Final Exam Review

The money used by the United States is referred to fiat money. This means that it is

  • backed by a commodity.
  • generally accepted because it can be exchanged for a metal such as gold or silver.
  • has an economic value because the government declares it.
  • resembles money from other countries.

Which of the following is true of the history of the United States business cycles, on average?

  • The overall trend is an upward slope.
  • Peaks and troughs are longer than expansions and contractions.
  • The United States has suffered only one contraction called the Great Depression.
  • Peaks are not part of the business cycle in the United States, on average.

Which economic law states the link between the quantity of how much producers create and the willingness of consumers to purchase?

  • The law of supply and demand.
  • The law of command economics.
  • The law of diminishing returns.
  • The law of production possibilities.

Which of the following is NOT a type of unemployment?

  • Frictional unemployment.
  • Structural unemployment.
  • Family unemployment.
  • Cyclical unemployment.

Property taxes are a form of taxation required to be filed and paid by all income earners in the United States.

  • True
  • False

True or False: A free-market/free-enterprise economic system is based upon the concept of supply and demand.

  • True
  • False

True or False: Opportunity costs arise due to scarce resources.

  • True
  • False

Under the free enterprise economic system used in the United States, could a 60-year-old tree farm owner benefit by planting and caring for his crop of Christmas trees, most of which will not be ready to harvest for 12 – 15 years?

  • No, the farmer will be dead before the crop of trees is ready to be harvested.
  • Yes, the farmer will benefit from the increased value of the land due to inflation/appreciation as the trees grow and the harvest moves closer.
  • No, the value of the land will decline since the farmer is taking it out of production for 12 – 15 years.
  • Yes, but only if the project is paid for by taxes supplied by the federal government in the form of subsidies.

Inflation is

  • a persistent increase in the general levels of prices.
  • a persistent increase in the price of an individual good, service or resource.
  • a one time increase in the general level of prices.
  • a one time increase in the price of an individual good or service.

True or False: The Free Application for Federal Student Aid (FAFSA) is the first step toward applying for federally funded programs like the Pell Grant and the Stafford Loan.

  • True
  • False

True or False: Government agencies, like the EPA, are able to regulate specific economic activities in the US.

  • True
  • False

What type of unemployment can be seen on the business cycle graph?

  • Seasonal.
  • Frictional.
  • Cyclical.
  • Structural.

An entrepreneur is a person who does all of the following EXCEPT

  • assumes the risk of a firm.
  • organizes and manages the resources required to start a firm.
  • turns a new idea or product into a business.
  • always means a profit and keeps it.

Which of the following is most likely to be funded by taxes?

  • an amusement park like Six Flags.
  • a private college or university like TCU.
  • a high school like SHHS.
  • a small business like Fuzzy’s Tacos.

True or False: Central planning, like that of command economics, is ineffective in organizing an economy.

  • True
  • False

Which of the factors of production would benefit if an employer offered a tuition reimbursement program?

  • Education.
  • Land.
  • Capital (human).
  • Capital (major equipment).

A monthly budget can help you achieve financial security by

  • helping you choose stocks that are most likely to increase in price.
  • increasing the likelihood that you will face unexpected expenses.
  • expanding the limits of your existing credit cards or increasing the number of credits cards you use.
  • increasing your financial awareness and helping you allocate your funds more effectively.

True or False: Macroeconomics focuses on the economic strategies of large companies or countries.

  • True
  • False

True or False: If you lost your job at Six Flags because school started and the park is closed, your unemployment would be classified as seasonal.

  • True
  • False

True or False: Sole proprietorships are risky since there could be conflict amongst the different business owners.

  • True
  • False

All things being equal, an excessive increase in the money supply (printing large amounts of money) will:

  • increase the value of the dollar.
  • decrease the value of the dollar.
  • have no impact on the value of the dollar.
  • reduce overall price levels.

The money supply of the United States is controlled by which entity?

  • United States Treasury.
  • The Federal Reserve.
  • Congress.
  • The President.

Increased competition in the market will generally

  • increase the price level of a good or service.
  • decrease the price level of a good or service.
  • have no impact on price level of a good or service.
  • cause unfair conditions on consumers.

An increase in the demand for soft drinks, like Coke, will

  • decrease the supply of recyclable aluminum.
  • decrease the demand for recyclable aluminum.
  • increase the demand for recyclable aluminum.
  • have no change on aluminum recycling.

Which of the following is the main feature of a command economy?

  • Private ownership of property.
  • Central planning.
  • Heavy use of the laws of supply and demand.
  • Wide-spread deregulation of markets.

Of the following countries, the one that best represents the concepts of a free-market economy is

  • China.
  • Cuba.
  • North Korea.
  • Canada.

 

What can cause a company’s ability to produce widgets to move beyond their current maximum production rates?

  • an increase the in the cost of electricity.
  • the purchase and use of new technology, like computer software.
  • a decrease in the availability of raw materials, like steel.
  • a new government regulation restricting how much pollution a plant can generate.

The law of demand states that an increase in the price of a good…

  • an increase in demand.
  • a decrease in demand.
  • no change at all.
  • a decrease in demand followed by an increase in inflation rates.

Trade-offs and opportunity costs are required because wants are unlimited and resources are

  • isolated.
  • marginal.
  • economical.
  • scarce.

The best material to use for money has all of the following characteristics except…

  • durability.
  • portability.
  • indivisibility.
  • stability.