Final Exam Review

Are prices likely to be more stable in a pure command economy or a pure market economy?

• A pure market economy because market forces will naturally cause businesses to set prices at the natural equilibrium point.

• A pure market economy because a central authority can use regulations to lessen the effects of the business cycle on prices.

• A pure command economy because businesses are able to control prices and seek stability in order to ensure high demand.

• A pure command economy because a central authority can use fiscal and monetary policies to regulate and control prices.

In 2017, Congress passed the Tax Cuts and Jobs Act. The law reduced income tax rates and increased standard deductions.

What was the Tax Cuts and Jobs Act an example of?

• Contractionary Fiscal Policy

• Expansionary Fiscal Policy

• Contractionary Monetary Policy

• Expansionary Monetary Policy

What was one reason that the government enacted the Emergency Economic Stabilization Act?

• To reduce the inflation rate.

• To promote price stability

• To reduce consumer consumption

• To promote economic growth

What are the four factors of production?

• Business, land, employees, and capital.

• Land, Capital, Labor, and Entrepreneurship

• Profit, Taxes, Incentives, and Marginal Costs

• Labor Unions, Subsidies, Government, and Taxes

Which of the following BEST describes a government budget deficit and its impact on national debt?

• Belgium owes money on government bonds issued in 2000, thus increasing its national debt.

• France spent more money last year than it collected in taxes, thus increasing its national debt.

• The United States Government brought in more tax revenue in 2015 than it spent in 2015, thus decreasing its national debt.

• Canada spent the amount it collected in tax revenue due to a law that requires its government to only spend what it collects in

  revenue, thus decreasing its national debt.

If inflation is increasing, which of the following might the Federal Reserve do to encourage price stability?

• Buy bonds

• Sells bonds

• Decrease the discount rate

• Decrease the reserve requirement

A natural disaster damaged Brian's parked car.

What type of automobile insurance coverage will pay for the damage?

• Liability

• Collision

• Premium

• Comprehensive

Which option would provide the lowest financial risk?

• Stocks

• Bonds

• Mutual Fund

• Savings Account

How does the North American Free Trade Agreement (NAFTA) reduce costs for consumers

• By regulating prices

• By increasing competition

• By increasing production costs

• By regulating safety standards

Tax M is 6% of every person's annual income.

What type of tax is being described?

• Excise

• Regressive

• Progressive

• Proportional