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Economics Final Exam Review

Total questions: 66

Worksheet time: 51mins

Name
Class
Date
1.
Economics is the study of _____
a)
Money
b)
Businesses
c)
Scarcity
d)
Time
2.
Scarcity forces us to make a choice. What do we call any decision to swap one resource for another?
a)
Trade-off
b)
Opportunity Cost
c)
Incentive
d)
Scarcity
3.
When we make that Trade-off, we are forced to make a choice. All of our choices have some sort of cost. What do we call the cost of our choices?
a)
Scarcity
b)
Trade-off
c)
Opportunity Cost
d)
Incentive
4.
What do we call the economic model that allows us to clearly define our costs by putting quantitative values on our choices?
a)
Opportunity Cost
b)
Trade-off
c)
Production Possibilities
d)
Scarcity
5.
Study this Production Possibilities Curve. Is the opportunity cost of producing Skis or Snowboards constant?
a)
Yes
b)
No
c)
Not always
6.
What would be the opportunity cost of moving from Point A to Point B on this Production Possibilities Curve?
a)
200 pairs of skis
b)
50 snowboards
c)
100 pairs of skis
d)
100 snowboards
7.
Study the Production Possibilities Curve. Assuming we are operating at maximum efficiency, what would be the Opportunity Cost to produce 2 units of Robots if we are currently producing zero units of robots?
a)
3
b)
16
c)
1
d)
11
8.
Which of these points represents a production combination that is possible, but is inefficient?
a)
A
b)
C
c)
X
d)
B
9.
Which point represents a production combination that is not possible?
a)
A
b)
C
c)
D
d)
X
10.
Which point represents a production combination that is possible and efficient? 
a)
A
b)
X
c)
D
11.
According to the Law of Supply at higher prices, producers will...
a)
produce less
b)
produce more
c)
maintain current production
d)
increase demand
12.
A Production Possibilities curve helps determine
a)
factors of production
b)
all the opportunity costs and trade-offs that a business will face during a year
c)
the maximum combinations of goods and services that can be produced during a given time
d)
factors of production
13.
In a capitalist economic system, most property is
a)
owned by the government
b)
owned by the banks
c)
controlled by the government
d)
owned by private citizens
14.
Entrepreneurship refers to the ability to
a)
manage other people
b)
start new businesses, introduce new products and processes, and improve management techniques
c)
adapt technology efficiently
d)
borrow capital successfully and expand an existing business to meet customer demand
15.
A communist economic system is characterized by
a)
a complete absence of government
b)
centralized economic planning and state ownership of the factors of production
c)
individual ownership of the factors of production and economic freedom
d)
decision making based on traditions and customs
16.
Another term for a Capitalist economic system is a...
a)
Command Economy
b)
Market Economy
c)
Mixed Economy
d)
Traditional Economy
17.
According to the Law of Demand, if the price of an item rises, quantity demanded will...
a)
increase
b)
decrease
c)
remain unchanged
d)
reflect the influence of new suppliers
18.
When the price of a good is too high for consumers, they look for
a)
luxury items
b)
complimentary goods
c)
substitute goods
d)
inflation
19.
The principle that states the more you have of something, the less satisfaction you will get from an additional unit is the
a)
law of demand
b)
law of supply
c)
law of economy
d)
law of diminishing marginal utility
20.
Which factor of production do the items pictured here illustrate?
a)
Capital
b)
Labor
c)
Land
d)
Entreprenuership
21.
Which factor of production does this picture illustrate?
a)
Land
b)
Labor
c)
Capital
d)
Entreprenuership
22.
The things seen in this picture would be best categorized as which factor of production?
a)
Land
b)
Entrepreneurship
c)
Labor
d)
Capital 
23.
Study this graph. Suppose this nation starts producing all military goods, represented by point A. It then decides to produce a mix of civilian and military goods, represented by point B. What represents the cost in military goods given up?
a)
The vertical distance between point x and point y
b)
the horizontal distance between point y point z
c)
the vertical distance from point A to point x
d)
the horizontal distance between point z and point E
24.
Which of the following choices could cause the movement shown in this graph?
a)
a decrease in the price of a complimentary good
b)
an increase in the price of a substitute good
c)
a decrease in consumer income
d)
an increase in population
25.
What goods and services should be produced, how they should be produced, and who should share in what is produced are three basic questions addressed by
a)
market economies
b)
command economies
c)
traditional economies
d)
all economies
26.
Suppose the demand curve shifts from D1 to D2 as shown in the graph. What would the equilibrium price be after the change?
a)
$14
b)
$17
c)
$15
d)
$16
27.
Suppose the demand curve shifts from D1 to D2 as shown in the graph. How do the quantity supplied and the quantity demanded change at the new equilibrium price?
a)
Quantity supplied increases and the quantity demanded decreases
b)
Quantity supplied decreases and the quantity demanded increases
c)
Both quantity supplied and quantity demanded decrease
d)
Both quantity supplied and quantity demanded increase
28.
When economists look at a nation's economy they look at 3 factors; _____, Unemployment, and Inflation to determine the health of the economy.
a)
deflation
b)
inflation
c)
unemployment
d)
Output
29.
Which of the following categories of spending would NOT be included in a nation's GDP?
a)
government spending
b)
net exports
c)
intermediate goods
d)
consumer spending
30.
Which of the following categories WOULD be counted towards a nation's GDP?
a)
consumer spending
b)
used Goods (produced during a previous year)
c)
intermediate goods
d)
illegal goods
31.
Refer to Table 19-1. Consider the table of production and price statistics for a small economy in 2008. If the economy only produces the four goods listed below, what is GDP for 2008?
a)
$24,000
b)
$267,000
c)
$428,000
d)
$1,424
32.
When the price of a good is too high for consumers, they look for
a)
luxury items
b)
complimentary goods
c)
substitute goods
d)
inflation
33.
According to the Law of Demand, if the price of an item rises, quantity demanded will...
a)
increase
b)
decrease
c)
remain unchanged
d)
reflect the influence of new suppliers
34.
The principle that states the more you have of something, the less satisfaction you will get from an additional unit is the
a)
law of demand
b)
law of supply
c)
law of economy
d)
law of diminishing marginal utility
35.

Which direction will the demand curve shift to show an increase in demand?

a)

Left

b)

Upward

c)

Right

d)

Downward

36.

An oven at a bakery is an example of which factor of production?

a)

labor

b)

entrepreneurship

c)

natural resource

d)

capital

37.

Minimum wage rises to $11.00 per hour. This is an example of which supply determinant?

a)

Expectations

b)

Taxes and Subsidies

c)

Number of producers

d)

Cost of Production

38.

There are many buyers AND sellers in this market structure.

a)

monopoly

b)

monopolistic competition

c)

oligopoly

d)

pure/perfect competition

39.

Their is only one supplier in this market structure.

a)

monopoly

b)

monopolistic competition

c)

oligopoly

d)

pure / perfect competition

40.

Product differentiation is _________________.

a)

having identical products.

b)

copying another business.

c)

small differences that make your product unique.

d)

having control of the market value.

41.
How many firms are there in a perfect competition?
a)
1
b)
2-5
c)
Many
42.
Factors that make it difficult for new firms to enter a market are called
a)
Barriers to entry
b)
Factors of production
c)
Limited supply
d)
Monopolistic Outlook
43.
An industry that is dominated by a few large firms is 
a)
monopolistic competition.
b)
a monopoly.
c)
perfect competition.
d)
an oligopoly.
44.
A market structure characterized by firms producing similar product with easy entry into the market
a)
Perfect Competition
b)
Monopolistic Competition
c)
Monopoly
45.
The primary role of the Federal Reserve Bank is to steer the economy by
a)
controlling the budget
b)
setting spending levels.
c)
controlling the money supply.
d)
loaning out money.
46.
In a recession, the Fed would likely
a)
Increase the supply of money in the economy
b)
Decrease the supply of the money in the economy
47.
If the United States is experiencing inflation, the Fed will likely
a)
Increase the supply of money in the economy
b)
Decrease the supply of money in the economy
48.

The FED increases/decreases the nation’s money supply in order to meet the 3 main government economic goals. These goals are

a)

decrease in prices, full employment, reduction in gross domestic product

b)

stable prices, full employment, economic growth

c)

consistent prices, regulation of the stock market, reduce gov't spending

d)

increase in prices, full unemployment, economic growth

49.

What are the phases of the business cycle, in order as labeled in this image?

a)

A=peak, B=contraction, C=trough, D=expansion

b)

A=peak, B=trough, C=contraction, D=expansion

c)

A=contraction, B=expansion, C=trough, D=peak

d)

A=trough, B=expansion, C=peak, D=contraction

50.

What is the Federal Reserve System?

a)

the central banking system of the United States.

b)

a government office for regulating the budget of the United States of America.

c)

the banking system of the southeast

d)

the office that controls tax rates and government spending

51.
The Federal Reserve can increase __________, which makes banks more selective when loaning out money
a)
Reserve Requirements
b)
Percentage/Earnings Ratios
c)
Dividends
d)
Blue Chip Stocks
52.
If the economy is expanding too quickly, the Federal Reserve will institute which type of monetary policy?
a)
Expansionary
b)
Contractionary
c)
Equanimitous
d)
Whole Dollar
53.

The rate of inflation is most commonly measured by use of

a)

a price deflator

b)

the GDP deflator

c)

the consumer price index

d)

all of the above

54.

Inflation reduced people's purchasing power because

a)

the same amount of money buys ore goods and services

b)

the same amount of money buys fewer goods and services

c)

the market basket has to be changed every year

d)

there is not enough money in the economy

55.

The inflation rate is

a)

the ability to buy goods or services

b)

measured in fixed dollars

c)

not an important measure to economists

d)

the percentage change in prices over time

56.
Who is most likely to be hurt by inflation?
a)
someone who borrowed money
b)
a retiree on a fixed income
c)
a business owner
d)
the U.S. government
57.

A little inflation is normal and even good for a healthy economy. Inflation becomes a problem when it grows too quickly.

a)

True

b)

False

58.

Fiscal policy is actions taken by ______________ to stabilize the economy.

a)

The federal Reserve

b)

The Air force

c)

the government

d)

Wall street

59.

The tools of fiscal policy are...

a)

Interest rates

b)

Taxes and Government spending

c)

Checks and balances

d)

Open market operations

60.

Contractionary fiscal policy are law aimed at reducing inflation. How might Congress use contractionary fiscal policy?

a)

Decrease government spending and increase taxes

b)

Decrease taxes

c)

Send stimulus checks to every person in the economy

d)

Increase government spending

61.

Expansionary fiscal policies are laws aimed at reducing unemployment. How might Congress use expansionary fiscal policy?

a)

Decrease the discount rate

b)

Increase taxes

c)

Decrease government spending

d)

Increase government spending and decrease taxes

62.

Which is an example of automatic stabilizer?

a)

Stimulus checks that congress had to vote on

b)

A paycheck from your employer

c)

Unemployment Insurance

d)

Interest on your savings account

63.

Which is a key characteristic of an automatic stabilizer?

a)

They take time to be implemented

b)

They occur automatically based on the phase of the business cycle we are in.

c)

They must be paid back to the government

d)

Only corporations have access to automatic stabilizers

64.

Who is in charge of Monetary Policy

a)

The Government

b)

The Federal Reserve System

c)

The states

d)

The Department of the Treasury

65.

Monetary Policy is the Federal Reserve Systems attempt to...

a)

control the amount of money in circulation

b)

control the Federal Government's debt

c)

control state governments' spending

d)

none of these answers are correct.

66.

Inflation makes your money less valuable over time?

a)

true

b)

false

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