Principles of Economics (CSA#2) Mid-Term Review

One of the requirements for a monopoly is that

• products are high priced

• there are several close substitutes for the product

• there is a unique product with no close substitutes

• the product cannot be produced by small firms

A monopoly is a market with

• many suppliers

• no barriers to entry

• many substitutes

• one supplier

The Federal Reserve wants to reduce the nation's money supply. This could be accomplished by doing all of the following EXCEPT

• decreasing the discount rate.
• increasing the reserve requirement.
• selling securities on the open market.
• making banks hold a reserve for all types of deposits.

If the Federal Reserve System wanted to stimulate the U.S. economy and reduce unemployment, it would

• A. cause interest rates to decrease because low interest rates encourage businessgrowth and expansion
• B. cause interest rates to rise because high interest rates encourage business growthand expansion
• C. increase the discount rate it charges banks, which would increase the money supply
• D. increase consumer spending by reducing the money supply

If the Federal reserve and Government are attempting to encourage growth and stimulate the economy, which actions would each take? 
(monetary / fiscal)

• increase the Required reserve / increase government spending
• sell government securities / decrease taxes
• decrease the interest rate / increase government spending
• buy government securities / decrease government spending

Who is in charge of fiscal policy?

• Government
• Federal Reserve

The federal government's overall approach to spending and taxes is called

• Physical Policy
• Fiscal Policy
• Money
• Monetary Policy

Which of the following is not a tool of fiscal policy?

• Taxing
• Spending
• Interest Rates
• All of these options are tools of fiscal policy.

What is an entrepreneur?

• Someone who is employed

• Someone who doesn't work

• Someone who has set up their own business

• Someone who works from home

Opportunity Cost is...

• the loss of potential gain from other alternatives when one alternative is chosen.
• the formation of a word from a sound associated with what is named (e.g., cuckoo, sizzle ).
• make changes in something established, especially by introducing new methods, ideas, or products.
• HI MOM!