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Economics midterm unit 1&2 Review

Total questions: 60

Worksheet time: 31mins

Name
Class
Date
1.

The basic problem of economics is what?

a)
Scarcity
b)
Inflation
c)
Unemployment
d)
Abundance
2.

What is opportunity cost?

a)
Opportunity cost is the same as sunk cost
b)
Opportunity cost is the total cost of all available options
c)
Opportunity cost is the value of the next best alternative that must be forgone in order to pursue a different option.
d)
Opportunity cost is the cost of the chosen option
3.

The 3 economic questions:

a)

What goods and services will be produced?

b)

How will goods and services be produced?

c)

Who benefits from an expanding economy?

d)

Who will get to use the goods and services that are produced?

4.

Command economy

a)
Monopoly
b)
Supply and demand
c)
Free market
d)

Government control

5.

Traditional economy

a)
Mixed economy is a combination of market and planned economies
b)
Modern economy is based on supply and demand
c)
Command economy relies on government control
d)
Customs, traditions, and beliefs shape the goods and services produced.
6.

Mixed economy

a)
A mixed economy is solely based on socialism.
b)
A mixed economy combines elements of both capitalism and socialism.
c)
A mixed economy is solely based on capitalism.
d)
A mixed economy is a type of dictatorship.
7.

Market economy

a)

A market economy is an economic system where supply and demand have no influence on production decisions.

b)

A market economy is an economic system where prices are set by a central authority.

c)

A market economy is an economic system where decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in the free market.

d)

A market economy is an economic system where the government controls all aspects of production and distribution.

8.

Law of demand

a)
Quantity demanded decreases as price increases
b)
Quantity demanded increases as price increases
c)
Quantity demanded decreases as price decreases
d)
Quantity supplied decreases as price increases
9.

Law of supply

a)
As the price of a good or service increases, the quantity supplied by producers increases.
b)
The law of supply is not related to the price of goods or services.
c)
The law of supply states that producers will supply more of a good or service as the price decreases.
d)
As the price of a good or service decreases, the quantity supplied by producers decreases.
10.

Equilibrium point

a)
Point where supply exceeds demand
b)
Where the price is set by the government
c)
The highest price in the market
d)
Intersection of supply and demand curves
11.

Marginal benefit

a)

Marginal benefit is the additional benefit gained from consuming one more unit of a good or service.

b)

Marginal benefit is the benefit derived from consuming a good or service at the average level.

c)

Marginal benefit is the cost incurred from consuming one more unit of a good or service.

d)

Marginal benefit is the total benefit gained from consuming a good or service.

12.

Perfect competition

a)
Perfect competition is a market structure characterized by many small firms selling identical products, no barriers to entry or exit, price takers, and perfect information.
b)
Perfect competition is a market structure where firms have complete control over pricing
c)
Perfect competition is a market structure characterized by high barriers to entry and exit
d)
Perfect competition is a market structure characterized by a single dominant firm controlling the market
13.

Horizontal integration

a)
Vertical integration with unrelated industries.
b)
Acquiring or merging with competitors in the same industry.
c)
Diversifying into new markets.
d)
Selling off assets to reduce market share.
14.

Vertical integration

a)
Supply chain management
b)
Outsourcing
c)
Controlling multiple stages of the supply chain
15.

Oligopoly

a)
Market structure where only one firm dominates the market
b)
Market structure where consumers dominate the market
c)
Market structure where government regulates the market
d)
Market structure where a small number of firms dominate the market
16.

Sherman Antitrust Act

a)

The Sherman Antitrust Act was the first federal statute to limit cartels and monopolies.

b)

The Sherman Antitrust Act was passed in the 20th century.

c)

The Sherman Antitrust Act was repealed in the 19th century.

d)

The Sherman Antitrust Act was focused on environmental regulations.

17.

Conglomerate

a)

A corporation that diversifies their stock portfolio

b)

A corporation made up of failing companies

c)
A corporation made up of several different companies in diversified industries.
18.

Market concentration

a)

Market concentration is the dominance of a few large firms in a particular market.

b)

Market concentration refers to the number of firms in a market, not their size.

c)

Market concentration is the same as market competition.

d)

Market concentration only applies to small businesses.

19.

What are some of the factors of supply?

a)

Global population growth, consumer tastes

b)

Production costs, technology changes, government policies

c)

Number of producers or sellers, Producer expectations

20.

What are some of the factors of demand?

a)

Weather, location, time of day

b)

Type of product, color, brand

c)

Government regulations, international trade, technology

d)

Price, income, preferences, expectations, number of buyers

21.

Elasticity of demand:

a)

Elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price.

b)

Elasticity of demand is not affected by consumer preferences.

c)

Elasticity of demand measures the total revenue change when the price changes.

d)

Elasticity of demand is the same as price elasticity of supply.

22.

Inelasticity of demand:

a)

is a concept that only applies to services.

b)

is only applicable to luxury goods.

c)

occurs when the quantity demanded increases with a decrease in price.

d)

occurs when the quantity demanded does not change much with a change in price.

23.

Gross national product (GNP)

a)

Total value of all goods and services imported by a country's residents at the end of the year

b)

Total value of all intermediate goods and services produced by a country's residents at the end of the year

c)

Total value of all final goods and services produced by a country's residents at the end of the year

d)

Total value of all final goods and services produced by a country's non-residents at the end of the year

24.

Gross domestic product (GDP)

a)

The total number of citizens in a country

b)

Total monetary or market value of all finished goods and services produced within a country's borders in a specific time period.

c)

The total amount of money in circulation within a country

d)

Total monetary value of all imports and exports in a country

25.

Lagging indicators

a)
Economic indicators that change after the economy has already begun to follow a particular trend.
b)
Political indicators that influence government policies
c)
Social indicators that measure societal well-being
d)
Leading indicators that predict future economic trends
26.

Leading indicators

a)
Leading indicators are economic indicators that have no impact on the economy.
b)
Economic indicators that change before the economy starts to follow a particular pattern.
c)
Leading indicators are economic indicators that change after the economy starts to follow a particular pattern.
d)
Lagging indicators are economic indicators that change before the economy starts to follow a particular pattern.
27.

Global Interdependence

a)
National Autonomy
b)
Interconnectedness and mutual reliance of countries on each other for economic, social, and political reasons.
c)
Local Independence
d)
Isolated Sovereignty
28.

Balance of trade

a)
The balance of trade is the difference between a country's birth rate and death rate.
b)
The balance of trade is the difference between a country's GDP and GNP.
c)
The balance of trade is the difference between a country's exports and imports of goods.
d)
The balance of trade is the difference between a country's government spending and revenue.
29.

Eminent domain

a)

the power of the government to take private property without compensation.

b)

a legal term for property owners to reclaim land from the government.

c)

a type of property ownership that grants full control to the government.

d)

the power of the government to take private property for public use with compensation to the owner.

30.

Bonds

a)

fixed-income securities issued by governments or corporations to raise capital.

b)

a type of chemical compound

c)

Used to lower capital within the economy in case of inflation

d)

A type of common stock

31.

Discretionary spending

a)
Fixed costs
b)
Mandatory expenses
c)
Necessary purchases
d)
Non-essential items or services
32.

Mandatory spending

a)
Voluntary spending determined by the government
b)
Spending that can be adjusted annually based on the budget
c)
Funds allocated for emergency situations
d)
Government expenditures that are required by law and not subject to the annual budget process.
33.

Fiscal policy

a)
Government's use of taxation and spending to influence the economy
b)
Individuals' use of taxation and spending to influence the economy
c)
Government's use of monetary policy to influence the economy
d)
Government's use of tariffs and subsidies to influence the economy
34.

Monetary policy

a)

Monetary policy is the term used to describe the process of regulating international trade agreements.

b)

Monetary policy refers to the process of setting interest rates by commercial banks.

c)

Monetary policy is the process by which a central bank controls the supply of water to achieve economic goals.

d)

Monetary policy is the process by which a central bank controls the supply of money to achieve economic goals.

35.

Expansionary policy

a)
Expansionary policy aims to slow down economic growth and discourage spending.
b)
Expansionary policy aims to reduce inflation and decrease aggregate demand.
c)
Expansionary policy aims to boost economic growth and increase aggregate demand.
d)
Expansionary policy aims to stabilize the economy by reducing government spending.
36.

Contractionary policy

a)
Fiscal policy tools used to increase government spending
b)
Monetary policy tools used to stabilize prices in the economy
c)
Expansionary policy tools used to increase the money supply in the economy
d)
Monetary policy tools used to reduce the money supply in the economy
37.

Dividends

a)
Dividends are taxes imposed on shareholders by a corporation.
b)
Dividends are loans taken by a corporation from its shareholders.
c)
Dividends are payments made by a corporation to its shareholders.
d)
Dividends are payments made by a corporation to its creditors.
38.

stocks

a)
Stocks are physical goods sold in stores.
b)
Stocks are a type of soup made from bones.
c)
Stocks are the wooden beams used to build houses.
d)
Stocks represent ownership in a company and are bought and sold on stock exchanges.
39.

What is the stock market?

a)

The stock market is a place where animals are adopted.

b)

The stock market is a place where securities like stocks and bonds are bought and sold.

c)

The stock market is a place where cars are manufactured.

d)

The stock market is a place where fruits and vegetables are sold.

40.

Stock exchange

a)

A stock exchange is a marketplace for buying and selling securities.

b)

A stock exchange is a place where you can buy groceries.

c)

A stock exchange is a type of currency used in medieval times.

d)

A stock exchange is a type of dance move.

41.

Stock index

a)

Stock index is a type of musical instrument

b)

Stock index is a unit of measurement for temperature

c)

Stock index is a measurement of a section of the stock market.

d)

Stock index is a type of fruit

42.

Preferred stock

a)

A type of stock that represents ownership in a corporation.

b)

A type of stock that is riskier than common stock.

c)

A type of stock that pays dividends before common stock.

d)

A type of stock that has a higher claim on assets and earnings than common stock.

43.

Common stock

a)
Common stock is a type of insurance policy.
b)
Common stock is a type of currency.
c)
Common stock is a type of bond.
d)
Common stock represents ownership in a company.
44.

Absolute advantage

a)
Ability to produce the same amount of a good or service with more resources
b)
Ability to produce more of a good or service with the same resources or the same amount with fewer resources
c)
Ability to produce less of a good or service with more resources
d)
Inability to produce any good or service
45.

Comparative advantage

a)
Comparative advantage is the ability of a country to produce a good or service at a lower opportunity cost than another country.
b)
Comparative advantage is only applicable to services, not goods.
c)
Comparative advantage refers to the equal production capabilities of different countries.
d)
Comparative advantage is the ability of a country to produce a good or service at a higher opportunity cost than another country.
46.

Security and Exchange Commission (SEC)

a)

Organization responsible for maintaining national parks

b)

Department of Transportation

c)

Government agency responsible for enforcing federal securities laws

d)

Federal Reserve Bank

47.

Federal Deposit Insurance Corporation (FDIC)

a)

FDIC only protects depositors in case of a stock market crash

b)

An independent agency of the United States government that protects depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails.

48.

Reserve requirements

a)

are the maximum amount of funds a bank can lend out to customers.

b)

refer to the interest rate set by the Federal Reserve for banks to borrow money.

c)

the amount of funds that a depository institution must hold in reserve against specified deposit liabilities.

d)

the amount of funds that a depository institution must hold in reserve against specified loan liabilities.

49.

Direct tax

a)
A tax paid to a private entity instead of the government.
b)
A tax paid directly by an individual or organization to the government.
c)
A tax paid indirectly by an individual or organization to the government.
d)
A tax paid by the government to individuals or organizations.
50.

Indirect tax meaning

a)

a tax paid directly by the consumer

b)

a tax levied on income

c)

type of tax collected by an intermediary from the person who bears the ultimate economic burden of the tax.

d)

a tax collected by the government

51.

Federal reserve(FED)

a)

a private corporation

b)

a non-profit organization

c)

a cryptocurrency

d)

the central banking system of the United States.

52.

Credit union

a)
A credit union is a for-profit organization
b)
A credit union is a member-owned financial cooperative.
c)
A credit union is owned by shareholders
d)
A credit union is a type of bank
53.

Tariffs

a)
Tariffs are subsidies given to domestic producers.
b)
Tariffs are restrictions on the export of goods.
c)
Tariffs are incentives for international trade.
d)
Tariffs are taxes imposed on imported goods and services.
54.

Imports

a)

the goods and services exported to other nations.

b)

the goods and services produced within the country.

c)

the goods and services brought into the country from other nations.

55.

Exports

a)
Exports are limited to digital products only.
b)

goods or services produced in one country and sold to another country.

c)

goods or services produced and sold within the same country.

d)

only related to physical goods, not services.

56.

Excise or Sin tax

a)
Excise tax is a tax on income
b)
Sin tax is a tax on property
c)
Excise tax is a tax on services
d)
Excise tax is a tax on specific goods, while a sin tax is a type of excise tax specifically aimed at discouraging the consumption of products deemed harmful to society.
57.

Progressive tax

a)
Tax rate increases as the taxable amount increases
b)
Tax rate decreases as the taxable amount increases
c)
Tax rate remains constant regardless of the taxable amount
d)
Tax rate is determined by the taxpayer's age
58.

Regressive tax

a)

takes a larger percentage of income from high-income earners than from low-income earners.

b)

a tax system where everyone pays the same amount regardless of income level.

c)

a tax system where the tax rate decreases as income increases.

d)

takes a larger percentage of income from low-income earners than from high-income earners.

59.

Proportional tax

a)
Everyone pays the same percentage of their income in taxes.
b)
Only the wealthy pay taxes
c)
Tax rates increase as income decreases
d)
Tax rates decrease as income increases
60.

Property rights

a)
Illegal rights to possess, use, and dispose of property.
b)
Moral rights to possess, use, and dispose of property.
c)
Temporary rights to possess, use, and dispose of property.
d)
Legal rights to possess, use, and dispose of property.

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