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Cumulative Exam — Cumulative exam Answers

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1
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Why is the slow growth that can result from a contractionary policy a positive effect?

A
It can increase loan interest rates.
B
It can decrease available credit.
C
It can increase the money supply.
D
It can decrease inflation.
2
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Which are affected by the factors of production? Choose three answers.the demand of the itemthe availability of the itemthe cost of the itemthe quality of the itemthe popularity of the item

A
the demand of the item
B
the availability of the item
C
the cost of the item
D
the quality of the item
E
the popularity of the item
3

John Maynard Keynes developed new economic theories in response to the

A
stock market crash of 1929.
B
Great Depression of the 1930s.
C
first and second world wars.
D
economic boom of the 1950s.
4

Angela is considering buying stock in a popular computer software company whose price has dropped significantly in the last year. Why might this be a wise move for Angela to make?

A
because it is smart to buy when prices are high and sell when prices are low
B
because it is smart to buy when prices are low and sell when prices are high
C
because her investment will be guaranteed by the government if the company fails
D
because the company will rebound because she likes to use the products they sell
5

How do trade agreements help the countries involved?

A
by restricting imports
B
by accelerating production
C
by expanding tax revenues
D
by decreasing trade barriers
6

Which best describes what happens to a corporation after its founders retire?

A
It shuts down operations.
B
It transfers to new owners.
C
It continues in business.
D
It sells out to shareholders.
7

What is true of the M1 category of money?

A
It is not usually in circulation.
B
It cannot be quickly exchanged.
C
It can be easily liquidated.
D
It is in investment accounts.
8

A company that makes mobile phones introduces a new, faster model that has strong consumer interest. However, the old model is still available. What will most likely happen to the price of the old model, and why?

A
The price will fall to encourage consumers to continue to purchase it.
B
The price will rise to encourage the producer to make more old models.
C
The price will fall to discourage the producer from making more old models.
D
The price will rise to encourage consumers to buy both models in equal amounts.
9

Which best describes why a company issues stocks?

A
to increase the company’s value
B
to ensure profits
C
to increase dividends
D
to raise capital
10

Compound interest is usually better than simple interest because it pays

A
interest on the principal and the interest earned in each period.
B
interest on the entire principal rather than the interest in each period.
C
more, as it is matched by an employer’s 401k contribution.
D
more often throughout the year rather than once a year.
11

Hayek believed that the economy could be hard to measure because

A
individuals have the power to make decisions and are unpredictable.
B
individuals have the power to make decisions and are predictable.
C
government has the power to make decisions and is unpredictable.
D
government has the power to make decisions and is predictable.
12

Which situation is an example of comparative advantage in an international market?

A
Country A decides to grow extra potatoes so they have more to export, while Country B does not grow potatoes to export.
B
Factories in Country A and Country B produce the same number of tablet computers. Country A’s factories could be used instead to build more laptops than the factories in Country B.
C
Country A invests in a new technology while Country B chooses to invest in education.
D
Country A can produce 100 units of rice per acre of farmland, while Country B can only produce 70 units of rice per acre of farmland using the same resources.
13

What is the role of the three questions of economics?

A
to assess product profitability
B
to aid in production decisions
C
to offset a poor economy
D
to determine quality and cost
14

Corporate taxes are a type of

A
income tax.
B
property tax.
C
sales tax.
D
excise tax.
15

An income is measured as

A
all money received, including gifts, in the course of a year.
B
an amount spent in one week’s time.
C
an amount received in a specific period: weekly, biweekly, or yearly.
D
all money saved during a year’s time.
16

The graph shows the marginal cost of producing soccer cleats for Sabrina’s Soccer. At which level of production does the company make the most profit?

Question illustration
A
the first pair of cleats
B
the second pair of cleats
C
the third pair of cleats
D
the fourth pair of cleats
17

Which of these practices describe how producers in oligopolies generally try to create competition? Check all that apply.by keeping prices lowby offering promotionsby advertisingby cultivating brand loyaltyby overcoming barriers to entryby developing a specific image

A
by keeping prices low
B
by offering promotions
C
by advertising
D
by cultivating brand loyalty
E
by overcoming barriers to entry
F
by developing a specific image
18

Which of these is not a main advantage for a business joining a cooperative?

A
Lower costs for purchasing supplies
B
Pooling products for better selling prices
C
Sharing costs for needed services
D
Having a larger vote than smaller companies
19

If expansionary taxation policies are left unchecked, which is the most likely result?

A
reduced profits
B
high inflation
C
reduced production
D
reduced disposable income
20

Which best describes an opportunity cost?

A
accepting an opportunity to do something else when making an economic decision
B
giving up an opportunity to do something else when making an economic decision
C
accepting an opportunity to help accomplish something else when making an economic decision
D
giving up an opportunity to increase prices when making an economic decision

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