HONORS ECONOMICS EOY REVIEW

Front

How can a firm engage in nonprice competition? Options: by reducing its variable cost of production, by raising the profit margins on its products, by extending free after-sale services to its customers, by lobbying the government to eliminate patents and licenses

Back

by extending free after-sale services to its customers

Front

Where monopolistic competition exists, why would a firm differentiate its product from those of its rivals?

Back

to make the demand for its product more inelastic

Front

Assume that the price for widgets is determined by market supply and demand. If each individual widget producer takes the market price as given and sells as many widgets as possible at that price, what would be the market structure for widgets?

Back

Perfect Competition

Front

How do Federal Reserve purchases of U.S. Treasury bonds on the open market affect the money supply and interest rates in the United States?

Back

The money supply increases and interest rates decrease.

Front

Why does the Federal Reserve implement monetary policy?

Back

to maintain stable prices and full employment

Front

Firms buy labor from households in the _______ market; households buy goods and services from firms in the ________ market.

Back

factor; product

Front

How do financial intermediaries play an important role in encouraging economic growth?

Back

channeling funds from savers to investors

Front

Which financial instrument is designed to offer regular interest payments?

Back

bonds

Front

Which major role is fulfilled by financial institutions? Options: conducting monetary policy, regulating financial markets, providing financial services to the government, reducing risk by investing in a variety of assets

Back

reducing risk by investing in a variety of assets

Front

Which statement is accurate about corporations in the United States? Options: Corporations are exempt from local sales taxes, Corporations have limited personal liability, Corporations have a single owner, Corporations are exempt from government regulation

Back

Corporations have limited personal liability