AnswersEconomics semester SS3314 ICUnit Test

Economic Policy Answers

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Jim lost his job in a car assembly factory to a robot and his skills will no longer be needed. Which terms can be used to describe Jim? Select two options.cyclically unemployeddomestically unemployedfrictionally unemployedstructurally unemployedstill employedunemployed

A
cyclically unemployed
B
domestically unemployed
C
frictionally unemployed
D
structurally unemployed
E
still employed
F
unemployed
2
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The circular flow model examines interactions between which sectors of the economy? Select THREE answers.privategovernmentforeigntechhouseholds

A
private
B
government
C
foreign
D
tech
E
households
3

When economists determine that a nation’s GDP has declined, they can point to this as a sign of

A
economic shrinkage.
B
economic growth.
C
low unemployment.
D
poor leadership.
4

Which is the best definition of inflation?

A
a gradual decrease in the price of goods and services
B
a gradual increase in the price of goods and services
C
an exponential decrease in the price of goods and services
D
an exponential increase in the price of goods and services
5

This is a graph showing price and total output in the short and long run.According to this graph, how does supply behave in the short run and long run?

Question illustration
A
Output remains constant.
B
Output increases.
C
Output cannot be predicted.
D
Output reacts differently.
6

What explains the difference between retail and commercial banking?

A
Commercial banks loan money to small businesses, while retail banks loan money to large corporations.
B
Retail banks loan money to small businesses, while commercial banks loan money to large corporations.
C
Commercial banks help small businesses make capital purchases, while retail banks help big businesses invest.
D
Retail banks help big businesses make capital purchases, while commercial banks help consumers invest.
7

Which of these scenarios involves commodity money?

A
A girl writes a check to her friend for a stack of valuable comic books.
B
A boy starts a lemonade stand and sells each drink for twenty-five cents.
C
A woman offers her neighbor a US silver dollar in exchange for a bicycle.
D
A man buys some T-shirts and pays with a US fifty-dollar bill.
8

Economic interactions involving which of the following would most likely be studied in macroeconomics?

A
a family’s finances
B
trade at a duty-free shop on the U.S.-Canadian border
C
International Monetary Fund policy
D
a small company’s supply contract for a local town
9

Which of the following is a characteristic of prosperity in the peak phase of the business cycle?

s
stagnant prices
h
high levels of production
a
ambivalence about the economy
r
reduced incomes
10

Which banker would a software company most likely visit for help to raise large amounts of capital to acquire, or buy out another company?

A
a community banker
B
an investment banker
C
a commercial banker
D
an executive banker
11

The Federal Reserve manages the nation’s currency and money supply by

m
manipulating interest rates and acting as a lender to banks.
o
overseeing bank collections and payments on loans.
d
dictating criteria and setting loan terms for banks.
o
offering investment advice and adjusting interest rates.
12

best

T
The recession enters a recovery period.
T
The recession slows.
T
The recession accelerates.
T
The recession starts and stops.
13

best

C
Consumers spend less, causing worker layoffs.
D
Demand falls, causing production to stay at its peak.
A
A recession begins, causing consumers to spend more.
G
Goods are overproduced, causing a surplus in jobs.
14

In microeconomics, what occurs when equilibrium is reached?

A
Prices decline.
B
Prices increase.
C
Prices are set.
D
Prices fluctuate.
15

During a recession, what is one way governments try to encourage growth?

b
by increasing unemployment benefits
b
by stopping government spending
b
by requiring firms to maintain production
b
by eliminating all tax breaks
16

Read the graph that displays interest and total payments on a loan.Banks make the most money and take the most risk with an interest rate of

Question illustration
5
5 percent.
1
10 percent.
1
15 percent
1
18 percent.
17

The Federal Reserve transfers profits from its twelve regional banks to

A
investment and commercial banks.
B
central banks in Europe and Asia.
C
the Department of Commerce.
D
the Department of the Treasury.
18

What types of money are included in the M2 category? Check all that apply.

A
currency
B
savings accounts
C
checking accounts
D
commodity money
E
short-term investment accounts
19

The graph shows data for the years 2010 through 2012.Which might be a better title for this graph?

Question illustration
A
Total Exports for the United States and China
B
Trade Between China and the United States
C
Unemployment in the United States and China
D
The History of International Trade
20

Why must old currency be taken out of circulation when new currency is made?

A
The old currency is more valuable than the new currency.
B
The new currency is much more liquid than the old currency.
C
Too much currency in an economic system will cause inflation.
D
Too much currency in an economic system will create artificial wealth.

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