Economics: EOCT Practice Game

Economics may best be defined as a

a) study of efforts to satisfy seemingly unlimited wants with scarce resources

b) branch of sociology

c) scientific study of supply and demand

d) limited description of economic activities

Three basic economic questions are

a) What?, How?, and When?

b) What?, How?, and For Whom?

c) What?, Where?, and When?

d) Why?, What?, and How?

A popular model used to illustrate the concept of

opportunity cost is calleda) entrepreneurship

b) factors of production

c) laissez-faire

d) the production possibilities frontier

A basic requirement for survival is a

a) need

b) opportunity cost

c) want

d) factors of production

Land, labor, capital, and entrepreneurship are thea) results of supply and demand

b) basis of employment

c) results of production

d) factors of production

An economy operating at its production possibility frontier

is operatinga) with high unemployment

b) with minimum growth

c) at full potential

d) on quota-filling production

A risk-taker in search of profits is called a(n)

a) economist

b) conspicuous consumer

c) entrepreneur

d) capitalist

A great variety of goods and services is characteristic of

a) a market economy

b) traditional economy

c) all economic systems

d) a command economy

The American economic system can be described as

having aa) command economy

b) traditional system

c) quota system

d) free enterprise system

In a modified free enterprise economy

a) entrepreneurship is prohibited

b) there is no government intervention

c) there is some government intervention

d) no one can hold private property

Choices in a command economy are made by

a) private business

b) government agencies

c) assembly line workers

d) competition

An organized way of providing for the wants and needs of

people is known asa) an economic system

b) economic interdependence

c) a fixed income

d) the profit motive

Which of the following is NOT an economic social goal?

a) entrepreneurship

b) economic efficiency

c) economic growth

d) price stability

Which of the following is NOT an economic social goal?

a) entrepreneurship

b) economic efficiency

c) economic growth

d) price stability

Which group of people ultimately determines the

products that a free enterprise economy produces?

a) property owners

b) consumers

c) local officials

d) Congress

The most common form of business organization in the

United States is thea) corporation

b) sole proprietorship

c) partnership

d) cooperative

Voting shareholders in a company holda) preferred stock

b) common stock

c) corporate bonds

d) dividends

The price paid to use another’s money is called

a) interest

b) principal

c) dividends

d) stocks

When corporations are chartered, they must register

with thea) county officials

b) Board of Directors

c) state of incorporation

d) shareholders

An advantage of a merger between two companies isa) improved production and efficiency

b) establishing a voluntary transaction

c) establishing a legal monopoly

d) increasing cost

Diversification is an advantage ofa) all corporations

b) private ownership

c) conglomerates

d) cooperatives

One weakness of the sole proprietorship is that the

a) business depends solely on the owner

b) owner has no control

c) owner has too many partners

d) business is in constant danger of bankruptcy

Which of the following is NOT an economic social goal?

a) entrepreneurship

b) economic efficiency

c) economic growth

d) price stability

Churches and schools are considered to bea) service organizations

b) nonprofit organizations

c) service co-ops

d) horizontal mergers

As a consumer, if the price of apples double and your salary remains the same, you would

probablya) buy more complementary goods

b) buy more apples

c) buy fewer apples

d) buy the same number of apples

If the price of a product decreases and consumers buy more of the product,

a) the product is a complementary good

b) a change in demand has taken place

c) there has been an increase in demand

d) a change in quantity demanded has taken place

The satisfaction a consumer enjoys by purchasing one more unit of a product is

calleda) marginal utility

b) trade-offs

c) personal satisfaction

d) cause and effect

The statement “the demand for an economic product

varies inversely with its price” is a definition of

a) the Law of Supply and Demand

b) the Law of consumption

c) the Law of Demand

d) laissez faire

Demand is based on consumer purchase, whereas

supply is based ona) producers offering products for sale

b) the ability to purchase

c) the willingness to purchase

d) offering a wide range of prices

If the price of a product falls, producers will generally

a) increase input

b) offer more for sale

c) hold a clearance sale

d) offer less for sale

In a market economy, a high price is a signal for

a) producers to offer less and consumers to buy more

b) producers to supply more and consumers to buy less

c) producers to buy more

d) government to step in and protect consumers

How do you know when a market is at equilibrium?

a) demand equals supply

b) supply is greater than demand

c) demand is greater than supply

d) the government has set price ceilings

Price competition is a characteristic of a

a) corporate state

b) market economy

c) command economy

d) traditional economy

In pure competition,a) buyers and sellers act together.

b) buyers and sellers deal in a variety of products.

c) buyers and sellers have little knowledge of the items for sale.

d) a large number of buyers and sellers exist.

Mergers and acquisitions might result in

a) increases in consumer demand

b) smaller companies

c) inadequate competition

d) more competition

In an oligopoly,a) prices are kept artificially low

b) advertising is limited

c) pure competition decides success

d) there are few suppliers

To be counted in the civilian labor force, a person must be

a) a member of the military

b) already employed and between the ages of 16 and 65

c) employed or looking for work, and between the ages of 16 and 65

d) male and more than 18 years old

A meeting of representatives for labor and management to negotiate contracts is called

a) macroeconomics

b) collective bargaining

c) arbitration

d) seizure

What type of union is made up of all workers, regardless of

the job each person performs?a) industrial union

b) company union

c) craft union

d) trade union

Since World War II, union membership in the United

States has beena) declining

b) at an all-time high

c) remaining constant

d) increasing

The President may intervene in labor disputes

a) whenever management is involved

b) only when federal workers are involved

c) if national security is affected

d) only on an interstate level

The use of a third party to make suggestions and advice in labor-management disputes

is calleda) closed shop

b) mediation

c) featherbedding

d) open shop

John earns $10,000 annually and pays $1000. Mary earns $60,000 during the same period and pays

taxes of $20,000. The tax they both paid was a _________ tax.

a) regressive

b) marginal

c) progressive

d) proportional

FICA includes taxes to pay fora) Social Security and unemployment

b) Social Security and Medicare

c) private schools

d) highways and welfare

The largest source of tax revenue for state governments

is thea) real estate tax

b) license fees

c) entertainment tax

d) sales tax

What are the three buying principles?a) comparing prices, using

advertisements, reading consumer reports

b) reading product literature, using discount stores, watching for sales

c) gathering information, using advertising, comparison shopping

d) watching for sales, comparing prices, making decisions

The larges source of income for city governments is the

a) sales tax

b) income tax

c) property tax

d) intergovernmental revenues

In recent years, the fastest growing portion of the federal

budget is the category ofa) entitlements

b) agriculture

c) national defense

d) international affairs

The federal budget is first prepared by the

a) President

b) Secretary of the Treasury

c) House Appropriations Committee

d) Congress

A law that reserves federal money for a specific purpose

is called a(n)a) congressional resolution

b) appropriations bill

c) excise tax

d) executive order

The sequence of approval of the federal budget is

a) President to Congress back to President

b) President to Congress to Supreme Court

c) Supreme Court to Congress to President

d) Congress to Supreme Court to President

A monetary standard is useda) to control government spending

b) to determine tax tables

c) only for international trade

d) to maintain the value of a money supply

When it comes to modern money, all of the following

apply EXCEPTa) it is very durable

b) it is very stable

c) it is very portable

d) it is very divisible

Federal Reserve notes area) backed by gold

b) special payments

c) NOW accounts

d) inconvertible flat money

The FDIC was established toa) create a government monopoly

b) help with the financing of World War II

c) federalize the banking system

d) protect the savings of the American people

A moneyless society that relies on trade is an economy

based ona) socialism

b) self-sufficient families

c) command economics

d) the barter system

Money that has an alternative use is

a) paper currency

b) commodity money

c) flat money

d) bullion

A dual banking system is one in which banks

a) get their insurance from the FDIC

b) are regulated by the Fed or the FDIC

c) can make loans in the form of cash or demand deposits

d) can obtain their charter from either the state of the federal government

The Truth-in-Lending Act is designed to

a) disclose all credit terms to borrowers

b) prohibit discrimination in granting credit

c) protect individual credit reports

d) prevent abuses to collection agencies

The Federal Reserve System is

a) the nation’s central bank

b) a branch of Congress

c) the primary regulator of all commercial banks

d) a private bank for savings

Banks that belong to the Federal Reserve System

a) are owned by the federal government

b) hold stock in the Fed and, therefore, own it

c) are independent of any regulations

d) receive no dividends

The seven-member Federal Reserve Board of Governors

is appointed bya) the Supreme Court

b) Congress

c) the President

d) state governors

Coins, currency, and deposits used to fulfill the Fed’s

reserve requirement are calleda) legal reserves

b) monetary policy

c) the fractional reserve system

d) the reserve requirement

To make a profit, a bank musta) pay depositors more interest than is

charged on loans

b) have less deposits than loans

c) change more for the loans that it makes than it pays on deposits

d) buy up home mortgages in the area

A tight money policya) increases bank notes

b) encourage economic growth

c) restricts the growth of the money supply

d) causes interest rates to decline

To decrease the money supply, the fed can

a) sell government bonds to securities dealers

b) lower the discount rate

c) buy government securities from bond dealers

d) stop printing money

Low interest ratesa) raise the cost of borrowing

b) decrease automobile sales

c) increase consumer borrowing

d) discourage home building

GDP isa) total amount of income going to

consumers before individual income taxes are subtracted

b) illegal activities that are not counted as part of the economy

c) total output of all final goods produced in a country in one year

d) none of the above

The best guide for comparing costs of credit is

a) the annual membership fee

b) the amount of the monthly installment payments

c) the repayment period required

d) the annual percentage rate

Generally, Americans want GDP toa) shrink

b) fluctuate

c) remain stable

d) grow

To help consumers compare food brands, most states require stores to provide

a) unit pricing on products

b) weekly advertising

c) scanners at checkout counters

d) private-label brands

When was the worst down-turn of the business cycle in

the United States?a) during the Great Depression of the

1930’s

b) during the postwar period of the 1950’s

c) during the Vietnam War in the 1960’s

d) during World War II in the 1940’s

A construction worker cannot work because of a winter

snowstorm. He isa) seasonally unemployed

b) frictionally unemployed

c) cyclically unemployed

d) structurally unemployed

All of the following types of unemployment might be

considered relatively temporary EXCEPTa) frictionally unemployment

b) cyclical unemployment

c) structurally unemployment

d) seasonal unemployment

The theory that inflation is caused by all sectors of the economy trying to buy m ore than the economy can

produce is called thea) cost-push theory of inflation

b) demand-pull theory of inflation

c) excessive monetary growth theory of inflation

d) wage-price spiral theory of inflation

An economist who attributes inflation to the increasing prices of producer inputs is holding to

thea) excessive monetary growth theory of

inflation

b) demand-pull theory of inflation

c) wage-price spiral theory of inflation

d) cost-push theory of inflation

Under Communisma) the government has a laissez-faire

attitude toward the economy

b) the government allows for capitalism

c) only the major industries are owned by the government

d) all means of production are owned by the government

Those who favor supply-side policies would tend to support

the government playinga) an expanding role in the economy

b) no role in the economy

c) a reduced role in the economy

d) a role in monetary policies only

The key to trade isa) flexibility

b) versatility

c) specialization

d) bartering

The ability of a country to produce more of a given

product isa) international trade

b) comparative advantage

c) absolute advantage

d) specialization

The ability of a country to produce relatively more

efficiently isa) comparative advantage

b) international trade

c) specialization

d) absolute advantage

Keogh and IRA plans allow people to do all of the

following EXCEPTa) receive dividend payments once a year

b) save money each year for retirement

c) deduct the amount saved from taxable income

d) establish their own pension plans

The most frequent argument used to support trade barriers

is that theya) protect domestic jobs

b) promote national defense

c) shield infant industries

d) raise government revenue

Today, international trade operates

a) with the fixed exchange rate system

b) with floating exchange rates

c) with a foreign exchange market

d) on a gold standard

The largest stock exchange in the USA is the

a) New York Stock Exchange

b) Over the Counter Exchange

c) NASDAQ

d) The New York Mercantile Market

The demand for lumber increases, so does the demand for nails. Economists would then

say that lumber and nails area) unrelated products

b) substitutes

c) independents

d) complements

All the following are currency except

a) quarters

b) one dollar bills

c) twenty dollar bills

d) ten dollar bills

All the following are considered professional

EXCEPTa) teacher

b) lawyer

c) truck driver

d) a member of Congress

Women in the American workforce,

a) generally do not work as many hours as men

b) are more likely to be President of a company than a man

c) are generally paid more than men

d) earn about 70% of what men earn for similar work