Transcript EOCT REVIEW

EOCT REVIEW
1.Which of the following
is a microeconomic
calculation?
• A. Calculating GDP
• B. Calculating the unemployment
rate
• C. Calculating the interest rate on a
loan
• D. Calculating the Consumer Price
Index
C
2.Which of the following benefits
from the declining value of money
during a period of high inflation?
•
•
•
•
A. a person with a savings account
B. A person with investments
C. a person who has borrowed money
D. A bank that has lent money
C
3.Which of these is the MOST
likely effect of a weak US
Dollar?
• A. Travel abroad will become more
affordable for Americans
• B. Goods imported from other
countries will become more
expensive
• C. Foreigners will buy fewer US exports
• D. Foreign investment in US businesses
will decline
B
4.If the government’s fiscal
policy is designed to end a
recession, which action would
congress MOST likely take?
•
•
•
•
A. lower income taxes
B. raise income taxes
C. reduce government spending
D. raise the discount rate
A
1. In a market economy, the
allocation of goods and services
is determined MOSTLY by
•
•
•
•
A. regulations of the federal government
B. decisions of advertisers
C. the needs of individuals
D. the incomes of individuals
D
2. When people use their
resources so that marginal
benefits exceed marginal costs,
they
• A. make rational economic decisions
• B. make irrational economic decisions
• C. Eliminate the opportunity costs of
decisions
• D. Fail to use resources efficiently
A
3. The main function of the
Federal Reserve System in the
US economy is to
•
•
•
•
A. establish monetary policy
B. establish fiscal policy
C. establish trade policy
D. balance the federal budget
A
4. A major problem that both
producers and consumers face
in market economies is
•
•
•
•
A. lack of freedom
B. lack of efficiency
C. lack of profit motive
D. lack of economic security
D
1. Which sentence describes the
MOST likely effect of a US
quota on Japanese imports?
• A. reduced trade barriers for American
exports to Japan
• B. increased trade barriers for American
exports to Japan
• C. a positive trade balance
• D. more choices and lower prices for
American consumers.
B
2. Which of the following is an
example of a capital investment
for a retail store?
•
•
•
•
A. hiring sales clerks and managers
B. renting retail space at a mall
C. Buying ads in a local newspaper
D. buying cash registers and displays
D
3. In which of the following
situations are two nations NOT
likely to trade?
• A. each nation has an absolute advantage in
producing one of the two products both want
• B. Each nation has a comparative advantage
in producing one of the two products both
want
• C. Neither nation has an absolute advantage in
producing the product
• D. Neither nation has a comparative
advantage in producing either product
D
4. When a product is selling at
its equilibrium price
• A. producers cannot supply enough of
it
• B. consumers want more of it than is
available
• C. producers supply as much as
consumers demand
• D. the price changes from day to day
C
1.What is one advantage of
choosing an insurance policy
with a higher deductible, rather
than a lower deductible?
• A. Lower premiums
• B. lower out-of-pocket costs for
claims
• C. higher coverage limit
• D. lower coverage limit
A
2. When a society invests in
education, it improves its
standard of living by improving
its
•
•
•
•
A.
B.
C.
D.
Labor
Capital Goods
Human Capital
Entrepreneurship
C
3. Which of the following is a
total ban on the import of items
from a particular country?
•
•
•
•
A.
B.
C.
D.
Quota
Embargo
Tariff
Standard
B
4. In which situation might the
Federal Reserve buy gov’t
securities and lower the
discount rate?
• A. In a recession
• B. When the inflation rate is too high
• C. When aggregate demand is too
high
• D. When the economy is expanding
A
1. When is it a benefit for
workers to have a contract with
a cost of living adjustment?
•
•
•
•
A. During a recession
B. During a depression
C. During an inflationary period
D. During a strike, or work
stoppage
C
2. Which type of business
organization has the advantage of
specialization but the disadvantage
of unlimited liability?
•
•
•
•
A.
B.
C.
D.
Sole Proprietorship
Partnership
Corporation
Oligopoly
B
3. Which form of credit has the
disadvantages of variable
interest rates and finance
charges compounded monthly?
•
•
•
•
A.
B.
C.
D.
Bank Loans
Credit Union Loans
Installment Plans
Credit Cards
D
4. If aggregate demand begins
decreasing, followed by a decrease
in aggregate supply, which stage of
the business cycle is the economy
entering?
•
•
•
•
A.
B.
C.
D.
A period of expansion
A period of slowdown
An inflationary period
A period of equilibrium
B
1. Why does every economic decision
involve an opportunity cost?
• A. Because resources are scarce and wants
are unlimited
• B. Because few decisions have a marginal
benefit
• C. Because prices in a market economy are
always too high
• D. Because trade-offs are impossible to
make in rational decisions
A
2.When people invest in stocks,
rather than bonds, what tradeoff are they making?
•
•
•
•
A.
B.
C.
D.
Lower risks for lower returns
Higher risks for higher returns
Lower risks for higher returns
Higher risks for lower returns
B
3. The shampoo market has a structure
of monopolistic competition. What is
one important feature of this market
structure?
• A. One large firms controls prices in the market
• B. A few large firms fix prices and control the
market
• C. A few large firms are interdependent and
engage in frequent price wars
• D. Firms with many similar products depend on
product differentiation, or branding
D
4. Keisha deposited $400 in a savings
account that pays a simple interest of
3.5%/year. If she made no other deposits
or withdrawals, how much interest had
she earned at the end of the 3 years.
•
•
•
•
A.
B.
C.
D.
$14
$28
$42
$50
C
1. If a nation’s imports for one year
are worth $8.6 billion and its exports
are worth $8.5 billion the same year,
that nation definitely has
•
•
•
•
A.
B.
C.
D.
A trade deficit
A trade surplus
A negative balance of payments
A positive balance of payments
A
2. Among the Native Americans,
beads were once used as a medium
of exchange. The main reason why
this type of money served its
function was that it was
•
•
•
•
A.
B.
C.
D.
Easy to carry
Accepted as payment
Easily divisible into units
A precious metal in its community
B
3. In a command economy,
the means of production are
owned by
•
•
•
•
A.
B.
C.
D.
Individuals
Family groups, or clans
Religious leaders
The government
D
4. If in one year, the federal
government takes in $100 billion
in taxes and spends $99 billion,
the nation definitely has
•
•
•
•
A.
B.
C.
D.
A budget deficit for that year
A budget surplus for that year
No national debt
A positive balance of payments
B
1. An example of a technological
monopoly
• A. A public utility that serves everyone in a
large city
• B. A drug company with a patent for a new
life-saving medicine
• C. A software company that drives
competitors out of business in a price war
• D. A steel company that receives
government subsidies.
B
2. Which of these is NOT one of
the major roles that the US gov’t
plays in the economy
• A. Providing private goods and
services
• B. Redistributing income through
transfer payments
• C. Protecting property rights
• D. Resolving market failures
A
3. The most important factor
that determines a nation’s
economic growth is
• A. How fast its labor force increases
• B. How quickly it can discover new
resources
• C. How much it can improve productive
efficiency
• D. How much its government improves its
fiscal policy
C
4. What kind of insurance pays
you a monthly income if you are
NOT able to work for an
extended period of time?
•
•
•
•
A.
B.
C.
D.
Term life insurance
Whole life insurance
Disability insurance
Health insurance
C
1. If inflation rates are sharply
increasing, which fiscal policy
would make the MOST sense?
•
•
•
•
A.
B.
C.
D.
Reduce government spending
Reduce income taxes
Reduce sales tax
Reduce the discount rate
A
2. What kind of economy do
MOST nations in the world
have today?
•
•
•
•
A.
B.
C.
D.
Market
Command
Traditional
Mixed
D
3. The best solution to problem of
cyclical unemployment is
• A. Using fiscal policy to expand the economy and
create more jobs
• B. Raising the minimum wage so that untrained
workers earn as much as trained workers
• C. Encouraging workers who have lost high-paying
jobs to take lower-paying jobs
• D. Retraining those whose skills are no longer
marketable
A
4. The automobile industry is
controlled by a few companies
whose pricing are interdependent.
This market is an example of
•
•
•
•
A.
B.
C.
D.
Monopoly
Oligopoly
Monopolistic Competition
Perfect Competition
B
1. The minimum wage is an
example of a
•
•
•
•
A.
B.
C.
D.
Market failure
Market equilibrium price
Price floor
Price ceiling
C
2. The Federal Deposit
Insurance Company (FDIC) is a
government agency that
• A. Provides health insurance for lowincome people
• B. Provides mortgage insurance for
homeowners
• C. Protects banks from the risks of
bankruptcy
• D. Protects the savings of people who
deposit their money in banks
D
3. Payments for the use of
land and capital are called
•
•
•
•
A.
B.
C.
D.
Rent and interest
Rent and wages
Interest and wages
Interest and profits
A
4. If a bank pays 3% interest on
saving accounts, how much
interest will it charge for loans?
•
•
•
•
A.
B.
C.
D.
3%
Less than 3%
More than 3%
The discount rate
C
1. A division of labor improves
efficiency on the job because it
involves
•
•
•
•
A.
B.
C.
D.
Specialization
Voluntary exchange
Job security
Diversification
A
2. In a market economy, how do
people obtain MOST of the
things they want and need?
•
•
•
•
A.
B.
C.
D.
Government transfer payments
Public goods and services
Voluntary exchange
Bartering and communal sharing
C
3. What choice describes a
macroeconomic calculation?
• A. Calculating a families monthly
budget
• B. Calculating a firm’s annual profits
• C. Calculating the unemployment
rate
• D. Calculating the interest on a
personal loan
C
4. When the US gov’t buys
airplanes from an aircraft company,
it makes a transaction in the
•
•
•
•
A.
B.
C.
D.
Factor Market
Product Market
Property Market
Public Market
B
1. An increase in the demand for
US exports will usually result in
• A. An increase in the international
value of the dollar
• B. A decrease in the international
value of the dollar
• C. An increase in the value of foreign
currency in the US
• D. An increase in the price of
imported goods in the US
A
2. The BEST way to improve
your credit rating is to
• A. Never get a credit card
• B. Never borrow money from a bank
• C. Never forget to pay your bills on
time
• D. Never accumulate assets or
collateral
C
3. If the unemployment rate is slowly
beginning to fall and the GDP is
slowly beginning to rise, which phase
of the business cycle are you in?
•
•
•
•
A.
B.
C.
D.
Recovery or expansion
Downturn, or contraction
Recession
An inflationary spiral
A
4.Which gov’t institution
regulates the money supply of
the US economy?
•
•
•
•
A. The United States Treasury
B. The United States Mint
C. The Federal Reserve System
D. The Securities and Exchange
Commission
C
1. A tax on an imported
good
•
•
•
•
A.
B.
C.
D.
Tariff
Quota
Embargo
Subsidy
A
1. If the price of milk increases
slightly, the demand for milk will
NOT change very much. This
market situation is an example of
•
•
•
•
A.
B.
C.
D.
Demand elasticity
Demand inelasticity
Supply elasticity
Supply inelasticity
B
2. Janice decides to spend $20 on a
ticket to a concert instead of buying
a new blouse. What is the
opportunity cost of her decision?
•
•
•
•
A. $20
B. The benefit of having a new blouse
C. The enjoyment of the concert
D. The opportunity to go out with
friends.
B
3. How is NAFTA similar to the
EU?
• A. Each increases trade barriers among
neighboring nations
• B. Each aims to eliminate trade barriers
among neighboring nations
• C. Each promotes free trade with all
nations of the world
• D. Each promotes protectionist policies
against nations around the world
B