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Practice Test Answers

16 verified answers
1
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Which would be the best label for the circle in the center?

A
The Free Enterprise System
B
Ineffective Economic Policies
C
Government Economic Policies
D
The Best Economic Policies
2
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Articles of partnership establish

A
what is included in a charter.
B
how businesses can raise capital.
C
how profits and losses are divided.
D
what business taxes are paid.
3

Which body manages the Fed?

A
the Federal Reserve Board
B
the Appropriations Committee
C
the Federal Open Markets Committee
D
the Economic Policy Subcommittee
4

What part does interest play in deficit spending?

A
Governments may charge foreign countries interest when they borrow money.
B
Citizens must pay interest when their governments borrow money.
C
Governments must pay interest on money they borrow when they take on debt.
D
Interest is not a factor when a government’s budget is in deficit.
5

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

A
monopoly.
B
commission.
C
regulatory agency.
D
mixed market.
6

Which best describes why governments collect taxes?

A
to ensure surplus funds
B
to fund government programs
C
to keep the government running
D
to control the value of currency
7

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
regulatory policy.
C
monetary policy.
D
trade policy.
8

Which best describes a regressive tax?

A
a tax that charges earners based on their professions
B
a tax that charges low-income earners a lower percentage than high-income earners
C
a tax that charges high-income earners a lower percentage than low-income earners
D
a tax that charges an equal percentage to all
9

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

A
the government required all labor unions to promote workplace reform.
B
the labor unions were created by workers and made up of workers.
C
the government shut down factories that did not improve work conditions.
D
the top factories were run by owners who wanted to retain their workers.
10

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

A
People are free to shop around for products, but manufacturers dictate what is available.
B
Government regulations ensure that everyone has the freedom to shop for the best deals.
C
People are free to shop for the best price on products because there is open competition.
D
Government oversight of business gives people freedom to shop for the best deals.
11

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

A
to move into a more favorable tax bracket.
B
to reduce the number of responsibilities.
C
to make it easier to raise funds for expansion.
D
to take advantage of little government oversight.
12

Which best describes a difference between the views of Milton Friedman and John Maynard Keynes on the economy?

A
Keynes believed the economy was too complicated to think of aggregates, while Friedman said higher aggregate demand could solve issues.
B
Keynes believed in little government intervention in the economy, while Friedman said government should play an active role.
C
Friedman said that monetary policy should be used to influence aggregate demand, while Keynes believed the best approach was fiscal policy.
D
Friedman said that fiscal policy should be used to influence aggregate demand, while Keynes believed the best approach was monetary policy.
13

Expansionary spending takes place when a government makes the decision to

A
put a freeze on the number of its employees.
B
raise taxes to balance its budget.
C
raise spending to stimulate the economy.
D
raise taxes to run a budget surplus.
14

The development of many new businesses helps limit

A
risk.
B
revenue.
C
taxation.
D
unemployment.
16

Which of these regulations is established at the federal level?

A
the pay for minimum-wage employees
B
the hours a business can stay open
C
the requirements employees must meet
D
the types of goods a market can sell
18

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

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

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