Question 1

Decreasing taxes can stimulate the economy by ________.

Accepted Answer

A)  allowing consumers more money to spend
B)  decreasing the amount of money the government is able to spend
C)  directly influencing the consumer price index
D)  controlling the money supply

Question 2

The average total of goods and services required to maintain a particular standard of living is called ________.

Accepted Answer

A)  the cost of living
B)  total household expenditure
C)  the cost of fundamental human needs
D)  the cost/price index

Question 3

The amount of a product or service that is available for purchase at any given time is called ________.

Accepted Answer

A)  commodity
B)  surplus
C)  supply
D)  demand

Question 4

A(n) ________ occurs when there are many buyers and sellers and little differentiation between products, but perceived differences between products among consumers.

Accepted Answer

A)  monopolistic competition
B)  monopoly
C)  oligopoly
D)  perfect competition

Question 5

________ is a decrease in the rate of inflation.

Accepted Answer

A)  Deflation
B)  Inflation
C)  Disinflation
D)  Deflection

Question 6

________ unemployment measures permanent unemployment associated with massive industry-wide changes that lead to complete elimination of the positions formerly held.

Accepted Answer

A)  Seasonal
B)  Frictional
C)  Structural
D)  Cyclical

Question 7

The value of the CPI's "market basket" is determined by ________.

Accepted Answer

A)  the combined prices of a specified set of goods and services, including taxes
B)  the net profit earned by businesses selling a specified set of goods and services
C)  the price of all goods and services, including taxes, purchased in a particular period
D)  the cost of production for a specified set of goods and services in a given market

Question 8

The gross domestic product (GDP) measures ________.

Accepted Answer

A)  the overall market value of final goods and services produced in a country in a given year
B)  the overall gross profit a country earns in a given year
C)  a country's overall income resulting from production in a year
D)  a country's overall expenditures in a given year

Question 9

Traditional economies are the most common economies found in the world today.

Accepted Answer

A) True 
 B)False

Question 10

The law of demand states that as the price for an item or service increases, so will the supply and that if the price is lower, the supply will also be less.

Accepted Answer

A) True 
 B)False

Question 11

The price of a product or service is based entirely on its actual value.

Accepted Answer

A) True 
 B)False

Question 12

Describe how each of the four degrees of competition affect supply and demand.

Accepted Answer

(1)In a monopoly, there is only one supp...

Question 13

Which of the following industries is LEAST likely to form an oligopoly?

Accepted Answer

A)  airline
B)  automobile
C)  tobacco
D)  consulting

Question 14

John is an employee at a car manufacturer. Today he has come into work to find that production has stopped because the government has determined that the steel used in the cars will be better used in the manufacture of a new railway line. John doesn't mind, because although his wages are low, he gets paid whether there is any work for him to do or not. John MOST likely lives in a ________.

Accepted Answer

A)  traditional economy
B)  planned economy
C)  market economy
D)  mixed economy

Question 15

All of the following statements about open market operations are true EXCEPT ________.

Accepted Answer

A)  they are used by the Federal Reserve to change the Federal Funds Rate
B)  they are used by the Federal Reserve to change the discount rate
C)  they are used by the Federal Reserve to buy and sell mutual funds
D)  they are used by the Federal Reserve to transact with securities dealers

Question 16

In which part of the business cycle is the Federal Reserve most likely to increase the discount rate to discourage banks from borrowing?

Accepted Answer

A)  trough
B)  expansion
C)  peak
D)  recession

Question 17

Define open market operations and describe how the Federal Reserve Bank uses them to control the money supply.

Accepted Answer

Open market operations are the buying an...

Question 18

ArmiLiza, a popular United States-based brand of handbags, has built a second factory in Mexico. The majority of the new factory's employees are Mexican citizens or Honduran immigrants. On which country's gross domestic product will the second factory's goods be counted?

Accepted Answer

A)  the United States
B)  Mexico
C)  Honduras
D)  All of the above

Question 19

The government allows ________ companies to operate as regulated monopolies.

Accepted Answer

A)  airline
B)  mining
C)  utility
D)  timber

Question 20

The Federal Reserve System (the Fed) manages the country's money supply through its monetary policy to control inflation by doing all of the following EXCEPT ________.

Accepted Answer

A)  buying and selling government securities
B)  trading in foreign exchange markets
C)  changing certain interest rates
D)  increasing taxes

Exam 2: Economics and Banking

The price of a product or service is based entirely on its actual value.

Correct Answer
verified

In which part of the business cycle is the Federal Reserve most likely to increase the discount rate to discourage banks from borrowing?

Correct Answer
verified

All of the following statements about open market operations are true EXCEPT ________.

Correct Answer
verified

Which of the following industries is LEAST likely to form an oligopoly?

Correct Answer
verified

The law of demand states that as the price for an item or service increases, so will the supply and that if the price is lower, the supply will also be less.

Correct Answer
verified

Define open market operations and describe how the Federal Reserve Bank uses them to control the money supply.

Correct Answer
verified
Open market operations are the buying an...
View Answer

The government allows ________ companies to operate as regulated monopolies.

Correct Answer
verified

________ unemployment measures permanent unemployment associated with massive industry-wide changes that lead to complete elimination of the positions formerly held.

Correct Answer
verified

ArmiLiza, a popular United States-based brand of handbags, has built a second factory in Mexico. The majority of the new factory's employees are Mexican citizens or Honduran immigrants. On which country's gross domestic product will the second factory's goods be counted?

Correct Answer
verified

Correct Answer
verified

The gross domestic product (GDP) measures ________.

Correct Answer
verified

Traditional economies are the most common economies found in the world today.

Correct Answer
verified

________ is a decrease in the rate of inflation.

Correct Answer
verified

The Federal Reserve System (the Fed) manages the country's money supply through its monetary policy to control inflation by doing all of the following EXCEPT ________.

Correct Answer
verified

The average total of goods and services required to maintain a particular standard of living is called ________.

Correct Answer
verified

Describe how each of the four degrees of competition affect supply and demand.

Correct Answer
verified
(1)In a monopoly, there is only one supp...
View Answer

The value of the CPI's "market basket" is determined by ________.

Correct Answer
verified

The amount of a product or service that is available for purchase at any given time is called ________.

Correct Answer
verified

A(n) ________ occurs when there are many buyers and sellers and little differentiation between products, but perceived differences between products among consumers.

Correct Answer
verified

Decreasing taxes can stimulate the economy by ________.

Correct Answer
verified

Exam 2: Economics and Banking

The price of a product or service is based entirely on its actual value.

Correct AnswerverifiedShow Answer

In which part of the business cycle is the Federal Reserve most likely to increase the discount rate to discourage banks from borrowing?

Correct AnswerverifiedShow Answer

All of the following statements about open market operations are true EXCEPT ________.

Correct AnswerverifiedShow Answer

Which of the following industries is LEAST likely to form an oligopoly?

Correct AnswerverifiedShow Answer

The law of demand states that as the price for an item or service increases, so will the supply and that if the price is lower, the supply will also be less.

Correct AnswerverifiedShow Answer

Define open market operations and describe how the Federal Reserve Bank uses them to control the money supply.

Correct AnswerverifiedOpen market operations are the buying an...View AnswerShow Answer

The government allows ________ companies to operate as regulated monopolies.

Correct AnswerverifiedShow Answer

________ unemployment measures permanent unemployment associated with massive industry-wide changes that lead to complete elimination of the positions formerly held.

Correct AnswerverifiedShow Answer

ArmiLiza, a popular United States-based brand of handbags, has built a second factory in Mexico. The majority of the new factory's employees are Mexican citizens or Honduran immigrants. On which country's gross domestic product will the second factory's goods be counted?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The gross domestic product (GDP) measures ________.

Correct AnswerverifiedShow Answer

Traditional economies are the most common economies found in the world today.

Correct AnswerverifiedShow Answer

________ is a decrease in the rate of inflation.

Correct AnswerverifiedShow Answer

The Federal Reserve System (the Fed) manages the country's money supply through its monetary policy to control inflation by doing all of the following EXCEPT ________.

Correct AnswerverifiedShow Answer

The average total of goods and services required to maintain a particular standard of living is called ________.

Correct AnswerverifiedShow Answer

Describe how each of the four degrees of competition affect supply and demand.

Correct Answerverified(1)In a monopoly, there is only one supp...View AnswerShow Answer

The value of the CPI's "market basket" is determined by ________.

Correct AnswerverifiedShow Answer

The amount of a product or service that is available for purchase at any given time is called ________.

Correct AnswerverifiedShow Answer

A(n) ________ occurs when there are many buyers and sellers and little differentiation between products, but perceived differences between products among consumers.

Correct AnswerverifiedShow Answer

Decreasing taxes can stimulate the economy by ________.

Correct AnswerverifiedShow Answer

Correct Answer
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Open market operations are the buying an...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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(1)In a monopoly, there is only one supp...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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