AnswersMNPS Economics FTC 25-26Unit Test

Economic Policy Answers

25 verified answers
1
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A responsibility the Federal Reserve has is to

A
loan money to banks during a crisis.
B
loan money to corporations for capital.
C
provide banking services to consumers.
D
provide financial services to corporations.
2
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What was the status of US workplace safety laws in 1900?

A
A few states had tried to pass safety laws, but they had no public support.
M
Most states had passed some safety laws, but enforcement varied.
M
Most states opposed safety laws, but workers began to demand them.
A
All states had safety laws, but no one bothered to enforce them.
3

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.
4

Stagflation occurs when high inflation combines with

A
high unemployment and a low level of production.
B
low unemployment and a high level of production.
C
a drop in buying power and a rise in workers’ wages.
D
a rise in buying power and a drop in workers’ wages.
5

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.
6

What would happen if currency in all countries had fewer denominations, i.e. fewer varieties of coins or numbers of bills?

A
People would be more likely to confuse the value of currencies.
B
Exchanging money between countries would be much easier.
C
People could not charge as many different prices for goods.
D
All goods would be more expensive than they currently are.
7

Typically, high inflation is a sign of

A
a healthy economy because it results from a fall in production costs.
B
a healthy economy because it results from a rise in consumer interest.
C
a struggling economy because wages cannot keep up with the increase in prices.
D
a struggling economy because it results from a fall in consumer interest.
8

Which factors can affect a stock’s price? Check all that apply.

A
market performance
B
the company’s financial health
C
the quantity products produced
D
location of the company
E
the economy
9

This graph shows merchandise export data for the years 2010 through 2012.Which statement most accurately describes the information presented on the graph?

Question illustration
A
The United States exported more merchandise than any other nation.
B
The United States exported more than $2 trillion worth of goods in 2012.
C
China exported more goods than the United States from 2010 to 2012.
D
China exported more than $2 trillion in goods for each year on the graph.
10

The graphs show the US unemployment rate and the price of whole milk between 2006 and 2012.

Question illustration
T
There is no link between prices and unemployment.
R
Rising unemployment rates drive prices higher.
F
Falling prices drive unemployment rates lower.
A
As unemployment rates rise, average prices fall.
11

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.
12

Both newspaper journalists and postal workers have been negatively affected by

A
the popularity of electronic communication and the Internet.
B
declining literacy rates and lack of interest in reading.
C
government budget cuts that led to fewer jobs in these fields.
D
competition with cheaper labor performed by overseas workers.
13

The graph shows changes in the US economy between 1971 and 2001.According to the graph, 1971 to 1976 was a period of stagflation due to

Question illustration
A
rising unemployment and inflation.
B
falling unemployment and inflation.
C
rising unemployment and falling inflation.
D
falling unemployment and rising inflation.
14

How is using money related to bartering?

A
It is a substitute for bartering.
B
It is the opposite of bartering.
C
It is a newer form of bartering.
D
It is an old form of bartering.
15

Which are the roles of a bank? Check all that apply.Storing and holding moneyMaking purchases to create profitsLending moneyInvesting in the economyCreating money for the economy

A
Storing and holding money
B
Making purchases to create profits
C
Lending money
D
Investing in the economy
E
Creating money for the economy
16

Which term refers to the possibility of an investor losing some or all of an investment?

r
risk
l
likelihood
p
probability
c
chance
17

People might choose to use a debit card rather than cash for purchases because

A
they do not want to carry around large amounts of cash.
B
their banking institutions charge high fees for cash withdrawals.
C
most items cost less when purchased with a debit card.
D
debit cards have a higher value than cash and can buy more.
18

Which is the correct order of entities that benefit when banks make a profit?

A
employees, shareholders, and the economy
B
shareholders, shoppers, and the economy
C
employees, companies, and the economy
D
shareholders, companies, and the economy
19

A currency’s exchange rate is

A
how many denominations the currency has.
B
its stable rate as established by the government.
C
how easily it can be divided into other currencies.
D
its changing value relative to other currencies.
20

best

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

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