Economics final questions and answers

the situation in which some necessities of little value while some non-necessities have a much higher value is know as
paradox of value
Manufactured goods needed to produce other goods and services are called
Capital goods
To arrive at an economic decision, a decision-making grid must be used to evaluate
Alternative choices of action
Division of labor is a characteristic of
Assembly-line production
The study of economics is important because it enables us to
Become better decision-makers
The dollar value of all final goods and services at the most comprehensive measure of a country’s total production output is
Gross domestic product
A popular model used to illustrate the concept of opportunity cost is
The production possibilities frontier
An economic at its production possibilities frontier is operating
At full potential
The money used to buy the tools and equipment needed for production is known as
Financial capital
Actions in one part of the country or world that have an economic impact on what happens elsewhere are examples of
Economic interdependence
The purpose of government in a command economy is to
Make major economic decisions
An example of market economy is
The United States
Which of the following is not considered an economic and social goal
Entrepreneurship
Which group of people ultimately determines the products they free enterprise economy produces
Consumers
United States can best be described as having a
Modified private enterprise system
All of the following are characteristics of a command economy except
Public services are available little or no cost
A market economy
Does not provide for everyone’s basic needs
The minimum-wage is an example of a federal law that supports
Economic equity
The concept of voluntary exchange means
People freely and willingly engage in market transactions
The governments role and a mixed economy is that it is the
Regulator charged with preserving competition
Unlike a general partnership
The inactive partner has limited liability for the business’s that
This regulates the sale of stock in a corporation
Securities and exchange commission
A merger of corporations involved in different steps of manufacturing or marketing is known as a
Vertical merger
Nonprofit organizations may
Provide goods and services to members
The local Chamber of Commerce works to
Promote the welfare of its members and the community
In a general partnership,
Partners usually draw up legal papers called articles of partnership
And advantage of a corporation is that
Owners have limited liability for debt
All of the following are examples of the government playing a direct role in the economy except
Public utility regulation
Which of the following is not a nonprofit organization
Multinational
And it’s a direct role as an economic organization, American government
Owns and manages public utilities
For most people and services, increased price results in
Demand for fewer products
And increase in the price of milk causes a decrease and the demand for cereal. The two products are
Complements
Advertising, fashion trends, and new product introductions serve to
Create consumer demand
Because a modest price increase has little or no effect, the demand for the product is
Inelastic
A business doubled the price of a product in order to increase profits. Which of the following scenarios might have occurred?
A dramatic decline in revenues demonstrated the elasticity of the product
A demands schedule shows
A listing of the various quantities demanded of a particular product that all prices that might prevail in the market
Consumers willingness to replace a costly item with a less costly item is an example of
The substitution effect
An increase in the price of cameras results in the decrease in the demand for film. The two products are
Complements
When a customer’s needs for a product is not urgent, demand tends to be
Elastic
The manufacturer of pain medication reduced the price of the medication by 30%, profits decline or almost exactly 30%. Demand for the product is
Unit elastic
All the following can change the market supply curve except
A change in the demand for the product
The supply of a product normally decreases if
Taxes on the product increase
When employees are getting in each others way, the firm is operating
In stage II of production
Total cost is the sum of the
Fixed and variable costs
The level of profit maximizing output is reached when marginal cost is
Equal to marginal revenue
When producers offer fewer products for sale at each and every price
The supply curve has shifted to the right
The theory of production deals with the relationship between the factors of production and
The output of goods and services
Rent payments and property taxes will be counted as
Fixed costs
Many businesses are engaging in e-commerce because
Fixed costs are minimal
Profits will be maximized when marginal revenue
Equals marginal cost
The fair labor standards act
Established a federal minimum-wage
The first federal legislation to exempt unions from the antitrust laws was the
Clayton antitrust laws
Workers who have the skills to operate machines and who require a minimum amount of training are
Semiskilled labor
This theory that wages are based on the supply and demand for a worker skill is the
traditional theory of wages
All of the following can be used to establish more equal pay between men and women except
Fair Labor standards act
The national labor relations act
Established the right of unions to collective-bargaining
One labor and management ask a third-party to collect information about a dispute and present nonbinding recommendations they are using
Fact-finding
Workers with knowledge-based education and managerial skills are
Professional labor
Who which of the following statements about minimum wages not accurate
When expressed as a percentage of the average manufacturing wage, the minimum-wage reached it’s peak in 1988
The invisible barrier that hinders women and minorities from advancing up the corporate ladder
Is known as the glass ceiling
The incident of a tax can more effectively be shifted from the supplier to the consumer if
The demand curve is inelastic
The authority to levy a federal income tax comes from
The 16th amendment
Intergovernmental revenues are generally intended for
Education and public welfare
The alternative minimum tax
Requires people to pay a minimum tax of 20%
The flat tax
Simplifies the tax process
The “Incident of tax”
Refers to those who bear the final burden of taxation
And earns $10,000 annually and pays a tax of $1000. Jerome earns $60,000 during the same period and paste taxes of $20,000. The tax they both payed was a
Progressive tax
FICA includes taxes to pay for
Social Security and Medicare
The taxpayer relief act of 1997
Did little to benefit people without children or capital gains
The flat tax
Departs from the ability to pay principle of taxation
All levels of government combine consume about
1/3 of the nations output
An example of mandatory spending is financing for
Interest payments on the federal debt
The largest category of spending for most local governments is
Elementary and secondary education
United States government accumulated huge deficits during the 1980s due to
A doubling of spending on national defense
The “pay-as-you-go “provision was a feature of the
Budget enforcement act
Transfer payments from the government to individuals or other levels of government might be used for all the following except
Maintenance of the Armed Forces
The sequence for the approval of the federal budget is
President to Congress back to president
The largest category of state spending is
Intergovernmental expenditures
The first federal budget surplus in three decades occurred in
1998
Legislation intended to establish a balanced budget was the
Gramm-Rudman-Hollings Bill
Money that has an alternative use as an economic good is
Commodity money
Money loses its value when it
Becomes too plentiful
When a bank is about to collapse,
The FDIC may secretly seize the bank
The FDIC was established to
Protect the savings of the American people
When Congress reformed the thrift industry in 1889, all of the following occurred except
Remaining S&Ls were merged with commercial banks
The problem with continental dollars was that
So much was printed they became nearly worthless
In order for money to have value, and must have all the following characteristics except
Plentiful availability
Local banks and 1800s the print too much money were called
Wildcat banks
The Federal Reserve system FRS was established in
1913
As a result of the financial institution crisis of the 1980s, S&Ls are now insured by the
FDIC
And non-bank financial intermediary that primarily makes loans to construction companies for building homes is the
Real estate investment trust
The par value of a bond is
The total amount borrowed
Junk bonds
Are exceptionally risky
The efficient market hypothesis EMH argues that
Stocks are always priced about right
Investors to sign a contract guaranteeing them the option of selling shares of stock at a specified price in the future have agreed to a
Put option
The largest borrowers are
Governments and businesses
Bonds
Pay a fixed interest rate over a specified period of time
Municipal pool bonds, or munis,
Are usually a safe investment
Most stocks in the United States are traded on the
Over-the-counter market
A stock transaction that is made immediately at the market price is made in the
Spot market