AnswersMO-EconomicsUnit Test

Unit Test — Unit test Answers

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The graph shows the number of employed workers in the United States in nonfarm jobs from 2008 to 2013.

Question illustration
A
reducing the size of its armed forces
B
laying off unnecessary workers
C
decrease taxes to increase consumers' money supply
D
encouraging people to travel overseas
2
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Government regulation is intended to

A
encourage producers to take negative actions.
B
discourage producers from taking harmful actions.
C
encourage producers to follow the Constitution.
D
discourage producers from making a profit.
3

Governments collect taxes to ensure that

A
there is sufficient money to fund private businesses.
B
citizens contribute to meeting society's needs.
C
politicians get paid in a timely manner.
D
a government program exists for every need that arises.
4

The graph shows an early economic theory known as the "invisible hand."

Question illustration
A
Producers decide what to make for consumers, which guides the economy.
B
Individuals seeking their own self interest benefit the economy as a whole.
C
Government sets policy for producers and consumers, which guides the economy.
D
Consumers decide what they need and want to buy, which guides the economy.
5

Which best summarizes the philosophical difference between economists John Maynard Keynes and Adam Smith?

A
Keynes said government was the key to solving economic issues, while Smith believed government should take a hands-off approach.
B
Smith said government was the key to solving economic issues, while Keynes believed government should take a hands-off approach.
C
Smith believed in an "invisible hand" with which government pushes the economy, while Keynes did not agree with this idea.
D
Keynes believed in an "invisible hand" with which consumers push the economy, while Smith did not agree with this idea.
6

Which best explains how contractionary policies can hamper economic growth?

A
They increase consumer demand.
B
They can increase inflation.
C
They reduce taxes which raises deficits.
D
They reduce disposable income.
7

Which document determines the number of shares in a company?

A
a stock prospectus
B
an annual bill of rights
C
a corporate charter
D
an annual report
8

A diagram shows that taxes go into the government, which then go into spending.

Question illustration
A
Government Spending
B
The National Economy
C
The Federal Debt
D
Fiscal Policy
9

If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of interest rates being increased?

A
Borrowing will decrease.
B
Investing will decrease.
C
Inflation will increase.
D
Liquidity will increase.
10

A line graph titled Number of Employed workers in nonfarm jobs, 2008 to 2013 shows years on the x axis from 2008 to 2009 and millions of employed workers on the y axis, from 105 to 117. Line starts at 116 on February 1, 2008, to 112 on November 1, 2008, to 107 on August 1, 2009.

Question illustration
A
low production
B
inflation
C
budget deficit
D
unemployment
11

A disadvantage of forming a partnership is that owners

A
can find it tougher to start and stop a business.
B
can find it more difficult to get a bank loan.
C
are only responsible for their own finances.
D
are fully responsible for their partners' losses.
12

Revenue and expenditures are sitting on a balance at the same level.

Question illustration
A
unbalanced
B
balanced
C
deficit
D
surplus
13

Which of these is a banking activity of the Fed?

A
printing money
B
regulating securities markets
C
storing money for banks
D
funding government programs
14

In a free enterprise system, what are the goals of government? Check all that apply.

A
to ensure safety for its citizens
B
to ensure that citizens' needs are met
C
to stay out of all economic decisions
D
to solve the problem of poverty
E
to prevent citizens from getting rich
F
to ensure that the market is fair
15

What is a potential negative effect of an expansionary policy?

A
decreased borrowing
B
increased interest rates
C
increased inflation
D
decreased available credit
16

Which best describes how expansionary policies can facilitate economic growth?

A
They prompt decreased demand.
B
They inspire consumer confidence.
C
They increase disposable income.
D
They help reduce consumer debt.
17

What is the economic outlook for occupations in the healthcare sector?

A
weak to very poor
B
depends on the economy
C
will remain stable
D
will increase in demand over time
18

A government might enact expansionary spending when it is trying to

A
increase aggregate demand for goods.
B
decrease aggregate demand for goods.
C
slow an economic expansion.
D
lower a budget deficit.
19

The graph shows Keynes's theory of aggregate demand.

Question illustration
A
Prices and output would drop, and the equilibrium point will stay the same.
B
Prices would rise, and output would drop in the short run.
C
Prices and output would rise, and the equilibrium point will change.
D
Prices would rise, and output would drop in the long run.
20

John Maynard Keynes believed that governments should increase spending in order to

A
increase prices.
B
increase supply.
C
decrease demand.
D
increase demand.

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