Download Chapter One Quiz 1. Any resources that are made by humans and

Chapter One Quiz
1. Any resources that are made by humans and used to create
other goods and services are called
A) services.
C) capital.
B) production.
D) labor.
2. The resources used to make all goods and services are the
A) production
C) production trade-offs.
possibilities.
B) factors of production. D) opportunity costs.
3.
The purpose of a production possibilities graph is to
A) enable a country to mobilize to win a war.
B) keep an economy from having nonproductive
workers.
C) show alternative ways to use an economy’s
resources.
D) make it possible to increase an economy’s
output.
4. An efficient economy is one that
A) has very few people who do not work for a
living.
B) makes the best use of all its goods and
services.
C) uses its resources to make the most goods
and services.
D) makes the least costly use of its resources.
5. 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
D) basic economic
margin.
decision.
6.
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
7. What is a factory building an example of?
A) human capital
C) an economic trade-off
B) physical capital
D) technology
8. Which of the following makes someone an entrepreneur?
A) earning a lot of money as a computer
programmer
B) becoming a highly paid athlete
C) running a service that hires people to install
sprinkler systems in lawns
D) inventing and selling the rights to
manufacture a computer game
9. You bought two new DVDs with the last $30 in your
checking account, and your next payday is on Monday. What
is the opportunity cost of these DVDs?
A) the difference between the cost to produce the
DVDs and the price you paid for them
B) $30
C) dinner and a movie with your friends this Saturday
night
D) knowing you are the first of your friends to have
these DVDs
10. A nation’s automakers install new robotic machinery to
build cars. Now, cars take only a day to make, and the
factories can produce many more cars than before. This
is an example of
A) land and natural
C) growth caused by
resources.
technology.
B) human capital.
D) production possibility
curves.
11. Which of the following lists would an economist consider to
be land?
A) factories, office buildings, assembly line workers
B) farm fields, tractors, pesticides, fertilizers
C) dams, bridges, rock quarries, oil wells
D) iron ore, natural gas, fertile soil, rivers
12. A company that makes baseball caps is underutilizing its
resources. What does this mean?
A) The company is running more efficiently than its
competitors.
B) The company is paying its employees less than it
should be.
C) The company is making caps when it could be
making t-shirts instead.
D) The company is producing fewer caps than it
could be.
13. Which of the following is an example of scarcity, rather than
shortage?
A) A popular toy is sold out during the busy holiday
season.
B) You have spent your last penny and payday is a
week away.
C) A person wants an endless supply of everything
but cannot have it.
D) Gasoline was rationed in America during World
War II.
14. Why are all goods and services scarce?
A) Some goods cost more than others.
B) All resources are scarce.
C) Some things are needs and others are wants.
D) Some people want to have more goods than
others.
15. The lack of which of the following represents a scarcity?
A) orange juice because the trucks carrying it
are on strike
B) enough workers to finish two jobs because
there’s a limited supply of workers
C) enough workers to work at night because the
pay is too low
D) grapefruit juice because very few people want
to buy it
16. What can a decision-making grid do?
A) tell you the right course of action
B) show you every possible consequence of
your decision
C) help you determine some of the opportunity
costs for your decision
D) show you every possible benefit of your
decision
17. One example of thinking at the margin is
A) determining whether it is better to spend your savings
on a new CD player or on a television.
B) deciding whether the benefit of working two extra
hours per day is worth the sacrifice of not having
enough time to work out at the gym.
C) putting all of your money in a savings account
because the interest rates are so high.
D) deciding to buy a car you don’t really like because it is
significantly less expensive than the one you want.
18. Which of the following is NOT shown on a
production possibilities curve?
A) all of the goods and services an economy has
the ability to produce
B) the efficiency of an economy
C) whether an economy has grown or shrunk
D) the opportunity cost of a decision to produce
more of one good or service
19. What can cause a production possibilities curve to move to
the right?
A) Thousands of people move out of the country.
B) A new invention lowers the cost of production.
C) An epidemic kills thousands of young men
and women.
D) The population is growing increasingly old.
20. You’ve been asked to go on vacation to the Grand Canyon
with a friend and his family. Which of the following is a
trade-off for accepting this invitation?
A) seeing the Grand Canyon
B) using your new hiking gear
C) getting to know your friend and his family
better
D) spending time with your other friends at home
Ch. 2 Quiz (2012)
21. Why does even a free market economy need some government
intervention?
A) to provide for things that the marketplace does
not address
B) to ensure that the government has the freedom to
tax as necessary
C) so that the government has some control over
factor resources
D) to make sure that the government can fulfill its
needs for military personnel
22. Which of the following was a free market philosopher?
A) Friedrich Engels
B) Adam Smith
C) Vladimir Lenin
D) Karl Marx
23. What does the process of specialization do for an
economy?
A) It makes it more
C) It eliminates
efficient.
unemployment.
B) It fosters competition. D) It makes it easier to
control.
24. When speaking of the “invisible hand” in the
marketplace, we mean that
A) producers somehow know what the best price is
for their goods or services so that they can enjoy
a high standard of living
B) the government quietly tells businesses what to
produce and the best way to do so.
C) when businesses are in financial trouble, the
federal government will likely “bail them out” by
lending them money to stay in business
D) The interaction of buyers and sellers, motivated
by self-interest and regulated by competition, all
happens without a central plan
25. Why do markets exist?
A) Markets allow people to C) Markets provide self-sufficient
buy what they need to
people with public places for the
consume and sell the
exchange of ideas.
specialized goods and
services they produce.
B) Markets ensure economic D) Markets ensure that government
equity for all people.
does not intervene in the
production of goods and services.
26.Suppose there is a family in which all the boys are
expected to become farmers when they are adults, just
as their fathers and grandfathers did. In which kind of
economy do they participate?
A) false economy
B) centrally planned
economy
C) command economy
D) traditional economy
27. What is the struggle among various producers for the
consumer’s business called?
A) self-regulation
B) incentive
C) competition
D) socialism
28. 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) traditional economy C) command economy
B) economy of scale
D) market economy
29. 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
30. Which of the choices below correctly explains in what way the
economy of China is in transition?
A) The economy is moving from central planning
toward a market-based system.
B) Investments are determined by state control
instead of by private decision.
C) The government rarely interferes in the free
market and is highly receptive to foreign
investment.
D) Individual firms are in the process of being sold to
the state.
31. What is the motivating force behind the free market?
A) self-interest
C) specialization
B) competition
D) the invisible hand
32. What is the purpose of competition?
A) to act as a motivating force behind the free
market
B) to cause buyers to have to be careful about
spending their money
C) to cause producers to attempt to put each
other out of business
D) to act as a regulating force in the marketplace
33. Each society determines who will consume what is
produced based on
A) its needs and wants
B) its unique combination of social values and
goals
C) what region of the world that society is
located
D) assuring every member receives an equal
amount of goods and services
34. Which of the following is NOT a key economic question?
A) Who consumes these goods and services?
B) How should these goods and services be
produced?
C) How should it be ensured that goods and
services are paid for?
D) What goods and services should be
produced?
35. A person who believed in the doctrine of laissez faire
would disapprove of
A) the invisible hand of C) government funding
the marketplace.
of education.
B) self-interest as the D) consumer
motivating force in
sovereignty.
the free market.
36. Which of the following is characteristic of a traditional
economy?
A) They have a high standard of living.
B) They are usually based on light industrial
production.
C) Communities tend to be fast-growing.
D) Children tend to have the same jobs as their
parents did.
37. What is an important advantage of a free market?
A) It does not change C) It protects the less
unless the
fortunate.
government directs it.
B) It offers a wide
D) It is easy to regulate.
variety of goods and
services.
38. Which of the following is NOT characteristic of a centrally
planned economy?
A) Each person is assigned a job.
B) Each collective or factory sets its own goals.
C) The central government owns all land and
capital.
D) The central government makes all economic
decisions.
Chapter 4 Quiz: Demand (Part 1)
39. How is the current demand for a good related to its future price?
A. If the price is expected to rise, current demand will fall.
B. If the price is expected to drop, current demand will
rise.
C. Current demand is not related to future price.
D. If the price is expected to drop, current demand will
fall.
40. A pharmaceutical company sells NOMOCREAKS, a drug that reduces joint
pain caused by arthritis. Which of the following would likely shift the
demand curve for the drug to the right?
A. The Food and Drug Administration announces that
NOMOCREAKS is no more effective than ordinary
aspirin.
B. The manufacturer of NOMOCREAKS now puts 100
capsules in the same bottle that used to hold 80
capsules, but charges the same price as the 80 capsule
bottle.
C. The American Society of Orthopedic Surgeons endorses
the drug as the most effective one on the market for
relieving arthritis pain
D. the price of the drug is reduced by 40%
41. What kind of table lists the quantity of a good that a person
will buy at different prices?
A. demand curve
B. market demand
curve
C. market demand
schedule
D. demand schedule
42. What term describes demand with an elasticity of less than
1?
A. inelastic
C. low
B. elastic
D. unitary elastic
43. Ceteris paribus, or “all other things held constant,” is an
assumption that has which of the following effects on a
demand schedule?
A. It is accurate no matter what changes may
occur in the market.
B. It takes only prices into account.
C. It is accurate only at one price level.
D. It considers the effects of all possible
changes on demand.
44. When prices rise, which of the following happens to
income?
A. Rising prices have no C. It goes down.
effect on income.
B. It rises to meet
D. It buys less.
prices.
45. A shift in the demand curve means which of the following?
A. a change in demand at every price
B. a change in consumer income
C. a rise in prices
D. a decrease in both price and quantity demanded
46. Which of these events could permanently shift an individual’s
demand curve for umbrellas to the right?
A. He moves from a desert community to a rainy city
by the ocean.
B. The price of umbrellas decreases significantly as
inexpensive umbrellas are imported from China.
C. Weather forecasters predict that a major hurricane
will hit his city the following week.
D. He buys a car so he no longer needs to walk to and
wait at a bus stop every morning to get to work.
47. What is a company’s total revenue?
A. the amount of goods a company can
expect to sell
B. the amount a company receives for selling
its goods
C. the price of a company’s goods
D. the amount of profit a company can
expect to make
48. What is a basic principle of the law of demand?
A. When a good’s price is lower, people will buy
more of it.
B. The higher the price, the more people will
want the good.
C. Most people want more material things than
they can afford
D. Everyone has a limited income that they will
spend.
49. What does it mean when the demand for a product is
inelastic?
A. A price increase does not have a
significant impact on buying habits.
B. People will not buy any of the product
when the price goes up.
C. Customers will react by finding
substitutes.
D. There are very few satisfactory substitutes
for the product.
50. What are inferior goods?
A. goods for which the demand rises when
income falls
B. goods that are poorly made and do not last
very long
C. goods that no one wants to buy
D. goods for which the demand falls when
income rises
51. Why does a demand curve slope downward from left to
right?
A. because price increases as demand increases
B. because revenues increase as price decreases
C. because demand increases as price decreases
D. because revenues decrease as price increases
52. Which of the following would probably have inelastic
demand for a student?
A. mouse pad
C. sneakers
B. ball point pen
D. school bus pass
53. What determines how a change in prices will affect total
revenue for a company?
A. elasticity of
demand
B. the company’s
pricing policy
C. values of elasticity
D. the consumers’ incomes
54. Which of the following is a good that might not be bought
when prices rise?
A. complement
C. inferior good
B. substitute
D. luxury
55. The price of movie tickets in a town has risen from $6 to $8.50. What is
the most likely effect of the change in price?
A. The demand curve for movie tickets will move right.
B. The quantity demanded of movie tickets will increase.
C. The demand curve for movie tickets will move left.
D. The quantity demanded of movie tickets will decrease.
56. Jasmine is willing to buy 40 pencils at 25 cents apiece.
When the price is ten cents apiece, she is willing to buy
100 pencils. Which of the following statements could be
true about Jasmine’s demand for pencils?
A. She will buy 80 pencils at 15 cents apiece.
B. She will buy 20 pencils at 20 cents apiece.
C. She will buy 100 pencils at 5 cents apiece.
D. None of these statements is likely to be true.
Ch. 5 Quiz on Supply (2012)
57. Regulation is government intervention in a market that
results in all of the following EXCEPT
A. influencing the price C. governing the
of a good.
quantity of a good.
B. lowering the costs of D. affecting the quality
production of a good. of a good.
58.Which of the following is an example of government
influence on supply?
A. Federal law changing Presidents Day to
February 5th
B. A bakery’s rent on the building increases by
$500 per month
C. Hybrid cars sales increase by 15% in 2010
D. Federal law making requiring every car to
have airbags
59.Which of the following is a fixed cost for a pizza
restaurant?
A. temporary workers C. cost of pepperoni
B. rent
D. take-out boxes
60. Which of the following is an example of lower production costs brought
about by the use of technology?
A. the use of e-mail to replace slower surface mail
B. the importing of fresh vegetables from South America
rather than using canned vegetables
C. the making of breads and pastries in local shops rather
than large bakeries
D. the delivery costs of gasoline to the consumer by
diesel trucks
61. Which of these events would cause a shift to the right in the
supply curve of a candy manufacturer?
A. The manufacturer lowers the price of its candy
bars.
B. The company shuts down for several weeks
because there’s been a fire.
C. Upgrades to its mixing equipment allow the
company to make more bars.
D. The company raises the price of its candy
bars.
62. What do sellers do if they expect the price of goods they
have for sale to increase dramatically in the near future?
A. sell the goods now and try to invest the
money instead of resupplying
B. store the goods indefinitely regardless of
when the price rises
C. store the goods until the price rises
D. sell the goods now but try to get the higher
price for them
63. When the selling price of a good goes up, what is the
relationship to the quantity supplied?
A. It becomes practical C. There is no
to produce more
relationship between
goods.
the two.
B. The cost of
D. The profit made on
production goes
each item goes
down.
down.
64. Which of the following is NOT an example of the law of supply?
A. A furniture store raises the price of its sofas since
they can sell more.
B. More consumers are buying sofas than ever
before.
C. A competitor produces more sofas after the price
is raised.
D. A furniture manufacturer raises the price and
increases the number of sofas it produces.
65. Which of the following is the best example of the law of supply?
A. A food producer increases the number of acres of
wheat he grows to supply a milling company.
B. A milling company builds a new factory to process
flour to export.
C. A sandwich shop increases the number of
sandwiches it sells every day when the price is
increased.
D. A catering company buys a new dishwasher to
make their work easier.
66. What factor has the greatest influence on elasticity
and inelasticity of supply?
A. time
C. profit
B. labor
D. financing
67. If the market price for pizza is $2.50 a slice, how many
slices will be supplied by all producers in the
market, according to Figure 5.4?
A. 300
B. 200
C. 3,000
D. 2,500
68. According to Figure 5.4, how many slices of pizza will
one pizzeria be willing to supply at a market price of
$3.00 a slice?
A. 1,000
B. 350
C. 100
D. 200
69. How does a supply curve illustrate the law of supply?
A. It is a horizontal line. C. It always rises from
right to left.
B. It is a vertical line.
D. It always rises from
left to right.
70. How would a new excise tax affect the supply curve?
A. It would not change the supply curve because
it would only move price.
B. It would probably cause the supply curve to
shift to the left.
C. It would probably cause the supply curve to
shift to the right.
D. The effect cannot be determined without
knowing the amount of the tax.
71. For the month of July a delicatessen had the following
expenses:
rent: $1,100
roast beef: $125
cheese: $245
delivery van lease: $550
Variable costs for July were:
A. $1,225
C. $370
B. $675
D. $795
72. According to the law of supply, the higher the price,
A. the more consumers are willing to pay.
B. the larger the quantity produced.
C. the smaller the quantity produced.
D. the more the availability of a good is reduced.
73. If the supply of a good is inelastic,
A. producers will not change their quantity supplied
by much if the market price doubles.
B. a small increase in price will lead producers to
sharply increase their quantity supplied.
C. producers will hire more workers in order to
double their production.
D. producers will increase their quantity supplied in
response to sharp drops in the market price.
74. What is an example of a variable cost in a major league
baseball franchise?
A. stadium rent
C. stadium maintenance
B. manager’s salary
D. ticket-takers’ salaries
75. All of the following are inputs EXCEPT
A. rent and utilities
C. raw materials
B. salaries and wages D. price of the good /
service
ECONOMICS:
Ch. 6 Quiz (2012)
76. Why do fads often lead to shortages, at least in the short term?
A. Buyers and sellers are unable to agree on a price for
the good.
B. Laws prevent stores from responding to excess
demand in time to prevent a shortage.
C. Manufacturers charge extremely high prices for the
goods that stores are unwilling to pay.
D. Demand increases so quickly and unexpectedly that
time is needed for the quantity supplied and price to
increase to reach a new equilibrium point.
77. A shortage will develop when
A. the market price is below the equilibrium
price.
B. the government provides subsidies to
producers.
C. the quantity supplied of a good is greater than
the quantity demanded of that good.
D. the equilibrium quantity supplied is lower than
the actual quantity supplied.
78. In response to rising car traffic, demand for bicycles has
increased. The new equilibrium point will show
A. fewer bicycles sold, but at a higher price.
B. more bicycles sold, but at a higher price.
C. more bicycles sold, but at a lower price.
D. fewer bicycles sold, but at a lower price.
79. Technological process has reduced the cost of
manufacturing tablets. If demand is unchanged,
A. more tablets will be sold at a higher price.
B. more tablets will be sold at a lower price.
C. fewer tablets will be sold at a higher price.
D. fewer tablets will be sold at a lower price.
80. What happens when the supply of a nonperishable good is
greater than the consumer wants to buy?
A. the good is discarded
B. either the good is saved for later sale or the
price is raised
C. either the good remains unsold or the price
drops
D. the good becomes a luxury and the price
rises
81. According to Figure 6.2, in this market, a price of $1.50
would be
A. a price floor.
C. a subsidy.
B. the equilibrium price. D. a price ceiling.
82. The price of a slice of pizza is $2.50. At the end of the day,
how many unsold slices of pizza will be left, according to
Figure 6.2?
A. none
C. 200
B. 100
D. 50
83. A new office building has opened and the demand for
pizza has increased. The new demand curve states that
consumers will buy 200 slices at $2.50 each and 300
slices at $1.50 each. Based on Figure 6.2, if the slope of
the curve has not changed, what is the new equilibrium
price and quantity supplied?
A. $1.50, 200 slices
C. $2.00, 250 slices
B. $1.00, 300 slices
D. $2.00, 150 slices
84. The price ceiling that was used to control the price of
housing in New York City and other cities was called
which of the following?
A. rent abatement
C. equilibrium price
B. rent control
D. housing control
85. If a bookstore manager prices a book lower than the
equilibrium price, then
A. there will be an excess supply of these
books.
B. the manager should lower the price again
of the books.
C. the market price of the book will become
higher.
D. there will be a shortage of these books.
86. A price support is a type of
A. rent control.
C. price floor.
B. price fixing.
D. price ceiling.
87. Suppliers will keep reducing prices in a certain market as
long as
A. there is excess supply and quantity
demanded exceeds the quantity supplied.
B. there is excess demand and quantity
supplied exceeds the quantity demanded.
C. there is excess demand and quantity
demanded exceeds the quantity supplied.
D. there is excess supply and quantity
supplied exceeds the quantity demanded.
88. What happens to a market in equilibrium when there is an
increase in supply?
A. Quantity demanded will exceed quantity
supplied, so the price will drop.
B. Undersupply means that the good will
become very expensive.
C. Excess supply means that producers will
likely maintain current levels of production.
D. Quantity supplied will exceed quantity
demanded, so the price will drop.
89. In a free market, prices lead to an efficient allocation of
resources. In other words,
A. consumers can buy unlimited amounts of any
good they like at a price of their choice.
B. people who own resources are unable to bargain
with people who wish to buy resources.
C. resources are used in the most valuable and
productive way according to the needs of
consumers and producers.
D. the government decides who controls natural
resources.
90. According to the law of supply, the higher the price,
A. the larger the quantity produced.
B. the more the availability of a good is
reduced.
C. the more consumers are willing to pay.
D. the smaller the quantity produced.
91. Which of these is most likely to lead directly to a black
market?
A. equilibrium
B. rationing
C. a supply shock
D. a price floor
92. If the owner of a pizzeria purchases additional equipment
for the kitchen, enabling the production of 30 percent
more pizzas, then
A. the demand curve for pizza would shift to the
right.
B. the supply curve for pizza would shift to the
right.
C. the supply curve for pizza would shift to the
left.
D. the demand curve for pizza would shift to the
left.
93. Which of the four main advantages of price in a free
market economy would best represent the statement
“Prices can be easily increased to solve a problem of
excess demand”?
A. price system is “free”
B. prices as signals
C. flexibility
D. price as an incentive
Chapter 8 Business Organization (2012)
94. In a publicly held corporation
A) family members are excluded from owning
stock.
B) shares of stock are rarely traded at stock
exchanges.
C) a large number of stockholders can buy and
sell stock.
D) stockholders rarely trade their stocks.
95. To determine if a business made a profit you must
A) subtract total
C) add sales and
expenses from total
expenses together
income
B) subtract taxes paid D) subtract wages from
from other expenses
revenues
96. Ellen started a catering business, but soon decided that
catering was too stressful for her. She could close her
business relatively easily and return to school because
the business was a
A) multinational
C) closely held
corporation
corporation.
B) sole proprietorship. D) general partnership.
97. Your running shoes were designed in the United States but
assembled in Asia by a company called RunnerPro, Inc.
which is a
A) government agency
B) general partnership.
C) sole proprietorship
D) multinational corporation.
98. A disadvantage to establishing a business as a corporation
is
A) earnings are taxed not once but twice
B) owners have unlimited personal liability for
the actions of the corporation
C) employees have limited liability
D) that if the chief executive officer dies, the
corporation likely goes bankrupt
99. Which of the following is an advantage of a sole
proprietorship?
A) Income from the business is taxed as
ordinary personal income.
B) It is an easy way to make a lot of money.
C) No one is responsible if it fails.
D) It is easy to get financing to start one.
100. Your uncle owns a convenience store that has branches
nationwide. His store is likely to be an example of a
A) business monopoly. C) multinational
corporation
B) business franchise. D) vertical merger
101. Which statement is TRUE?
A) Sole proprietorships and partnerships together generate
about the same amount of sales as corporations.
B) Sole proprietorships make up most of the businesses in the
U.S. and generate most of the sales.
C) Partnerships make up the least number of businesses in the
U.S. but generate most of the sales.
D) Corporations generate most of the sales in the U.S., but
sole proprietorships make up the greatest number of
businesses.
102. Which of the following is the reason franchising has become popular in
recent years?
A) Franchise owners are free to set their own rules and
operating standards, but they benefit from national ad
programs.
B) Because they are owned by a group of individuals for
their shared benefit, franchises spread the liability.
C) Franchising fees and royalties require no more than a
$5,000.00 initial investment , and profits above
$500,000.00 are guaranteed.
D) Small franchise owners enjoy a degree of control and
can benefit from the support of the parent company.
103. Corporations are defined as “entities” because they
A) require a certificate of corporation.
B) have a legal identity separate from those
of their owners.
C) sell about 90 percent of the products sold
in the United States.
D) may merge in various ways.
104. Which of the following best describes a sole
proprietorship?
A) receives all profits but is subjected to double
taxation
B) relatively few regulations but limited liability
C) easy to start but unlimited personal liability
D) expensive to start but full control
105. What is a major disadvantage to both sole proprietorships
and general partnerships?
A) double taxation
B) the potential for conflict amongst owners
C) many government regulations
D) the possibility of losing personal assets
106. You are looking for a job that offers many fringe benefits.
You would most likely find them in
A) a sole proprietorship. C) Cleveland.
B) a corporation.
D) a general partnership.
107. What is the major difference between a corporation and
other kinds of businesses?
A) A corporation has limited liability.
B) A corporation is always much larger than the
other business structures.
C) A corporation has a board of directors who
handle the day-to-day operations of the business.
D) A corporation is not responsible for its debts if it
fails.
108. Several office supply companies decide to combine into
one large company. This type of business combination is
an example of a
A) vertical merger
C) horizontal merger
B) multinational
D) conglomerate
corporation
109. About what percentage of U.S. businesses are sole
proprietorships?
A) 75%
C) 5%
B) 25%
D) 50%
110. You are part-owner of NewBrands Corporation because
you
A) have created a corporate charter for the
company.
B) have purchased company bonds.
C) own the company’s stock.
D) attend the company’s annual meetings.
111. If a general partnership fails, who is responsible for the
debts?
A) all of the partners
B) anyone who works for the partnership
C) no one
D) only the most senior general partner
112. In which kind of business organization should you
participate if you can afford to lose only the amount of
your initial investment?
A) limited partnership C) dual partnership
B) general partnership D) sole proprietorship
113. The most basic form of business organization is
A) the general
C) the limited
partnership
partnership
B) the corporation
D) the sole
proprietorship
114. A joining of two or more businesses that are involved in
different stages of producing the same good or service is
called which of the following?
A) vertical merger
C) conglomeration
B) cooperative
D) horizontal merger
Ch. 12 Quiz: GDP and the Business Cycle (2012)
115. Stock prices and changes in the number of building
permits issued for private homes are examples of
A. non-market
C. leading economic
indicators
indicators.
B. lagging economic
D. coincident economic
indicators
indicators
116. The main economic variables that affect business cycles
include all of the following EXCEPT
A. personal savings
C. interest rates.
levels.
B. business investment D. external shocks.
levels.
117. If business activity was slowing and unemployment was
rising, the business cycle would be in the
A. contraction phase
C. either “A” or “B”
B. recovery and
D. neither “A” nor “B”
expansion phase
118. What is the difference between a recession and a
depression?
A. A recession is more severe than a depression
and lasts longer.
B. Unlike a recession, a depression includes
high levels of inflation.
C. A recession is a period of economic growth
while a depression is a period of economic
contraction.
D. A depression is a particularly deep recession
with high levels of unemployment.
119.
Business cycles in the United States
A. always last for at
C. occur irregularly.
least a decade
B. are always preceded D. occur about every 6
by periods of mild
years.
inflation.
120. When GDP levels off and begins to decline, the economy
is entering
A. the contraction part C. a depression.
of the business cycle.
B. an economic boom. D. a peak part of the
business cycle.
121. Any period of at least six months, during which real GDP
does not grow is
A. a recession.
B. a depression.
C. a trough.
D. an expansion.
122. How do fears of future economic problems affect GDP?
A. consumers will spend more money in the short
term to prevent future economic problems; GDP
will be pushed up
B. government will spend less and save money for a
future economic contraction; GDP will be reduced
C. businesses will invest more money in the short
term to ensure higher profits in the future; GDP
will be pushed up
D. consumers will spend less and save money in
case future economic problems affect them; GDP
will be reduced
123. Which of the following is an example of a final good or
service?
A. A cake purchased from a bakery for a
wedding
B. Lumber purchased by a construction
company to use in building houses
C. Wheat a bakery purchases to make bread
D. Coffee beans a coffee shop purchases to
make coffee
124. An economy that experiences decreasing real GDP and
increasing prices is said to suffer from
A. a depression.
C. stagflation.
B. a recession.
D. a business cycle.
125. To calculate the GDP,
A. a dollar is used as the C. the quantity of items
common measure.
produced is added up.
B. both new and used
D. the quality of goods is
goods are included.
considered.
126. An example of a durable good would be
A. a lawnmower
C. a roll of paper towels
B. a gallon of milk
D. a box of cereal.
127. GDP expressed in constant, or unchanging prices (in
other words, the effects of inflation have been removed)
is called
A. net national product. C. nominal GDP.
B. real GDP.
D. price level.
128. The lowest point in an economic contraction is called
A. a peak.
C. a depression.
B. a recession.
D. a trough.
129. If interest rates fall,
A. the unemployment rate will most likely
rise.
B. consumers will be less likely to buy more
expensive items.
C. businesses will be more likely to expand.
D. there will be a downturn in the economy.
130. The phase of the business cycle in which GDP is growing
is
A. the contraction phase C. the peak
B. a recession.
D. the expansion phase
131. Which of the following results when businesses increase
capital investment?
A. decrease in
production
B. external shocks
won’t occur
C. increased output
and job creation
D. mild recessions
132. Which of the following describes the United States
economy in the 1930s?
A. serious economic contraction
B. sustained economic expansion
C. small ups and downs
133. In computing the GDP, which category of the economy
represents expenditures on tools, machines, and
buildings used to produce goods?
A. government sector C. investment sector
B. net exports
D. consumer sector
134. During the 1990s, the U.S. economy experienced
A. the longest period of uninterrupted growth in U.S.
history
B. a severe downturn for more than half of the
decade
C. three separate recessions all related to the
energy crisis
D. a violent recession with unusually high
unemployment levels caused by nearly 10 million
soldiers returning from war in Europe
Ch. 13 Quiz (2012)
135. Imagine that gasoline has risen in price from $1.75 to
$3.50 per gallon. Assuming the higher prices are the
result of inflation and no other market forces, what has
happened to consumers’ purchasing power?
A. increased it
C. stopped it
B. reduced it
D. doubled it
136. All of the following are causes of structural unemployment
EXCEPT
A. a falling stock
C. relocating jobs to
market.
other countries.
B. depletion of natural D. inventing new ways
resources.
of doing things.
137. Which of the following families is statistically the most
likely to live below the poverty threshold?
A. a two-parent white family living in a rural area
B. a black family headed by a single mother living in
the inner city
C. a black family headed by a single mother living in
the suburbs
D. a two-parent family of Hispanic origin living in the
inner city
138. According to the principle of cyclical unemployment, what
will occur when the demand for goods and services
drops during a recession?
A. The business cycle resumes an upward
trend.
B. No frictional unemployment exists.
C. The demand for labor drops.
D. The demand for labor rises.
139. What does it mean when a person is underemployed?
A. The person is not making as much money
as they need.
B. The person has a job but they are
overqualified for it.
C. The person is looking for work in a special
field.
D. The person has been working but now is
laid off.
140. The poverty threshold, or poverty line, varies according to
what?
A. the inflation rate
C. nationwide income
averages
B. the size of the family D. the census
141. During a war, the government puts pressure on producers
for heavy equipment, supplies, and services, making
each more valuable. What theory about inflation does
this condition represent?
A. demand-pull
C. quantity
B. cost-push
D. cost-pull
142. According to the cost-push theory, what is responsible for
inflation?
A. Demand for goods/services exceeds existing
supply.
B. Too much money is in circulation.
C. The economy is operating as though there
was a war.
D. Producers raise prices to meet increased
costs.
143. According to the demand-pull theory, what is responsible
for inflation?
A. Too much money is in circulation.
B. The economy is in a wage-price spiral.
C. Demand for goods and services exceeds
existing supply.
D. Producers raise prices to meet existing
demand.
144. In the last two decades, the distribution of income has
A. narrowed the income C. become less equal.
gap.
B. not changed
D. become more equal.
significantly
145. Which one of these people lost his or her job because of
structural unemployment?
A. Tam’s job as a landscaper is on hold until
the spring.
B. Jordan graduated from law school and is
interviewing with various law firms.
C. Eva lost her job at a major interior design
firm during the recession in the 1980s.
D. Sonya dropped out of school and now
fails to meet the minimum requirements
for her job.
146. If Bob loses his job at the GM plant because car
manufacturing is slow due to a downturn in the
economy, you can conclude that he is
A. structurally
C. seasonally
unemployed.
unemployed.
B. cyclically
D. frictionally
unemployed.
unemployed.
147. The “market basket” that is used by the Bureau of Labor
Statistics to calculate prices is made up of which of the
following?
A. typical goods and services for an urban
household
B. food items only
C. nonfood items only
D. food and necessary services for any family
148. Which of the following is most vulnerable to the loss of
purchasing power caused by high inflation?
A. a lawyer
C. a doctor with a
suburban practice
B. a shopkeeper
D. a retired couple living
on a fixed income
149. Which of the following might cause the inflation rate to spike up
sharply?
A. Prices on world oil markets rise steeply due to
war in the Middle East.
B. The purchasing power of the average consumer
decreases due to a sluggish economy.
C. The items in the CPI market basket change to
account for changing consumer buying habits.
D. Plentiful rainfall and moderate temperatures result
in good harvests of wheat and soybeans.
150. Economists look to which of the following explanations for
inflation?
A. demand for goods exceeds supply, as in
wartime
B. too much money in the economy
C. producers raise prices in order to meet
increased costs
D. all of the above
Ch. 15/16 Quiz (2011)
151. Classical economics includes all of the following key
elements except
A. a free market economy.
B. the natural interaction between supply and
demand.
C. markets achieving equilibrium
D. direct action by government to influence
the business cycle
152. Expansionary fiscal policy is designed to
A. increase output.
B. prevent hyperinflation.
C. slow the growth of the GDP.
D. increase the separation between government
and private industry.
153. An example of expansionary fiscal policy would be
A. decreasing taxes.
B. decreasing government spending.
C. decreasing interest rates
D. decreasing prices of consumer goods.
154. After the economy severely contracted in the early 1930s
what did classical economists believe would result in
recovery ?
A. an increase in government spending
B. raising interest rates
C. patience and allowing the economy to
achieve equilibrium naturally
D. decreasing taxes to promote growth
155. The government would most likely increase taxes or
decrease government spending to
A. implement
C. increase aggregate
expansionary fiscal
demand.
policy.
B. speed up economic D. avoid high inflation.
growth.
156. What is the relationship between interest rates and
demand for loans?
A. As interest rates decrease, demand for loans
increases.
B. As interest rates increase, demand for loans
increases.
C. Interest rates are determined by demand for
loans.
D. Interest rates and demand for loans are
unrelated.
157. Which of these is a contractionary monetary policy?
A. The federal government builds a new medical
research center at a prestigious state
university.
B. The Federal Reserve raises the Fed Funds
rate
C. The federal government sends taxpayers up
to $300 each in the form of an income tax
rebate.
158. An example of contractionary fiscal policy would be
A. cutting taxes.
B. decreasing government spending.
C. increasing production of consumer goods.
D. expanding the government’s role in regulating
private industry.
159. What type of policy does the Fed use to counteract a
contraction?
A. fiscal policy
C. easy money policy
B. tight money policy D. policy lags
160. All of the following people are well-known classical
economists EXCEPT
A. Adam Smith.
C. John Maynard Keynes
B. David Ricardo.
D. Thomas Malthus.
161. 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
162. Which economic school of thought would explain how
massive government expenditures during World War II
sharply moved the country out of the Great Depression?
A. Council of Economic C. supply-side
advisors
economics
B. Keynesian
D. classical economics
economics
163. 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
164. Why does a bank sometimes hold excess reserves?
A. to be sure they can meet their customers’
demands
B. to protect against high prices
C. to make check clearing easier
D. to keep from lending too much money
165. Which of these situations is most likely to cause the Fed
to introduce a tight money supply?
A. A recession has reduced aggregate demand and
increased unemployment.
B. The federal government passes a new budget with
a large deficit.
C. The economy is prosperous with relatively low
inflation and low unemployment.
D. The economy is expanding quickly and prices are
rising too quickly.
Personal Finance (2012)
166. Budgeting is important for ALL of the following reasons
EXCEPT
A. it helps you see how and where you spend
your income
B. it helps to reduce careless spending
C. it tells you which bills are the most important
to pay
D. it is an invaluable tool towards building
financial security
167. A creditor is
A. the one who extends credit to a borrower
B. anyone who buys something with credit
C. the one who helps you get a car loan from
a bank
D. the bank that offers the best credit ratings
168. Which of the following is not one of the major credit
reporting agencies?
A. Equifax
C. Experian
B. Transunion
D. United Credit Corp.
169. Financial advisors generally agree that an emergency
savings fund should have enough for you to pay your
living expenses for
A. 3 to 6 months
C. 2 to 3 years
B. 12 to 18 months
D. at least 5 years
170. The amount of money available to you from lenders is
your
A. debt
C. annual percentage
rate
B. credit
D. credit history
171. You should check your credit report
A. at least once a year
B. if you suspect fraud
C. before making a large purchase that will
require credit from a lender
D. all of the above
172. When taking out a loan, you will pay the least interest
A. the more time you have to repay the debt
B. the shorter the time you have to repay the
debt
C. Either “A” or “B” could be correct
D. There’s not enough information to determine
a correct answer
173. When collateral is not required, the loan is considered to
be
A. secured debt
C. marginal debt
B. unsecured debt
D. voluntary debt
174. With a revolving line of credit
A. credit becomes available as you pay down
the balance
B. credit becomes less available as you pay
down the balance
C. the borrower rotates the use of credit cards
so as not to run up a large balance on any
one card
D. the borrower must provide collateral
175. Which is the only true statement about stocks and bonds?
A. A bond is an IOU issued by a corporation or
government as a way for them to borrow money
B. A stock is an IOU issued by a corporation or
government as a way for them to borrow money
C. Owning a company’s bond makes one a part
owner of that corporation
D. Stocks are guaranteed to increase in value over
time.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
C
B
C
C
A
D
B
C
C
C
D
D
C
B
B
C
B
A
B
D
A
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
B
A
D
A
D
C
D
B
A
A
D
B
C
C
D
B
B
D
C
D
A
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
61.
62.
63.
B
D
A
A
B
A
A
D
C
D
A
D
D
A
B
D
B
A
C
C
A
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
81.
82.
83.
84.
B
C
A
C
B
D
B
C
B
A
D
D
D
A
B
B
C
B
C
C
B
85. D
86. C
87. D
88. D
89. C
90. A
91. B
92. B
93. C
94. C
95. A
96. B
97. D
98. A
99. A
100. B
101. D
102. D
103. B
104. C
105. D
106. B
107. A
108. C
109. A
110. C
111. A
112. A
113. D
114. A
115. C
116. A
117. A
118. D
119. C
120. A
121. A
122. D
123. A
124. C
125. A
126. A
127. B
128. D
129. C
130. D
131. C
132. A
133. C
134. A
135. B
136. A
137. B
138. C
139. B
140. B
141. A
142. D
143. C
144. C
145. D
146. B
147. A
148. D
149. A
150. D
151. D
152. A
153. A
154. C
155. D
156. A
157. B
158. B
159. C
160. C
161. D
162. B
163. D
164. A
165. D
166. C
167. A
168. D
169. A
170. B
171. D
172. B
173. B
174. A
175. A