ECONOMICS Part 4 Exam

A budget will

• make it more attractive for you to buy a car every couple of years

• help you focus on those expenditures that you value highly relative to cost.

• improve your credit standing so you can use borrowing to increase your current consumption.

• All of the above.

Which of the following will help you generate income and accumulate wealth?

• Getting another credit card so you will have more borrowing power in the future.

• Budgeting in order to regularly contribute to savings and investments.

• Borrowing funds in order to increase your current consumption.

• Making only the minimum monthly payment on your outstanding credit card balances.

Your comparative advantage in a specific area is determined by

• the market value of the skill relative to your opportunity cost of supplying it.

• the absolute value of the skill in the performance of a specific job.

• minimum wage laws, health and safety standards and marginal tax rates.

• the comparative positions of the wealthy, the middle income individuals and low income individuals.

Compared to high school graduates, those who drop out are

• more valuable to employers.

• more likely to be poor.

• more likely to be highly productive.

• more likely to earn high incomes.

Which of the following statements is true?

• Life is a lottery.

• Individuals will be better off if they are really good at something that is highly valued by others.

• Most millionaires are born rich.

• It is more difficult to be successful today because the world is running out of nonrenewable resources.

Entrepreneurs are vitally important for economic progress because they

• innovate and discover new ways of bringing items of value to consumers willing to pay for them.

• stick with the tried and true methods rather than experimenting with new ways of doing things.

• rely on government grants and subsidies for the funding of research and development.

• rely on price controls to determine the prices charged for the items they bring to market.

The employee is thinking like an entrepreneur in which of the following situations?

• An hourly employee goes to work and performs only the required tasks.

• A cashier rings up the total purchase price of the goods in the customer’s cart.

• A staff member brings a plan to the supervisor which describes how to reduce costs and attract new customers.

• An employee attends a monthly staff meeting on company policies and procedures.

Which of the following is true?

• The parents of successful entrepreneurs almost always have at least a college education.

• Entrepreneurs are under-represented among millionaires.

• Successful entrepreneurs are good at discovering profitable opportunities that have been overlooked by others.

• All of the above are true.

Financial insecurity in America is primarily the result of

• a shortage of financial planners and portfolio managers.

• the low incomes of Americans.

• the huge amount of time and complex knowledge required for basic financial planning.

• a low rate of personal saving and poor financial planning.

Workers who have success-oriented attitudes tend to be

• more successful in the labor market.

• less cooperative, preferring to work alone.

• argumentative to the point of being disrespectful.

• overeducated daydreamers.