WorksheetsEcon CFE Review 2025
Total questions: 30
Worksheet time: 15mins
In a circular flow diagram, which sector primarily supplies labor to firms through the factor market?
Foreign sector engaging in trade flows
Financial institutions offering credit services
Government sector providing public services
Households supplying labor resources
A local bakery lowers prices to attract customers, improves quality to beat rivals, and earns profits. Which idea best explains how these actions can still benefit society overall?
Price floors ensure fairness
Invisible hand of self‑interest
Public subsidies guarantee profits
Central authority sets production plans
Which pairing correctly matches market participant to role in the factor market?
Firms purchase labor inputs
Households demand finished goods
Government sells production capital
Banks supply entrepreneurial talent
An investor wants both moderate income and lower risk over five years. Which option best aligns with that goal compared to the others?
Cryptocurrencies with extreme swings
Corporate bonds with credit risk
Government bonds with lower risk
Individual stocks with high volatility
Which investment is generally considered low risk and offers relatively stable returns over time?
Penny stocks with rapid growth
Government bonds with fixed interest
Options contracts for speculation
Cryptocurrencies with high volatility
A diversified portfolio primarily helps an investor achieve which outcome?
Maximize short-term speculative gains
Guarantee positive annual returns
Reduce exposure to individual asset risk
Eliminate every possible risk
Which retirement account is typically funded with pre-tax contributions from salary?
Health Savings Account deposits
Taxable brokerage account funds
Traditional 401(k) via payroll
Roth IRA with after-tax money
When price elasticity of demand is high, a small price change tends to cause which effect?
A large change in quantity demanded
A small change in quantity demanded
No change in quantity demanded
A change in product supply
Which change causes a movement along the demand curve rather than a shift of the curve?
Change in consumer incomes
Change in market price only
Change in tastes and preferences
Change in population size
In a market with perfectly inelastic demand, what happens to quantity demanded when price increases?
Quantity demanded rises noticeably
Quantity demanded falls sharply
Quantity demanded stays unchanged
Supply quantity increases instead
On a production possibilities curve, a point inside the curve represents:
Maximum possible production
Unattainable production combination
Feasible but inefficient output
Efficient use of all resources
During which business cycle phase is unemployment typically at its highest level?
Recovery toward trend
Trough after contraction
Peak phase of activity
Expansion and growth
If a firm chooses to produce more of Good A using scarce resources, the opportunity cost is:
The explicit money price of A
The units of Good B forgone
The total cost of production
The expected profit from A
Which phase of the business cycle is typically associated with rising GDP and falling unemployment?
Depression with severe prolonged decline
Expansion with increasing output and hiring
Trough with lowest output and employment
Recession with declining output and jobs
At the peak of the business cycle, what is the most likely next phase?
Immediate drop to a trough point
Continued growth without slowdowns
Contraction as growth starts to slow
Stable conditions for several years
Which Federal Reserve tool directly changes the money supply by buying or selling government securities?
Tax rates set by fiscal authorities
Reserve requirements for member banks
Discount rate charged to institutions
Open market operations in securities
If the Fed lowers the discount rate during a slowdown, what effect is it primarily aiming for?
Decrease borrowing and spending
Increase borrowing and investment
Reduce inflation immediately
Raise unemployment consciously
A budget deficit occurs when:
Revenue exceeds spending
Taxes exceed spending
Exports exceed imports
Government spending exceeds revenue
Which group typically benefits from unexpected inflation?
Retirees on fixed incomes
Debtors with fixed-rate loans
Lenders
Savers
The national debt is:
Total accumulated government borrowing
Annual government deficit
Trade deficit
Current year’s budget
In a sole proprietorship, the owner has:
No liability
Unlimited liability
Limited liability
Shared liability
A vertical merger occurs when:
Two competitors combine
Companies in different stages of production combine
A company creates a new product line
Two unrelated businesses combine
Which business structure offers the most protection from personal liability?
Limited partnership
Corporation
General partnership
Sole proprietorship
In a command economy, who answers the three economic questions?
Market forces
Consumers
Government
Businesses
The factors of production are:
Supply, demand, and price
Goods, services, and money
Production, distribution, and consumption
Land, labor, capital, and entrepreneurship
What happens to aggregate demand when both consumer confidence and business investment increase?
Increases
Decreases
Cannot be determined
Stays the same
When the central bank uses contractionary monetary policy, what happens to short-term interest rates?
They decrease slightly
They increase generally
They stay exactly constant
They turn negative quickly
Which fiscal policy tool can change aggregate demand most immediately during a recession?
Adjusting tax rates
Rewriting regulatory rules
Altering government spending
Modifying transfer payments
In a mixed economy, who is primarily responsible for providing public goods such as national defense?
Financial institutions
International agencies
Government sector
Private businesses
Which type of unemployment best describes workers temporarily between jobs after leaving one position?
Seasonal unemployment
Cyclical unemployment
Frictional unemployment
Structural unemployment
