Final Econ Review

How does the circular-flow model illustrate the role of government in the economy?

• Government has no role in the model

• Government only provides services to households

• Government takes taxes from firms and households, and returns money through services and purchases

• Government controls all flows of money between firms and households

Which statement best compares and contrasts free enterprise and socialist economic systems?

• Free enterprise allows competition to set prices, while socialist systems have no price mechanisms

• Free enterprise has no government involvement, while socialist systems are entirely government-controlled

• Free enterprise incentivizes individual choice, while socialist systems aim for wealth redistribution

• Free enterprise benefits only business owners, while socialist systems benefit all citizens equally

Based on the information provided, which of the following strategies would likely be most effective for managing credit card debt?

• Using multiple credit cards to spread out debt

• Paying only the minimum required monthly payments

• Spending freely, assuming future income will cover debts

• Spending only what can be repaid and paying more than the minimum monthly payment

Which of the following best describes the relationship between price and demand according to the law of demand?

• As price increases, demand increases

• As price decreases, demand decreases

• As price increases, demand decreases

• Price and demand have no relationship

What is the term for the point on a supply and demand graph where the number of items for sale is the same as the units demanded?

• Equilibrium price

• Scarcity point

• Break-even point

• Market saturation

Which of the following is NOT considered a non-price determinant that can affect demand?

• Population density

• Regional preferences

• Complementary goods

• The current price of the good itself

How might the formation of a corporation impact a business owner's control compared to a sole proprietorship?

• The owner gains more control over daily operations

• The owner's control remains unchanged

• The owner may lose some control as decisions are influenced by shareholders

In the context of capital formation, why might an entrepreneur choose to invest in higher-risk options rather than a traditional savings account?

• Higher-risk investments are guaranteed to provide immediate returns

• Traditional savings accounts have higher interest rates than other investment options

• Higher-risk investments may offer the potential for greater profits and faster capital accumulation

• Entrepreneurs are required by law to invest in high-risk options when starting a business

How might the rise of app-based businesses and online marketplaces affect traditional brick-and-mortar stores?

• Brick-and-mortar stores will likely see increased foot traffic due to online advertising

• Traditional stores may need to adapt their business models or risk losing market share to digital competitors

• App-based businesses will have no impact on traditional retail stores

• Brick-and-mortar stores will automatically benefit from the growth of online marketplaces

Which of the following best describes the function of money as a "medium of exchange"?

• It allows people to store value over time

• It provides a standard measure for comparing the value of goods

• It enables people to directly trade goods and services without currency

• It facilitates the purchase of goods and services using an agreed-upon currency