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Practice Exam Answers

38 verified answers
1
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Among the changes that labor reformers wanted after the Industrial Revolution was

A
jobs for women factory workers.
B
a ban on child factory workers.
C
more jobs for untrained workers.
D
equal pay for owners and workers.
2
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A reason that countries trade with each other is

A
to help their neighbors.
B
to share excess resources.
C
to get products they cannot produce.
D
to sell goods they do not need.
3

What term is used to describe an individual's money and personal property?

A
income
B
finances
C
assets
D
budget
4

What is the difference between inflation and deflation?

A
Inflation can result from rising demand and boosts the value of money. Deflation can result from falling demand and reduces the value of money.
B
Inflation can result from falling demand and boosts the value of money. Deflation can result from rising demand and reduces the value of money.
C
Inflation can result from falling demand and reduces the value of money. Deflation can result from rising demand and boosts the value of money.
D
Inflation can result from rising demand and reduces the value of money. Deflation can result from falling demand and boosts the value of money.
5

Which describes the difference between a personal loan and a credit card?

A
Credit cards offer lump sums of money, while personal loans set a maximum amount a person can borrow.
B
Personal loans are secured for small purchases, while credit cards are unsecured loans for large amounts.
C
Personal loans offer lump sums of money, while credit cards set a maximum amount a person can borrow.
D
Credit cards are secured loans for large amounts, while personal loans are unsecured for small purchases.
6

What does elasticity measure in economics?

A
how the amount of a good changes when the producer hires more employees
B
how the amount of a good changes when its price goes up or down
C
how the amount of a good changes when the producer uses new materials
D
how the amount of a good changes when its distribution expands
7

A monopoly is a market that has

A
few competing businesses.
B
many sellers of a variety of products.
C
a single supplier of a good or service.
D
many sellers of the same item.
8

Which describes a type of tax that people pay on money they earn?

A
progressive tax
B
income tax
C
purchase tax
D
flat tax
9

Which is likely to occur if there is a price increase for a good which exhibits elastic demand?

A
People might buy a less expensive substitute good.
B
People might buy a less expensive complementary good.
C
People might buy a more expensive substitute good.
D
People might buy a more expensive complementary good.
10

What role do government agencies play in a mixed market economy?

A
They run shipping companies and other sources of distribution.
B
They employ most of the workers in the economic system.
C
They regulate some aspects of production and distribution.
D
They own farms, factories, and other sources of production.
11

An economy that balances government intervention with free enterprise is known as a

A
monopoly.
B
regulatory agency.
C
commission.
D
mixed market.
12

Why does an increase in literacy rates often accompany an increase in per capita income?

A
Developed countries often attempt to raise low literacy rates to improve income.
B
People who can read and who receive an education are eligible for higher-paying jobs.
C
Developing countries have higher-than-average literacy rates, which typically leads to higher income.
D
People who have higher-paying jobs often have the time available to develop literacy skills.
13

What is the definition of gross income?

A
amount received after deductions
B
amount of income saved per year
C
amount of tax deducted from income
D
amount earned before deductions
14

Opportunity cost means that something needs to be

A
given up.
B
paid for.
C
ignored.
D
replenished.
15

An economic incentive is best described as something that

A
benefits producers or consumers when taking action.
B
motivates producers or consumers to take action.
C
forces producers or consumers to act in a certain way.
D
pushes producers or consumers to act on the government's behalf.
16

How do bank loans help the nation’s economy?

A
They allow businesses to expand and improve.
B
They ensure the success of new businesses.
C
They allow consumers to quickly pay off debts.
D
They ensure consumer spending and confidence.
17

What is one purpose of studying economics?

A
to find reasons why some resources become scarce
B
to determine the principles that explain why consumers buy services
C
to examine principles that influence the production of goods and services
D
to understand the reasons why people purchase certain goods
18

Which of the would be considered a nonrenewable resource?

A
wind
B
petroleum
C
lumber
D
sun
19

Does a depression always follow a recession?

A
Yes, the trough is always considered a depression.
B
No, a depression is indicated when the recession is exceptionally long.
C
Yes, for recovery to occur, the trough must be reached.
D
No, the economy could decline quickly and bypass recession.
20

What happens if a country faces a shortage of raw materials?

A
The sellers will hire more labor to compensate for raw materials.
B
The sellers will halt the production of the product.
C
The sellers will invest more capital to compensate for raw materials.
D
The sellers will provide high-quality products at the same price.

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