Economics Review Question Preview (ID: 23818)


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Some tribes in remote areas of the world still live in a command economy.
a) True
b) False
c)
d)

All points on the Production Possibilities Frontier (PPF) are efficient.
a) True
b) False
c)
d)

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
c)
d)

A leftward shift of a supply curve might be caused by a decline in the prices of needed inputs.
a) True
b) False
c)
d)

The three market forces are: (1) competition, (2) the profit motive, and (3) supply and demand.
a) True
b) False
c)
d)

An increase in the price of chicken causes a change in the quantity demanded for chicken.
a) True
b) False
c)
d)

The unique qualities that characterize a market economy are all of these EXCEPT:
a) private ownership
b) competition and profit
c) economic freedom
d) market forces

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

If Spam is an inferior good, an increase in income will shift the:
a) supply curve for Spam to the right
b) supply curve for Spam to the left
c) demand curve for Spam to the right
d) demand curve for Spam to the left

When the reserve requirement is low, banks have ______________ money to lend to customers.
a) more
b) less
c) the same amount of
d) no

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

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) supply
c) demand
d) shortage

The contest among sellers to win customers is
a) efficiency
b) sovereignty
c) competition
d) profits

Equilibrium is also known as the
a) supply/demand price
b) equal market price
c) market clearing price
d) efficient market price

The ______________ is used to measure cost of living increases applied to Social Security and pension benefits.
a) CPI
b) GDP
c) CCI
d) OMO

Which of the following newspaper headlines would explain a supply curve shift to the left in the market for automobiles?
a) Cost of Steel Decreases
b) National Income Decreases by 3%
c) Price of Rubber Expected to Rise in 3 Months
d) ABC Auto Maker Closes It's Doors After 35 Years

A recession is defined as
a) three back-to-back quarters of declining GDP
b) two back-to-back quarters of declining GDP
c) a period of rising prices
d) a period of rising prices and increasing GDP

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

Redistribution of income is achieved through which of the following?
a) monetary policy
b) regressive taxes
c) progressive taxes
d) deficit spending

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