Econonics Final Exam

ECONOMICS FINAL EXAM

___ 1. Who was the author of the book The Wealth of Nations ? (in which capitalism is described): A. Karl Marx B. Adam Smith C. David Ricardo D. Robert Owen

___ 2. According to Communist Theory, history will come to an end when: A. the world is destroyed by WW3 B. the owner regains control and puts down the worker C. money becomes irrelevant D. the worker, all over the world, rises up and overthrows the rich, ruling class

___ 3. TINSTAAFL means: A. there is really nothing that is free B. that everything choice has consequences C. that the more you have of something the less you desire another one D. that your savings accounts are insured by the government

___ 4. Water being cheaper than gold is an example of : A. an opportunity cost B. a trade off C. the paradox of value D. a cost-benefit analysis

___ 5. An economy operating at the its production possibilities frontier is: A. operating at full production B. demonstrating slow economic growth C. showing no economic growth D. conserving its resources.

___ 6. Which type of business organization generates the most money? A. general partnership B. sole proprietor C. corporation D. non-profit corporation

___ 7. The oldest and most respected stock market in the world is the: A. Tokyo Exchange B. NYSE C. NASDAQ D. AMEX

___ 8 Long working hours, unlimited liability and the difficulty in raising money are some of the trade-offs of forming a(n): A. labor union B. sole proprietorship C. co-operative D. corporation

___ 9. Investors who buy this type of stock are guaranteed their dividends payments first: A. common stock B. equity stock C. preferred stock D. over-the-counter stock

___ 10. One of the first laws passed by Congress to regulate business was the: A. Interstate Commerce Act B. Sherman Anti-trust Act C. Federal Trade Act D. none of these

___ 11. Capital expenditures, Inventory adjustments, Innovation and Imitation are all examples of: A. causes of the Great Depression B. causes of Inflation C. causes of the Business Cycle D. causes of High Unemployment

___ 12. In March 2012, America’s trade deficit was: A. non-existent B. -$57 billion C. actually a trade surplus D. was the lowest in 15 years

___ 13. According to the Bureau of Labor Statistics every .1% change in the unemployment rate equals: A. 150,000 people B. a 10% increase in inflation C. 10 extra points on Ruzzle D. a 5% increase in military enlistments

___ 14. The popular name given to describe a healthy stock market is: A. calling it a bull market B. calling it a bear market C. the Dow-Jones Industrial Average D. Bear Stearns Financial report

___ 15. All of the following are ways cities try to lure businesses to their towns, except: A. building of the necessary infrastructure B. purchasing the land for the company C. offering tax breaks D. guaranteeing cheaper labor

___ 16. Which of the following is America’s leading export?: A. gasoline, diesel and jet fuel B. military items C. computer software D. soft drinks

___ 17. The idea that each successive cold drink on a hot summer day is worth less and less illustrates: A. the Law of Demand B. the concept of diminishing marginal utility C. the Principle of Diminishing Returns D. the demand curve

___ 18. The demand curve for cheap candy is likely to be: A. inelastic B. unit elastic C. elastic D. paradoxical ___ 19. Which of the following is NOT a determinant of demand? A. consumer income B. product durability C. Substituted items D. Future Expectations

___ 20. Full employment is: A. 0% unemployment B. plotted at the production possibilities frontier C. <1 million unemployed D. 4.5% unemployment

___ 21. A surplus is when: A. supply is more than demand B. demand and supply are equal C. supply is less than demand D. price drops suddenly

___ 22. Salaries of professional personnel, rent, taxes and insurance payments are called: A. Variable costs B. fixed costs C. marginal revenue D. marginal product

___ 23. When a decrease in the price of peanut butter results in an increase in the demand for jelly : A. is an example of substituted items B. is an example of diminishing returns C. is an example of complimentary items D. is none of these.

___24. According to the Demand-Pull phenomena a thriving economy causes inflation because: A. it requires more money in circulation to keep up with the growing economy B. all parts of the economy are buying more than the economy can produce therefore creating shortages C. the money supply increases faster than the GDP D. of a rise in oil prices

___25. When the inflation rate exceeds 3% it is: A. creeping inflation B. galloping inflation C. runaway inflation D. monetary collapse

MATCHING

___26. Protective Tariff A. Trade agreement with Mexico and Canada. . ___27. Inconvertible Fiat Money Standard B. Guaranteed customer deposits in the event of a bank ___28. NAFTA failure.

___29. Federal Depository Insurance C. The “bank” that sets the discount rate. Corporation D. Tax that deters “dumping”. ___30. Federal Reserve E. Gave the federal government the exclusive power over America’s money supply.

MULTIPLE CHOICE

___31. Which of the following has the least effect as a barrier to international trade? A. revenue tariffs B. protective tariffs C. quotas D. strict import inspections

___32. When a country sells a product below production costs then it is: A. an external shock B. deficit spending C. dumping D. placing a barrier to international trade

___33. When a country can produce a product more efficiently than the others it has: A. Absolute advantage B. Comparative advantage C. flexible exchange D. subsidies

___34. Which function of money is defined by its acceptance by all parties as payment for goods and services ? A. medium of exchange B. store of value C. measure of value D. divisible

___35. Two doctors; Dr. A. is an exceptional cook and heart surgeon, Dr. B. is a good cook but a terrible heart surgeon, which one has the comparative advantage as a cook? A. neither B. Dr. A C. Dr. B D. both ___ 36. U3: A. the unemployment rate counting all of those seeking work and under employed B. civilian unemployment rate plus military personnel C. all those actively seeking work D. all those actively seeking employment plus the discouraged worker and the part-time worker

___ 37. Taxes affect: A. the quality of government services B. economic productivity c. the allocation of resources D. all of the above

___ 38. Which of the following is NOT true about a sales tax? A. It is levied in all 50 states B. It is collected at the time of the purchase C. It tends to be regressive. D. none of these

___ 39. When the currency exchange rate was fixed, it was based on: A. oil B. silver C. gold D. the dollar

___ 40. Which amendment to the Constitution permitted a federal individual income tax? A. 13th B. 14th C. 16th D. 26th

___ 41. Of the following what does the FICA tax pays for: A. social security B. military items C. roads D. public schools

___ 42. America’s federal individual income tax is: A. regressive B. progressive C. is the same as FICA D. a tax on real property

___ 43. A strong dollar: A. increases imports to the USA B. benefits companies that export C. has no bearing on international trade D. does all of these

___ 44. This international organization referees the fairness of international trade. A. GATT B. the UN C. the FICA D. the World Trade Organization

___ 45. One of the main advantages of a Flat Tax is: A. It is progressive B. it closes loopholes C. it is tax neutral D. it would replace sales taxes

___ 46. When the adding of an additional worker decreases productivity it is called: A. dropping revenue B. point of diminishing returns C. the unit point D. break even point

___ 47. People who favor barriers to international trade are called: A. “free-traders” B. Libertarians C. Protectionists D. Tea Partiers

___ 48. If there are thousands, even millions, of both buyers and sellers, then that is a characteristic of a(n): A. monopolistic competition B. perfect competition C. oligopoly D. monopoly

___ 49. What type of money has value because of a legal decree? A. commodity money B. fiat money C. specie D. intangible money

___ 50. A construction worker, an amusement park employee and Dairy Queen employee in the winter may experience: A. frictional unemployment B. seasonal unemployment C. technological unemployment D. diminishing marginal utility