AnswersFinancial Literacy WMHS - Semester 1Introduction to Economics

Introduction to Economics — Cumulative exam Answers

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22
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Economic policy must strike a balance between ideals and

A
freedom.
B
needs.
C
supply and demand.
D
private property.
23
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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
24

In a mixed market economy, what is a typical way the government can reduce unemployment?

A
The government can pay for projects to create work.
B
The government can control new factories to provide jobs.
C
The government can create new farm fields to hire workers.
D
The government can raise taxes to encourage employment.
25

The graph shows a demand curve with the price of a good compared to the quantity demanded.What does this graph demonstrate?

Question illustration
A
the amount of microwaves produced increases the price
B
the amount of microwaves produced decreases the price
C
the price decreases with a larger quantity demanded
D
the price increases with a larger quantity demanded
26

Corporate taxes are a type of

A
income tax.
B
property tax.
C
sales tax.
D
excise tax.
27

Businesses can use globalization to their advantage by

A
creating trade barriers to other countries.
B
reducing exports to other countries.
C
finding customers in other countries.
D
insourcing jobs in other countries.
28

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
29

Which economic indicators are used to measure the global economy? Choose four answers.

A
purchasing power parity
B
trade volumes
C
spending power parity
D
labor market data
E
gross domestic product
F
trade deficits and surpluses
30

When the government injects money into the economy, consumers may have more disposable income, which may lead to

A
higher unemployment.
B
higher production.
C
lower production.
D
increases in taxes.
31

Which best describes how advertising influences consumer choice in an oligopoly?

A
Advertising coaxes people to buy new products.
B
Advertising alerts consumers to price reductions.
C
Advertising undermines competition.
D
Advertising informs brand knowledge.
32

The chart shows the marginal cost of producing apple pies.This chart demonstrates that the marginal cost

Question illustration
A
initially decreases as production increases.
B
initially increases as production increases.
C
eventually decreases as production increases.
D
eventually increases as production decreases.
33

If Country A is an agricultural country and Country B has many cities and factories, it would make sense for

A
both countries to set up car manufacturing plants.
B
Country A to specialize in growing corn while Country B specializes in making cars.
C
Country A to specialize in making cars while Country B specializes in growing corn.
D
both countries to compete in growing more corn.
34

What is one example of a closed economy?

A
a barter system that does not rely on money or other currency
B
a restricted system that blocks trade with international partners
C
a trade-based system that encourages the flow of goods and services
D
an old-fashioned system that preserves traditional choices and customs
35

Who was Adam Smith?

A
He was a philosopher who promoted the idea of free enterprise.
B
He was an economist who spoke against the market economy.
C
He was an official who ran an important government agency.
D
He was a producer who operated a factory in Scotland.
36

Which best defines a service?

A
a task that is performed in exchange for payment
B
an object that is acquired
C
a plan that is executed
D
an image that is drawn
37

Aggregate supply is best described as the

A
total output of all products and services.
B
point of equilibrium.
C
nation’s real gross national product.
D
excess supply in the market.
38

People who oppose labor unions believe that unions

A
keep more qualified workers from being hired.
B
create more new jobs than workers can fill.
C
make many businesses more competitive.
D
encourage employers to reduce salaries.
39

What is one main objective in the study of economics?

A
recognizing the types of services available to everyone
B
recognizing the relationship between producers and consumers
C
recognizing the reasons why consumers supply services
D
recognizing the difference between producers and consumers
40

Demand-pull inflation occurs when

A
the price of goods rises suddenly and extremely fast.
B
consumers begin purchasing more goods.
C
producers need more money to make and distribute goods.
D
the government prints more money and pushes prices up.
41

The Fed may respond to a recession by

A
discouraging consumer borrowing.
B
decreasing interest rates.
C
decreasing government spending.
D
decreasing available credit.

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