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Understanding Economic Principles Quiz

Total questions: 143

Worksheet time: 5hrs 39mins

Name
Class
Date
1.

What is the term for the limited nature of society’s resources?

a)

Surplus

b)

Scarcity

c)

Equilibrium

d)

Deflation

2.

Which curve shows the maximum possible output combinations of two goods that can be produced with available resources and technology?

a)

Demand Curve

b)

Production Possibility Curve

c)

Supply Curve

d)

Circular Flow Chart

3.

What is the opportunity cost?

a)

The cost of producing one more unit

b)

The value of the next best alternative forgone

c)

The total cost of production

d)

The price paid for a good

4.

Which of the following is NOT one of the four main types of economic systems?

a)

Command

b)

Market

c)

Mixed

d)

Democratic

5.

What does the Law of Demand state?

a)

As price increases, quantity demanded increases

b)

As price increases, quantity demanded decreases

c)

As price decreases, quantity supplied decreases

d)

As price decreases, quantity demanded decreases

6.

Which of the following is a function of money?

a)

Medium of exchange

b)

Price ceiling

c)

Surplus

d)

Deficit

7.

Which market structure is characterized by a single seller?

a)

Monopoly

b)

Oligopoly

c)

Perfect Competition

d)

Monopolistic Competition

8.

Which type of unemployment is caused by changes in the business cycle?

a)

Frictional

b)

Structural

c)

Cyclical

d)

Seasonal

9.

Which of the following is a characteristic of money?

a)

Durability

b)

Surplus

c)

Deflation

d)

Debt

10.

If the government sets a maximum legal price for a good below equilibrium, what is this called?

a)

Price Floor

b)

Price Ceiling

c)

Surplus

d)

Deficit

11.

Given a production possibility curve, if a country moves from point A to point B, what does this represent?

a)

A change in opportunity cost

b)

A reallocation of resources between two goods

c)

An increase in total resources

d)

A decrease in technology

12.

If the supply of a product increases, what is likely to happen to its equilibrium price, assuming demand remains constant?

a)

It will increase

b)

It will decrease

c)

It will stay the same

d)

It will become unpredictable

13.

Which of the following would cause a shift in the demand curve for a product?

a)

A change in the price of the product

b)

A change in consumer income

c)

A change in supply

d)

A change in equilibrium price

14.

If a country has an absolute advantage in producing wheat, what does this mean?

a)

It can produce wheat at a lower opportunity cost than other countries

b)

It can produce more wheat than other countries using the same resources

c)

It can trade wheat for other goods

d)

It has the highest demand for wheat

15.

Which of the following is an example of a trade barrier?

a)

Tariff

b)

Comparative advantage

c)

Circular flow chart

d)

Law of supply

16.

A business organization wants to maximize profit. Which market structure would likely allow for the greatest pricing power?

a)

Perfect competition

b)

Monopoly

c)

Oligopoly

d)

Monopolistic competition

17.

Suppose the government implements an expansionary fiscal policy. What is the likely effect on aggregate demand?

a)

Aggregate demand will decrease

b)

Aggregate demand will increase

c)

Aggregate demand will remain unchanged

d)

Aggregate demand will become unpredictable

18.

A country can produce 10 units of cars or 20 units of computers with its resources. Another country can produce 5 units of cars or 15 units of computers. Which country has the comparative advantage in producing computers?

a)

The first country

b)

The second country

c)

Both countries

d)

Neither country

19.

If the government sets a price floor above the equilibrium price, what is the most likely outcome in the market?

a)

Shortage

b)

Surplus

c)

Equilibrium

d)

Deflation

20.

A business is experiencing a contraction in the business cycle. What strategic action could it take to minimize losses?

a)

Increase production

b)

Reduce costs and delay expansion plans

c)

Hire more workers

d)

Raise prices

21.
The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes. 
Which country has the comparative advantage in producing trucks and what is their opportunity cost? 
a)
Japan, 1/3 airplane per truck
b)
US, 1/2 airplane per truck
c)
US, 2 airplanes per truck
d)
Japan, 3 airplanes per truck
22.
The US can produce 200 airplanes or 400 trucks. Japan can produce 300 trucks or 100 airplanes. 
Which country has the comparative advantage in producing airplanes and what is their opportunity cost? 
a)
Japan, 1/3 trucks per airplane
b)
US, 1/2 trucks per airplane
c)
US, 2 trucks per airplane
d)
Japan, 3 trucks per airplane
23.
The opportunity cost of increasing production from 7 to 9 trucks is
a)
1 boat
b)
2 boats
c)
2 trucks
d)
3 boats
24.

A _______ is the giving up of one thing to get something else.

a)

resource

b)

scarcity

c)

trade off

d)

economy

25.
The night before an economics test, you decide to go to the movies instead of studying for the test. You get 50% for the test – not the 70% you normally score. What was the opportunity cost of your evening at the movies?
a)
50%
b)
70%
c)
20%
d)
Nil.
26.

What you get when you make a choice

a)

opportunity cost

b)

benefit

c)

trade

27.

If the class lowers the supply of doughnuts to 10 doughnuts a day, what do you think they could do with the price?

a)

Raise it

b)

Leave it the same

c)

Lower it

28.

Which of these best describes the law of demand?

a)

if prices go up, quantity demanded will fall and if prices go down, quantity demanded will go up

b)

if prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down

c)

there is no law of demand, each situation is unique and demand and prices cannot be predicted

d)

prices will go up for certain goods when quantity demanded goes up and vice versa

29.

more than enough of a product?

a)

Supply

b)

Demand

c)

Surplus

d)

Deficit

30.
The desire or willingness a consumer has to purchase a good or a service is called?
a)
shortage
b)
supply
c)
price
d)
demand
31.

economic law stating that as the price of a good or service increases, the quantity demanded decreases, and vice versa

a)

Revenue

b)

Law of Demand

c)

Elasticity

d)

Law of Supply

32.
The government has little to no role in the production of goods in this type of economy. 
a)
Traditional 
b)
Mixed
c)
Command 
d)
Market
33.
There are four types of economic systems.  Most economies are _____. 
a)
Traditional 
b)
Command 
c)
Market 
d)
Mixed
34.

Which economy relies mostly on agriculture, gathering, hunting and fishing? It includes time -honored beliefs and specific gender roles.

a)

Market Economy

b)

Mixed Economy

c)

Traditional Economy

d)

Command Economy

35.
Last year, you sold your game system to your friend Jimmy for $125 in cash. You've been saving that money in a shoe box under your bed. You are saving the money to buy a new computer next year. What is the primary function of money exhibited here? 
a)
Medium of Exchange
b)
Store of Value
c)
 Unit of Account
d)
Stable 
36.

Which of these are functions of money?

a)

medium of exchange that allows the trade of goods and services

b)

holds value over time

c)

standard of value that allows comparison of the value of goods related to one another

d)

used as the only means of trade between nations

37.

Money is a medium of exchange, store of value, and a unit of account, durable, portable, divisible, and uniform.

a)

True

b)

False

38.

Any asset that is widely accepted as final payment for goods and services.

a)

Currency

b)

Barter

c)

Trade

d)

Money

39.

What 3 functions does money serve in the economy? Pick all that apply.

a)

medium of exchange

b)

demand deposit

c)

standard of value

d)

store of value

40.

Money has ______ if it can be broken down into smaller units so it can be used as needed.

a)

Divisibility

b)

Portability

c)

Scarcity

d)

Durability

41.

What is the main function of money in the economy?

a)

To save wealth

b)
To complicate transactions
c)

To reduce inflation

d)

Facilitate exchange of goods/services

42.

Which characteristic of money means easily transferred from person to person, to make the exchange of money for products easier?

a)

Durability

b)

Portability

c)

Divisibility

d)

Scarcity

43.

Money has ______ if it doesn't deteriorate when it is being handled frequently.

a)

Scarcity

b)

Divisibility

c)

Durability

d)

Portability

44.

What type of market structure is described by the information?

a)

Pure Competition

b)

Monopolistic Competition

c)

Oligopoly

d)

Monopoly

45.

Which of the following is described by the characteristics listed in the box?

a)

Monopoly

b)

Oligopoly

c)

Pure competition

d)

Monopolistic competition

46.

When a business controls a product of service by eliminating the competition.

a)

capitalism

b)

copyrights

c)

monopoly

d)

Walmart

47.

What letter on the graph represents the proper location for the market structure “oligopoly”?

a)

W

b)

Y

c)

X

d)

Z

48.

The most competitive market structure is

a)

perfect competition.

b)

Oligopoly

c)

monopolistic competition

d)

Monopoly

49.

Sara’s Hair Palace is a small, locally owned beauty salon in Bainbridge. This represents what type of business?

a)

corporation

b)

partnership

c)

sole proprietorship

50.

Susie is starting her own online shoe store. What economic term would best describe Susie and what does that term mean?

a)

Consumer – a person who uses or consumes goods

b)

Partnership – partner in the lemonade stand

c)

Entrepreneur- - person who takes a risk to start a new company

51.
Dan has $5,000. He wants to invest his money in the type of business that has the least amount of liability. In which type of business should he invest?
a)
corporation
b)
partnership
c)
proprietorship
52.
A business partnership has ___________ who share the risks and the profits.
a)
One owner
b)
No more than three owners
c)
Two or more owners
d)
Five or more owners
53.
Which of the following is an advantage of sole proprietorships:
a)
Limited liability
b)
Unlimited financial power
c)
Dual taxation
d)
Quick decision making
54.
Which of the following is an advantage of the corporation as a form of business ownership:
a)
Less complex requirements
b)
Separate owners and managers
c)
Limited liability
d)
High Taxes
55.
What is a company called that sells stock to raise money?
a)
Partnership
b)
Corporation
c)
Sole Proprietorship
d)
Limited Partnership
56.

The most common type of business organization in the United States in the _________.

a)

corporation

b)

partnership

c)

sole proprietorship

57.
Which is ONE disadvantage of Sole Proprietorship?
a)
Less direct control
b)
Disagreements
c)
Hard to raise money
58.

Which of the following is NOT a Phase?

a)

Expansion

b)

Contraction

c)

Neutral

d)

Peak

e)

Trough

59.

The Business Cycle measures ___ over time.

a)

wealth

b)

inflation

c)

economic growth

60.

The business cycle is made up of how many phases?

a)

5

b)

4

c)

3

d)

2

61.

The business cycle rises above the trendline during-

a)

rescessions

b)

expansions

c)

troughs

62.

GDP declines during a(an)

a)

peak

b)

contraction

c)

expansion

63.

Economic recovery begins-

a)

above the trend line

b)

at the end of a recession (trough)

c)

at the "boom" period

64.

When GDP rises faster than the long-run trend the economy is experiencing-

a)

recession

b)

expansion

c)

recovery

65.

GDP will begin to decline at-

a)

the peak.

b)

the trough.

c)

the contractionary phase.

66.

If a news headline says, "Finally!!! 2 straight months of increased jobs."

Where on the business cycle is the current economy?

a)

Peak

b)

Contraction/Recession

c)

Trough

d)

Expansion/Growth/Recovery

67.

If a news headline says, "3 months of consecutive job losses is impacting consumer confidence."

Where on the business cycle is the current economy?

a)

Peak

b)

Contraction/Recession

c)

Trough

d)

Expansion/Growth/Recovery

68.

Which of the following is a peak?

a)

A

b)

B

c)

C

d)

D

69.

Which of the following is a recession, or contraction?

a)

A

b)

B

c)

C

d)

D

70.

Which of the following is a trough?

a)

A

b)

B

c)

C

d)

D

71.

Which of the following is an expansion, or recovery?

a)

A

b)

B

c)

C

d)

D

72.

GDP divided by ______ = GDP per capita

a)

population

b)

income

c)

wealth

d)

production

73.

Inflation Rate =

a)

CPI Current Year - CPI of Previous Year/CPI of Previous Year X 100

b)

CPI of Base Year - CPI of Current Year/CPI of Current Year X 100

c)

PPI / CPI X 100

d)

PPI X CPI / 100

74.

Comparative advantages show:

a)

outcomes without trading

b)

who can make more items

c)

competition within countries

d)

who should produce what item at the lowest cost

75.

What type of advantage shows who can make the most item?

a)

absolute advantage

b)

comparative advantage

76.

Joy gives 2 haircuts and 1 perm. Susie gives 3 haircuts and 2 perms. Who has the absolute advantage for haircuts?

a)

Joy

b)

Susie

77.

True or False: It is better for countries to specialize and conduct trades given comparative advantage data.

a)

True

b)

False

78.
A nation has this type advantage when it can produce a good at a lower opportunity cost than another person or nation.
a)
Absolute Advantage
b)
Comparative Advantage
c)
Complete Advantage
d)
Controlling Advantage
79.
a)

High Demand and Low Supply

b)

Low Demand and High Supply

80.
a)

High Demand and Low Supply

b)

Low Demand and High Supply

81.
a)

High Demand and Low Supply

b)

Low Supply and High Demand

82.
a)

High Demand and Low Supply

b)

Low Demand and High Supply

83.

When producers offer more of a good as its price increases and less as its price falls, this defines the

a)

law of demand

b)

law of supply

c)

change in demand

d)

change in supply

84.

The willingness and ability of a producer to make a product is referred to as

a)

quantity supplied

b)

quantity demanded

c)

supply

d)

demand

85.

Movement along a supply curve demonstrates

a)

a change in quantity supplied

b)

a change in quantity demanded

c)

a change in supply

d)

a change in demand

86.

Which of these demonstrates an example of a supply curve? (More than one answer)

a)
b)
c)
d)
87.

Which of the following supply curves demonstrates a decrease in the quantity supplied?

a)
b)
c)
d)
88.

A decrease in supply is demonstrated by which of the following?

a)
b)
c)
d)
89.

A hurricane wipes out an orange crop in Florida, sharply affecting the supply of oranges. Which chart demonstrates this concept?

a)
b)
c)
d)
90.

Which of the following is NOT one of the determinants of supply?

a)

Change in cost of production/resources

b)

Change in number of sellers

c)

Substitutes

d)

Change in technology

91.
Identify the correct determinant of supply.
Example: As the demand for DVDs decreased due to consumer preference for streaming movies, the market price for DVDs fell. This lower market price caused sellers to leave the DVD market and supply decreased. 
a)
Government regulation
b)
Change in number of sellers
c)
Change in income
d)
Change in expectations
92.
Identify the correct determinant of supply.
Example: If airlines expect prices for airline tickets to fall in September when families are less likely to travel due the school calendar, they will supply more during the summer months when they can charge higher fares.
a)
Change in income
b)
Change in number of sellers
c)
Expectations
d)
Change in technology
93.

Which of the following is NOT a determinant of supply?

a)

Change in cost of production

b)

Technology

c)

Change in number of consumers

d)

Government regulations

94.

This is an example of an economic model called a ____________

a)

Production Possibilities Curve

b)

Intro. to Economics Curve

c)

Latter Curve

d)

Circular Flow Curve

95.

Points B, D, and C represent ___________ use of resources.

a)

Ineffecient

b)

Efficient

c)

Unfeasible

96.

Point X represents an amount of production which is __________.

a)

Unfeasible

b)

Inefficient

c)

Efficient

d)

Well thought out

97.

Point A represents an __________ use of resources.

a)

Smart

b)

Inefficient

c)

Efficient

d)

Unfeasible

98.

Which factors could cause an increase the productive capacity of the PPC?

a)

Adding land, labor, and capital

b)

Losing land, labor, and capital

99.

Which factors could cause a decrease the productive capacity of the PPC?

a)

Adding land, labor, and capital

b)

Losing land, labor, and capital

100.

What is the opportunity cost of moving from production from point D to B?

a)

35 units of food

b)

1,000 units of clothes

c)

150 units of clothes

d)

100 units of clothes

101.

Which of the following concepts can be modeled using a PPC?

a)

Societies have preferences about what should be produced

b)

Governments, rather than markets, are more efficient allocators of resources

c)

Prices that the goods will sell for will be determined in a market

d)

A society can produce more of any good just by reallocating its resources more efficiently

e)

When all resources are being used, making more of one good means making less of the other good

102.
What does the circular flow matrix show?
a)
How products, resources, and money flow in the economy
b)
How to escape the Matrix
c)
How businesses make profits
d)
How households spend money
103.
In a market economy, what are the two main sectors?
a)
Government and businesses
b)
Households and government
c)
Households and businesses
d)
Producers and consumers
104.
Where do businesses sell goods and services to households?
a)
Resource market
b)
Product market
c)
Financial market
d)
Government market
105.
In the circular flow model, do businesses demand or supply in the product market?
a)
Demand
b)
Supply
c)
Both demand and supply
d)
Neither demand nor supply
106.
Businesses provide government with...
a)
taxes
b)
sales
c)
private goods & services
d)
interest
107.
In terms of resources, what do households provide for businesses?
a)
loans
b)
savings
c)
labor
d)
private goods
108.
In terms of resources, what do businesses provide for households?
a)
income
b)
sales
c)
taxes
d)
private goods
109.
In the circular flow model, the product market describes _____.
a)
stores that sell goods and services to households
b)
the government paying for public goods
c)
households selling their labor to businesses
d)
households receive income from businesses
110.
In this market, businesses buy resources they need to produce goods and services.
a)
factor market
b)
stores
c)
product market
d)
 businesses
111.

A full time construction worker working 60+ hours a week at $18 per hour plus overtime pay.

a)

Employed

b)

Unemployed

c)

Not counted / Not in the Labor Force

112.

A 40 year old man living at home collecting a disability check.

a)

Employed

b)

Unemployed

c)

Not counted / Not in the Labor Force

113.

An 80 year old woman living off Social Security.

a)

Employed

b)

Unemployed

c)

Not counted / Not in the Labor Force

114.

Laid off autoworker who is receiving unemployment benefits and is looking for a new job.

a)

Employed

b)

Unemployed

c)

Not counted / Not in the Labor Force

115.

Sixteen year old high school junior working at McDonalds after school a few nights a week.

a)

Employed

b)

Unemployed

c)

Not counted / Not in the Labor Force

116.

Carl is in prison for life. He sorts laundry for $0.35 per hour.

a)

Employed

b)

Unemployed

c)

Not counted / Not in the Labor Force

117.

a student who just graduated from college and is waiting to start their new job is...

a)

frictionally unemployed

b)

structurally unemployed

c)

technologically unemployed

d)

cyclically unemployed

e)

seasonally unemployed

118.

a woman who lost her job due to a decrease in sales during a recession in the economy is...

a)

frictionally unemployed

b)

structurally unemployed

c)

technologically unemployed

d)

cyclically unemployed

e)

seasonally unemployed

119.

Farm helpers are unemployed when the cropping season is over.

a)

frictional

b)

cyclical

c)

structural

d)

seasonal

120.

Which of the following best defines unemployment?

a)

The state of being able to work and actively seeking work, but unable to find employment

b)

The state of being able to work, but choosing not to

c)

The percentage of the labour force that is able and actively seeking work, but cannot find employment

d)

The total number of people who do not work

121.

Sum of the employed and the unemployed

a)

Employed

b)

Unemployment

c)

Labor Force

122.

Joe is an expert at repairing VCRs. However, due to a lack of customers, his business had to close.

a)

frictionally unemployed

b)

structurally unemployed

c)

technologically unemployed

d)

cyclically unemployed

e)

seasonally unemployed

123.

These decisions are determined by the U.S. Congress.

a)

FISCAL

b)

MONETARY

124.

Making changes to the federal funds rate is a policy tool.

a)

FISCAL

b)

MONETARY

125.

The buying and selling of bonds are tools of this policy.

a)

FISCAL

b)

MONETARY

126.

Increases in spending on infrastructure is part of this policy.

a)

FISCAL

b)

MONETARY

127.

Raising taxes to slow the growth of the economy.

a)

FISCAL

b)

MONETARY

128.

The discount rate gets lowered.

a)

FISCAL

b)

MONETARY

129.

Income tax rates get lowered.

a)

FISCAL

b)

MONETARY

130.

The reserve requirement gets raised.

a)

FISCAL

b)

MONETARY

131.

These decisions are determined by the Federal Reserve Board of Governors.

a)

FISCAL

b)

MONETARY

132.

Increases in unemployment benefits for people looking for work.

a)

FISCAL

b)

MONETARY

133.

Who controls fiscal policy?

a)

The Federal Reserve

b)

The Federal Government

c)

The FBI

d)

Federal Income Tax

134.

During economic crisis, the primary role of the Federal Government is to promote a healthy economy by...

a)

controlling the budget

b)

setting spending levels

c)

manipulating taxes and government spending

d)

loaning out money

135.

Increasing taxes...

a)

increases money supply

b)

decreases money supply

136.

Decreasing taxes...

a)

increases money supply

b)

decreases money supply

137.

Which policy would help fight inflation?

a)

Expansionary Policy

b)

Contractionary Policy

138.

Which policy would help fight unemployment?

a)

Expansionary Policy

b)

Contractionary Policy

139.

During a recession, the Federal Government should use...

a)

Expansionary Policy

b)

Contractionary Policy

140.

During rapid expansion, the Federal Government should use...

a)

Expansionary Policy

b)

Contractionary Policy

141.

Increasing Government Spending...

a)

increases money supply

b)

decreases money supply

142.

Decreasing Government Spending...

a)

increases money supply

b)

decreases money supply

143.

Does increasing the money supply cause inflation or deflation?

a)

Inflation

b)

Deflation

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