EPF Final Review

Which reason explains the need for economic choices? E.1.2

• Consumer wants are limited and resources are limited.

• Services are unlimited and quantities demanded are unlimited.

• Services are limited and quantities demanded are low.

• Consumer wants are unlimited and resources are scarce.

Which factor is a major advantage of free enterprise economies compared with centrally planned economies? E.1.1

• slower rate of change in business cycles

• more extensive social welfare programs

• more equitable distribution of goods

• greater variety in consumer choice

The Federal Reserve System regulating the flow of currency into the economy is indicative of which of the following economic policies? E.2.3

Responses

• Tax Policy

• Investment Policy

• Fiscal Policy

• Monetary Policy

Which option BEST matches a gross domestic product (GDP) trend with a stage in the business cycle? E.2.1

• stable GDP growth – period of recession

• increasing GDP growth – period of depression

• decreasing GDP growth – period following a trough

• accelerating GDP growth – period of expansion

What is a key role of the Federal Reserve in the U.S. economy? E.2.4

• to regulate the supply of money in order to control the federal budget

• to regulate banks in order to control the money supply and interest rates

• to regulate the stock market in order to ensure transparency

• to regulate prices in order to protect consumers and limit inflation

Regulating business and providing entitlements define the primary economic role of government in which economic system? E.1.1

• traditional economy

• mixed economy

• pure capitalist economy

• command economy

Which scenario is an example of a monopoly? E.1.4

• A dry cleaner specializes in environmentally friendly cleaning methods.

• A farmer produces green beans for sale at a farmers’ market.

• A local water company is the sole provider of water for a small town.

• A small number of cereal companies produce most of the cereal on the market.

Why does the U.S. government enforce antitrust laws? E.3.2

• to promote competition in the marketplace

• to develop large-scale efficient industries

• to create incentives for research and development

• to ensure the development of public goods and services

How does this government office encourage entrepreneurship?

• by providing funding for innovative products

• by protecting the rights of inventors

• by ensuring the safety of new merchandise

• by regulating the distribution of information

Which of the following is the MAIN source of federal government revenue? E.3.3

• social security tax

• corporate income tax

• local sales tax

• personal income tax