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WorksheetsEcon Final Exam Review 2
Total questions: 50
Worksheet time: 25mins
Name
Class
Date
1.
50. Most billionaires hold their wealth in:
a)
Stock
b)
Income
c)
Property
d)
Art
2.
51. Which of the following is a significant factor contributing to the growth of the US national debt?
a)
Decreasing interest rates
b)
Increasing federal budget surpluses
c)
Persistent budget deficits
d)
Decreasing healthcare costs
3.
52. The annual shortfall in government revenues compared to government spending is called what?
a)
Deficit
b)
Debt
c)
Interest
d)
Crowding out
4.
53. What is “crowding out” in the context of fiscal policy?
a)
The reduction in private investment due to increased government borrowing and spending
b)
The increase in consumer spending due to government stimulus
c)
The decrease in government spending due to high inflation
d)
The displacement of small businesses by large corporations
5.
54. Which of the following is a potential downside of using fiscal policy during an economic downturn?
a)
Increasing unemployment
b)
Crowding out private investment
c)
Reducing inflation
d)
Decreasing consumer confidence
6.
55. Which of the following is an example of a supply shock?
a)
An unexpected drop in consumer spending
b)
A natural disaster that disrupts production
c)
An increase in government spending
d)
A sudden change in tax policy
7.
56. Fiscal policy is generally more effective in addressing which type of economic issue?
a)
Long-term economic growth
b)
Short-term downturns in aggregate demand
c)
Structural unemployment
d)
Supply-side constraints
8.
57. Which of the following best defines fiscal policy?
a)
The use of government spending and tax policies to influence economic conditions
b)
The regulation of interest rates to control inflation
c)
The management of the money supply by the central bank
d)
The establishment of laws and regulations to protect consumers
9.
58. Which of the following describes the concept of fiscal policy being "well-targeted"?
a)
It aims to address specific under-employed resources.
b)
It focuses on broad, general measures that affect the entire economy.
c)
It avoids intervention in any specific economic sector.
d)
It prioritizes long-term projects over immediate needs.
10.
59. Which fiscal policy tool is most likely to have an immediate impact on consumer spending?
a)
Reducing corporate taxes
b)
Increasing defense spending
c)
Expanding long-term infrastructure projects
d)
Providing direct cash to households
11.
60. What are some reasons why it is difficult to reduce the federal budget deficit?
a)
Voters don’t want higher taxes
b)
Voters don’t want lower spending
c)
Voters want more services
d)
None of the above
12.
61. Which of the following is an example of an automatic stabilizer?
a)
Road spending
b)
Unemployment insurance
c)
Direct relief
d)
Sales tax cuts
13.
62. Which of the following is NOT a way fiscal spending can be mis-targeted?
a)
Corruption
b)
Skill mismatch
c)
No “shovel ready” projects
d)
If it’s an automatic stabilizer
14.
63. What is consumer surplus?
a)
The difference between the price paid and the cost to produce
b)
The difference between willingness to pay and the price
c)
The total amount spent by consumers
d)
The total revenue earned by producers
15.
64. Which of the following is a likely consequence of implementing an effective price ceiling?
a)
A surplus
b)
A shortage
c)
An increase in quality products
d)
A decrease in non-price competition
16.
65. Which of the following is true about the deadweight loss created by a price ceiling?
a)
The deadweight loss represents the extra transactions that occur due to a subsidy
b)
The deadweight loss refers to the dead bodies that crop up due to black market transactions for price controlled goods.
c)
The deadweight loss refers to the time producers lose because they overinvest in product quality.
d)
The deadweight loss represents the lost value of transactions that don’t occur due to the established maximum price.
17.
66. Which of the following is TRUE about how a price ceiling impacts a market?
a)
An effective price ceiling decreases the quantity demanded.
b)
An effective price ceiling increases the quantity supplied.
c)
An effective price ceiling increases the quantity demanded.
d)
An effective price ceiling does not impact the quantity supplied.
18.
67. An effective price floor is likely to result in:
a)
A shortage
b)
A surplus
c)
Market equilibrium
d)
Government budget surplus
19.
68. Which of the following best describes a price floor?
a)
A price floor establishes a minimum legal price for a good.
b)
A price floor establishes a maximum legal price for a good.
c)
A price floor establishes a minimum quantity sold for a good.
d)
A price floor establishes a maximum quantity for export.
20.
69. Suppose that the US implements an effective price floor on milk. Which of the following is true about milk purchases in the US?
a)
Consumers will buy more milk.
b)
Consumers will buy less milk.
c)
Consumers will not change their milk consumption.
21.
70. Which of the following reasons helps to explain why government price controls stick around?
a)
Price controls are economically efficient.
b)
Price controls provide widespread benefits with costs concentrated on small, politically popular groups.
c)
Price controls disperse costs widely and generally benefit small, politically connected groups.
d)
Governments never implement price controls.
22.
71. Which of the following is true about price controls AND price ceilings?
a)
Both price ceilings and floors improve allocative efficiency.
b)
Both price ceilings and floors generate deadweight loss.
c)
Both price ceilings and floors increase consumer surplus.
d)
None of the above
23.
72. Price Ceilings will NOT cause which of the following?
a)
An underground market to develop
b)
Lower quality goods
c)
A shortage
d)
A surplus
24.
73. Which of the following is a price control that will NOT affect the market price?
a)
A price ceiling of $0.01 on bread when the market price is $5
b)
A price floor on sugar/lb. of $100 when the market price is $0.10
c)
A price ceiling of $300 on iPhone cases when the market price is $50
d)
A price floor on bricks of $10 when the market price is $5
25.
74. Which of the following is an example of a PRICE CEILING discussed in the unit?
a)
Rent Control
b)
Guaranteed price for sugar
c)
Milk Price that led to cheese caves
d)
Airfare in the 1970s
26.
75. Refer to the following graph, which of the following labeled areas is the deadweight loss due to the price ceiling?
a)
ABC
b)
DEF
c)
CE
d)
ABCDEF
e)
None of the above
27.
76. Refer to the following graph, which of the following labeled areas is the consumer surplus after the price ceiling?
a)
ABC
b)
DEF
c)
CE
d)
ABCDEF
e)
None of the above
28.
77. Refer to the following graph, which of the following labeled areas is the consumer surplus after the price floor?
a)
ABC
b)
A
c)
DE
d)
CE
e)
ABCDE
29.
78. Refer to the following graph, which of the following labeled areas is the deadweight loss after the price floor?
a)
ABC
b)
A
c)
DE
d)
CE
e)
ABCDE
30.
79. In this unit, we learned about Spangler lollipops that moved their factory to Mexico. According to the CEO, why did Spangler do this?
a)
To employ cheaper labor
b)
To pay less taxes
c)
To avoid a price floor on sugar
d)
To avoid environmental regulations
31.
80. Which of the following changes is consistent with the implementation of an effective price floor on tomatoes?
a)
Quantity demanded increases.
b)
Quantity demanded decreases.
c)
Quantity demanded stays the same, only quantity supplied is affected by the price floor.
32.
81. Which of the following is true about BOTH price floors and price ceilings?
a)
Both price floors and ceilings benefit producers at the expense of consumers.
b)
Both price floors and ceilings benefit consumers at the expense of producers.
c)
Both price floors and ceilings reduce the total number of voluntary transactions.
d)
None of the above.
33.
82. Which of the following policies is most likely to result in a shortage?
a)
A $1 million price ceiling on diamonds
b)
A $5 federal minimum wage
c)
A $10 price floor on antibacterial hand soap
d)
A $20 price ceiling on laptop computers
34.
83. Refer to the following graph, which of the following labeled areas is the producer surplus prior to the price floor?
a)
ABC
b)
BCDE
c)
BD
d)
DE
e)
None of the above
35.
84. Refer to the following graph, which of the following labeled areas is the producer surplus after the price floor, assuming there is no government program buying any surplus (if applicable)?
a)
A
b)
BC
c)
BD
d)
CE
e)
None of the above
36.
85. What does deadweight loss in a price ceiling represent?
a)
The decline in quality of a good
b)
The value of lost transactions
c)
The lost profits of inefficient producers
d)
The lost wages of consumers from standing in line
37.
86. What is mostly likely to happen to producer surplus when a $15 price floor is implemented on leather couches (the average price of leather couches is $2000)?
a)
Producer surplus drastically increases
b)
Producer surplus drastically decreases
c)
Producer surplus does not change
38.
87. Fill in the banks fofr the following sentence:
Price Ceilings (below the equilibrium price) will ________ the price, lead consumers to demand ________ of the good, and producers to supply ________ of the good, and there will be a _______.
a)
decrease, less, more, surplus
b)
decrease, more, less, shortage
c)
increase, less, more, surplus
d)
increase, more, less, shortage
39.
88. Fill in the banks fofr the following sentence:
Price Floors (above the equilibrium price) will ________ the price, lead consumers to demand ________ of the good, and producers to supply ________ of the good, and there will be a _______.
a)
decrease, less, more, surplus
b)
decrease, more, less, shortage
c)
increase, less, more, surplus
d)
increase, more, less, shortage
40.
89. Why is consumer surplus never negative?
a)
Because consumers always pay more than they value the product
b)
Because transactions are voluntary
c)
Because producers set prices below consumer value
d)
Because consumer surplus is calculated after discounts
41.
90. How can the demand curve be used to understand consumer surplus?
a)
It shows the minimum price consumers are willing to pay
b)
It represents the maximum price consumers are willing to pay for each quantity
c)
It indicates the total quantity sold
d)
It reflects the cost of production
42.
91. If a consumer values am item at $80 and the price is $20, what is the consumer surplus?
a)
$60
b)
$100
c)
$20
d)
$80
43.
92. Joe values a painting at a flea market at $30. If the price is $20, should he buy it and what would his consumer surplus be?
a)
Yes, $10
b)
No, $10
c)
Yes, $20
d)
No, $0
44.
93. Producer surplus is _________.
a)
the difference between price and cost
b)
the total revenue minus total cost
c)
the difference between willingness to pay and the price
d)
the total cost of production
45.
94. If the price of a barrel of oil is $40 and the cost to produce it is $20, what is the producer surplus?
a)
$20
b)
$40
c)
$60
d)
$0
46.
95. Which statement is true about voluntary transactions?
a)
They always generate consumer surplus but not producer surplus
b)
They always generate both consumer and producer surplus
c)
They never generate producer surplus
d)
They always result in a loss for consumers
47.
96. Brady values a car at $33,000, and the seller's cost is $28,000. If the seller's lowest price is $30,000 should Gonzalo buy it?
a)
Yes, because his value is higher than the price
b)
No, because the price is too high
c)
Yes, because the seller's cost is low
d)
No, because the seller's price is above his value
48.
97. What is the relationship between willingness to pay and consumer surplus?
a)
Consumer surplus is always equal to willingness to pay
b)
Consumer surplus is the difference between willingness to pay and price
c)
Consumer surplus is always greater than willingness to pay
d)
Consumer surplus is unrelated to willingness to pay
49.
98. Why is consumer surplus never negative in voluntary transactions?
a)
Because prices are always set fairly
b)
Because consumers always make perfect decisions
c)
Because consumers only buy when their willingness to pay exceeds the price
d)
Because sellers always offer discounts
50.
99. How does the demand curve relate to consumer surplus?
a)
It has no relation to consumer surplus
b)
It represents the maximum price consumers are willing to pay at each quantity
c)
It only shows the quantity demanded at each price
d)
It always results in zero consumer surplus
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