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Final

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 
 
Part 1: Main Idea
 

 1. 
Into what four categories do economist divide factors of production?
a.
land, labor, capital, and entrepreneurship
b.
land, labor, money, and entrepreneurship
c.
resources, labor, capital, and entrepreneurship
d.
resources, labor, money, and entrepreneurship
 

 2. 
Which of the following examines the costs and expected benefits of a choice?
a.
choice-benefit analysis
b.
cost-profit analysis
c.
cost-benefit analysis
d.
choice-profit analysis
 

 3. 
The United States decides what goods to produce by letting
a.
only the government decide
b.
the producers and government decide
c.
only the producers decide
d.
the producers and consumers decide
 

 4. 
To be a successful entrepreneur requires a willingness to
a.
play it safe
b.
borrow money
c.
take risks
d.
limit risks
 

 5. 
An example of a trade-off is
a.
giving up going to a movie to spend time shopping
b.
giving up going to a movie because it got bad reviews
c.
going to a movie to see your favorite move star
d.
going to a movie because it got good reviews
 

 6. 
The satisfaction received from using one more unit of a good or service is called
a.
opportunity cost
b.
opportunity benefit
c.
marginal cost
d.
marginal benefit.
 

 7. 
Wants are unlimited and
a.
constant
b.
costly
c.
easily fulfilled
d.
ever changing
 

 8. 
Deciding to go to a ballgame rather than do your homework is an example of a(n)
a.
production possibility
b.
marginal cost
c.
trade-off
d.
opportunity expense
 

 9. 
The benefits and costs of a choice is shown by using a
a.
statistical table.
b.
decision-making grid.
c.
circle graph.
d.
line graph
 

 10. 
The way a society uses scarce resources to satisfy its people's unlimited wants is called an economic
a.
system
b.
utility
c.
incentive
d.
grid
 

 11. 
Absolute loyalty to the people in power is required by a(n)
a.
traditional system
b.
socialist system
c.
authoritarian system
d.
market system
 

 12. 
The government owns some, but not all, factors of production in a(n)
a.
authoritarian system
b.
communist system
c.
pure market system
d.
socialist system
 

 13. 
With voluntary exchange, a buyer and seller agree to do business together
a.
only for the benefit of the seller
b.
only for the benefit of the buyer
c.
for the mutual benefit of both
d.
for the benefit of neither
 

 14. 
In a market economy, the real power in the market place is held by the
a.
producer
b.
seller
c.
government
d.
consumer
 

 15. 
The nation where government plays the most limited role in the economy is
a.
North Korea
b.
Sweden
c.
France
d.
the United States
 

 16. 
When a nation's economy privatizes it changes from
a.
public ownership to government ownership
b.
government ownership to private ownership
c.
private ownership to public ownership
d.
private ownership to government ownership
 

 17. 
Monopolists are able to control prices because they have
a.
much competition and there are many substitutes for their products
b.
much competition and there are no close substitutes for their products
c.
no competition and there are many substitutes for their products
d.
no competition and there are no close substitutes for their products
 

 18. 
An oligopolist sells
a.
either standardized or differentiated products
b.
more standardized than differentiated products
c.
only differentiated products
d.
only standardized products
 

 19. 
Reducing or eliminating government control of business is called
a.
deregulation
b.
desisting
c.
disclosure
d.
discrimination
 

 20. 
With what kind of tax does the tax rate increase as income increases?
a.
flat tax
b.
progressive tax
c.
proportional tax
d.
regressive tax
 

 21. 
What does the government use to try to influence economic behavior?
a.
incidence of tax
b.
progressive tax
c.
regressive tax
d.
tax incentive
 

 22. 
What are tax exemptions?
a.
the amount that taxpayers can subtract from income for each family member
b.
the amount that taxpayers can subtract from income for mortgage interest
c.
the amount that taxpayers can subtract from income for charitable contributions
d.
the amount that taxpayers can subtract from income for medical expenses
 

 23. 
What is the term used to describe the money taken out of a paycheck before the worker receives it?
a.
exemption
b.
deduction
c.
mortgage
d.
withholding
 

 24. 
Which statement is true of discretionary spending?
a.
The government can choose whether or not to fund it.
b.
The government is required by law to fund it.
c.
The government must use payroll taxes to fund it.
d.
The government must use user fees to fund it.
 

 25. 
Which statement is true of mandatory spending?
a.
Most of it is used to fund defense.
b.
Most of it is used to fund education.
c.
Most of it is used to fund entitlements.
d.
Most of it is used to fund highways.
 

 26. 
If the government wants to expand the economy, what action might it take?
a.
begin construction of a new dam
b.
maintain the level of funding for highway repairs
c.
increase income tax rates
d.
reduce grants-in-aid to states
 

 27. 
If the government wants to slow down the economy, what action might it take?
a.
hire workers to create a new national park
b.
offer states federal funds for textbooks
c.
double the excise tax on sales of gasoline
d.
lower corporate income tax rates
 

 28. 
How did the Great Depression affect the thinking of John Maynard Keynes and other economists?
a.
It caused them to adopt more laissez-faire policies.
b.
It caused them to advocate reductions in government spending.
c.
It caused them to advocate higher income tax rates.
d.
It caused them to favor government intervention in the economy.
 

 29. 
Which action is an example of demand-side fiscal policy?
a.
decreased government regulation
b.
increased government spending
c.
incentives for new businesses
d.
wage controls to halt inflation
 

 30. 
What is the difference between the budget deficit and the national debt?
a.
The deficit is the money the government owes; the debt is owed to the government.
b.
The debt is the money the government owes; the deficit is owed to the government.
c.
The national debt is a total that includes many years of budget deficits.
d.
The budget deficit is a total that includes many years of national debts.
 

 31. 
The money supply can be expanded by
a.
changing the required reserve ratio from 5 percent to 10 percent
b.
changing the required reserve ratio from 10 percent to 5 percent
c.
keeping the required reserve ratio stable at 5 percent
d.
keeping the required reserve ratio stable at 10 percent
 

 32. 
A central bank is
a.
a bank centrally located in a region
b.
a bank that has many branches
c.
a city's primary bank
d.
a nation's main monetary authority
 

 33. 
The Fed provides banking services for
a.
the national government and many private banks
b.
the national government and only a few private banks
c.
only the national government
d.
only private banks
 

 34. 
The official paper currency of the United States is called a
a.
Federal Bank note
b.
Federal Cash note
c.
Federal Monetary note
d.
Federal Reserve note
 

 35. 
Expansionary fiscal policy is likely to
a.
cause interest rates to fluctuate
b.
have no affect on interest rates
c.
lower interest rates
d.
raise interest rates
 

 36. 
The Fed implements a contractionary monetary policy by
a.
decreasing interest rates
b.
decreasing reserve requirements
c.
decreasing the discount rate.
d.
selling bonds on the open market
 

 37. 
The difference between savings and investments is that
a.
savings earn money while investments do not
b.
investments earn money while savings do not
c.
savings are investments that are put to use
d.
investments are savings that are put to use
 

 38. 
Before choosing among investment options, an investor should
a.
hire a financial analyst
b.
consult a stockbroker
c.
determine an investment objective
d.
read a financial newspaper
 

 39. 
One helpful guideline for investing is that
a.
the longer you have to invest, the more risk you can take
b.
the less time you have to invest, the more risk you should take
c.
you should invest in stocks before paying off credit card debt
d.
if you have a low income, you must worry about tax liability first
 

 40. 
One investment that is considered almost risk free is
a.
common stock
b.
preferred stock
c.
corporate bonds
d.
U.S. government bonds
 

 41. 
Diversification means that an investor
a.
diverts all his or her funds to corporate bonds
b.
makes several different types of investments to minimize risk
c.
invests in stock from a variety of corporations
d.
buys stock on several stock exchanges in case one crashes
 

 42. 
In general, people put money in risky investments because
a.
they can take a tax deduction if they lose money
b.
such investments often earn the greatest profits
c.
no other investments are available at the time
d.
they receive bad advice from a financial analyst
 

 43. 
A situation in which producers in one nation depend on others to provide goods and services they do not produce is called
a.
corporate interdependence
b.
economic interdependence
c.
international interdependence
d.
trade interdependence
 

 44. 
Consumers benefit from imports because they cause the
a.
selection of goods to decrease and prices to decrease
b.
selection of goods to decrease and prices to increase
c.
selection of goods to increase and prices to decrease
d.
selection of goods to increase and prices to increase
 

 45. 
Any law passed to limit free trade between nations is called a trade
a.
barrier
b.
cartel
c.
embargo
d.
tariff
 

 46. 
Taxes on imported goods that minimize the price advantage they have over domestic goods are called
a.
protective embargoes
b.
revenue embargoes
c.
protective tariffs
d.
revenue tariffs
 

 47. 
Expansionary monetary policy is sometimes called
a.
circulation-money policy
b.
easy-money policy
c.
lending-money policy
d.
money-flow policy
 

 48. 
Contractionary monetary policy is sometimes called
a.
decreasing-money policy
b.
saving-money policy
c.
slow-money policy
d.
tight-money policy
 

 49. 
Global financial transactions have been made quick, inexpensive, and easy by
a.
computer linkages
b.
telegraph linkages
c.
shipping linkages
d.
radio linkages
 

 50. 
When a nation's economy nationalizes it changes from
a.
private ownership to public ownership
b.
public ownership to private ownership
c.
government ownership to private ownership
d.
government ownership to public ownership
 



 
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