The American Market Economy — Test

Question 1

Once stocks are on the market, which best explains how their prices are set?

Revolt · Accepted Answer

Prices fluctuate on the basis of demand.

Question 2

The Davis family grows organic vegetables to sell at a local farmer’s market. Which are factors that directly affect their profit? Choose three correct answers.

Revolt · Accepted Answer

a rise in demand for organic produce; an increase in customers at the market; an increase in the cost of farm equipment

Question 3

Since stocks can be traded online, which purpose is best served by markets?

Revolt · Accepted Answer

Markets are where the trades actually occur.

Question 4

Which best describes what a market index does?

Revolt · Accepted Answer

An index measures market performance.

Question 5

What types of investments do banks use to make a profit? Choose three correct answers.

Revolt · Accepted Answer

issuing loans to all customers; buying stocks and bonds; buying the rights to loans

Question 6

In pure competition, producers compete exclusively on the basis of

Revolt · Accepted Answer

selling identical items.

Question 7

Are the buying and selling of stocks centralized activities? Why or why not?

Revolt · Accepted Answer

No, there are many stock markets around the world, and they are independent of one another.

Question 8

When supply is higher than demand, prices will

Revolt · Accepted Answer

fall until the demand rises.

The American Market Economy — Test Answers

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