Economics Final Exam Review

If Bill makes $200,000 per year and Jan makes $75,000 per year, how does sales tax effect each of them?

• Sales tax is progressive, since Bill makes more money, he pays a bigger % of his income than Jan

• Sales tax is proportional, so both Bill and Jan are impacted equally.

• Sales tax is regressive, so since Jan makes less money, she pays a larger % of her income than Bill

• Sales tax does not effect anyone's income

Which type of insurance would you need if you were injured and were taken to the hospital?

• automobile

• life

• disability

• health

Why is it less risky to buy mutual funds than to buy individual stock?

• Buying small pieces of companies at a time means you diversify your risk

• Inflation will not effect mutual funds

• Mutual funds are insured by the FDIC

• Individual companies always go bankrupt

What is the difference between credit card purchases vs bank loans?

• Credit cards do not have a limit and banks loans do

• bank loans are much easier to get than credit cards

• credit card interest rates are usually higher than interest rates on bank loans

• you have to pay back bank loans sooner than credit card payments

What is the purpose of NAFTA?

• establish trade between the US and Europe

• to reduce trade barriers/increase free trade between USA, Mexico, & Canada

• to increase trade tariffs among members

• to counter the European Union

A tariff placed on imported goods is a

• subsidy to help domestic prodcuers

• barrier to trade

• way to offer free trade

• a balance of a trade deficit

If someone is in favor of protectionism trade policies (barriers) they would

• support the need to preserve domestic industries

• support a reduction in trade barriers like tariffs

• call for no restrictions on imports

• think that protectionist trade barriers harms consumers

Which of the following has the greatest role in determining the amount of money workers earn in a career?

• credit worthiness

• location of the business

• their education level

• size of business they work for

If unemployment rate is rising & GDP is falling, which fiscal policy would the government take?

• decrease spending

• decrease taxes

• decreased the money supply

• decrease reserve requirements

The price of one nation's currency in terms of another nation's currency is called

• exchange rate

• trade rate

• currency exchanging

• exchange market