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WorksheetsUnit 4 CFM Model
Total questions: 47
Worksheet time: 24mins
Which of the following is not part of the expanded circular flow model?
A diagram showing how businesses compete
A model showing the flow of goods, services, and money in an economy
The government recieving taxes and providing goods and services
Banks taking deposits and giving loans to households and businesses.
In the circular flow model, businesses provide:
Goods and services
Factors of production
Taxes
Government regulations
Which of the following sectors buys goods and services in the product market?
House holds
Both government and households
Government
Banks
What do businesses supply in the product market?
Labor
Goods and services
Capital
Wages
Which of the following is NOT part of the circular flow model?
Households
Businesses
Government
Unemployment
In the factor market, businesses purchase:
Finished goods
Factors of production
Consumer services
Imports
The circular flow model assumes:
No international trade
No government involvement
Continuous flow of money and resources
Fixed prices
Which market connects households and businesses for goods and services?
Factor market
Product market
Capital market
Labor market
Money and Banking — What is the primary function of money
To create inflation
To serve as a medium of exchange
To increase taxes
To reduce trade
Section 2: Money and Banking — Which of the following is NOT a characteristic of money
Durability
Portability
Immunity to inflation
Divisibility
Money and Banking — What is fiat money?
Money backed by gold
Money with no intrinsic value but accepted by law
Cryptocurrency
Barter system
Money and Banking — Which institution controls the money supply in the U.S.
The executive branch
Federal Reserve
Treasury Department
Bank of America
Money and Banking — Which of the following is a function of commercial banks?
Printing currency
Issuing bonds
Accepting deposits and making loans
Regulating interest rates nationally
The process of banks creating money through lending is called:
Fractional reserve banking
Monetary neutrality
Open market operations
Quantitative easing
Households in Circular Flow — Households do not earn income by:
Providing entrepeneurship
Providing labor
Collecting taxes
Providing natural resources
Households in Circular Flow — Households contribute to economic growth by:
Consuming goods and services
Reducing wages
Limiting production
Increasing tariffs
Section 3: Households in Circular Flow — Which of these is NOT a factor provided by households?
Land
Labor
Capital
Finished goods
Section 4: Factor Markets — Which of the following is NOT considered a factor of production?
Land
Labor
Capital
Money
Factor Markets — In economics, the term "land" refers to:
Only physical plots of land
All natural resources used in production
Buildings and infrastructure
Only agricultural output
Factor Markets — Which of the following best describes the factor market?
A market where goods and services are sold
A market where resources like natural resources and labor are bought and sold
A market for consumer products
A market for financial securities
Factor Markets — Entrepreneurs primarily contribute to production by:
Providing physical labor
Organizing resources and taking risks
Supplying raw materials
Lending money
Which of the following is the simplest and most common form of business ownership?
Partnership
Sole Proprietorship
Corporation
No one
What is a major advantage of a sole proprietorship?
Limited liability
Easy to start and full control by the owner
Ability to sell stock
Shared decision-making
Which type of business offers limited liability protection to its owners and is often used by small businesses?
Sole Proprietorship
Partnership
Limited Liability Company (LLC)
Cooperative
In a general partnership, who is responsible for the business’s debts?
Only the managing partner
All partners equally
Only silent partners
No one
Which of the following is a key characteristic of a corporation?
Owned by one person
Owners have unlimited liability
Can issue shares of stock to raise capital
Cannot be taxed
What is the main purpose of a cooperative (co-op)?
To maximize profits for shareholders
To provide goods or services for the mutual benefit of its members
To avoid paying taxes
To compete with corporations
Which type of business is most likely to have double taxation (profits taxed at corporate and personal levels)?
Sole Proprietorship
Partnership
Corporation
LLC
Which of the following is an advantage of forming an LLC?
Unlimited liability
Easy transfer of ownership through stock
Limited liability and flexible management structure
Requires no paperwork
Which type of business is owned and controlled by shareholders?
Corporation
Cooperative
Partnership
Sole Proprietorship
Which of the following is a disadvantage of a sole proprietorship?
Easy to start
Owner keeps all profits
Unlimited personal liability
Complete control by the owner
Which market structure has the greatest number of sellers?
Monopoly
Oligopoly
Perfect Competition
Duopoly
In a monopoly, how many firms dominate the market?
One
Two
A few large firms
Many small firms
Which of the following is a characteristic of perfect competition?
Firms sell identical products
Firms have significant control over prices
High barriers to entry
Only one seller
Which market structure often uses advertising to differentiate products?
Perfect Competition
Monopoly
Oligopoly
All of the above
Which of the following is an example of a monopoly?
A local water utility company
A fast-food restaurant chain
A clothing store in a mall
A farmers’ market
In an oligopoly, firms are most likely to:
Ignore competitors’ actions
Engage in price wars or collusion
Have no barriers to entry
Sell identical products only
Which market structure is most efficient in terms of resource allocation?
Monopoly
Oligopoly
Perfect Competition
None of the above
What is a major disadvantage of a monopoly?
Lower prices for consumers
Lack of competition leading to higher prices
Many sellers in the market
Easy entry for new firms
Which market structure typically has the highest barriers to entry?
Perfect Competition
Oligopoly
Monopoly
None of the above
Which of the following best describes an oligopoly?
One seller controls the entire market
Many sellers with identical products
A few large firms dominate the market
No barriers to entry
What is the main reason countries engage in international trade?
To reduce competition
To access goods and services they cannot produce efficiently
To avoid using natural resources
To eliminate imports
Section 7: International Trade in Circular Flow (Questions on imports, exports, foreign exchange.) What does the term “globalization” refer to?
Countries becoming more isolated
Increased interconnectedness of economies, cultures, and populations
Elimination of all trade barriers
Only trade between neighboring countries
Section 7: International Trade in Circular Flow (Questions on imports, exports, foreign exchange.) What is a tariff?
A tax on imported goods
A subsidy for exports
A ban on foreign products
A free trade agreement
Section 7: International Trade in Circular Flow (Questions on imports, exports, foreign exchange.) Which term describes when a country focuses on producing goods it can make most efficiently?
Absolute advantage
Comparative advantage
Protectionism
Specialization
Section 7: International Trade in Circular Flow (Questions on imports, exports, foreign exchange.) What is a potential downside of globalization?
Increased access to foreign markets
Job losses in certain industries
Greater cultural diversity
Lower consumer choice
Section 7: International Trade in Circular Flow (Questions on imports, exports, foreign exchange.) Which of the following is an example of a trade barrier?
Free trade agreement
A quota on the amount of strawberries that can be imported
Lower transportation costs
Currency exchange
