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Economics Review
Test Description: Economic Review Game - Skemp
Instructions: Answer all questions to get your test result.
1) Some tribes in remote areas of the world still live in a command economy.
A
True
B
False
2) All points on the Production Possibilities Frontier (PPF) are efficient.
A
False
B
True
3) The law of supply says that consumers will supply more of a product at a lower price than at a higher price.
A
True
B
False
4) A leftward shift of a supply curve might be caused by a decline in the prices of needed inputs.
A
True
B
False
5) The three market forces are: (1) competition, (2) the profit motive, and (3) supply and demand.
A
False
B
True
6) An increase in the price of chicken causes a change in the quantity demanded for chicken.
A
False
B
True
7) The unique qualities that characterize a market economy are all of these EXCEPT:
A
competition and profit
B
market forces
C
economic freedom
D
private ownership
8) How would the government and the Fed most likely respond to a period of rapid inflation?
A
lower taxes and decrease interest rates
B
lower taxes and increase interest rates
C
increase taxes and increase interest rates
D
increase taxes and decrease interest rates
9) If Spam is an inferior good, an increase in income will shift the:
A
demand curve for Spam to the left
B
supply curve for Spam to the left
C
demand curve for Spam to the right
D
supply curve for Spam to the right
10) When the reserve requirement is low, banks have ______________ money to lend to customers.
A
more
B
no
C
less
D
the same amount of
11) What happens to the money supply during open market operations when the Fed sells government securities?
A
increases
B
decreases
C
stays the same
D
not enough information to answer the question
12) The quantity of a product that producers are willing and able to make available for sale at various prices over a given period of time is said to be
A
surplus
B
demand
C
supply
D
shortage
13) The contest among sellers to win customers is
A
efficiency
B
competition
C
sovereignty
D
profits
14) Equilibrium is also known as the
A
market clearing price
B
supply/demand price
C
equal market price
D
efficient market price
15) The ______________ is used to measure cost of living increases applied to Social Security and pension benefits.
A
GDP
B
OMO
C
CCI
D
CPI
16) Which of the following newspaper headlines would explain a supply curve shift to the left in the market for automobiles?
A
ABC Auto Maker Closes It's Doors After 35 Years
B
National Income Decreases by 3%
C
Cost of Steel Decreases
D
Price of Rubber Expected to Rise in 3 Months
17) A recession is defined as
A
a period of rising prices
B
three back-to-back quarters of declining GDP
C
two back-to-back quarters of declining GDP
D
a period of rising prices and increasing GDP
18) Open Market Systems involve
A
the buying and selling of government securities
B
increasing reserve requirements
C
the interest rates that banks charge commercial banks for when the borrow
D
cutting taxes and increasing government spending
19) Redistribution of income is achieved through which of the following?
A
deficit spending
B
progressive taxes
C
monetary policy
D
regressive taxes
*select an answer for all questions
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