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EPF Final Unit 2 Review

Total questions: 60

Worksheet time: 30mins

Name
Class
Date
1.

During this.... GPD increased over two quarters of the year

a)

peak

b)

Decline

c)

Expansion

d)

trough

2.

What is a tariff?

a)

A tariff is a regulation on domestic production so that inflation can be controlled.

b)

A tariff is a subsidy for local businesses to help with production and jobs.

c)

A tariff is a type of trade agreement between countries that blockades outsiders.

d)

A tariff is a tax that is imposed by one country on the goods and services imported from another country.

3.

What is a trough in the business cycle?

a)
The trough represents a stable economy with no fluctuations.
b)
The trough is the lowest point in the business cycle, indicating a period of economic decline before recovery begins.
c)
The trough is the peak of economic growth in the business cycle.
d)
The trough is a period of rapid expansion and growth in the economy.
4.

What part of the business cycle might you see a contraction in three consecutive quarters, GPD fell compared to the last year and estimates say it will continue to contract in the 4th quarter?

a)
Boom
b)
Stagnation
c)
Recession
d)
Expansion
5.

How does a high unemployment rate sustained over a long period of time affect the economy?

a)
It creates more job opportunities in the market.
b)

It leads to a decrease in the amount of currency circulating in the economy.

c)

It leads to increased consumer spending putting more money into the economy.

d)

It boosts overall economic confidence and leads the country into a boom.

6.

What is per capita Real Gross Domestic Product?

a)
Per capita Real Gross Domestic Product is the average economic output per person, adjusted for inflation.
b)
Per capita Real Gross Domestic Product is the total economic output of a country.
c)
Per capita Real Gross Domestic Product is the total population divided by the GDP of a country.
d)
Per capita Real Gross Domestic Product measures the wealth of a nation without adjusting for inflation.
7.

What is the best measurement that indicates economic growth of a country?

a)

Per capita Unemployment Rate

b)

Real per capita Inflation Rate

c)

Real per capita Gross Domestic Product (GDP)

d)

Fiscal Policy increasing and increasing trade Balance

8.

During what might a business owner find that demand for their goods have declined and likely will cause a decrease in prices?

a)
Increased consumer income
b)
Government subsidies for goods
c)
Seasonal demand fluctuations
d)

Economic recession

9.

What is a recession?

a)
A recession is a period of economic decline characterized by falling GDP and other economic indicators.
b)
A recession is when the stock market reaches an all-time high.
c)
A recession is a time of economic growth and rising GDP.
d)
A recession is a period of increased consumer spending and investment.
10.

What is a contraction in the business cycle?

a)
A contraction is when unemployment rates reach an all-time low.
b)
A contraction is a phase where economic activity increases.
c)
A contraction is a phase in the business cycle where economic activity decreases.
d)
A contraction refers to a period of stable economic growth.
11.

Why would a business owner prefer lower tax rates?

a)
To reduce employee salaries
b)
To increase product prices
c)
To avoid business expansion plans
d)

Maximizes their profits because they can keep more.

12.

How can the Federal Reserve reduce inflation?

a)
Reduce taxes to encourage consumer spending.
b)
Increase interest rates and reduce the money supply.
c)
Print more money to stimulate the economy.
d)
Lower interest rates and increase government spending.
13.

Why would the Federal Reserve lower the reserve requirements?

a)
To reduce inflation by decreasing consumer spending.
b)

To increase the interest rates on loans and people will borrow more.

c)

To limit the amount of money banks can lend out so there isn't a bank failure.

d)

To stimulate economic growth by encouraging banks to make more loans.

14.

What is the Federal Reserve?

a)
The Federal Reserve is a stock exchange in New York.
b)
The Federal Reserve is the government agency that prints money.
c)
The Federal Reserve is a private bank.
d)
The Federal Reserve is the central banking system of the United States.
15.

What is Fiscal Policy?

a)
Fiscal policy is the government's approach to managing the economy through spending and taxation.
b)
Fiscal policy is the process of setting trade tariffs and quotas.
c)
Fiscal policy refers to the government's control over the money supply.
d)
Fiscal policy is solely about regulating interest rates.
16.

What is Monetary Policy?

a)
Monetary policy is the government's budget plan for the year.
b)
Monetary policy is the process by which a central bank manages the money supply and interest rates.
c)
Monetary policy refers to the taxation policies of a country.
d)
Monetary policy is the process of setting trade tariffs.
17.

Why is a strong workforce important to the economy?

a)
A strong workforce is only important for large corporations.
b)
A strong workforce leads to higher unemployment rates.
c)
A strong workforce is essential for driving productivity, innovation, and economic growth.
d)
A strong workforce decreases overall economic stability.
18.

Why would a government impose a price floor on agricultural products?

a)

To ensure farmers receive a minimum income and protect their profits.

b)

To encourage overproduction of crops to meet increased demand as population increases.

c)
To reduce the income of farmers during harvest season.
d)
To increase the prices of imported goods.
19.

What is a price floor?

a)
A price floor is a maximum price set by the government for a good or service.
b)
A price floor is a price that fluctuates based on market demand.
c)
A price floor is a minimum price set by the government for a good or service.
d)
A price floor is a tax imposed on goods and services by the government.
20.

What is a quota on imports and how would it affect the supply and price in the domestic market?

a)
A quota on imports has no effect on supply or prices in the domestic market.
b)
A quota on imports limits supply, leading to higher prices in the domestic market.
c)
A quota on imports increases supply, lowering prices in the domestic market.
d)
A quota on imports allows unlimited imports, stabilizing prices in the domestic market.
21.

How do governments raise money to provide services?

a)
Through international loans
b)
Governments raise money through taxation and fees.
c)
By selling government assets
d)
Via lottery ticket sales
22.

What is minimum wage?

a)
Minimum wage is the lowest legal hourly pay for workers.
b)
Minimum wage is the average pay for all workers.
c)
Minimum wage is a type of tax on businesses.
d)
Minimum wage is the highest salary a worker can earn.
23.

How does the federal government use the Federal Insurance Contributions Act (FICA) payroll tax?

a)
The FICA payroll tax is used to fund military operations.
b)
The FICA payroll tax is allocated to state governments for infrastructure projects.
c)
The FICA payroll tax supports public education programs.
d)
The FICA payroll tax funds Social Security and Medicare programs.
24.

What is the the Federal Insurance Contributions Act (FICA) payroll tax?

a)
FICA is a tax on corporate profits.
b)
FICA funds state unemployment benefits.
c)
FICA is a payroll tax that funds Social Security and Medicare.
d)
FICA is a tax for private health insurance.
25.

How does the excise tax on gasoline fund government services?

a)
The excise tax on gasoline supports healthcare services.
b)
The excise tax on gasoline funds government services by supporting transportation infrastructure and maintenance.
c)
The excise tax on gasoline is used to fund public education programs.
d)
The excise tax on gasoline is allocated to environmental protection initiatives.
26.

What is the 1994 North American Free Trade Agreement (NAFTA)?

a)
A financial aid package provided by the U.S. to Mexico in 1994.
b)
A cultural exchange program initiated in 1994 for North American countries.
c)
NAFTA is a trade agreement between the U.S., Canada, and Mexico established in 1994.
d)
A military alliance formed in 1994 between the U.S., Canada, and Mexico.
27.

What is an excise tax?

a)
A tax that is only applied to luxury items.
b)
An excise tax is a tax on specific goods or services.
c)
A tax imposed on all goods regardless of type.
d)
A tax on income earned by individuals.
28.

If nations announce a new trade agreement what are they hoping to gain?

a)

Goods they are unable to produce on their own.

b)
Higher tariffs on imports and exports.
c)
Increased military power and dominance.
d)
Reduction of foreign investments and partnerships.
29.

Due to scare or sometimes rare resources what does that force countries to do?

a)
Increase military spending
b)
Focus solely on domestic production
c)
Ignore international relations
d)

Engage in international trade

30.

If North Carolina is a larger state for exporting agricultural products how do they contribute to the world economy?

a)
North Carolina's economy relies solely on technology and manufacturing sectors.
b)
The state has no impact on global agricultural markets.
c)
North Carolina primarily imports agricultural products from other states.
d)

North Carolina boosts the world economy by providing foreign markets with agricultural products.

31.

IF North Carolina exported millions of dollars in agricultural and animal (food) products how are they contributing to another countries economy?

a)
North Carolina's agricultural exports have no impact on foreign economies.
b)
North Carolina imports food products from other countries.
c)
North Carolina's exports lead to a decrease in local food prices.
d)
North Carolina contributes to another country's economy by supplying food products that enhance food security and stimulate local economic growth.
32.

How does Gross Domestic Product fluctuate over the course of the business cycle?

a)
GDP only rises during recessions and falls during expansions.
b)
GDP remains constant throughout the business cycle.
c)
GDP is unaffected by changes in the business cycle.
d)

GDP rises during expansions and falls during recessions and a trough in the business cycle.

33.

How does participation in the world economy benefit North Carolina?

a)

through expanded access to imported goods increased choices for consumers and businesses.

b)
North Carolina does not engage in international trade.
c)
North Carolina's economy is solely based on agriculture.
d)
Participation in the world economy leads to job losses in North Carolina.
34.

How does North Carolina's poultry industry contribute to the world economy?

a)
North Carolina's poultry industry primarily focuses on dairy production.
b)
The poultry industry in North Carolina has no impact on global trade.
c)
North Carolina's poultry industry is solely for local consumption.
d)

North Carolina's poultry industry boosts the world economy through supplying poultry to meet demand.

35.

When would unemployment be at the highest in the business cycle?

a)
During an economic boom.
b)

During a trough.

c)
When inflation is at its highest.
d)
At the peak of the business cycle.
36.

How does the NC furniture industry benefit from world economics?

a)
The NC furniture industry benefits from increased export opportunities and access to global markets.
b)
The NC furniture industry benefits from reduced competition in the global market.
c)
The NC furniture industry relies solely on local sales.
d)
The NC furniture industry is negatively impacted by global trade restrictions.
37.

What is a sanction?

a)
A sanction is a penalty or coercive measure imposed to influence behavior.
b)
A sanction is a reward for good behavior.
c)
A sanction is a form of communication between countries.
d)
A sanction is a type of legal document.
38.

How would one nation imposing a sanction on another nation most likely affect trade between the two?

a)
Trade between the two nations is likely to decrease.
b)
Trade will only be affected by third-party nations.
c)
Trade will remain unchanged between the two nations.
d)
Trade between the two nations is likely to increase.
39.

If the government allows free and open trade between countries what is that encouraging?

a)

The countries to trade needed items with each other.

b)
Increased tariffs and trade barriers.
c)
Reduced international cooperation.
d)
Stagnation of local industries.
40.

What short-term effects might an increase in government spending have on the US economy?

a)
Decrease in consumer spending
b)
Increase in inflation rates
c)
Reduction in government services
d)
Short-term increase in aggregate demand, higher employment, and boosted GDP.
41.

How might the Congress and President enact fiscal policy to stimulate spending?

a)
Cut funding for social programs and public services.
b)
Increase government spending and implement tax cuts.
c)
Implement stricter regulations on businesses.
d)
Reduce government spending and increase taxes.
42.

What happens to demand during a period of growth?

a)
Demand decreases during a period of growth.
b)
Demand remains unchanged during a period of growth.
c)
Demand fluctuates randomly during a period of growth.
d)
Demand generally increases during a period of growth.
43.

What happens to demand during an economic contraction?

a)
Demand increases during an economic contraction.
b)
Demand remains unchanged during an economic contraction.
c)
Demand fluctuates unpredictably during an economic contraction.
d)
Demand decreases during an economic contraction.
44.

How might you describe the GPD during a recession?

a)
The GDP increases during a recession.
b)
The GDP remains unchanged during a recession.
c)
The GDP fluctuates wildly during a recession.
d)
The GDP decreases during a recession.
45.

During the business cycle, what is more likely to happen as the GDP increases?

a)
Interest rates are likely to increase.
b)

The business cycle is more likely to experience a period of expansion.

c)

Consumer spending is likely to decline and a contraction will begin.

d)

Inflation rates are likely to decrease and consumer spending will slow.

46.

What is the main reason the government monitors leading economic indicators?

a)
To predict future economic activity.
b)
To manage public spending.
c)
To control inflation rates.
d)
To increase government revenue.
47.

What is a leading economic indicator?

a)
A leading economic indicator is a statistic that predicts future economic activity.
b)
A leading economic indicator is a measure of current economic performance.
c)
A leading economic indicator is a statistic that reflects past economic activity.
d)
A leading economic indicator is a type of financial investment strategy.
48.

Why would a government want to determine if the economy is experiencing a period of expansion or contraction?

a)
To increase taxes on citizens.
b)
To inform policy decisions and manage economic stability.
c)
To promote international trade agreements.
d)
To reduce government spending on social programs.
49.

What is a lagging economic indicator?

a)
A lagging economic indicator predicts future economic trends.
b)
A lagging economic indicator is a metric that changes before the economy follows a trend.
c)
A lagging economic indicator is a measure of current economic performance.
d)
A lagging economic indicator is a metric that changes after the economy has already begun to follow a particular trend.
50.

Why would the government offer subsidies to encourage production?

a)
To lower production costs and encourage economic growth.
b)
To increase taxes on production
c)
To reduce competition in the market
d)
To limit the availability of resources
51.

What is a subsidy?

a)
A subsidy is a loan that must be repaid with interest.
b)
A subsidy is a tax imposed on businesses.
c)
A subsidy is a type of insurance policy for farmers.
d)
A subsidy is a financial aid provided by the government to support an economic sector.
52.

What is comparative advantage?

a)
Comparative advantage is the skill of negotiating better trade deals.
b)
Comparative advantage refers to the total output of an economy regardless of efficiency.
c)
Comparative advantage is the ability of an individual or group to carry out a particular economic activity more efficiently than another activity.
d)
Comparative advantage is the ability to produce goods at a lower cost than others.
53.

If one country has a comparative advantage over another country in producing cars, how would that affect the grade between them?

a)
Both countries will stop trading cars altogether.
b)
The country with the comparative advantage will likely export cars to the other country.
c)
The country with the comparative advantage will import cars from the other country.
d)
The country without the comparative advantage will produce more cars than the other country.
54.

What is the primary tool the Federal Reserve uses to conduct Monetary Policy?

a)

Currency devaluation and tax increases

b)

The federal funds rate, the rate banks pay for overnight borrowing in the federal funds market.

c)

Interest rate adjustments and add indicators

d)

Reserve requirements and reserve laws

55.

How do changes in the federal funds rate influence other interest rates?

a)
Interest rates are only influenced by inflation, not the federal funds rate.
b)
Changes in the federal funds rate influence other interest rates by causing them to rise or fall in response to the cost of borrowing for banks.
c)
Changes in the federal funds rate have no effect on other interest rates.
d)
All interest rates decrease when the federal funds rate increases.
56.

How would the Federal Reserve lowering interest rates affect the unemployment rate?

a)
Lowering interest rates increases the unemployment rate.
b)

Lowering interest rates generally decreases the unemployment rate due to encouraging borrowing promoting new business, production, and jobs.

c)

Lowering interest rates has no effect on the unemployment rate and is typically not adjusted.

d)

Lowering interest rates leads to higher job losses. and more production overall

57.

What is Gross Domestic Product? What can it tell you about a country?

a)
GDP indicates the economic performance of a country, reflecting its size, growth rate, and standard of living.
b)
GDP is the total population of a country.
c)
GDP indicates the cultural heritage of a nation.
d)
GDP measures a country's military strength.
58.

When thinking about the Federal Reserve and monetary policy, how would you define interest rates?

a)
Interest rates are the percentage charged on borrowed money or paid on savings.
b)
Interest rates are the penalties for late loan payments.
c)
Interest rates are the fees paid for bank account maintenance.
d)
Interest rates are the total amount of money in circulation.
59.

Why would the Federal Reserve want banks to make more loans?

a)
To reduce inflation rates.
b)
To increase bank profits.
c)
To limit consumer spending.
d)
To stimulate economic growth.
60.

How would a decrease in payroll taxes affect the economy?

a)
A decrease in payroll taxes would likely stimulate economic growth by increasing disposable income and consumer spending.
b)
A decrease in payroll taxes would have no impact on the economy.
c)
A decrease in payroll taxes would reduce consumer spending and economic activity.
d)
A decrease in payroll taxes would lead to higher unemployment rates.

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