S2 – 8.00 Final Exam

Question 1

1. The study of economics involves which of the following?
   

   		studying government policies as they relate to globalization
   		studying how people relate to each other racially
   		studying how people try to satisfy their unlimited wants with limited resources
   		studying the impact of humans on the environment

2 points

Question 2

1. Which of the following would an economist say motivates a woman who sews purses and sells them to the public?
   

   		satisfaction
   		self-interest
   		absolute advantage
   		monetary policy

2 points

Question 3

1. While
   shopping you discover that your favorite department store has lowered
   the price on a new video game that you wanted to buy. However, after
   looking through the store you find that they are completely sold out.
   This scenario illustrates the concept of
   

   		comparative advantage.
   		law of demand.
   		scarcity.
   		shortage.

2 points

Question 4

1. People must make choices because money and resources
   

   		are scarce.
   		are abundant.
   		remain unchanged.
   		are undetermined.

2 points

Question 5

1. Which of the following is NOT an economic right or responsibility?
   

   		deciding where to work
   		choosing a college
   		community service
   		paying taxes

2 points

Question 6

1. The most appealing trade-off or item given up as the result of an economic decision is called a(n)
   

   		opportunity cost.
   		economic trade-off.
   		increasing cost.
   		recycled trade-off.

2 points

Question 7

1. Who presents the final federal budget to Congress at the beginning of the calendar year?
   

   		the Supreme Court
   		the President
   		the Vice President
   		the Office of Management and Budget

2 points

Question 8

1. Which of the following statements describes the economic goal of freedom?
   

   		Consumers can choose where they want to work.
   		Colleges choose the students who will attend.
   		The government provides workmen’s compensation to large businesses.
   		The government requires companies to pay minimum wage to certain occupations.

2 points

Question 9

1. Which of the following is considered a market?
   

   		digging for food in a dumpster
   		standing in an unemployment line
   		ordering a book from an Internet bookseller website
   		growing food in a backyard garden

2 points

Question 10

1. In a ____________ economy, some government involvement in the economy is evident.
   

   		centrally planned
   		laissez faire
   		corporate
   		mixed

2 points

Question 11

1. Which of the following is a disadvantage of free market economies?
   

   		Consumers receive the goods and services they need.
   		Many products are provided in an attempt to meet the demands of consumers.
   		Some consumers are not paid fairly and equally.
   		Public services are available to all members of society.

2 points

Question 12

1. Which of the following is a principle of the American Free Enterprise System?
   

   		voluntary exchange
   		tax rebates
   		absolute advantage
   		federal regulation

2 points

Question 13

1. Which of the following is an example of a public good?
   

   		private college
   		interstate highway
   		retirement village
   		hotel

2 points

Question 14

1. The Federal Reserve is run by
   

   		Congress.
   		the President.
   		the Board of Governors.
   		the U.S. Treasury.

2 points

Question 15

1. Monetary policy is best described by which of the following statements?
   

   		Policies Congress puts into effect to manage the money supply.
   		Policies the President puts into effect to manage the money supply.
   		Actions that the Office of Management and Budget takes to monitor fiscal policies.
   		The collection of actions the Federal Reserve takes to manage the money supply.

2 points

Question 16

1. Which of the following will cause an increase in the supply of a product?
   

   		production increases
   		establishment of new companies
   		both a and b
   		neither a or b

2 points

Question 17

1. If demand decreases, producers will decrease prices to
   

   		get people to buy their goods.
   		stop people from buying their goods.
   		influence the IRS to impose tax relief measures.
   		cause an increase in supply.

2 points

Question 18

1. Which of the following is a characteristic of a general partnership?
   

   		Partners sell each other shares.
   		Partners sell shares to cover costs.
   		Partners share responsibilities.
   		All but one of the partners is liable for all debts.

2 points

Question 19

1. Lynette
   buys a cup of coffee for $1.25. She hands a $2.00 bill to the cashier
   and receives $.75 in return. Which of the following is NOT a
   characteristic of money illustrated in this example?
   

   		It is easily transferable.
   		It cannot be exchanged for a good.
   		It is easy to carry around.
   		It is accepted everywhere.

2 points

Question 20

1. Which of the following was an example of a monopoly that was forced by the government to break-up into smaller companies?
   

   		United Airlines
   		AT & T
   		Verizon
   		Citibank

2 points

Question 21

1. Which of the following is considered the riskiest type of investment?
   

   		certificates of deposit
   		savings accounts
   		stocks
   		bonds

2 points

Question 22

1. Which goal of the U.S. economy is important in reducing the amount of waste of resources?
   

   		efficiency
   		equity
   		growth
   		stability

2 points

Question 23

1. What is the highest point of the business cycle called?
   

   		trough
   		peak
   		depression
   		recession

2 points

Question 24

1. Which of the following is a factor that influences the business cycle?
   

   		import fees
   		interest rates on loans
   		tax rebates
   		political elections

2 points

Question 25

1. What is the name given to unemployment that occurs because people do not have the required job skills?
   

   		seasonal
   		frictional
   		cyclical
   		structural

2 points

Question 26

1. The government calculates the unemployment rate by
   

   		adding the CPI Index to the GDP and dividing by the number of people in the labor force.
   		taking the number of unemployed people and dividing by the total labor force number and then multiplying by 100.
   		adding the number of people in the labor force to the number of retired people and dividing by 100.
   		none of the above

2 points

Question 27

1. Which of the following countries is involved in the North American Free Trade Agreement?
   

   		United States
   		Mexico
   		Canada
   		all of the above

2 points

Question 28

1. Which of the following is a major export of the United States?
   

   		agricultural products
   		scientific instruments
   		ceramic figurines
   		recreational equipment

2 points

Question 29

1. Which of the following is a characteristic of a developed country?
   

   		low life expectancy
   		low literacy rates
   		low industrial output
   		low unemployment

2 points

Question 30

1. Which of the following organizations focuses on getting rid of poverty?
   

   		World Bank
   		United Nations Development Fund
   		North American Free Trade Agreement
   		United Way Development Agency

2 points

Question 31

1. Which of the following is NOT a function of a 21st century bank?
   

   		pay interest
   		lend money
   		accept tax payments
   		issue credit cards

2 points

Question 32

1. Which of the following is NOT a characteristic of a horizontal merger?
   

   		help lower costs
   		help improve products
   		two companies that produce the same product
   		government controlled

2 points

Question 33

1. An industry that has four large firms that provide ______ of the supply of the product is called an oligopoly.
   

   		75%
   		65%
   		55%
   		45%

2 points

Question 34

1. The
   law of __________ is defined as the willingness of producers to produce
   or supply more of a good as the price of the good increases.
   

   		demand
   		increasing costs
   		supply
   		increasing prices

2 points

Question 35

1. Which of the following is described by this statement?
   As
   the prices of some goods rise, consumers cut back on the amount of
   items that they normally purchase and demand for these goods decreases.
   

   		substitution effect
   		income effect
   		increment effect
   		demand effect

2 points

Question 36

1. A production possibilities graph can show the effects of industrialization on the environment.
   

   		True
   		False

1 points

Question 37

1. Land, labor, and capital are three factors of production.
   

   		True
   		False

1 points

Question 38

1. Any
   intersection of points inside the line (to the left of the line) on a
   production possibilities graph shows that the economy is growing.
   

   		True
   		False

1 points

Question 39

1. If a business chooses to make one product over another there is always a trade-off involved because resources are limited.
   

   		True
   		False

1 points

Question 40

1. Competition ensures that consumers will be able to purchase products at the lowest possible price.
   

   		True
   		False

1 points

Question 41

1. In centrally planned economies, the people own most of the factors of production.
   

   		True
   		False

1 points

Question 42

1. In
   a circular flow of money of a mixed economy, the government puts money
   into the economy by purchasing goods and services that are needed to run
   the government and help society.
   

   		True
   		False

1 points

Question 43

1. In
   a free market economy, producers take the money they earn from selling
   products and use it to buy the things they want and need.
   

   		True
   		False

1 points

Question 44

1. When there is a shortage, producers raise the price of the good so that demand will be lowered.
   

   		True
   		False

1 points

Question 45

1. Medicare is one redistribution program.
   

   		True
   		False

1 points

Question 46

1. The U.S. Treasury conducts check clearing services for all banks in the country.
   

   		True
   		False

1 points

Question 47

1. Expansionary polices involve increasing spending and cutting taxes.
   

   		True
   		False

1 points

Question 48

1. When a market is in equilibrium, the quantity demanded and the quantity supplied is equal.
   

   		True
   		False

1 points

Question 49

1. When the quantity demanded for a good is elastic, it means the demand for the product is not influenced by price changes.
   

   		True
   		False

1 points

Question 50

1. Some corporations sell shares of stock to the public.
   

   		True
   		False

1 points

Question 51

1. The structural approach is used to calculate Gross Domestic Product.
   

   		True
   		False

1 points

Question 52

1. Unemployment has no effect on the economy.
   

   		True
   		False

1 points

Question 53

1. Unemployment rates nearest zero are not desirable in the economy.
   

   		True
   		False

1 points

Question 54

1. Nominal GDP is calculated using unchanging prices.
   

   		True
   		False

1 points

Question 55

1. Unemployment can force the economy into an expansion.
   

   		True
   		False

1 points

Question 56

1. You
   are faced with a problem. You want to go to the movies with your
   friends and see the latest action flick. However, your mother left you
   firm instructions to mow the lawn. You will risk losing y

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