2. What is economics all about?
a. money c. snuggies
b. choices d. the stock market
– 10 points
3. Which of the following is an example of
scarcity, rather than shortage?
a.A popular toy is sold out during the
busy holiday season.
b.You have spent your last penny and
payday is a week away.
c.A person wants an endless supply of
everything but cannot have it.
d.Gasoline was rationed in America
during World War II.
– 20 points
4. Human capital includes
a. the salary paid to an accountant.
b.a taxi driver’s knowledge of the city
streets.
c. the machinery used to weave cloth.
d.the equipment used by a doctor to
cure a patient.
– 30 points
5. A company that makes baseball caps is
underutilizing its resources. What does this
mean?
a.The company is running more
efficiently than its competitors.
b.The company is paying its employees
less than it should be.
c.The company is making caps when it
could be making t-shirts instead.
d.The company is producing fewer caps
than it could be.
– 40 points
6. What can cause a production possibilities
curve to move to the right?
a.Thousands of people move out of the
country.
b.A new invention lowers the cost of
production.
c.An epidemic kills thousands of young
men and women.
d.The population is growing increasingly
old.
– 50 points
7. What is the struggle among various
producers for the consumer’s business
called?
a. socialism c. incentive
b. competition d. self-regulation
– 10 points
8. Which of the following was a free market
philosopher?
a. Karl Marx c. Vladimir Lenin
b. Adam Smith d. Friedrich Engels
– 20 points
9. In what kind of an economy does the
government make all the decisions?
a. socialist c. centrally planned
b. laissez faire d. free enterprise
– 30 points
10. What is the purpose of competition?
a.to act as a regulating force in the
marketplace
b.to cause producers to attempt to put
each other out of business
c.to cause buyers to have to be careful
about spending their money
d.to act as a motivating force behind the
free market
– 40 points
11. What economic goals are most likely to be
achieved in a market economy?
a.freedom, security, and equity
b.security, equity, efficiency
c. freedom, growth, and efficiency
d.good environment, and a good
government
– 50 points
12. When a consumer is able and willing to
buy a good or service, he or she creates
which of the following?
a. consumption c. elasticity
b. demand d. allocation
– 10 points
13. What is a basic principle of the law of
demand?
a.The higher the price, the more people
will want the good.
b.Everyone has a limited income that
they will spend.
c.When a good’s price is lower, people
will buy more of it.
d.Services are of interest in the same
way that goods are.
– 20 points
14. A shift in the demand curve means which
of the following?
a. a change in demand at every price
b. a rise in prices
c.a decrease in both price and quantity
demanded
d. a change in consumer income
– 30 points
15. How is future price expectations related to
current demand?
a.If the price is expected to rise, current
demand will drop.
b.If the price is expected to fall, current
demand will rise.
c.If the price is expected to rise, current
demand will rise.
d.Future price is not related to current
demand.
– 40 points
16.
17. You are part-owner of Apple corporation
because you
a. own some of the company’s stock.
b.have created a corporate charter for
the company.
c. have purchased company bonds.
d. attend the company’s annual meetings.
– 10 points
18. Which of these tools in an example of
monetary policy?
a. reducing income taxes
b. buying and selling government securities
(bonds)
c. increasing government spending
d. borrowing money through deficit spending
– 20 points
19. Which of the following is a treaty to
eliminate all trade barriers between
Canada, Mexico, and the United States?
a. APEC c. CARICOM
b. MERCOSUR d. NAFTA
– 30 points
20. Which of the following goods has an
inelastic demand?
a.Nike shoes
b.cigarettes
c. Motorola cell phones
d. Toshiba computers
– 40 points
21. When the government deregulates a
product or service, what happens to it?
a.The product or service is available to
more people.
b. The product or service becomes cheaper.
c. Some government regulations over the
industry are eliminated.
d. Government control over the industry is
stopped.
– 50 points
22. What type of policy does the Federal
Reserve use to counteract an expansion
that is causing high interest rates?
a.fiscal policy
b.easy money policy
c. tight money policy
d. policy lags
– 10 points
23. What is one possible short-term effect of
an easy money policy?
a.decreasing inflation
b.a contracting money supply
c. higher interest rates
d. an increased money supply
– 20 points
24. When the selling price of a good goes up,
what is the relationship to the quantity
supplied?
a. The cost of production goes down.
b.The profit made on each item goes down.
c. The producer supplies more of the good.
d. There is no relationship between the two.
– 30 points
25. Supply refers to ______________, while
demand refers to _________________.
a.consumers, producers
b.producers, consumers
c. consumers, shoppers
d. business owners, entrepreneurs
– 40 points
26. What is an important advantage of a free
market?
a.It does not change unless the
government directs it.
b.Individuals are free to make their own
economic decisions.
c. It is easy to regulate.
d. It protects the less fortunate.
– 50 points
