Review for Test (3/19-3/20)

Developments for the Space Program - Freeze-dried food - Water purification systems - Solar panels - UV-blocking glass - Wireless headsets

• - to promote stability through fiscal policies

• - to sponsor plans to develop urban areas

• - to support basic research for technological advances

• - to provide large companies with military contracts

Which statement best describes the relationship between labor and capital?

• Laborers help determine the amount of taxes paid by the owner of the capital.

• Entrepreneurs use capital with labor to produce goods for the marketplace.

• Capital is the result of competition between laborers and entrepreneurs.

• Capital will determine the number of laborers employed in a factory.

These characteristics describe a market that is guided by: - Means of production are privately owned - Quality and product availability are high - Prices on merchandise are low

• a strict set of regulatory laws.

• the practice of free competition.

• a scarcity of natural resources.

• the demands of organized labor.

[By directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. —Adam Smith, Wealth of Nations]

What did Adam Smith believe was the result of influence by an "invisible hand"?

• regulations to ensure the quantity and availability of goods from vendors

• competition that improved the quality of goods and lowered prices

• manufacturing process to produce large quantities with minimal profits

• industry monopolies that evolved because of immense profits

According to the Bureau of Labor Statistics, unemployment in the United States rose steadily from a low of 4.4% in March 2007 to a peak of 10.2% in October 2009. Which statement best supports this information?

• The statistics include those who stopped actively seeking work or settled for part-time jobs.

• The trend indicated that the country was experiencing a period of economic recession.

• The data put monetary policy pressure on central banks to raise their interest rates.

• The change signified an economy with rising income levels for the middle class.

Which of the following best completes this list? Major Factors That Influence a Market Economy: Capital, Unrestricted trade, ________.

• Contract law

• Interest rates

• Labor unions

• Competition

[The balance between consumption and production makes price. The market settles, and alone can settle, that price. Market is the meeting and conference of the consumer and producer, when they mutually discover each others wants. -Edmund Burke, 1795]

According to Burke, what determines the price of a good or service?

• quality of a product

• changes in tax rates

• demand for a product

• access to new technology

What is the most likely result of imposing a price ceiling on a particular product?

• Supply exceeds demand and results in a surplus.

• Sellers decide to produce more of that product.

• Demand exceeds supply and results in a shortage.

• Buyers lose interest in purchasing that product.

The cost of manufacturing a specific good in a developing country is less than the cost to manufacture it in the United States. What is the most likely result if that country exports the good to U.S. markets?

• Prices will decrease and the quantity produced will increase.

• Congress will raise the rates on international tariffs.

• Prices will remain stable but quality will decline.

• Companies will expand production to compete in the industry.

Which term is used to describe a company’s ability to produce a good at a lower opportunity cost than another company?

• trade imbalance

• absolute advantage

• non-structural barrier

• comparative advantage