Economics Final Exam review

Review the timeline and answer the question.

• July 2018: The United States announces 25% tariffs on $24 billon of Chinese imports; China responds with similar tariffs on $34 billion of US imports.

• September 2018: The United States places 10% tariffs on $200 billion of Chinese imports; China responds with similar tariffs on $60 billion of US imports.

• May 2019: The United States increases tariffs on $200 billion of Chinese imports from 10% to 25%; China responds by increasing tariffs on $60 billion of US imports.

How did these developments affect trade between the countries?

• They led to an increase in trade between the countries as domestic goods became more expensive than foreign goods.

  The tariffs artificially raised the prices of foreign goods as compared to their domestic counterparts, resulting in a decline in trade between the nations.

• They led to a decrease in trade between the countries as fewer goods were able to be imported into each country.

  Though the tariffs did reduce trade during this period, this answer choice describes the impact of quotas, not tariffs.

• They led to an increase in trade between the countries as more goods were able to be imported into each country.

  The tariffs enacted by the United States and China negatively impacted trade by artificially raising the price of foreign goods. Further, this answer choice describes the impact of quotas, not tariffs.

• They led to a decrease in trade between the countries as foreign goods became more expensive than domestic goods.

  The tariffs artificially raised the prices of goods from the other country, resulting in a decline in trade between the two.

A New Year

In the January following an election year, a new president and a new Congress were sworn in. During the first 100 days of the new administration, Congress and the president coordinated to address the country's economic issues. During this time period, the government raised the personal income tax rate for high earners and corporations and produced a budget reducing government spending and limiting deficit spending.

Which answer choice best describes the government's concerns about inflation and its approach to addressing these concerns?

• Due to concerns about a low inflation rate, the government is pursuing contractionary fiscal policies.

  While the text describes contractionary policies, the government would typically enact such policies in response to high, not low, levels of inflation.

• Due to concerns about a high inflation rate, the government is pursuing expansionary fiscal policies.

  While concerns about high inflation would motivate the government to enact policies such as those described, they are examples of contractionary, not expansionary, policies.

• Due to concerns about a low inflation rate, the government is pursuing expansionary fiscal policies.

  The policies described are examples of contractionary, not expansionary, policies and would be pursued by the government in response to high, not low, levels of inflation.

• Due to concerns about a high inflation rate, the government is pursuing contractionary fiscal policies.

  To combat high inflation rates, the government would likely reduce the monetary supply through contractionary policies such as those described in the text.

Read a reporter’s notes, taken at a press conference held by the Georgia Department of Economic Development, and answer the question.  

What would be an appropriate title for the journalist's article covering the press conference?

• Georgia Hurts its Economy by Sending Jobs and Industries Overseas

  Participating in exports does not mean Georgia is sending jobs or industries overseas. Instead, they are selling goods to foreign markets.

• Percentage of Georgia's Economy Tied to Trade is Too Small to Measure

  The notes suggest that the percentage of the economy tied to trade is significant and measurable.

• Exports Bring Jobs and Sizable Growth to Georgia's State Economy

  The notes show that exports contribute to both the economic production in the state and the employment of many workers.

• Georgia is Too Reliant on Trade to Drive State's Economic Growth

  The notes do not suggest that Georgia is over-reliant on trade. Instead, the points suggest that trade is an important and beneficial component of the state's economy.

What factor typically causes the value of nation's currency to fall compared to other currencies?

• high levels of inflation

• high levels of export activity

• low levels of public debt

• low levels of unemployment

Read the passage and answer the question.

An apple farmer regularly sold a portion of his crop at a local farmer's market once each month. Most Saturdays, the farmer charged $1.50 per pound of apples. Two months in a row, the farmer sold all of the apples within a few hours. The next month, the farmer returned to the market, and priced his apples for $3.00 per pound. However, the farmer failed to sell all of his apples and was forced to bring many of them home.

Which principle of economics does the passage best illustrate?

• 
  the law of demand, which states that as a product’s price increases, demand for the product decreases

• the law of supply, which states that as a product’s price increases, demand for the product increases

• the law of demand, which states that as a product’s price increases, demand for the product increases

• the law of supply, which states that as a product’s price increases, demand for the product decreases

Review the summary of two individuals' credit information and answer the question

Which action would most likely result in the largest increase in the person's credit score in the next six months?

• Anthony takes out a loan to help him purchase a car.

• Cheyenne pays off the remaining balance on her credit cards.

• Cheyenne takes out a mortgage for an expensive house.

• Anthony applies for a fifth credit card from a different bank.

Diego and Luna both work on a fishing boat. On average, Diego catches 20 fish per day, while Luna averages 15 fish per day. After they have both worked for their particular company for a month, Diego is offered a raise of $4 an hour, while Luna's wages remain the same. Which of the following BEST explains the company's justification for this?

• 
  Diego is working harder to please his bosses than Luna is.

• Luna is not meeting the company's expected level of productivity.

• Diego is contributing more to the company's revenue than Luna.

• Luna is preventing other workers from being as productive as expected.

Look at the table. Then answer the questions that follow.

Personal Income Tax Rates in Four CountriesIncome BracketCountry
QCountry
RCountry
SCountry
T$1–$25,0004%15%40%10%$25,001–$95,0008%20%20%10%$95,001–$200,00016%30%10%10%$200,001+32%50%5%10%

• Only Country S has a proportional income tax system.

• Only Country T has a proportional income tax system.

• Country Q and Country R both have proportional income tax systems.

• Country Q and Country S both have proportional income tax systems.

What factor does not determine whether something functions well as a modern currency?

• whether it is widely accepted as a payment for goods

• whether it is measured in units that are easy to calculate

• whether it will retain its value over time

• whether it has a high intrinsic value

Use the graphs illustrating statistics about Country X to answer the question

Based on the graphs, what most likely occurred in Country X between 2000 and 2020?

• 
  real GDP per capita increased

• aggregate supply decreased

• the unemployment rate increased

• the inflation rate decreased