WorksheetsEcon 100 Final Exam
Total questions: 45
Worksheet time: 23mins
What is economics?
A study of the institutional mechanisms of commerce, like trade and the stock market.
A study of how people make choices to achieve goals with resource constraints.
A study of how businesses and individuals make the most money.
A study of comprehensive, international economic development.
What is the contribution of The Wealth of Nations published by Adam Smith in 1776?
Adam Smith described how people made production and consumption decisions in the 18th Century.
Adam Smith was a landowner and trade protectionist who drafted the “corn laws.”
Adam Smith created capitalism.
Adam Smith was an English warrior who led the English people to freedom from a king.
What do consumers want to achieve?
Take care of their children and families.
Assure that poor people are fed, housed, and clothed.
Maximize personal satisfaction.
Any and all of the above.
As the price of gasoline continues to rise,
The quantity consumed will not change because everyone must travel.
The quantity consumed will decline as consumers respond to higher prices.
The quantity consumed will rise because producers will produce more gasoline.
The quantity consumed will rise because consumers will need more gasoline for their bigger cars.
Which of the following products is likely to have the lowest income elasticity of demand?
Vacation trips to Las Vegas.
Diamond rings.
Milk.
Refrigerators.
How would you characterize the price elasticity of demand for college education?
Price elastic because it is a luxury item.
Price elastic because it is so expensive.
Price inelastic because it consumes a large part of disposable income.
Price inelastic because if one wants education, they get it at almost any price as an investment in their future income.
Price elasticity of supply tends to get higher over longer periods of time because:
Quantity supplied gets more rigid as production plants age.
There is time to build capacity to produce more of a product at higher prices.
Companies run out of input materials over time.
Interest rates are lower over time.
Which of the following is not a fundamental private property right?
The right to buy property at a fair price.
The right to use the property as desired.
The right to exclude others from using the property.
The right to transfer ownership of the property.
Capitalism represents a system of economic production and exchange in which individuals own and manage the major means of production. Which of the following statements is not a characteristic of capitalism?
Capitalism tends to create the greatest amount of total wealth among people.
Capitalism captures the greatest amount of creativity among people.
Capitalism results in rapid adjustments to changing conditions.
Capitalism assures a fair distribution of income and wealth among people.
Why are capitalism, socialism and communism called economic systems?
Like the solar system, there are spheres of influence in the control of wealth.
An economic system is an accepted, interconnected set of people and institutions regularly working to accomplish production and consumption of goods and services.
Like a water system, the economic pressures are equivalent everywhere.
The one common element of economic systems is the power of a central authority.
During the early 19th century Robert Owens opened a worker-friendly factory in the upper Midwest called “New Lanark.” Why did it fail?
One cannot survive in business when employees are provided good benefits.
The education and day care costs drove the factory to bankruptcy.
The owner lost interest and management failed.
It was a Socialist organization which was outlawed.
Which of the following statements best captures the difference between a command economy and a market economy?
A command economy involves government, while government is not as necessary in a market economy.
A command economy allocates resources through a single decision maker, while a market economy allocates resources through markets as people buy and sell.
A market economy is a democracy, while a command economy is a dictatorship
A command economy is not as good as a market economy, as history has proven.
Farmers represent a very small portion of the population; why are they so effective in getting subsidies and import protections which represent costs to most citizens?
Farmers as a group generally are poor and they need the governmental assistance.
Landowners have more votes than other citizens.
Small groups with intense interests in policy are more effective in getting what they want from government than large groups with less intense interest in protecting themselves.
Farmers are a group of people which needs to be protected to sustain our culture.
What is the objective of government when it is establishing the level of fines for polluters?
The level of the fine must equal or exceed the cost of stopping the pollution.
The level of the fine must be just high enough to cause irritation or embarrassment.
The level of the fine must not threaten the viability of businesses.
The level of the fine must cover the cost of law enforcement.
What is true of the motivation for government regulations?
Regulations always benefit consumers.
Regulations always benefit producers.
Sometimes regulations benefit existing producers by limiting the competition in the market.
Regulations always limit the opportunities of business.
When governmental monopolies are responsible for producing a service:
Services are hard to find because government does not advertise.
There are few incentives for innovation and customer service.
The products usually are produced more efficiently and sold at lower prices.
There is no product differentiation.
Patents and copyrights have what purpose?
To keep products off the market.
To provide public recognition to individuals for their creative work.
To provide government subsidies for creativity.
To provide inventors protection from competition while they get a return on their development cost.
What is the value of product and service “branding?”
“Branding” provides the identity and protection of ownership.
“Brand new” products and services are more exciting than “old” products and services.
Attractive logos capture customer attention.
“Branded” products and services provide information about consistent quality across space and time.
Consumers sometimes make mistakes when making purchases; why does this occur?
Information is costly in terms of time and money, so purchases almost always are made with imperfect information.
Sometimes a consumer is lucky and sometimes not.
Too many sellers in the market are fraudulent.
Consumers tend to be compulsive and make decisions too quickly.
Can one count on information about the future being useful?
Economic and weather forecasting always is right.
Economic and weather forecasting are produced by government with political motives.
Economic and weather forecasting use data to narrow the range of likely outcomes to enhance planning.
Economic and weather forecasting usually is wrong.
Why would businesses invest in human capital of employees, when these investments may make the employee more valuable to other companies?
Employees consider it a benefit of the job for an employer to make them more valuable in the marketplace for labor.
Good health insurance with preventative health and dental checkups makes employees more reliable with the potential for fewer sick days off.
Job-relevant training makes employees more productive (more valuable) within the company.
All of the above.
Governmental provision of public health infrastructure in a community . . . .
Is a moral obligation of governments.
Is an example of socialism with government owning the major means of health care.
Is a smart investment in the productivity of schools, businesses, and community organizations.
Is more expensive than what the competitive market can provide.
The Georgia Miracle used all the state’s lottery earnings to support development of education from K-12 through higher education. What happened?
Industrial firms flocked to Georgia in the next decade because of the highly educated workforce available in Georgia.
Free education attracted people who migrated to Georgia, creating a housing crisis.
Most of the talented workforce left the state for better jobs.
The impact was disappointing because many other southern states implemented the same policy.
International organization investment in education and health for women and girls . . .
Is blatantly discriminatory against men and boys.
Will make business competition more severe with African and South Asian countries.
Is a moral imperative of all developed nations.
Represents investment with proven high rates of return as women’s roles expand in poor countries.
Compare the promise of $1,000 today and the promise of $1,000 two years from now?
Both promises are worth the same; $1,000 is $1,000 anytime.
The promise in two years is worth more because it is a secure nest egg for future spending.
The promise today is worth more because the money could be invested to earn interest over the next two years.
The promise today is worth more because one cannot trust that the person who promised the money will be around in two years.
Suppose Joe's wage increased from $10 per hour to $12 per hour, and over the same period the GDP deflator increased from 100 to 130. What can you correctly say about what Joe gets out of working?
Joe became better off, because his nominal wage increased, and his real wage decreased.
Joe became worse off, because his nominal wage increased, and his real wage decreased.
Joe became worse off, both his nominal wage decreased, and his real wage decreased.
Joe became better off because his wage increased.
What is not a primary function money?
Store of value.
Standard of value.
Risk protection.
Medium of exchange.
Why is it so difficult and slow to reduce the unemployment rate after a recession?
As the number of jobs rebound, both unemployed and previously discouraged workers enter the workforce.
The minimum wage is not sufficient to encourage people to go to work.
Employment is the last thing that re-emerges following a recession.
Unemployment insurance is too lucrative to give up.
Luxemburg has the highest Gross Domestic Product Per Capita in the world; the U. S. is 11th and Equatoria Guinea (a small African country) is 30th, just ahead of Denmark. Why does this measure not always serve to measure economic well-being of people in a country?
Per Capita GDP is too unstable a statistic to be reliable.
Economic well-being is not just about money.
Cultural factors are more important for well-being than economic factors.
Per Capita GDP does not reflect distribution of income in a country.
The official “unemployment rate” (U3) in the United States is calculated as:
A monthly business establishment sample survey of numbers of people working or not working.
A monthly household sample survey of individuals at least 16 years of age asking who worked and who didn’t work but were actively seeking employment in a particular week.
A complete monthly reporting of the U. S. population as to whether they are working.
A monthly household survey of individuals at least 16 years of age asking who did not work in a particular week.
What is the primary measure of inflation?
The Producer Price Index.
The Consumer Price Index.
Purchasing Power Parity Index.
The average Exchange Rate with other nations.
How do we know when the U. S. economy is in a recession?
When unemployment rises above 8%.
When inflation rises above 4% on an annual basis.
When GDP falls two consecutive quarters.
When GDP/capita falls two consecutive quarters.
Which of the following is a tool of monetary policy?
Tax rates.
Government spending.
Export controls.
Bank reserve requirements.
How does the Federal Reserve System reserve requirement on banks work to curb inflation?
An increase in bank reserve requirements reduces the amount of money banks can put out for loans and therefore reduces the money supply.
A decrease in bank reserve requirements reduces the amount of money banks can put out for loans and therefore reduces the money supply.
An increase in bank reserve requirements increases the amount of money banks can put out for loans and therefore increases the money supply.
A decrease in bank reserve requirements increases the amount of money banks can put out for loans and therefore increases the money supply.
What is the principal variable the Federal Reserve System controls to perform its functions?
Federal spending.
Money supply.
Aggregate demand.
Industrial policy.
What is the chief cause of the unusual increase in inflation in 2021?
Consumption of imported goods exceeding exports.
A permanent increase in demand for all products and services above the ability of the economy to provide them.
An increase in prices of a few products, like used cars, appliances, and gasoline after a disruption in those industries during the COVID pandemic.
High unemployment.
What is a regressive tax?
A tax that takes a greater share of income at higher levels of income.
A tax which declines at higher income levels.
A tax rate which rises at higher income levels.
A tax that takes a greater share of income at lower levels of income.
Congress only controls a portion of government spending (“discretionary spending”). The remainder is “mandatory spending.” Which of the following represents “discretionary spending?”
Defense spending.
Federal employees' retirement payments.
Interest on the national debt.
Social Security payments.
In a period of high inflation, the U. S. government, via the Federal Reserve System and the Congress and President, can practice which of these tools to “slow the economy” (decrease aggregate demand)?
Raise taxes.
Sell government bonds to banks.
Cut government spending.
All of these.
The North American Free Trade Agreement (NAFTA) lowered trade barriers between the U. S., Mexico, and Canada, increasing commodity trade significantly between the three countries. What did the re-negotiated U. S., Mexico, Canada Agreement (USMCA) accomplish?
The USMCA addressed U. S. complaints of NAFTA by increasing trade barriers providing enhanced protection for U. S. Pharma, labor, auto industry, and agriculture.
The USMCA does not “ensure” market access for US exporters of farm and industrial goods any more than the existing NAFTA.
What is meant by a "strong U. S. dollar?"
A "strong U. S. dollar" stimulates imports into the U. S.
A "strong U. S. dollar" diminishes exports from the U. S.
At the current time the U. S. dollar exchanges for a large amount of other countries' currencies.
What has facilitated globalization?
Cheaper transportation of products.
Lower trade barriers resulting from World Trade.
Organization negotiations.
Easier communications by way of the internet.
All of these.
International comparisons of Gross Domestic Product per capita (GDP/capita) are adjusted using "Purchasing Power Parity" (PPP). What do the adjustments reflect?
Differences in the prevalence of home production of goods and services.
Transportation Costs.
Trade Barriers.
Non-tradeable inputs.
Describe the evolution of worldwide economic development since World War II.
After World War II, a number of developing countries attained independence from their former colonial rulers.
Per capita income, education and health have improved, and the issues of environmental quality and income distribution are getting worse.
The war has cause incredible recession.
What are the principal sources of "drag" weighing on the prospects of economic growth in developing countries?
Rapid population growth.
A large share of employment in agriculture.
Widespread poverty and malnutrition.
All of these.
