ECONOMICS PF FINAL EXAM REVIEW

What is the reason for making economic choices?

• Consumer wants are unlimited and resources are scarce.

• Services are limited and quantities demanded are low.

• Consumer wants are limited and resources are limited.

• Services are unlimited and quantities demanded are unlimited.

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

• more equitable distribution of goods

• more extensive social welfare programs

• slower rate of change in business cycles

• greater variety in consumer choice

Which of the following is a true statement regarding mixed and market economies?

• Government and consumers make economic decisions in a mixed economy, while consumers make economic decisions in a market economy.

• Consumers make economic decisions in a mixed economy, while consumers and government make economic decisions in a market economy.

• Government makes all economic decisions in a mixed economy, while consumers make all economic decisions in a market economy.

• Consumers make all economic decisions in a mixed economy, while the government makes all economic decisions in a market economy.

What does the point of intersection shown on this graph represent?

• elasticity

• equilibrium

• opportunity cost

• marginal production

What type of policy is being implemented when the Federal Reserve adjusts interest rates to influence economic activity?

• Fiscal Policy

• Tax Policy

• Monetary Policy

• Trade Policy

Which option BEST matches a stage in the business cycle with a GDP trend?

• stable GDP growth – RECESSION

• increasing GDP growth – CONTRACTION

• decreasing GDP growth – PEAK

• accelerating GDP growth – EXPANSION

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

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

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

• to regulate the stock market in order to ensure transparency

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

In which economic system does the government primarily regulate business and provide entitlements?

• command economy

• mixed economy

• pure capitalist economy

• traditional economy

Which scenario is an example of a monopoly?

• A dry cleaner specializes in environmentally friendly cleaning methods.

• 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.

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

• to promote competition in the marketplace

• to create incentives for research and development

• to develop large-scale efficient industries

• to ensure the development of public goods and services