Economics Quiz

What are the factors of production?

• goods and services

• risk and opportunity

• land, labor, and capital

• wages, salaries, and profits

What would government do in a model free enterprise system?

• ensure that prices remain reasonable

• stay out of economic activity altogether

• protect property rights and enforce contracts

• support entrepreneurs to encourage innovation

The law of demand states that as price decreases

• wages decrease.

• production increases.

• demand increases.

• quality decreases.

The degree to which the quantity demanded responds to changes in price is called

• elasticity.

• revenue.

• schedule.

• utility.

Which of these is the best example of diminishing marginal utility?

• A shortage of bike paths makes bicycles less useful.

• Bicycles become less useful as they get old and start to rust.

• Someone who has one bicycle will have less use for another.

• People with cars have less use for bicycles than people without cars have.

What institution determines what fraction of deposits a bank must set aside to be available for customer withdrawals?

• Federal Reserve System

• New York Stock Exchange

• Securities and Exchange Commission

• Federal Deposit Insurance Corporation

Which of these principles determines wage rates in a labor market?

• collective bargaining

• globalization

• risk and reward

• supply and demand

Food stamps, the Earned Income Tax Credit, and unemployment insurance are examples of

• income redistribution.

• natural monopolies.

• negative externalities.

• regulatory capture.

When a tax becomes a disincentive to work, the resulting reduction in productivity is a form of

• A. deadweight loss.

• B. entitlement.

• C. marginal tax rate.

• D. tax incidence.

The market value of all final goods and services produced within a country in a given time period is the

• A. wage-price spiral.

• B. consumer price index.

• C. gross domestic product.

• D. net of exports minus imports.