ECON test with 100% ECON test correct answer 2024.

An economy that contains both perfect and imperfect competition and both regulated and nonregulated industries is known as - answer-mixed economy An economys production possibilities curve could shift outward as a result of an - answer-increased level of technology which one of the following is a charecteristic of capitalism but not of communism? - answer-private property Full employment describes the condition in which - answer-95 to 96 percent of the civilian labor force is employed When different regions of a country produce different goods - answer-the country becomes better off if the regions are pursuing their comparative advantage Which of the following is true of scarcity - answer-it is a basic problem of economics that affects all nations Economic growth can be illustrated by: - answer-an outward shift of the production possibilities curve Figure 2-2 shows the production possibilities curve of an economy in the production of consumption goods and capital goods. Currently, Point ____ is impossible to achieve - answer-G Generally, in economics we study how people - answer-make choices when resources are scarce An example of rational behavior in economics is - answer-all of these in a market economy, the goods produced go to those - answer-who have sufficient income and are willing to pay the price asked for those goods Suppose the government decided to impose a tac on each child born. Then, it is likely that - answer-fewer children would be born When an economic unit limits the scope of its productive efforts instead of trying to produce everything it needs, it is engaging in - answer-specialization A need to make choices exist because of - answer-both scarcity of resources and unlimited human needs and wants a good economic theory - answer-explains economic behavior and predicts well In a cooperative form of business enterprise, a shareholder is entitled to - answer-one vote a production possibilities curve is negatively sloped because of - answer-the price of a good falls as you move down along the curve profits can be thought of as - answer-all of these Which of the following is an example of marginal analysis - answer-A fast food restaurant that only serves lunch and dinner trying to determine if it should open for breakfast If a nation is producing a combination of goods inside its production possibilities curve, it is underutilizing its resources - answer-true consumer sovereignty means that consumers vote with their dollars in a market economy, which helps determine what is produced - answer-true In a market economy, prices serve as a rationing mechanism - answer-true an economic growth rate of 3 percent would be considered unhealthy for the US economy - answer-false In exercising the principle of comparative advantage, a nation with no absolute advantage should produce a commodity in which it faces a lower opportunity cost than its trading partners face - answer-true Ceteris paribus is a latin expression that means " holding everything else constant" - answer-true Payment for the use of capital is made in the form of rent - answer-false the US economy is a mixture of perfect and imperfect competition and regulated and non regulated industries - answer-true The oppurtunity cost of attending college is likely high for a high school graduate who leaves a job grilling hamburgers than it is for someone who leaves a job working as a computer network adminstrator - answer-False Laissez-faire is a policy of government nonintervention in the economy - answer-true a decrease in the unemployment rate will shift an economys production possibilities curve outward - answer-false high wage countries like the United States tend to use less labor-intensive production methods than low wage countries like Mexico - answer-true In determining what and how much to produce, the market economy works in a democratic manner based on dollar votes - answer-true If Xavier gives up a job in which he earns $23,000 per year in order to go to college full time, his foregone income is part of the opportunity cost of going to college - answer-true The fallacy of composition states that even if something is true for an individual, it is not necessarily true for many individuals as a group - answer-true Positive economics deals with "what is" and "what ought to be" - answer-true In a corporate form of business enterprise, both profits and dividends are subject to income tax - answer-true A subjective, untestable statement that attempts to describe what should be done; it is about what ought to or should be - answer-Normative Statement The value of the forgone alternative that was not chosen - answer-opportunity cost Inputs- land, human effort and skills, and machines and factories, for instance- used to produce goods and services - answer-Resources To determine whether a hypothesis is valid, economists engage in this, the examination of the data to whether the hypothesis fits well with the facts - answer-empirical analysis the study of choices we make among our many wants and desires given our limited resources - answer-Economics A special human resource, distinct from labor. It is the process of combining labor, land, and capital to produce goods and services - answer-Entrepreneurship The assumption that people do the best they can, based on their values and information, under current and anticipated future circumstances - answer-Rational decision making Scarce goods created from scarce resources- goods that are desirable but limited in supply - answer-Economic goods A testable proposition that makes some type of prediction about behavior in response to certain changes in conditions based on our assumptions - answer-Hypothesis The ability to produce a good or service using fewer resources than other producers use - answer-Absolute advantage The total of both physical and mental effort used in the production of goods and services - answer-Labor Markets for consumer goods and services; households are buyers and firms are sellers - answer-Product Markets Studying or determining the value of one more or one less unit - answer-Marginal Analysis A position of stability or rest, where the quantity supplied equals the quantity demanded - answer-Equilibrium Getting the most we can get our of our scarce resources - answer-Efficiency Items we value or desire that we can reach out and touch - answer-Tangible goods The equipment and structures used to produce goods and services - answer-Capital In the circular flow, an increase in the money supply tends to result when - answer-planned investment is greater than planned saving The higher the reserve requirement - answer-The less the money supply can expand The federal reserve banks are owned by - answer-Their member banks If total production of goods and services for a given quarter is $2,000 billion ( seasonally adjusted), the GDP will be reported at an annual rate of - answer-8,000 Billion Changes in the discount rate are initiated by - answer-Federal Reserve Banks According to the simple circular flow concept, whenever planned investment is less than planned saving - answer-inventories accumulate Because exports are usually less than imports - answer-Net exports are a negative percentage of GDP A bank can actually create money by - answer-lending its excess reserves In the United States, decisions regarding purchases and sales of government securities are made by - answer-The federal open market committee The first bank of the United States was chartered by - answer-the federal government Net national product (NNP) is equal to - answer-GNP minus capital consumption allowance and indirect business taxes Rising reserve requirements, other things being equal, would tend to: - answer-decrease the money supply The GDP figures does not accurately reflect economic welfare because: - answer-it does not include nonmonetary transactions Excluded from the Gross Domestic Product are - answer-non monetary transactions Any bank reserves over and above the level of required reserves are known as: - answer-excess reserves representative money is - answer-redeemable for a commodity Members of the Board of Governors of the Federal Reserve are - answer-selected by the US president Which of the following is not a correct statement about money - answer-the value of money generally fluctuates much more than the prices of individual commodities _________ shows roughly how long it will take a nation to double its output at various growth rates - answer-The Rule of 70 Social costs are associated with: - answer-Deterioration of the natural environment Included in the official U.S. money supply are: - answer-checkable deposits The Gross National Product and National Income figures are not equal because - answer-capital consumption allowance and productive resource income from the rest of the world are included in the GNP but not in. NI A depositor cannot directly write checks against - answer-nontransaction deposits The GDP counts durable goods only during their year of production - answer-True When final sales are less than GDP, a net reduction in inventory has taken place. - answer-false Checkable deposits are counted as part of the money supply - answer-true An increase in the quantity of labor always leads to economic growth - answer-false The GDP implicit price deflators take into account price changes, as well as some changes in the quality of various products - answer-True If banks had $10 million in legal reserves, $110 million in checkable deposits, and a 10 percent reserve requirement, they would have to reduce checkable deposits by $10 million or increase reserves by $1 million - answer-true In a circular flow model, the total expenditures on an economys output of goods and services equal the value of total income - answer-true Nontransaction deposits are the money itself - answer-false In the United States, fiscal policy is the responsibility of the Federal Reserve Board of Governors and the FOMC - answer-False The value of leisure is not taken into consideration in Gross Domestic Product (GDP) accounting - answer-true Money functioning as a medium of exchange results in an increase in transactions costs - answer-False The Federal Reserves system is completely and totally independent of the government - answer-false The discount rate at all Federal reserves Banks is always identical - answer-false The GDP is reported on a monthly basis by the US department of commerce - answer-False Transfer payments are added to National Income in the process of determining personal income - answer-true The federal reserve system was established by the National Banking Act of 1864 - answer-false All members of the Federal Reserve Board of Governors are members of the Federal Open Market Committee - answer-true A situation where exports exceed imports can cause total output to increase - answer-true Added spending in the circular flow that are not paid for out of current resource income - answer-Injections The interest rate at which depository institutions borrow funds from the Reserve Banks - answer-Discount rate This law increased regulation and decreased competition in the banking industry during the Great Depression - answer-Glass-Steagall Act of 1932 This law eliminated restrictions placed on the banking industry by the earlier law and removed the separate regulatory barriers between financial institutions - answer-Financial Services Modernization Act of 1999 money that is redeemable for a commodity, such as gold or silver - answer-Representative money money that is not redeemable for a commodity and is accepted on faith - answer-Fiat money The number of units of currency needed in one country to buy the same amount of goods and services that one unit of currency will buy in another country - answer-Purchasing power parity The amount of depreciation and obsolesce in the GNP - answer-Capital consumption allowance an analysis of the equation of exchange, which assumes that any money received is spent directly or indirectly to buy goods and services - answer-Transactions approach This law permitted interstate banking for the first time since the Great Depression - answer-Riegle-Neal Act of 1994 This law made all depository institutions subject to the Federal Reserve's reserve requirements. - answer-Monetary Control Act of 1980 A measuring system for comparing the average price of a group of goods and services to another period - answer-Price Index Flows out of the circular flow that occur when resource income is received and not spent directly on purchases from domestic firms - answer-Leakages In a barter economy, the need to find a match between what each of two traders wants to obtain and what each wants to offer in exchange - answer-Double coincidence of wants The unregulated portion of the economy involving goods and services that are produced and exchanged without the use of monetary transactions - answer-Underground Economy An adjustment allowance to eliminate discrepancies between Net National Product (NNP) & national income figures. - answer-Statistical discrepancy If Stephen earns $100,000 a year and pays $20,000 in taxes and Chris earns $50,000 a year and pays $5,000 in taxes, the tax system is - answer-progressive Figure 1 shows the total adult population in an economy and the number of civilians who are employed and unemployed, Based on the figure, ______ people constitute the labor force - answer-195 million Which of the following would be an example of an expansionary fiscal policy - answer-an increase in government purchases One major difference between Keynesian and classical theory is that the classical theory assumes: - answer-full employment as a norm Most of the US national debt is owed to - answer-federal reserve banks and government agencies "Supply creates its own demand" is an expression of: - answer-Says law According to Keynes, in deciding whether to increase or decrease planned investment, businesses will be guided primarily by: - answer-expected profits According to Keynes, in deciding whether to increase or decrease planned investment, businesses will be guided primarily by: - answer-expected profits In a measure of aggregate expenditure (AE) for the national economy, net exports: - answer-may be either positive or negative The financial burden entailed in the paying of a tax is known as the: - answer-impact of the tax Figure 2 shows the aggregate demand curve along with both the long run and the short run aggregate supply curves in an economy. The economy can move from point E0 to E1 through: - answer-a decrease in taxes and an increase in government purchases, other things constant A person who is out of work, available for work, but not seeking work is - answer-a discouraged worker If you are "between jobs" you are considered to be - answer-frictionally unemployed Suppose a flat tax plan allows individual to deduct a standard allowance of $25,000 from their wages and the flat tax rate is 12 percent. An individual earning $20,000 a year would pay - answer-$0 in taxes An expansionary fiscal policy consists of - answer-decreased taxes and/or increased transfer payments The most significant real economic cost of high unemployment is - answer-the potential goods and services that might have been produced but were not The value-added tax is an - answer-indirect tax The multiplier is equal to - answer-the reciprocal of MPS Refer to the graph below . A minimum wage in this labor market would - answer-all of the above Figure 3 shows the relationship between the real GDP and the price level of an economy. In the figure______ represents aggregate demand - answer-Curve C The administrative burden of taxation refers to the - answer-individuals cost of preparing tax returns and the governments cost of enforcing tax laws The government's fiscal policy is its plan to regulate aggregate demand by manipulating: - answer-taxes and spending Which of the following is not one of the four major sectors of the economy to which GDP is allocated? - answer-agriculture An aggregate demand curve shows the - answer-real output (real GDP) people are willing and able to buy and to sell at different price levels A short run aggregate supply curve shows the - answer-real out (real GDP) producers are willing and able to sell at different price levels If household incomes go up and almost all the increases are spent on consumer goods: - answer-the marginal propensity to consume is high the ration of the change in consumption spending to the change in disposable income is called the - answer-marginal propensity to consume One of the reasons why the aggregate demand curve slopes downward is that as the - answer-price levels fall, purchasing power rises because of increases in the minimum wage, new entrants into the labor force find it easier to find unemployment - answer-false If the overall price level decreases , then the aggregate demand curve will shift to the right - answer-false The natural rate of unemployment can change over time as technological, demographic, institutional, and other conditions vary - answer-True Taxes for the most part are efficient because they increase the incentive to work and align the values that buyers and sellers place on goods and services - answer-false the unemployment rate rose from 3 percent to more than 20 percent during the great depression - answer-true Unions cause a lowering of wages in the unionized labor market - answer-false The lower the marginal propensity to consume, the higher the multiplier will be - answer-false When there is a recessionary gap, one is likely to see an increase in overtime work - answer-false The United States will face bankruptcy if the national debt ever reaches a figure higher than its GDP - answer-false The US national debt has declined continuously as a percentage of GDP since WW II - answer-false In a proportional tax system, each individual would be charged the same percentage of their income - answer-true When payroll taxes and medicare are taken into consideration, the tax system in the United States becomes more progressive than when viewing the federal income tax individually - answer-false Keynes recommended the use of government deficit spending to overcome widespread unemployment - answer-true automobile license fees and gasoline taxes are based on the benefit-received theory of taxation - answer-true An excise tax is an example of a regressive tax - answer-true The inflation rate rose from 3percent to 20 percent during the Great Depression - answer-false Passing the debt on to future generations has a different impact on individuals than it does on the total enconomy - answer-true The US unemployment rate excludes unemployed workers who are not actively seeking work - answer-true The aggregate supply curve shows how much a nations consumers are willing and able to consume at each price level - answer-false The benefits received principle means that the individuals recieving the benefits are those who pay for them - answer-true if the cost of collecting a tax is low relative to the revenue generated, the tax is said to be economical - answer-true an increase in disposable income would tend to shift the aggregate demand curve to the right - answer-true All persons in the noninstitutional population who are either working or seeking work - answer-total labor force The civilian labor force expressed as a percentage of the civilian noninstitutional population - answer-Labor Force Participation Rate All persons in the total labor force except members of the resident armed services - answer-Civilian Labor force All persons in the labor force who are not currently working but are actively seeking work - answer-Unemployed Labor Force A college student who is enrolled in school full time and not seeking employment - answer-not a member of the labor force A worker temporarily away from the job due to illness - answer-Employed A convicted felon serving time in a federal prison - answer-not a member of the labor force A discouraged worker who has discontinued his or her job search - answer-not a member of the labor force A part time worker seeking full time work - answer-Employed and underemployed A person whose employment was terminated five weeks ago but who is using a job placement agency to help him find a new job. - answer-unemployed