Economic Choices Quiz

Which reason explains the need for economic choices?

• Consumer wants are limited and resources are scarce.

• Consumer wants are unlimited and resources are scarce.

• Consumer wants are limited and resources are limited.

• Services are unlimited and quantities demanded are unlimited.

The lack of enough resources to produce everything people want is which central economic problem?

• allocation

• production possibilities

• scarcity

• productivity

Which of the following economic activities are people free to do under the free enterprise system?

• engage in predatory competition

• own a state-operated business

• not pay taxes

• start their own business

Which scenario is an example of a monopoly?

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

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

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

• A dry cleaner specializes in environmentally friendly cleaning methods.

How will increased supply and decreased demand for a product affect the equilibrium price?

• It will go up.

• It will go down.

• It will be unaffected.

• It will continue to fluctuate.

An infestation of apple worms has destroyed a region’s crop of apples. How would this most likely affect the supply and price of apples?

• Both the supply and price would increase.

• Both the supply and price would decrease.

• The supply would decrease, and the price would increase.

• The supply would increase, and the price would decrease.

How can the Federal Reserve influence consumers to borrow money to purchase a home during an economic downturn?

• by increasing interest rates on home loans to make banks more willing to loan money to consumers

• by reducing interest rates on home loans to make consumers more willing to take loans from banks

• by buying U.S. Treasury bonds back from consumers to allow them to have more cash in hand

• by selling U.S. Treasury bonds to strengthen the U.S. economy and gross domestic product

What is one characteristic of a period of recession?

• unemployment tends to rise

• consumer spending increases

• companies increase production

• prices tend to rise

How would tax credit most likely affect consumer spending behavior?

• It would lead to a decrease in savings.

• It would lead to a decrease in spending.

• It would lead to an increase in spending.

• It would lead to an increase in borrowing.

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

• to promote the development of public goods and services

• to create incentives for research and development

• to develop large-scale efficient industries

• to ensure competition in the marketplace