AnswersCHS EconomicsUnit Test

Unit Test — Unit test Answers

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Typically, high inflation is a sign of

A
a healthy economy because it results from a fall in production costs.
B
a healthy economy because it results from a rise in consumer interest.
C
a struggling economy because wages cannot keep up with the increase in prices.
D
a struggling economy because it results from a fall in consumer interest.
2
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Jim lost his job in a car assembly factory to a robot and his skills will no longer be needed. Which terms can be used to describe Jim? Select two options.

A
cyclically unemployed
B
domestically unemployed
C
frictionally unemployed
D
structurally unemployed
E
still employed
F
unemployed
3

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

A
Yes, the New York Stock Exchange is the primary exchange for all the world’s most important trades.
B
No, people can buy stocks anywhere, and they do not need to go through a market.
C
Yes, the world’s stock markets are coordinated exchanges, and they are dependent on one another.
D
No, there are many stock markets around the world, and they are independent of one another.
4

Consumers having more money to purchase computers will most likely result in

A
a decrease in prices for computers and computer accessories.
B
an increase in prices for computers and computer accessories.
C
a decrease in prices for computers, but not computer accessories.
D
an increase in prices for computers, but not computer accessories.
5

What might cause a change in the value of fiat money?

A
a change in the value of commodities
B
a change in government regulations
C
a change in materials used to make money
D
a change in individuals’ spending habits
6

A fee banks charge in exchange for borrowing money is called .

Answer not available
7

When government intervention makes currency worthless, this condition is called

A
deflation.
B
hyperinflation.
C
cost-push inflation.
D
demand-pull inflation.
8

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.
9

Which types of investments are securities?

A
both debt and equity
B
debt only
C
equity only
D
neither debt nor equity
10

If a company pays dividends on a stock, does that mean that the stock has appreciated in value? Why or why not?

A
Yes, the payment of dividends indicates that a stock’s value has increased.
B
No, the payment of dividends indicates that a company has earned profits.
C
Yes, the payment of dividends indicates that a company’s assets have grown.
D
No, the payment of dividends indicates that a company can repay investors.
11

One social issue often facing developing countries is

A
democratic rule is easily obtainable.
B
reluctance to accept change.
C
a shortage of natural resources.
D
very high population growth.
12

Stagflation occurs when high inflation combines with

A
high unemployment and a low level of production.
B
low unemployment and a high level of production.
C
a drop in buying power and a rise in workers’ wages.
D
a rise in buying power and a drop in workers’ wages.
13

Which is the correct order of entities that benefit when banks make a profit?

A
employees, shareholders, and the economy
B
shareholders, shoppers, and the economy
C
employees, companies, and the economy
D
shareholders, companies, and the economy
14

Which scenario is an example of cost-push inflation?

A
Consumers have more money to buy cars, and the prices of cars and car parts rise as a result.
B
An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.
C
The demand for cars falls as consumers have less disposable income, and car prices fall as a result.
D
A government bailout helps car manufacturers lower their costs, and car prices fall as a result.
15

What gives commodity money its value?

A
a government’s guarantee of its value
B
the type of material with which it is made
C
its rate of exchange in other countries
D
the ability to trade it for a valuable good
16

The circle graph shows information about Germany’s labor force in 2011.Which statement most accurately describes Germany’s labor force?

Question illustration
A
Most Germans are farmers.
B
Most Germans work in services.
C
Most Germans work in factories.
D
Most Germans fish for a living.
17

Sometimes an economy cannot grow because of external factors, such as

A
lack of skilled labor.
B
poor infrastructure.
C
low domestic demand.
D
low demand for exports.
18

Why are environmental problems common in developing countries?

A
The citizens of developing countries have not been educated about the dangers of pollution and the need to protect resources.
B
People in developing countries travel long distances by car to get to work and school, leading to air pollution and habitat destruction.
C
Rapid growth of new industries and technology has led to an enormous increase in environmental woes in developing countries.
D
Developing countries often specialize in manufacturing and providing raw materials, which can seriously harm the environment.
19

Banks pay interest to customers through a

A
savings account.
B
credit card account.
C
mortgage account.
D
401k account.
20

Which best describes the purpose served by economic models within an economic system?

A
Models identify patterns.
B
Models determine the business cycle.
C
Models control change.
D
Models define global demand.

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