The United States placed a limit on the number of cars that can be brought into the country for sale. This is an example of?
B. an import quota
According to the law of comparitive advantage, a country should?
C. specialize and export goods with the lowest opportunity cost.
Which of the followingis a treaty to eliminate all trade barriers between Canada, Mexico, and the US?
B. NAFTA
What is the European Union?
B. a regional trade organization of European nations
What is an infant industry?
C. a young or developing industry
When the exchange rates are allowed to be determined by supply and demand, they are called which if the following?
A. flexible
What does it mean when an economist says that an area specializes in producing certain products?
D. They produce only certain goods rather than everything they need.
What country is the world's largest exporter of services?
A. United States
How do countries protect their domestic economy from excessive influence by multinational corporations?
B. by limiting the supplies of the multinational corporation
What is a currency system in which each country tries to keep the value of its currency constant against one another called?
B. a fixed exchange rate system
What happen's when a nation's currency depreciates?
D. Its product becomes cheaper to other nations
When a nation imports more than it exports, economists say it has which of the following?
B. a trade deficit
The main source of funding for your school probably comes from?
A. local property taxes
Which of the following is NOT tax exampt?
D. the convenience store on the corner
What happens to they money that your employer withholds from your paycheck?
B. Your employer sends it to the federal government to help pay your income tax bill.
What is the major source of tax revenue for local governments?
C. property taxes
What is an entitlement?
B. a social welfare program providing benefits to people who meet certain eligibility requirements
Which of the following is one reason the federal government collects income taxes as a person earn?
A. so that the government can pay bills as they come due.
What do Social Security taxes pay for?
A. benefits to older citizens, surving family members of wage earners, and people with certain disabilities.
Who generally bears most of a sales tax when the demand for the good taxed in inelastic?
D. the consumer
What do taxes collected under the Federal Insurance Corperation Act (FICA) fund?
A. Social Security and Medicare
The Dow Jones Industrial Average consists of
B. 30 stocks
The interest rate the bond issuer pays to the bondholder is called the?
B. coupon rate
An accurate statement about bonds would be that...?
B. they are usually a low-risk investment
The main advantage of diversification in an investment policy is that it
B. reduces risk to investors
What is the largest income for banks?
D. the interest they recieve from loans
What happens when you make a purchase using a credit card?
A. The credit card issuer pays the store.
What happens during a bank run?
D. More customers withdraw money than the bank has on hand.
What were greenbacks?
A. Commodity money used by the Union
What did the federalists believe about banking?
B. They believed that a Centralized banking system was necessary
What is the purpose of the Federal Deposit Insurance Corporation (FDIC)?
D. to make sure customers don't lose money if a bank fails
Labor Unions arose largely in response to the
A. dangerous working conditions and long hours of factory jobs in the 1800s
Which of the following jobs are expected to grow significantly?
B. computer-related jobs
When did labor unions begin to gain some legal rights in the United States?
B. 1930s
According to economic theory, what happens to job opportunities in low-paying jobs when the minimum wage goes up?
C. the quantity of labor demanded goes down
What is collective bargaining?
A. union and company representatives meeting to negotiate a new labor contract
Approximately what percentage of U.S. workers belong to labor unions?
B. 13 percent
Corporations are defined as "entities" because they
A. have a legal identity seperate from those of their owners.
In a publically held corporation
D. a large number if stockholders can buy and sell stock
If a general partnership fails, who is responsible for the debts?
D. all of the partners
What are organizations that are in the bussiness of benefiting society and operate like a bussiness called?
C. nonprofit organizations
What are the money and other valuables that belong to a corporation on partnership called?
B. assets
What is a fringe benefit?
B. a payment other that wages or salaries
What are royalties?
C. a percentage of a franchise's earnings paid to the parent company
What is the major difference between a corporation and other kinds of bussinesses?
D. a corporation has a seperate entity apart from that of the owners and workers
Why is it easier for a partnership to borrow money and hold good employees than it is for a sole propietorship to do so?
D. A partnership has more personal stability and access to more money.
A joining of two or more bussinesses that are involved in different stages of producing the same good or service is called which of the following?
B. verticle merger
If a general partnership fails, who is responsible for the debts?
B. all of the partners
What percentage of bussinesses are sole proprietorships?
D. 75%
What was the cheif effect of the Sherman Antitrust Act?
D. The federal government won the power to prevent monopolies and mergers that interefered with trade between states.
What is the definition of an oligopoly?
B. two to four firms producing 70 percent to 80 percent of the output
Which of the following is a product that is considered a commodity?
D. feed corn for cattle
Which of the following industries have been deregulated in recent years?
A. airlines
How does a natural monopoly function?
B. A single firm supplies all the output
When the government deregulates a product or service, what happens to it?
A. Some government regulations over the industry are eliminated
What happens to a monopolistically competitive firm that begins to charge an excessive price for its product?
D. Consumers will substitute a rival's product
What is a monopolistic competition?
D. many companies selling similar but not ientical products
What is one kind of monopoly that the U.S. goverment usually permits?
C. professional sports leagues
What kind of market runs most efficiently when one large firm supplies all of the output?
C. a natural monopoly
A shortage will develope when
D. the market price is below the equilibrium price
Which of these is most likely to lead directly to a black market?
B. rationing
The price ceiling that was used to control the price of housing in New York City and other cities was called which of the following?
B. rent control
What is the name of the smallest amount that can be paid to most workers for an hour of work?
B. minimum wage
What is it called when the gov't uses some tool other than money to allocate goods?
C. rationing
What happens to a market in equilibrium when there is an increase in supply?
B. Quantity supplied will exceed quantity demanded, so the price will drop
Why did the U.S. gov't use rationing for some foods and consumer goods during World War II?
A. to garuntee each civilian a minimum standard of living in wartime
What happens when the supply of a nonperishable good is greater than the consumer wants to buy?
C. either the good remains unsold or the price drops
When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached?
C. equilibrium
Any resources that are made by humans and used to create other goods and services are called
B. capital
The resources used to make all goods and services are the
B. factors of production
The purpose of a production possibilites graph is to
A. show alternatives ways to use an economys resources
An efficient economy is one that
C. uses its resources to make the most goods and services
The law of increasing costs means that when an economy increases the production of one item
B. the opportunity cost goes up
The governement of a country must make a decision between increasing military spending and subsidizing wheat farmers. This kind of decision is a
D. guns or butter issue
The opportunity cost of a decision can be examined by using a
A. production possibilites graph
What is the opportunity cost of a decision?
A. the most desirable alternative given up for the decision
What is the struggle among various producers for the consumers business called?
A. competition
What is one of the most important advantages of a free market?
D. it encourages growth
Which of the following was a free market philosopher?
C. Adam Smith
What is the product market?
A. the market in which households purchase the goods and services that firms produce
What incentive do manufacturers have to sell their products?
A. making profits on sales
In what kind of economy does the gov't make all the decisions?
C. centrally planned
What is the function of an economic system?
D. to produce and distrubute goods and services
Who was the leader that introduced communism and central planning to the former soviet union?
D. Vladimir Lenin
When a consumer is able and willing to buy a good or service, he or she creates which of the following?
D. demand
What determines the price and quantity produced of most goods?
D. the interaction of supply and demand
What are inferior goods?
D. goods for which demand falls when income rises
What determines how a change in prices will affect total revenue for a company?
A. elasticty of demand
What kind of system is the United States economy based on?
A. market
Ceteris paribus, or "all other things held constant," is an assuption that has which of the following effects on a demand schedule?
D. it takes only prices into account
On what kinds of goods do gov'ts generally place price ceilings?
C. those that are essential but too expensive for some consumers
What happens when wages are set above the equilibrium level by law?
D. Firms employ fewer workers than they would at the equilibrium wage.
If the supply of a good is inelastic,
a. producers will not change their quantity supplied
by much if the market doubles
b. a small increase in price will lead producers to sharply increase thier quantity supplied
c. producers will have diminishing marginal returns of labor
d. producers will increase their quantity supplied in response to sharp drops in the market price
a. producers will not change their quantity supplied by much if the market doubles
Which of the following is a fixed cost for a store?
D. rent
What factor has the greatest influence on elasticity and inelasticity of supply?
D. time
When the selling price of a good goes up, what is the relationship to the quantity supplied?
D. It becomes practical to produce more goods
What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?
C. store the goods until the price rises
What is the effect on import restrictions on prices?
B. They cause prices to rise
What kind of table lists the quantity of a good that a person will buy at different prices?
A. demand schedule
What shows the quantities of products demanded at each price by all consumers in a market?
