. spillover d. monetary policy The only sector of the economy that can act in the best interest of the economy is a. Consumers b. Government c. business d. foreign countries The only sector of the economy that can act in the best interest of the economy is a. Consumers b. Government c. business d. foreign countries If the U.S. imports more than it exports it would lead to a a. b. c. d. Trade balance Trade deficit Positive balance of trade Fixed foreign exchange market If the U.S. imports more than it exports it would lead to a a. b. c. d. Trade balance Trade deficit Positive balance of trade Fixed foreign exchange market TRUE OR FALSE Entrepreneurship is encouraged by freedom of choice and competition. TRUE OR FALSE Entrepreneurship is encouraged by freedom of choice and competition. TRUE TRUE OR FALSE All persons in the United States have the right to own personal property, land, factories, farms and businesses. TRUE OR FALSE All persons in the United States have the right to own personal property, land, factories, farms and businesses. TRUE TRUE OR FALSE The government is not allowed to buy private property for public purposes. TRUE OR FALSE The government is not allowed to buy private property for public purposes. FALSE TRUE OR FALSE In a market system, the consumer “votes” for the goods and services he wants to see produced. TRUE OR FALSE In a market system, the consumer “votes” for the goods and services he wants to see produced. TRUE TRUE OR FALSE A change in the quantity demanded of cigarettes is the result of a change in the price of cigarettes. TRUE OR FALSE A change in the quantity demanded of cigarettes is the result of a change in the price of cigarettes. TRUE TRUE OR FALSE An increase in price will cause a leftward shift in demand a rightward shift in supply. TRUE OR FALSE An increase in price will cause a leftward shift in demand a rightward shift in supply. TRUE TRUE OR FALSE Buyers tend to change to lower-priced from higher-priced goods, according to the substitution effect. TRUE OR FALSE Buyers tend to change to lower-priced from higher-priced goods, according to the substitution effect. TRUE TRUE OR FALSE If the price of tennis racquets rises, then the demand for tennis balls will tend to rise also. TRUE OR FALSE If the price of tennis racquets rises, then the demand for tennis balls will tend to rise also. FALSE TRUE OR FALSE If the price of cassettes rises, the demand for CD’s will rise. TRUE OR FALSE If the price of cassettes rises, the demand for CD’s will rise. TRUE TRUE OR FALSE If the price is below the equilibrium price, a shortage will develop. TRUE OR FALSE If the price is below the equilibrium price, a shortage will develop. TRUE TRUE OR FALSE If supply shifts to the left and demand does not change, then the equilibrium price and the equilibrium quantity will rise. TRUE OR FALSE If supply shifts to the left and demand does not change, then the equilibrium price and the equilibrium quantity will rise. FALSE TRUE OR FALSE If demand shifts to the left and supply does not change, then the equilibrium price and the equilibrium quantity will fall. TRUE OR FALSE If demand shifts to the left and supply does not change, then the equilibrium price and the equilibrium quantity will fall. TRUE TRUE OR FALSE Minimum wage laws are a form of price ceiling. TRUE OR FALSE Minimum wage laws are a form of price ceiling. FALSE TRUE OR FALSE Increasing productivity makes goods more expensive. TRUE OR FALSE Increasing productivity makes goods more expensive. false TRUE OR FALSE Productivity refers to the efficiency with which we produce goods and services. TRUE OR FALSE Productivity refers to the efficiency with which we produce goods and services. true TRUE OR FALSE A firm in a perfectly competitive industry is a price-taker. TRUE OR FALSE A firm in a perfectly competitive industry is a price-taker. true TRUE OR FALSE A geographic monopoly exists when the market is not large enough to support more than one seller. TRUE OR FALSE A geographic monopoly exists when the market is not large enough to support more than one seller. true TRUE OR FALSE The presence of many buyers and sellers in the market is a characteristic of an oligopoly. TRUE OR FALSE The presence of many buyers and sellers in the market is a characteristic of an oligopoly. false TRUE OR FALSE The increase in farm productivity is the result of advances in science and technology. TRUE OR FALSE The increase in farm productivity is the result of advances in science and technology. true TRUE OR FALSE The breakfast food industry is a good example of an oligopoly. TRUE OR FALSE The breakfast food industry is a good example of an oligopoly. true TRUE OR FALSE Corporations are the most common business organization in the U.S. TRUE OR FALSE Corporations are the most common business organization in the U.S. false TRUE OR FALSE Proprietorships account for the largest amount of business revenues. TRUE OR FALSE Proprietorships account for the largest amount of business revenues. false TRUE OR FALSE Corporate shareholders are taxed twice on the corporations earnings. TRUE OR FALSE Corporate shareholders are taxed twice on the corporations earnings. true TRUE OR FALSE Proprietorships and partnerships face limited liability for the debts of their firms. TRUE OR FALSE Proprietorships and partnerships face limited liability for the debts of their firms. false TRUE OR FALSE Trade credit is the most common type of short-term financing for businesses. TRUE OR FALSE Trade credit is the most common type of short-term financing for businesses. true TRUE OR FALSE People who own corporate bonds have loaned the company money. TRUE OR FALSE People who own corporate bonds have loaned the company money. true TRUE OR FALSE High interest rates encourage borrowing by companies. TRUE OR FALSE High interest rates encourage borrowing by companies. false TRUE OR FALSE Retained earnings are undistributed profits. TRUE OR FALSE Retained earnings are undistributed profits. true TRUE OR FALSE Officers selected by the board of directors run the corporation. TRUE OR FALSE Officers selected by the board of directors run the corporation. true TRUE OR FALSE Members of one in five American families own shares of stock. TRUE OR FALSE Members of one in five American families own shares of stock. true TRUE OR FALSE Assets – Liabilities = Net Worth TRUE OR FALSE Assets – Liabilities = Net Worth true TRUE OR FALSE In recent years the number of blue collar jobs has remained at the same level. TRUE OR FALSE In recent years the number of blue collar jobs has remained at the same level. false TRUE OR FALSE At present, the size of the labor force in the U.S. is about half the total population. TRUE OR FALSE At present, the size of the labor force in the U.S. is about half the total population. true TRUE OR FALSE In recent decades, the rate of population growth in the U.S. has been slowing down. TRUE OR FALSE In recent decades, the rate of population growth in the U.S. has been slowing down. true TRUE OR FALSE The average age of the U.S. population is getting younger. TRUE OR FALSE The average age of the U.S. population is getting younger. false TRUE OR FALSE Jobs in the U.S. have been shifting from the goods-producing to the service industries. TRUE OR FALSE Jobs in the U.S. have been shifting from the goods-producing to the service industries. true TRUE OR FALSE The demand for workers in an industry tends to rise as the demand for the goods it produces increases. TRUE OR FALSE The demand for workers in an industry tends to rise as the demand for the goods it produces increases. true TRUE OR FALSE Supply and demand are the major factors in determining wage rates. TRUE OR FALSE Supply and demand are the major factors in determining wage rates. true TRUE OR FALSE The more training required for a job, the larger the supply of workers available. TRUE OR FALSE The more training required for a job, the larger the supply of workers available. false TRUE OR FALSE Public goods and services cannot be easily divided and sold in small units. TRUE OR FALSE Public goods and services cannot be easily divided and sold in small units. true TRUE OR FALSE One of the functions of taxes is to discourage certain behaviors. TRUE OR FALSE One of the functions of taxes is to discourage certain behaviors. true TRUE OR FALSE The sales tax is an example of a proportional tax. TRUE OR FALSE The sales tax is an example of a proportional tax. false TRUE OR FALSE The largest source of income for the federal government is the federal personal income tax. TRUE OR FALSE The largest source of income for the federal government is the federal personal income tax. true TRUE OR FALSE Government can encourage economic growth by promoting saving and investing. TRUE OR FALSE Government can encourage economic growth by promoting saving and investing. true TRUE OR FALSE If population increases faster than GDP, the standard of living increases. TRUE OR FALSE If population increases faster than GDP, the standard of living increases. false TRUE OR FALSE Debtors profit from inflation. TRUE OR FALSE Debtors profit from inflation. true TRUE OR FALSE Checking accounts and checking-type accounts are considered forms of money. TRUE OR FALSE Checking accounts and checking-type accounts are considered forms of money. true TRUE OR FALSE The value of M1 is always greater than the value of M2. TRUE OR FALSE The value of M1 is always greater than the value of M2. false TRUE OR FALSE M2 is the most liquid definition of money. TRUE OR FALSE M2 is the most liquid definition of money. false TRUE OR FALSE A bank’s legal reserves are equal to its total assets. TRUE OR FALSE A bank’s legal reserves are equal to its total assets. false TRUE OR FALSE The nation’s money supply may increase when banks make loans. TRUE OR FALSE The nation’s money supply may increase when banks make loans. true TRUE OR FALSE If an individual bank has excess reserves, it can make loans. TRUE OR FALSE If an individual bank has excess reserves, it can make loans. true TRUE OR FALSE If reserve requirements rise, the amount of money in circulation increases. TRUE OR FALSE If reserve requirements rise, the amount of money in circulation increases. false TRUE OR FALSE When prices fall, the value of money rises. TRUE OR FALSE When prices fall, the value of money rises. true Final Review------What is the fundamental problem of economics? scarcity Final Review------What are the four factors of production? Land, labor, capital and entrepreneurship Final Review------Which of the following is an example of a good? a. A car b. A car wash c. A tune-up d. An oil change Final Review------Which of the following will cause the PPC to shift outward? a. Reduction in size of labor force b. Increase in the quantity of labor c. Inefficiency that is corrected d. Decrease in the amount of capital Final Review------Who is considered the “father of modern economics”? Adam Smith Final Review------Which of the following best represents payment for a service? a. $1.95 for a hamburger b. $18.95 for a textbook c. $15,000 for a new car d. $10.00 for a haircut Final Review------What does having a “pure” market economy mean? No government involvement Final Review------In what type of economy does the government make all the basic economic decisions? command Final Review------Private property rights Economic freedom Profit motive Government control All of these are characteristics of what type of economy? Capitalism Final Review------What is the most common form of business organization in the U.S.? Sole proprietorship Final Review------The owners of a corporation are called what? shareholders Final Review------Buying only one soda instead of two at lunchtime describes the economic concept of what? Diminishing marginal utility Final Review------How does the demand curve respond to an increase in demand? The demand curve shifts to the left Final Review------The demand curve will always slope___________________. downward Final Review------What will cause a change in quantity demanded of a product? A change in price Final Review------If prices are not allowed to reach equilibrium, what will occur? Prolonged shortages Final Review------If there is a shortage in the market, what will likely happen to price? Price will rise Final Review------What are the four market structures discussed in class? Perfect competition Monopolistic competition Oligopoly Monopoly Final Review------Which market structure would have the least control over price? Perfectly competitive market Final Review------The refusal of workers to go to work is called what? Strike Final Review------Training, experience, and education are all considered……. Investment in human capital Final Review------The traditional theory of wage determination says that wages are determined by…………… Supply and demand Final Review------The profit made on the sale of stock is known as……………. Capital gain Final Review------A taxation system where rates rise as income rises is called …….. A progressive tax system THE END