Question 1

What protections does OSHA give to people in the United States?

Accepted Answer

regulates workplace safety and information about hazards in the workplace.

Answer

regulations about clean environment.

Answer

consumer protection in buying foods.

Answer

protection for certain key industries such as logging.

Question 2

Which of the following is a critical rule for determining whether something is a public good?

Accepted Answer

The total benefits to society are greater than the total cost

Answer

The benefits of the facility are greater for the society than for the individuals using it.

Answer

The total cost is small for each individual taxpayer.

Answer

The benefits to each individual who uses the facility is greater than the cost.

Question 3

Which of the following is an example of lower production costs brought about by the use of technology?

Accepted Answer

The use of email to replace slower surface mail.

Answer

The delivery costs of gasoline to the consumer by diesel trucks.

Answer

The importing of fresh vegetables from South America rather than canned goods.

Answer

The making of breads and pastries in local shops rather than large bakeries.

Question 4

What is the term for the total value of all goods and services produced in a particular economy?

Accepted Answer

gross domestic product

Answer

standard of living

Answer

open market value

Answer

net worth

Question 5

What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?

Accepted Answer

store goods until the price rises

Answer

sell the goods now and try to invest the money instead of resupplying.

Answer

store the goods indefinitely regardless of when the price rises.

Answer

sell the goods now but try to get the higher prices for them.

Question 6

What is a factory building an example of?

Accepted Answer

physical capital

Answer

an economic trade-off

Answer

technology

Answer

human capital

Question 7

All of the following are examples of financial intermediaries except

Accepted Answer

a stock certificate

Answer

a credit union

Answer

a life insurance company

Answer

a finance company

Question 8

The interest rate the bond issuer pays to the bondholder is called the

Accepted Answer

coupon rate

Answer

discount rate

Answer

maturity rate

Answer

value rate

Question 9

To finance the building of a new police station, a local government is most likely to issue a

Accepted Answer

municipal bond

Answer

money market bond

Answer

treasury bond

Answer

junk bond

Question 10

Which of the following is an example of a barter system?

Accepted Answer

Instead of paying rent, you clean the house for the owner.

Answer

Instead of paying for a purchase in Mexico in pesos, you use dollars from the United States.

Answer

Instead of paying the full amount for a car, you pay 10 percent in cash and pay for the rest in monthly installments.

Answer

Instead of paying cash for a computer, you use a credit card.

Question 11

What is the purpose of competition?

Accepted Answer

To act as a regulating force in the marketplace.

Answer

To act as a motivating force behind the free market.

Answer

To cause buyers to have to be careful about spending their money.

Answer

To cause producers to attempt to put each other out of business.

Question 12

What does it mean when a person is underemployed?

Accepted Answer

The person has a job but they are overqualified for it.

Answer

The person is looking for work in a a special field.

Answer

the person is not making as much money as they need to live above the poverty level.

Answer

The person has been working but is now laid off.

Question 13

How does a natural monopoly function?

Accepted Answer

A single firm supplies all the output.

Answer

The government supplies all buyers with the product.

Answer

A few firms are in perfect competition.

Answer

Imperfect competition makes it difficult for firms to do business.

Question 14

Why does government use its powers to make sure that businesses disclose so much information to the public?

Accepted Answer

To make buyers more knowledgeable and safer.

Answer

To make it easy for businesses to have good information.

Answer

To make it hard for businesses to make an excess profit.

Answer

To make it easier for consumers to save money.

Question 15

Which of the following is a situation that makes the market behave inefficiently?

Accepted Answer

When consumers do not have enough information to make good choices.

Answer

When the market is in perfect competition and prices are high.

Answer

When producers have the power to find out exactly what to produce.

Answer

When both consumers and producers are fully informed about a product.

Question 16

Which of the following is an example of a good whose price goes down because of improvements in technology?

Accepted Answer

computer printers

Answer

typewriters

Answer

running shoes

Answer

hard-bound books

Question 17

What is monopolistic competition?

Accepted Answer

Many companies selling similar but not identical products.

Answer

One company selling the identical product under different names.

Answer

A very few companies selling identical products.

Answer

One company selling several different products under different names.

Question 18

How is future price related to current demand?

Accepted Answer

If the price is expected to rise, current demand will rise.

Answer

If the price is expected to fall, current demand will rise.

Answer

If the price is expected to rise, current demand will drop.

Answer

Future price is not related to current demand.

Question 19

Which of the following is characteristic of a traditional economy?

Accepted Answer

Children tend to have the same jobs as their parents did.

Answer

Communities tend to be fast-growing.

Answer

They have a high standard of living.

Answer

They are usually based on light industrial production.

Question 20

Why is it easier for a partnership to borrow money and to hold good employees than it is for a sole proprietorship to do so?

Accepted Answer

A partnership has more personal stability and access to more money.

Answer

The more limited access to a partner's personal funds make the business more money.

Answer

The larger number of partners makes it more likely that the business will be a success.

Answer

The large number of partners means that people are easier to get along with.

Question 21

The amount of money a person has left of his or her income after taxes is called

Accepted Answer

disposable personal income

Answer

aggregate income

Answer

personal income

Answer

national income

Question 22

What happens to a market in equilibrium when there is an increase in supply?

Accepted Answer

Quantity supplied will exceed quantity demanded, so the price will drop.

Answer

Undersupply means that the good will become very expensive.

Answer

Excess supply means that producers will make less of the good.

Answer

Quantity demanded will exceed quantity supplied, so the price will drop.

Question 23

Compared with the expenditure approach to calculating GDP, the income approach is

Accepted Answer

more accurate.

Answer

connected more strongly to stock market performance.

Answer

preferred by the average consumer.

Answer

more practical.

Question 24

An accurate statement about bonds would be that

Accepted Answer

they are usually a low-risk investment.

Answer

they entitle the holder to a share of ownership in a corporation.

Answer

they are insured by the FDIC

Answer

they are generally held for 3 or 6 months.

Question 25

What happens when wages are set above the equilibrium by law?

Accepted Answer

Firms employ fewer works than they would at the equilibrium wage.

Answer

Firms tend to try to break the law and hire people at the equilibrium wage.

Answer

Firms hire more workers but for fewer hours than they would at the equilibrium wage.

Answer

Firms employe more workers than they would at the equilibrium wage.

Question 26

Which of the following is the main disadvantage of using shells as money instead of coins?

Accepted Answer

uniformity

Answer

durability

Answer

portability

Answer

divisibility

Question 27

What is the major difference between a corporation and other kinds of businesses?

Accepted Answer

A corporation is a separate entity apart from that of the owners.

Answer

A corporation is not responsible for its debts if it fails.

Answer

A corporation is much larger than other kinds of businesses.

Answer

A corporation has officers who are responsible for the business.

Question 28

Cartels are difficult to operate for which of the following reasons?

Accepted Answer

They work only if members keep to their agreed output.

Answer

Firms in a cartel are likely to lose money.

Answer

They are illegal worldwide.

Answer

The products are perfectly competitive.

Question 29

What is the effect of import restrictions on prices?

Accepted Answer

They cause prices to rise.

Answer

They usually do not have any lasting effect on price.

Answer

They often cause prices to rise steeply and then to drop.

Answer

They cause prices to drop.

Question 30

An example of a nondurable good is

Accepted Answer

a paperback book

Answer

a new car

Answer

a used car

Answer

a washing machine

Question 31

When is a buyer NOT willing to spend a lot of time and energy researching the market?

Accepted Answer

When the savings to be made are small.

Answer

When prices vary but quality is the same.

Answer

When there are many identical products available.

Answer

When buying a large quantity of goods.

Question 32

What is the difference between seasonal unemployment and structural unemployment?

Accepted Answer

Seasonal unemployment occurs because of schedules, whereas structural occurs because of lack of skills.

Answer

Season unemployment occurs only in the summer whereas structural can occur all year round.

Answer

Seasonal unemployment is generally among low-paid workers, whereas structural is among the highly paid.

Answer

Seasonal unemployment is rare in a modern society, whereas structural is not.

Question 33

What determines the price and the quantity produced of most goods.

Accepted Answer

The interaction of supply and demand.

Answer

The availability of substitutes for the goods.

Answer

The consumer's perception of necessity.

Answer

The quality of the goods that are produced.

Question 34

What condition is necessary for a fiat money system to work?

Accepted Answer

The government must control the money supply.

Answer

Money owed must be paid on time.

Answer

Banks must hold sufficient gold to cover any paper money they give out.

Answer

Customers with checking accounts cannot earn interest on those accounts.

Question 35

What are the money and other valuables that belong to a corporation or partnership called?

Accepted Answer

assets

Answer

liabilities

Answer

liens

Answer

ownership

Question 36

What determines how a change in prices will affect total revenue for a company?

Accepted Answer

elasticity of demand

Answer

the consumers' incomes

Answer

the company's pricing policy

Answer

values of elasticity

Question 37

Why does the government sometimes give monopoly power to a company by issuing a patent?

Accepted Answer

The company can then profit from their research without competition.

Answer

The company pays the government for the patent.

Answer

The government does not want competition for the product.

Answer

The company makes a product better than anyone else's.

Question 38

What is one of the most important advantages of a free market?

Accepted Answer

It encourages growth.

Answer

It can change rapidly.

Answer

It protects the less fortunate.

Answer

It is easy to regulate.

Question 39

An accurate statement about the Great Depression would be that

Accepted Answer

it was the most severe economic downturn in the history of industrial capitalism.

Answer

its effects and duration would have been even worse if it weren't for a strong economy in Japan and Europe at the time.

Answer

it was a recession that became a depression because of WW II.

Answer

it was set off because of a sharp and unexpected rise in interest rates.

Question 40

All of the following are types of decisions that can be made at the margin EXCEPT

Accepted Answer

whether or not to go on vacation.

Answer

whether to leave early in the morning or late in the day for a trip.

Answer

whether or not to hire 100 new workers.

Answer

whether or not to grow beans or corn on a large farm.

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