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Business and Government — Test Answers

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1
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Which generalization best describes the information provided by this graph?

A
By 2012, the United States had solved its economic problems.
B
In today's economy, a country needs fewer workers to remain strong.
C
The United States faced an economic crisis that started in 2008.
D
The United States had the world’s weakest economy by 2010.
2
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The best conclusion that can be drawn from the graph is that the number of nonfarm jobs

A
started going down in 2008.
B
went up every year since 2008.
C
remained consistent over time.
D
started going down in 2010.
3

What course of action might a government take to respond to the downturn revealed in this graph?

A
encouraging people to travel overseas
B
decrease taxes to increase consumers' money supply
C
laying off unnecessary workers
D
reducing the size of its armed forces
4

Which best describes how individuals help the economy grow?

A
They work as part of a unified group.
B
They work to influence the economy.
C
They work to influence the money supply.
D
They work in their own self-interest.
5

Which best describes the idea behind the "invisible hand"?

A
Producers decide what to make for consumers, which guides the economy.
B
Government sets policy for producers and consumers, which guides the economy.
C
Consumers decide what they need and want to buy, which guides the economy.
D
Individuals seeking their own self interest benefit the economy as a whole.
6

What does the author believe about factory owners?

A
They earned their privileges.
B
They are stubborn but hardworking.
C
They are greedy and selfish.
D
They struggle just as workers do.
7

How are government regulations established?

A
Specialized executive agencies respond to a new policy by creating regulations.
B
The courts establish regulations in response to unfair business practices.
C
Citizens agree on new regulations through annual elections.
D
Business owners agree to create regulations to better compete with one another.
8

Which best describes a central bank's primary goals?

A
controlling stagflation and reducing unemployment
B
reducing unemployment and maintaining cash flow
C
limiting inflation and reducing unemployment
D
managing credit and ensuring the money supply's liquidity
9

When a government creates a budget, it is seeking a way to

A
return as much money to taxpayers as possible.
B
cut spending to a bare minimum.
C
spend as much revenue as possible.
D
allocate money to programs and projects.
10

An entrepreneur is someone who

A
is an employee of a business.
B
invents products for other businesses.
C
starts and runs a business.
D
works for multiple developing businesses.
11

Which best describes a central bank's primary role?

A
printing money
B
increasing credit
C
creating monetary policy
D
controlling inflation
12

Who was known as the "Father of Economics,” whose ideas of free markets inspired classical economic thinkers?

A
John Keynes
B
Friedrich Hayek
C
Milton Friedman
D
Adam Smith
13

Letterfront Bookstore has been the top bookseller in the city for the past 20 years. In the last five years, the bookstore has seen stiff competition from the smaller bookstores in the city. How did this affect consumer behavior when purchasing books?

A
Sellers will see a rise in book sales due to competition.
B
Sellers will raise the price of books to make more profits.
C
Consumers have to pay more to buy books from Letterfront Bookstore.
D
Consumers have many options when purchasing books.
14

Governments collect taxes to ensure that

A
citizens contribute to meeting society's needs.
B
there is sufficient money to fund private businesses.
C
politicians get paid in a timely manner.
D
a government program exists for every need that arises.
15

What gives the US government the power to collect taxes?

A
an executive order
B
common law
C
laws passed by Congress
D
the Constitution
16

The most common business organizations in the United States are

A
partnerships.
B
franchises.
C
sole proprietorships.
D
corporations.
17

Which best describes the difference between sole proprietorships and partnerships?

A
Sole proprietors split profits and share liabilities, while partners keep all profits and have unlimited liability.
B
Sole proprietors share responsibilities, while partners are responsible for only a portion of the business.
C
Sole proprietors pay taxes only on business profits, while partners do not have to pay taxes on profits.
D
Sole proprietors keep all profits and have unlimited liability, while partners split profits and share liabilities.
18

What led to Henry Ford’s success as an entrepreneur?

A
His personal wealth.
B
His innovative production methods.
C
His commitment to improving labor laws.
D
His desire to pay high wages.
19

Economists studying the money supply categorize the status of the money based on

A
inflation rates.
B
interest rates.
C
liquidity.
D
credit.
20

What is the definition of collective bargaining?

A
a written set of guidelines about legal and illegal workplace conditions
B
labor union and employer negotiations about wages and other issues
C
ongoing salary negotiations between an employee and a factory owner
D
an agreement among a group of factory owners to raise worker wages

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