Font size
Worksheetsecon eoy post test q's
Total questions: 145
Worksheet time: 1hrs 13mins
The system of markets and trade that links the countries of the world is called the
balance of trade.
foreign exchange.
global economy.
import/export ratio.
Which of these developments has been the most essential factor in the growth of international trade?
widespread use of cell phones
rising demand for bulk commodities
proliferation of container ports serving large ships
increase in passenger jets carrying wealthy tourists
Which service is counted as a U.S. export?
A U.S. business traveler stays at a hotel in Australia.
A French movie attracts large crowds at U.S. theaters.
A Dutch family hosts a high school student from the United States.
A German student pays tuition to attend college in the United States.
An attempt to influence another country's politics is the most common motive for which form of protectionism?
embargo
protective tariff
quota
voluntary restraint
The majority of economists support
free trade.
import quotas.
trade embargoes.
trade restrictions.
What was a central goal of the formation of the European Union and the World Trade Organization?
to ensure fair wages
to regulate investment
to reduce trade barriers
to protect national security
What determines floating rates of foreign exchange?
the black market
government decree
supply and demand
multinational treaties
The United States borrows dollars from foreign investors by
printing dollars abroad.
negotiating agreements.
lending money in return.
selling government bonds.
The United States borrows from foreign investors in order to
finance a trade deficit.
gain influence overseas.
help the dollar appreciate.
obey the terms of NAFTA.
Which of the following concepts explains why a country would both import and export a particular type of good?
comparative advantage
import quotas
product differentiation
voluntary restraints
Which of these supports large infrastructure projects, such as dams, in developing countries?
International Monetary Fund
United Nations
World Bank
World Trade Organization
Why is foreign debt a serious problem for poor countries?
Governments that borrow for day-to-day operations lose elections.
Officials feel pressured to support military policies they cannot afford.
Paying off principal and interest takes a large part of the national budget.
Currency from other powerful countries lowers the value of local currency.
Which of these are examples of nongovernmental organizations (NGOs)?
Sierra Club, CARE, Save the Children
Hong Kong, Central African Republic
Exxon/Mobil, General Motors, McDonald's
United Nations, International Monetary Fund
Movement of money and investments from one country to another is called
capital flow.
debt forgiveness.
goods and services.
industrial commerce.
Economic development is defined as the process by which nations
participate in trade agreements.
strengthen their military capacity.
increase output and improve lives.
provide enough food to meet needs.
Why are stable legal institutions necessary for the economy of a developed country?
Schools provide an educated workforce.
Courts enforce property laws and contracts.
Judicial appointments are rewards for success.
Power and transportation fuel industrial growth.
Why did per capita gross domestic product (GDP) of some least developed countries fall in 2012?
Exports grew faster than imports.
Manufacturers quit hiring children.
Workers began working shorter hours.
Populations grew faster than economic output.
Which aspect of economic development has had the greatest impact on climate change?
use of the Internet
burning of fossil fuels
construction of highways
reforestation of cleared areas
How do high U.S. or European tariffs on agricultural products and clothing hurt least developed countries (LDCs)?
weakening of LDCs' local traditions
smaller market for LDCs' exports
decrease in food for people in LDCs
less incentive for workers in LDCs to migrate
The concept of sustainable development draws particular attention to the well-being of
senior citizens.
other countries.
future generations.
endangered species.
The market value of all final goods and services produced within a country in a given time period is the
wage-price spiral.
consumer price index.
gross domestic product.
net of exports minus imports.
The difference between real and nominal GDP is that real GDP is adjusted for
inflation.
entitlements.
unemployment.
international trade.
Keith lost his job at his company’s telephone switchboard when the company installed an automated phone system. Which type of unemployment did Keith experience?
cyclical
frictional
seasonal
structural
Why is the unemployment rate above zero when the economy reaches full employment?
Most jobs lay off workers when the economy slows.
There are always some people in transition between jobs.
There are never enough jobs for everyone who wants one.
Most workers do not have enough training for the best jobs.
The official unemployment rate may be overstated because it ignores
discouraged workers who have given up looking for a job.
involuntary part-time workers who would prefer to work full time.
workers in the illegal or informal economy who do not report their jobs.
parents who do not want jobs because they are caring for young children.
Which condition is considered normal in the United States?
deflation
stagflation
hyperinflation
creeping inflation
One cause of inflation is
a rise in the cost of production.
a decrease in consumer demand.
a tightening of the money supply.
a growth in the size of inventories.
Business investment is most likely to increase during which phase of the business cycle?
contraction
expansion
peak
trough
A decline in economic activity over a period of at least six months is called a
contraction.
depression.
panic.
recession.
Why is consumer confidence important to the business cycle?
Consumers who lack confidence work longer hours, increasing productivity.
Confident consumers purchase more, increasing business profits and employment.
Consumers who lack confidence spend recklessly, triggering a speculative bubble.
Confident consumers are content with what they have, reducing demand and inflation.
Why did the U.S. government initiate a policy of more frequent intervention during the Great Depression?
to dominate global trade
to stabilize the economy
to prepare for a possible war
to strengthen local governments
What is the primary goal of supply-side economic policies?
to stimulate production
to increase top tax rates
to slow the multiplier effect
to fund new federal programs
Why did Paul Volcker, Federal Reserve chairman during the Carter administration, adopt a tight-money policy?
to stimulate exports to Japan and Europe
to promote investment in new technology
to reduce inflation caused by the oil crisis
to increase employment in manufacturing
What is the principal economic argument for deficit spending?
to cut inflation
to lower the national debt
to increase overall demand
to limit the size of government
Which of these is the best example of fiscal policy?
deregulate airlines so they have to compete
lower interest rates so mortgages are cheaper
create federal jobs so workers can spend more
insure savings accounts so depositors feel safe
Which of these has the most responsibility for monetary policy?
Federal Reserve Board
United States Congress
New York Stock Exchange
Department of the Treasury
When the Federal Open Market Committee decides to use open-market operations, what is it deciding to do?
adjust the reserve requirement
deregulate the stock exchanges
buy or sell government securities
change the terms for lending to banks
Why do fiscal policy measures rarely have an immediate impact on the economy?
Policies are poorly publicized.
The multiplier effect takes time.
People are slow to accept change.
The misery index can be misleading.
The crowding-out effect occurs when
a growing national debt transfers the burden to future generations.
banks with large reserves drive many community banks out of business.
mandatory spending leaves fewer federal funds for discretionary spending.
high government borrowing drives up interest rates, making business investment more expensive.
Why is it not fully accurate to describe the national debt as money we owe only to ourselves?
Government bankruptcy is unlikely.
Most individuals are in debt as well.
The debt will have to be paid off in the future.
About one-third of the debt is held by foreigners.
Which of these sources of government revenue best illustrates the benefits-received approach to tax equity?
A corporation pays taxes on its income.
A driver deposits coins in a parking meter.
A percentage of a large inheritance is paid to the government.
Funds for Medicare are withheld from a paycheck.
Which historical period brought the greatest increase in government involvement in the economy?
Reconstruction (after Civil War)
Gilded Age (late 1800s)
Progressive Era (early 1900s)
Great Depression (1930s)
How do state and local governments typically generate revenue to pay for education, law enforcement, and fire protection services?
payroll and insurance taxes
corporate and business taxes
property and sales taxes
lotteries and municipal bonds
Which of these taxes is the leading source of revenue for the federal government?
corporate income taxes
individual income taxes
inheritance taxes
payroll taxes
How do economists think private ownership most affects property maintenance?
It is helpful because owners have to pay taxes on the property, which the government uses for maintenance.
It is harmful because owners must pay property tax and usually don't have enough money for upkeep.
It is harmful because owners save money by letting property get run down.
It is helpful because owners have an incentive to care for the property.
The U.S. Patent and Trademark Office was established to protect
corporate property.
inherited property.
intellectual property.
public use property.
Most sales taxes are regressive because
taxable purchases are capped at $50,000 a year.
wealthier people pay less tax on a purchase than poorer people would pay on the same item
most people cannot afford to buy such luxury goods as yachts, furs, and diamonds.
poorer taxpayers spend a larger proportion of their income on taxable goods and services than do wealthier taxpayers
Establishment of which regulatory agency is associated with a 60 percent drop in workplace fatalities since 1971?
Consumer Product Safety Commission
Environmental Protection Agency
National Highway Traffic Safety Administration
Occupational Safety and Health Administration
To calculate the amount of tax due, multiply the tax base by the tax
rate.
assessment.
return.
referendum.
When a tax becomes a disincentive to work, the resulting reduction in productivity is a form of
deadweight loss.
marginal tax rate.
entitlement.
tax incidence.
When federal expenditures exceed federal tax revenues, how does the government fund the deficit?
by printing additional paper money
by asking not-for-profit corporations for help
by taking a loan from the Federal Reserve Bank
by borrowing money through the sales of bonds
The Internal Revenue Service routinely collects taxes from employees through a system of
withholding.
audits.
assessments.
entitlement.
Food stamps, the Earned Income Tax Credit, and unemployment insurance are examples of
income redistribution.
natural monopolies.
negative externalities.
regulatory capture.
Which of the following best explains why the market is an inefficient way to allocate immunization against infectious diseases?
In a market, too much vaccine is likely to be produced, taking resources from other needs
In a market, competition among manufacturers may result in the production of vaccines that nobody wants.
The revolving door between government and industry gives drug companies too much power to be left to the market alone.
Markets do not take into account that preventing the spread of disease affects people in addition to the producer and the consumer
What is the economic purpose of market regulation?
to assert federal economic power over the states
to translate widely accepted economic traditions into law
to influence the economic behavior of individuals and firms
to improve the United States' comparative advantage in foreign trade
Which of these agencies has primary responsibility for preventing price fixing and bid rigging?
Antitrust Division of the Department of Justice
Consumer Protection Agency
Department of Labor
Securities and Exchange Commission
Which of these is a progressive tax?
excise tax
luxury tax
property tax
Social Security tax
Which of these is a common resource?
bread
pencils
roads
shoes
Which of these questions measures the efficiency of a tax system?
How simple is the tax code to understand and obey?
How fairly are the taxes distributed between rich and poor?
How much of the tax gets into the public treasury?
How well does the system fund the expenses of government?
What was a main contributor to the end of the Great Depression?
World War I
Korean War
World War II
none Parsons D none of the above
Why are U.S. dollars considered money?
They are printed on paper or minted as coins.
They are backed by government-owned gold or silver held in vaults.
Their value rises and falls with the economy.
By law, they must be accepted as a means of payment.
Which of these best explains why gold and silver came to be regarded as money?
They were rare and did not decay.
They could be shaped into jewelry.
They were easy to store in bank vaults.
They came from mines owned by rulers.
The main function of a bank is to bring together
risk and reward.
cash and currency.
savers and borrowers.
officers and customers.
Who are the primary customers of the Federal Reserve?
businesses
governments
individuals
private banks
How does personal saving help the economy grow?
It results in individuals spending less.
It motivates families to make a budget.
It provides funds for business investment.
It causes manufacturers to lower their prices.
What institution determines what fraction of deposits a bank must set aside to be available for customer withdrawals?
Federal Reserve System
New York Stock Exchange
Securities and Exchange Commission
Federal Deposit Insurance Corporation
Which form of business organization is most common?
partnership
corporation
business franchise
sole proprietorship
What is the role of silent partners in a limited partnership?
They work for the company but do not make any investment.
They take an active role in operations but have limited liability.
They have unlimited liability but do not have a voice in decisions.
They contribute capital but are not involved in day-to-day operations.
One advantage of a partnership over a sole proprietorship is that a partnership
faces less regulation.
avoids double taxation.
can get credit more easily.
has easier decision making.
Venture capitalists invest in new businesses in exchange for
broad publicity.
ownership shares.
interest payments.
management jobs.
What is the main goal of a cooperative?
to earn its members a profit on investment
to offer its members low-cost goods or services
to expand by receiving royalties from its members
to provide guaranteed employment for its members
Which of these is a disadvantage of turning a partnership into a corporation?
loss of control
continuity issues
expanded liability
less management skill
Which of these people is part of the labor force?
a career soldier stationed overseas
a laid-off carpenter looking for a job
a retiree who worked 40 years in one place
a mother choosing to stay home with her kids
Which sentence best explains why the number of manufacturing jobs has declined?
Fewer products are now made in the United States.
More jobs are being taken by women and minorities.
Older employees no longer have to retire at a certain age.
Training and technology have increased worker productivity.
Outsourcing is the practice of
letting employees work from home.
setting up factories in other countries.
using outside contractors instead of staff.
hiring temporary workers without benefits.
Which of these principles determines wage rates in a labor market?
collective bargaining
globalization
risk and reward
supply and demand
Which of these is one reason young workers seek entry-level positions?
to receive high pay right away
to avoid expectations of hard work
to start building experience in a field
to enjoy more leisure with other workers
Which period of U.S. history brought legislation most supportive to collective bargaining?
Industrial Revolution
post–Civil War
New Deal
post–World War II
Right-to-work laws in many states prohibit employers from
requiring workers to join a labor union.
promoting only high-performing employees.
laying off workers when business slows down.
making prior experience a condition of employment.
One major reason women earn less than men on average is that women
more often lose experiences by interrupting their careers for family
have become a majority of all paid workers
have less opportunity to learn basic job skills in entry-level jobs
are more likely to look for manufacturing jobs
Select the best answer. The law of demand states that as price decreases
wages decrease.
production increases.
demand increases.
quality decreases.
Select the best answer. Quantity demanded moves along the demand curve in response to changes in
price.
income.
preferences.
expectations.
Select the best answer. Supply depends on the willingness and ability of
donors to contribute.
producers to produce.
advertisers to promote.
consumers to purchase.
Select the best answer. According to the law of supply, what happens as price increases?
The demand decreases.
The quantity supplied increases.
The supply curve becomes flat.
The supply curve shifts to the left.
Select the best answer. The degree to which the quantity demanded responds to changes in price is called
elasticity.
revenue.
schedule.
utility.
Select the best answer. Which of these is the best example of diminishing marginal utility?
A shortage of bike paths makes bicycles less useful.
Bicycles become less useful as they get old and start to rust.
Someone who has one bicycle will have less use for another.
People with cars have less use for bicycles than people without cars have.
Select the best answer. Which of these situations best illustrates market equilibrium?
The price of soap does not vary much from week to week.
Soap production ensures a good profit for the manufacturer.
Everyone who wants or needs soap can easily afford to buy it.
The amount of soap made matches the amount of soap that people want to buy.
Select the best answer. How is the market-clearing price determined?
It is fixed by each manufacturer.
It is reached through trial and error.
It is calculated by economic analysts.
It is set by a government commission.
Select the best answer. The equilibrium price is the price at which
consumers start reducing demand.
producers' total revenue is highest.
demand and supply curves intersect.
neither demand nor supply will shift.
Select the best answer. Which of these might best signal furniture makers to cut back production?
a fall in the cost of essential raw materials
an increase in availability of skilled workers
an introduction of competitors into the market
a drop in the price consumers are willing to pay
Select the best answer. What is the usual result of setting a price ceiling on rents?
People can find apartments but cannot afford to rent them.
Houses are broken up into apartments to meet the demand.
More people want to rent apartments than are available to rent.
Construction jobs increase with the building of new apartment buildings.
Select the best answer. The purpose of rationing during World War II was to ensure that
manufacturers could make a profit.
everyone could get essential scarce goods.
workers would have an incentive to get jobs.
products would go to those who valued them most.
Select the best answer. The most important argument many economists make against price controls is that they are
unfair.
unstable.
insecure.
inefficient.
Select the best answer. As it becomes easier to start a new business in a market, that market
attracts more consumers.
increases transaction costs.
becomes more competitive.
offers higher-quality products.
Select the best answer. In a market with perfect competition, how are prices determined?
by supply and demand
by government regulation
by cultural ideals of fairness
by agreement among producers
Select the best answer. In which market structure do producers have the most market power?
monopolistic competition
monopoly
oligopoly
perfect competition
Select the best answer. Why is competition among restaurants in a big city an example of monopolistic competition?
Starting a restaurant is expensive.
Restaurants often go out of business.
All restaurants serve food, and each restaurant is distinctive.
All restaurants serve people, and one restaurant serves the most people.
Select the best answer. Which of these is the best example of an externality?
You decide to stop snacking between meals.
You enjoy looking at your neighbor's garden.
Your shoe store stops selling your favorite style.
Your new bicycle goes faster than you expected.
Select the best answer. Why do goods made in factories that cause pollution tend to be overproduced?
Some stores stock more than they can sell.
Some costs are not charged to the producer.
Some benefits are wanted by the community.
Some people may refuse to purchase the items.
Select the best answer. Why doesn’t the market system work to provide street lighting and other public goods?
Too few of these services are available.
Important needs cannot be left to chance.
Voters put pressure on local governments.
There is no easy way to charge individual users.
Why might some historians consider Adam Smith one of the most influential people in history?
He taught that all people should be economic equals.
He introduced a way of thinking about economic ideas.
He argued for a larger role for the government in the economy.
He wrote the economic argument for American independence.
Which of these statements is an example of normative economics?
"Taxes ought to be lowered."
"Inflation is higher this year."
"The bond market is in decline."
"Speculation caused a recession."
A limitation of using graphs to represent relationships is that they
must be presented in a small space.
typically show the less important variables.
omit factors other than those being graphed.
are hard for anyone but economists to interpret.
Which statement is the best example of thinking at the margin?
John has six shirts and is trying to decide whether to buy a seventh.
Mary observes that the average cost of shoes is higher than last year.
David decides to volunteer this summer instead of working for pay.
Jane wants to buy a car but decides she cannot afford the insurance.
What are the factors of production?
goods and services
risk and opportunity
land, labor, and capital
wages, salaries, and profits
Ocean waves can be used to generate energy. Ocean waves are considered which type of resource?
capital
nonrenewable
perpetual
renewable
Which of these items is a measure of productivity?
years of education
bushels of corn per acre
number of workers employed
dollars invested in new equipment
Why are tradeoffs necessary?
Resources are limited.
Every product has flaws.
People want different things.
Advertisers promote products.
Which scenario best illustrates the law of diminishing marginal utility?
A car breaks down more often as it gets older.
A collector of china figurines is eager to get a new one.
Someone who doesn't listen to music does not care about getting a new CD.
A new toy is less exciting to a child with many toys than to a child with just a few.
Choose the best word to fill in the blank. The three fundamental economic questions are what to produce, ____________, and for whom.
why
how
when
where
Which of these economic goals is most important in a traditional economy?
growth
stability
freedom
efficiency
Why are economies most efficient when they have full employment?
No one person has to work too hard.
Wages are spent for consumer goods.
Unemployment offices can be closed.
No productive resources are left unused.
Which kind of economy is most common today?
command
market
mixed
traditional
What would government do in a model free enterprise system?
ensure that prices remain reasonable
stay out of economic activity altogether
protect property rights and enforce contracts
support entrepreneurs to encourage innovation
Which is the best example of specialization?
A surf shop lowers the price on swimsuits.
A dry cleaner spends extra time on grease spots.
An assistant in a tailoring shop only replaces zippers.
An online clothing outlet offers customized monograms.
How does division of labor increase productivity?
Workers require minimal training.
Workers can be paid a lower wage.
Workers become expert at one task.
Workers move often from job to job.
In a voluntary exchange, why do people give something up?
to increase their self-sufficiency
to get something they want more
to allocate scarce resources fairly
to comply with state requirements
What does it mean to say that Jen has a comparative advantage over Julian for weeding people's gardens?
Jen weeds more quickly than Julian does.
Jen's expertise at weeding is greater than Julian's.
Jen can charge more for weeding than Julian can.
Jen's opportunity cost for weeding is lower than Julian's.
Why has much clothing manufacturing moved from the United States to other countries?
Most of the market for textile products has shifted overseas.
American workers have a weaker work ethic today than in the past.
Education in this country has not kept up with the needs of the 21st-century economy.
Nations with large, low-skilled workforces have a comparative advantage for assembly-line production.
How does trade increase the value of an item?
It makes the item more expensive to buy.
It puts more different goods into competition.
It provides work for storekeepers and truckers.
It transfers the item to someone who values it more.
Why might some historians consider Adam Smith one of the most influential people in history?
He argued for a larger role for the government in the economy.
He introduced a way of thinking about economic ideas.
He wrote the economic argument for American independence.
He taught that all people should be economic equals.
What are the factors of production?
risk and opportunity
land, labor, and capital
goods and services
wages, salaries, and profits
What would government do in a model free enterprise system?
protect property rights and enforce contracts
ensure that prices remain reasonable
stay out of economic activity altogether
support entrepreneurs to encourage innovation
The law of demand states that as price decreases
quality decreases.
demand increases.
production increases.
wages decrease.
The degree to which the quantity demanded responds to changes in price is called
utility.
revenue.
schedule.
elasticity.
Which of these is the best example of diminishing marginal utility?
People with cars have less use for bicycles than people without cars have.
Someone who has one bicycle will have less use for another
Bicycles become less useful as they get old and start to rust
A shortage of bike paths makes bicycles less useful.
What institution determines what fraction of deposits a bank must set aside to be available for customer withdrawals?
Federal Reserve System
Federal Deposit Insurance Corporation
Securities and Exchange Commission
New York Stock Exchange
Which of these principles determines wage rates in a labor market?
supply and demand
risk and reward
collective bargaining
globalization
Food stamps, the Earned Income Tax Credit, and unemployment insurance are examples of
income redistribution.
regulatory capture.
negative externalities.
natural monopolies.
When a tax becomes a disincentive to work, the resulting reduction in productivity is a form of
entitlement.
tax incidence.
deadweight loss.
marginal tax rate.
The market value of all final goods and services produced within a country in a given time period is the
consumer price index.
net of exports minus imports.
gross domestic product.
wage‑price spiral.
The difference between real and nominal GDP is that real GDP is adjusted for
international trade.
entitlements.
inflation.
unemployment.
Which of these is the best example of fiscal policy?
create federal jobs so workers can spend more
lower interest rates so mortgages are cheaper
deregulate airlines so they have to compete
insure savings accounts so depositors feel safe
An attempt to influence another country's politics is the most common motive for which form of protectionism?
protective tariff
voluntary restraint
embargo
quota
What was a central goal of the formation of the European Union and the World Trade Organization?
to protect national security
to ensure fair wages
to regulate investment
to reduce trade barriers
Which of the following concepts explains why a country would both import and export a particular type of good?
product differentiation
import quotas
comparative advantage
voluntary restraints
Why did per capita gross domestic product (GDP) of some least developed countries fall in 2012?
Manufacturers quit hiring children.
Populations grew faster than economic output.
Exports grew faster than imports.
Workers began working shorter hours.
Which kind of economy is most common today?
command
traditional
market
mixed
Which scenario best illustrates the law of diminishing marginal utility?
A new toy is less exciting to a child with many toys than to a child with just a few
A collector of china figurines is eager to get a new one
A car breaks down more often as it gets older
Someone who doesn't listen to music does not care about getting a new CD
Why are tradeoffs necessary?
Resources are limited
Advertisers promote products
Every product has flaws
People want different things
How does trade increase the value of an item?
It provides work for storekeepers and truckers
It makes the item more expensive to buy
It puts more different goods into competition
It transfers the item to someone who values it more
In which market structure do producers have the most market power?
perfect competition
oligopoly
monopoly
monopolistic competition
One advantage of a partnership over a sole proprietorship is that a partnership
can get credit more easily
has easier decision making
avoids double taxation
faces less regulation
Which of these is a progressive tax?
excise tax
luxury tax
property tax
Social Security tax
A decline in economic activity over a period of at least six months is called a
recession
panic
depression
contraction
