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Practice Test Answers

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1
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Which best describes a regressive tax?

A
a tax that charges high-income earners a lower percentage than low-income earners
B
a tax that charges low-income earners a lower percentage than high-income earners
C
a tax that charges an equal percentage to all
D
a tax that charges earners based on their professions
2
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An economy that balances government intervention with free enterprise is known as a

A
commission.
B
monopoly.
C
mixed market.
D
regulatory agency.
3

Successful entrepreneurs contribute to the economy by

A
creating business strategies.
B
encouraging free trade.
C
expanding markets.
D
becoming wealthy.
4

Among the changes that labor reformers wanted after the Industrial Revolution was

A
a ban on child factory workers.
B
more jobs for untrained workers.
C
equal pay for owners and workers.
D
jobs for women factory workers.
5

How does private ownership of factors of production help businesses?

A
It helps businesses to promote unfair business practices.
B
It helps businesses to monopolize the market.
C
It helps businesses to enjoy profits without growing the business.
D
It helps businesses to invest more in growing the business.
6

Which group does the Fed serve?

A
financial institutions
B
consumers
C
bankers
D
government bodies
7

Expansionary spending takes place when a government makes the decision to

A
raise spending to stimulate the economy.
B
raise taxes to balance its budget.
C
put a freeze on the number of its employees.
D
raise taxes to run a budget surplus.
8

North Carolina ranks first in the nation in producing which crop?

A
tobacco
B
peaches
C
corn
D
cotton
9

Which describes an example of the economic system known as free enterprise?

A
People are free to shop for the best price on products because there is open competition.
B
Government regulations ensure that everyone has the freedom to shop for the best deals.
C
People are free to shop around for products, but manufacturers dictate what is available.
D
Government oversight of business gives people freedom to shop for the best deals.
10

In 2013, who became the first Republican to be elected governor in North Carolina since 1988?

A
Barack Obama
B
Dan Blue
C
Pat McCrory
D
Al Gore
11

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

A
The sellers will provide high-quality products at the same price.
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 hire more labor to compensate for raw materials.
12

Which best explains why a sole proprietor would want a partner?

A
to make it easier to raise funds for expansion.
B
to take advantage of little government oversight.
C
to reduce the number of responsibilities.
D
to move into a more favorable tax bracket.
13

What part does interest play in deficit spending?

A
Governments may charge foreign countries interest when they borrow money.
B
Governments must pay interest on money they borrow when they take on debt.
C
Citizens must pay interest when their governments borrow money.
D
Interest is not a factor when a government’s budget is in deficit.
14

When a government decides to limit the number of goods that can be sold to another nation, that government is creating

A
fiscal policy.
B
monetary policy.
C
trade policy.
D
regulatory policy.
15

Labor unions were certain to advocate for the best interests of workers because

A
the government shut down factories that did not improve work conditions.
B
the top factories were run by owners who wanted to retain their workers.
C
the government required all labor unions to promote workplace reform.
D
the labor unions were created by workers and made up of workers.
16

Which body manages the Fed?

A
the Federal Open Markets Committee
B
the Federal Reserve Board
C
the Economic Policy Subcommittee
D
the Appropriations Committee
17

The development of many new businesses helps limit

A
unemployment.
B
revenue.
C
taxation.
D
risk.
18

Which of these regulations is established at the federal level?

A
the requirements employees must meet
B
the types of goods a market can sell
C
the hours a business can stay open
D
the pay for minimum-wage employees
19

Which best describes why governments collect taxes?

A
to ensure surplus funds
B
to control the value of currency
C
to keep the government running
D
to fund government programs
20

Articles of partnership establish

A
what is included in a charter.
B
how profits and losses are divided.
C
what business taxes are paid.
D
how businesses can raise capital.

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