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Economics Final

Terms in this set (130)

Which of the following is THE basic economic problem?
explaining how people deal with scarcity
When a nation's total output increases over time, the nation is experiencing ____.
economic growth
Which of the following descriptions best explains the meaning of opportunity cost?​
the cost of choosing one alternative over another
A nation's wealth is determined by its ____.
accumulation of all tangible products
Consumers waiting in long lines for a new product is an example of ____.
scarcity
Paradox of value refers to the ____.
high value of a nonessential item and the low value of an essential item
The efficient use of scarce resources leads to an increase in ____.
productivity
The most comprehensive measure of a nation's wealth is provided by its ____.
gross domestic product
When a business needs to decide whether a certain action is worth the cost, the most helpful analysis would be a(n) ____.
cost-benefit analysis
Which of the following statements best describes the purpose of the production possibilities curve?
it identifies all possible combinations of goods and services an economy can produce
The market structure called perfect competition is best described as ____.
theoretical and a goal
What is the main cause of a change in quantity demanded?
change in price
What is the major difference between perfect competition and monopolistic competition?
product differentiation
What is the relationship between income and demand?
An increase in income increases demand.
When the price of something increases, the quantity demanded ____.
decreases
Which is an example of a public good?
The army
Which market structure is defined by a single producer?
monopoly
Which of the following do economists use to classify markets?
number of firms, size of firms, type of product
Which of the following replaces a costly item with a less costly one?
the substitution effect
Which of these best describes the influence of high prices on the behavior of producers?
They are an incentive for producers to produce more.
Why is the Law of Demand called a "law"?
because it has been demonstrated repeatedly
According to Keynesian economics, which sector of the economy could offset a decline in business spending?
government
Equilibrium is reached when what occurs?
quantity demanded equals quantity supplied
Fiscal policy may involve ____.
taxing corporations
In the economic term oligopoly, the root "olig-" probably means ___.
"few"
It is generally believed that a sales tax
hurts the poor
The Federal Income Tax system is
Efficient
Which of the following groups does supply-side policy target through stimulation?
Producers
​"The most important source of state government revenue." "Primarily transferred from federal government to state governments." "The most important source of local government revenue." All of these statements are true of
intergovernmental revenue
Elementary schools, police departments, and electrical service are typically paid for by
local government
Policies that make production more efficient are favored by ____.
both supply-siders and demand-siders
President Reagan tried to reduce government spending by ____.
lowering taxes
The government does not try to eliminate all monopolies. Why?
Not all monopolies (such as natural monopolies) are bad.
What level of government is most closely associated with zoning restrictions?
local
Which of the following best identifies the incidence of individual income tax?
workers
Approximately what percent of all US banks are members of the Fed?
40%
During the Civil War, Congress enacted the National Currency Act, which
created a National Banking System, raised money for the Union, and created a national currency
How does new money enter into circulation in the United States?
It is distributed by banks, which get it from the Fed.
In the early 1800s, currency in the United States was issued by
banks
Most banks are established
as corporations
Printed on a Federal Reserve note is this statement: "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE." This reflects money's function as
a medium of exchange
​The United States went on the gold standard in _____ and then went off the gold standard in _____.
1900, 1933
What are the Fed's three main tools for conducting monetary policy?
the reserve requirement, open market operations, and the discount rate
What do Fed member banks do with customer deposits?
They keep a portion as legal reserves and loan out a portion at interest
Which agency manufactures US paper money?
the US Bureau of Engraving and Printing
Which of the following can cost you money in large interest payments?
a credit card
Which of the following is a DDA?
a checking account
Which of the following of fiat money?
federal reserve note
Which of these best describes the effectiveness of wage-price controls on inflation?
They tend to be unsuccessful
Which of these describes a general connection between the money supply and interest rates?
A contraction of the money supply is associated with higher interest rates
Which of these ensures that the US government does not own the Fed?
Private national banks are required to purchase shares in the Fed
Which of these interest rates is set by individual banks?
the prime rate
Why is the Federal Open Market Committee considered the Fed's primary monetary policy-making body?
it has the power to raise and lower interest rates
You can easily carry money in a pocket or purse. This reflects what characteristic of money?
portability
You pick up a $1 bill. What are you holding?
currency, a Federal Reserve note, fiat money
One of the characteristics of a capitalist free enterprise economy is
voluntary exchange
The economic system of the United States is considered a
free market capitalist economy
What kind of economy offers uniformity in wages regardless of individual productivity?
command and socialist economies
Which of the following is a disadvantage of a market economy?
It sustains a high degree of uncertainty and doesn't provide for everyone's needs
Which of the following were a direct result of union activity?
a higher rate of pay for overtime hours worked
Which statement describes a disadvantage of a command economy?
Numerous consumer inconveniences are present
____ protect consumers against harm from products on the market.
government regulations
A general rise in the level of prices over time is known as
inflation
Consumers in a free enterprise economy ultimately determine ____ to produce.
what
During the Great Depression, union promoters ____.
renewed their efforts because hard times united workers
Economic equity means that is illegal to discriminate on the basis of age, sex, race, religion, or
disability
​How is the principle of "There's No Such Thing As A Free Lunch" illustrated in a socialist economy?
Socialist economies tend to offer extensive government services but have high tax rates
Markets in the free enterprise system are seldom regulated by
the government
The four factors of production are land, labor, capital, and
entrepreneurs
What have some states done to protect workers from adverse economic events such as layoffs and illnesses?
They set up unemployment programs
Which of the following best expresses the idea that higher education often results in higher earnings?
signaling theory
Which of the following describes a move away from capitalism?
the nationalization of major industries in Hugo Chavez's Venezuela
Which of the following illustrates why the wage gap between women and men is discriminatory?
glass ceiling
Which of the following is a term for a labor-dispute tactic used by neither unions nor management?
seizure
Which of the following is largely responsible for the growth of a free enterprise system?
profit motive
Which of the following is most responsible for increases in the federal minimum wage?
inflation
Which of the following tactics is used only by management?
lockout
Which of the following were the first types of unions formed in the United States?
craft unions and industrial unions
Which of these is an accurate statement about mixed economies today?
there are more mixed economies in the world than any other kind
Which statement is the best explanation of the market theory of wage determination?
a worker's pay rate is set by supply of and demand for that worker's skills
Who did Karl Marx believe would be the beneficiaries of socialism?
workers
Why did Sweden move from socialism to a more mixed economy in the 1980s?
Its citizens objected to the nation's high rate of taxation
Which best explains why a nation's GDP is an indication of its citizens' overall well-being?
It gauges the number of voluntary economic transactions occurring in that nation
What conditions stop the economy from growing and turn an expansion into a contraction?
external shocks
What type of unemployment occurred when the government closed military bases in the 1990s?
structural
Which of these are the two most significant causes of income inequality?
differences in wealth and differences in education
a trend line is ____.
a hypothetical graph line
​During which decade were government assistance programs most effective at reducing the poverty rate?
the 1960s
How are the effects of US inflation rates felt around the world?
US inflation makes US exports more expensive overseas.
How did business cycles change after World War II?
Recessions became shorter and periods of expansion became longer
What does a trough indicate?
The GDP has stopped declining and has begun to increase.
Which economic sector is not determined by measuring specific sources of income?
the net foreign sector
Which of the following is a form of instability that reverses economic growth?
recession
Which of the following is included in the unemployment rate?
the jobless who made an effort to find a job during the past month
Which of the following is not a cause of inflation?
demand-push
Which of the following is true about inflation?
inflation tempts some people to speculate in an attempt to take advantage of rising prices
Which of these foes a Lorenz curve compare?
equal income distribution and actual income distribution
Which of these groups is most vulnerable to poverty?
children
Which of these states a difference between personal income (PI) and disposable personal income (DPI)?
PI is measures before taxes are taken; DPI is measured after taxes are taken.
Which of these would economists count as a member of a household, but not part of a family?
a single person with relatives who live elsewhere
Which of these was run by the states but later taken over by the federal government?
Supplemental Security Income (SSI)
Why would the sale of a secondhand car not be included in a calculation of GDP?
the car does not represent new production
What lead to many of the struggles in Russia during the 1990s after the fall of the USSR?
the transition from a socialist command economy to a free market capitalist economy
19-country common market for eastern and southern Africa
COMESA
What is the measure of the value of one currency against another currency?
exchange rate
Which of the following is true about exchange rates?
they are floating and flexible
Many of the nations of Eastern Europe that were located behind the Iron Curtain made the transition from ____ to ____ during the 1990s.
Communism to Capitalism
An Economic and Travel area made up of 28 European nations (soon to be 27) is known as the ____?
European union
What is the common currency used by most of the nations of the EU?
Euro
Which of the following is not an example of a capitalist economy?
North Korea
Which statement describes why the people in a nation with a command economy might resist a shift to a free market economy?
The political leaders would not want to have to share power with voters and business owners when they have total control in a command economy
If the United States can produce more oil than Japan the United States is said to have a ____ over Japan.
an absolute advantage
What does it mean when we say that the dollar floats?
the value of the dollar changes on a daily basis based on economic factors
What year did the dollar begin to float?
1971
How do trade-deficits correct themselves?
the floating exchange rate of the dollar
When President Trump speaks of imposing tariffs on foreign steel what does he mean?
increasing taxes on steel imports into the United States.
What kind of fund collects and invests income for later payments to eligible recipients?
pension fund
Junk bonds usually have low ratings because ____.
they are high risk investments
In investing a bear market refers to ____.
a stock market that is expected to decrease in the near future
Which is not a type of business organization?
stockholder
A person who owns a share of stock is known as
a stockholder
Money borrowed that is guaranteed only by a promise to repay it is known as a ____.
unsecured loan
The price for an insurance policy is known as a ____.
premium
A strategy of holding different kinds of investments to minimize risk is known as ____.
portfolio diversification
Which of the following is an advantage of a 401(k) plan?
Employers can match the contributions of their employees
All of the following are good ways to save money short term except a(n) ____.
mutual fund
A coupon rate is
the rate of return on a bond
Every student who wants financial aid must
complete the FAFSA application form
Which type of financial organization is a nonprofit service cooperative?
credit union
What does a person who takes out a loan pay in addition to paying down the principal?
interest
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