AnswersOC27 Economics-2102310-Sem-MeadowsUnit Test

Unit 3A Test Answers

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Read a passage from a speech given by President Barack Obama.Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit . . . And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits.–President Barack Obama, February 4, 2009

A
It describes government measures to stimulate demand and bring about a recovery.
B
It describes government measures to increase production and bring about a depression.
C
It describes a shift in government policies during a trough on the business cycle.
D
It describes a shift in government policies during a peak on the business cycle.
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There are four steps in solving one’s personal financial challenges:1. considering opportunity costs2. assessing risks and returns 3. setting short- and long-term goals4. assessing needs and wantsWhich of these is the correct order of these steps?

A
2, 1, 3, 4
B
1, 2, 3, 4
C
4, 1, 2, 3
D
4, 2, 3, 1
103

Which of the following is a characteristic of prosperity in the peak phase of the business cycle?

s
stagnant prices
h
high levels of production
a
ambivalence about the economy
r
reduced incomes
104

Which best describes why taxes and savings are considered leakage factors?

A
They take money out of households.
B
They take money out of the economic system.
C
They take money out of the economic sectors.
D
They take money out of the financial sector.
105

Why should investors know the difference between nominal and real interest rates?

A
to know what they are likely to lose
B
to understand changes in monetary policy
C
to guarantee an investment’s profitability
D
to recognize the effects of inflation
106

Which of the following conditions is most indicative of recovery?

A
The economy has stopped shrinking.
B
The economy begins to peak.
C
The GDP continues to shrink.
D
The economy is growing again.
107

Which of these scenarios involves commodity money?

A
A girl writes a check to her friend for a stack of valuable comic books.
B
A boy starts a lemonade stand and sells each drink for twenty-five cents.
C
A woman offers her neighbor a US silver dollar in exchange for a bicycle.
D
A man buys some T-shirts and pays with a US fifty-dollar bill.
108

Ida is 25 years old and invests a one-time lump sum of $10,000 in her company's 401(k), which earns an average annual return of 6% compounded annually.Using the Rule of 72, about how many years will it take for Ida's investment to double?

A
2 years
B
6 years
C
10 years
D
12 years
109

Which best describes what a market index does?

A
An index measures market performance.
B
An index measures economic trends.
C
An index measures growth.
D
An index measures the performance of a single stock.
110

These circle graphs show information about Bolivia’s workforce and GDP.Which statement summarizes the information on these graphs?

Question illustration
A
Many Bolivians are farmers, but agriculture makes a modest contribution to the GDP.
B
Industry in Bolivia has grown faster than the labor force can supply workers.
C
Bolivia has invested large sums of money into education to encourage economic growth.
D
Bolivia must depend on agriculture to have a healthy economic future.
111

When might it be important to know a currency’s exchange rate?

A
when planning expenses for an overseas trip
B
when changing money into smaller denominations
C
when preparing to buy something expensive
D
when deciding which college is the best value
112

There are four stages in an economic recovery. 1. increased production2. rising demand (occurs twice)3. increased hiring In which order do these stages occur?

A
2, 1, 2, 3
B
3, 2, 1, 2
C
2, 3, 1, 2
D
2, 1, 3, 2
113

Which best describes how a recession develops as demand and production decrease?

A
The recession enters a recovery period.
B
The recession slows.
C
The recession accelerates.
D
The recession starts and stops.
114

Emma lives on a tight budget. She saves money and also makes intelligent choices when spending it. Which statements describe Emma’s financial skills? Select three options.

A
Emma is more prepared to meet her basic needs.
B
Emma is better prepared to avoid financial setbacks.
C
Emma is better able to avoid accumulating assets.
D
Emma is more prepared to face emergencies.
E
Emma is better able to avoid decision-making with her finances.

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