Easy Economic test but has to be done well.

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Economics

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Easy but needs to be done well.

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Unit 1 Evaluation Economics BUSH 035 060 This evaluation will cover the lessons in this unit. It is open book, meaning you can use your textbook, syllabus, and other course materials. To submit the evaluation, follow the directions provided. Multiple-Choice Select the response that best completes the statement or answers the question. _____ 1. What is the difference between a shortage and a scarcity? a. b. c. d. _____ 2. Why are free market economies able to grow? a. b. c. d. _____ Consumers can buy all needed goods. Competition encourages innovation. Everyone acts in their own interest. Firms keep producing incentives. 3. What is considered a negative effect of government regulation? a. b. c. d. _____ Scarcity always exists. Scarcity results from falling prices. Scarcity concerns a single item. There is no real difference. It is expensive for businesses to follow all the rules. It does not protect the well-being of the public. It protects consumers but harms the environment. It allows businesses to sell unsafe products. 4. The United States government intervenes in the economy in order to a. b. c. d. Unit 1 Evaluation provide competition for private firms. impose barriers on foreign trade. promote the public interest. protect laissez-faire. BUSH 035 _____ 5. Why does the government promote technological processes? a. b. c. d. _____ to make the economy stronger and more efficient to reduce the economy’s dependence on government to slow an economy down for a long period of time to increase unemployment by making workers unnecessary 6. A company that makes baseball caps is underutilizing its resources. What does this mean? a. b. c. d. _____ The company is running more efficiently than its competitors. The company is paying its employees less than it should be. The company is making caps when it could be making t-shirts instead. The company is producing fewer caps than it could be. 7. Peter must decide if he should add one more dog to his dog-walking business. What is this decision an example of? a. b. c. d. _____ 8. Which of the following might be a positive aspect of centrally planned economies? a. b. c. d. _____ efficiency scarcity using human capital thinking at the margin low unemployment due to guaranteed jobs high levels of consumer satisfaction quick adjustment to changing conditions incentives for workers to be innovative 9. In what kind of an economy does the government make all the decisions? a. b. c. d. _____ 10. mixed laissez-faire centrally planned free enterprise Which of the following is a characteristic of a public good? a. b. c. d. Unit 1 Evaluation The private sector could provide it more efficiently. Its benefits are greater for government than for society. It is shared by the public but is provided by the government. Taxpayers demand that the government provide it. BUSH 035 _____ 11. Each payday, some of your pay is withheld for Social Security. What happens to this money? a. b. c. d. It is redistributed as cash transfers to workers who are injured on the job. It is put into an account under your name to earn interest until you retire. It is used to provide medical benefits to Americans over 65. It is redistributed as cash transfers to retired and disabled people. _____ 12. When does market failure occur? a. b. c. d. when the free market does not distribute resources efficiently when businesses do not follow public disclosure laws when the free enterprise system does not work when buyers and sellers engage in voluntary exchange _____ 13. The economic concept of guns or butter means that a. b. c. d. a person can spend money on either sports equipment or food. a company must decide whether to manufacture guns or butter. a government must decide to spend more on either military or domestic needs. a government can buy unlimited military and civilian goods if it is rich enough. _____ 14. Which of the following is an example of a shortage? a. b. c. d. Water cannot be used to irrigate one crop because it is used for another. Kumquats are not available because few people want to buy them. A type of doll is not available because a limited number were made. Workers are not available because they have other jobs. _____ 15. What do people supply in return for factor payments? a. b. c. d. innovation, profit, or goods land, labor, or capital services, goods, or traditions innovation, labor, or trade _____ 16. Which of the following is a summary of the basic economic questions? a. b. c. d. Who will buy which goods and services, and how much will they pay? How, when, and from whom should consumers get what they want? When, where, and by whom should goods and services be produced? What goods and services should be produced, how, and for whom? _____ 17. Which are the government’s three goals for promoting economic strength? a. b. c. d. Unit 1 Evaluation high employment, steady growth, and stability high employment, increased spending, and low taxes low unemployment, low prices, and low taxes steady growth, high prices, and innovation BUSH 035 _____ 18. What is the difference between a business cycle and the day-to-day ups and downs of the stock market? a. Day-to-day ups and downs are more predictable than a business cycle. b. Day-to-day ups and downs have a greater impact on people’s finances than a business cycle. c. A business cycle is local, whereas day-to-day ups and downs are worldwide. d. A business cycle describes a longer period of time than day-to-day ups and downs. _____ 19. Every decision involves trade-offs because a. b. c. d. _____ 20. everyone has to make decisions. everyone’s resources are limited. some people have more money than others. cost and benefit ranked in progressive units. The line on a production possibilities curve showing the relative amounts of two types of goods produced using all resources is called the a. b. c. d. production possibilities frontier. opportunity cost line. utilization of resources. maximum of possible production line. _____ 21. An efficient economy is one that a. b. c. d. creates new resources through ongoing research and development. conserves its resources through underutilization. uses its resources to make the most goods and services. does not face the problem of scarcity. _____ 22. Which of the following is the kind of decision that can be made at the margin? a. b. c. d. whether or not to hire an extra worker whether or not to go on a vacation whether or not to buy a new home whether to have a dog or cat as a pet _____ 23. Which of the following is physical capital? a. b. c. d. Unit 1 Evaluation a college degree a factory building learning to sew playing the violin BUSH 035 _____ 24. Which of the following people is an entrepreneur? a. a person who earns a lot of money as a singer or dancer b. a person who creates a game and sells it to a game manufacturer c. a person who starts an all-organic cleaning supplies business that employs others d. a person who works as a highly-paid computer programmer _____ 25. What must a nation’s economy do in order to improve the standard of living? a. b. c. d. remain stable grow reach economic equity allow central planning _____ 26. Why do people need to buy and sell goods and services? a. b. c. d. People need to make a profit. People need a competitive society. No one is completely independent. People need to provide the market with goods. _____ 27. What does the process of specialization do for an economy? a. b. c. d. It eliminates unemployment. It makes production more efficient. It fosters competition. It makes labor easier to control. _____ 28. What is the profit motive? a. b. c. d. exchange of goods money that a business makes opportunity for success incentive to make money _____ 29. Why has America been referred to as the “land of opportunity”? a. b. c. d. _____ 30. It provides anyone the possibility of success through hard work. It provides jobs for all citizens. It provides farmers farmland without levying taxes on the land. It provides money for all citizens. In what way does the Bill of Rights protect individuals’ freedom to engage in business activities? a. b. c. d. Unit 1 Evaluation It recognizes property rights. It denies the government the ability to regulate commerce. It provides free contracts. It provides each industry with a competitive edge. BUSH 035 _____ 31. The federal government monitors and regulates American banks and other financial institutions a. b. c. d. to improve the standard of living for all. to keep control over the economy. to shield money from the damaging effects of economic downturns. to keep prices stable. _____ 32. Health insurance for the elderly, the low-income, and the disabled is provided by a. b. c. d. Medicare and Medicaid. the unemployment insurance program. worker’s compensation. TANF. _____ 33. Which of the following are factors of production? a. b. c. d. capital and land scarcity and shortages technology and productivity economics and business decisions _____ 34. A decision is made at the margin when each alternative considers a. b. c. d. a different trade-off than the others. where the most costly alternative will be. what the “all or nothing” alternative will be. cost and benefit ranked in progressive units. _____ 35. Refer to Figure 2.2 on page 31 in your textbook. Which statement best describes the circular flow of a market economy? a. b. c. d. Physical flow and monetary flow always go in the same direction. Monetary flow always goes from firms to households. Households pay for goods and services; firms pay for land, labor, and labor. Physical flow always goes from households to firms. _____ 36. Which of the following best describes the economy of the United States? a. b. c. d. Unit 1 Evaluation free market centrally planned mixed, but more centrally planned mixed, but more like a free market BUSH 035 _____ 37. Which of the following might a government provide as part of a safety net for citizens? a. b. c. d. general elections every four years unemployment compensation a strong military defense regulation of commerce _____ 38. Various federal, state, and local government programs help raise people’s standard of living because a. b. c. d. people living in areas of poverty cannot afford to pay their taxes. people want the government to intervene in the market. certain groups of people have fewer opportunities to be productive. people expect to maintain a high standard of living. _____ 39. Private company Big Red Inc. is put in charge of building and running a state’s entire road system. The company charges high fees to use its roads and only maintains them in heavily populated areas. Big Red is an example of a a. b. c. d. _____ 40. positive externality. public good. market failure. negative externality. When an economy grows, its production possibilities curve a. b. c. d. shifts to the right. shifts to the left. shifts upward. shifts downward. _____ 41. Which of the following is an example of using physical capital to save time and money? a. hiring more workers to do a job b. building extra space in a factory to simplify production c. switching from oil to coal to make production cheaper d. lowering workers’ wages to increase profits _____ 42. Which statement about the American government’s power to tax is true? a. b. c. d. Unit 1 Evaluation The president can create new taxes with executive orders. The Sixteenth Amendment says only state and local governments can tax income. Congress can levy direct taxes based on income. All federal taxes are indirect taxes. BUSH 035 _____ 43. The town of Riverton makes many tires. The town also grows a small amount of strawberries. Strawberries are becoming more popular. Riverton decides to grow more strawberries and make fewer tires. According to the law of increasing costs, what will happen? a. b. c. d. The opportunity cost of making tires will increase. The opportunity cost of growing strawberries will increase. The opportunity cost of making tires will decrease. The opportunity cost of growing strawberries will decrease. _____ 44. Who owns the factors of production? a. b. c. d. individuals households firms the market _____ 45. A farm grows corn and alfalfa. What would happen if the farm owner could not get enough workers to plant all the fields? a. b. c. d. Taxes will go up. The farm will be most efficient. Less corn and alfalfa can be grown. The demand for corn will grow. _____ 46. Refer to Figure 2.4 on page 41 in your textbook. According to the continuum of mixed economies, which country is closest to an unregulated economy? a. b. c. d. China Mexico Singapore United States _____ 47. Business cycles occur in free enterprise systems because a. government policy creates cycles. b. the efficiency of workers is not the same from season to season, but fluctuates on a regular basis annually. c. the standard of living is very high. d. economic decisions about factors such as prices, production, and consumption are determined by the market. _____ 48. Which of the following are the most common in-kind benefits? a. b. c. d. Unit 1 Evaluation Medicaid, food stamps, Social Security, and legal aid food giveaways, food stamps, Social Security, and legal aid food giveaways, food stamps, subsidized housing, and legal aid food giveaways, food stamps, subsidized housing, and college financial aid BUSH 035 _____ 49. Which would a company do to increase its human capital? a. b. c. d. _____ 50. build a company cafeteria hire more part-time workers pay for employees’ education lease cars for employees Refer to Figure 2.3 on page 40 in your textbook. Which statement about circular flow in a mixed economy is false? a. b. c. d. Firms may tax households directly. Tax dollars flow from households to firms by way of government expenditures. Tax dollars flow from firms to households by way of government expenditures. The government taxes firms and households. Carefully check your answers on this evaluation and make any corrections you feel are necessary. When you are satisfied that you have answered the questions to the best of your ability, transfer your answers to an answer sheet. Please refer to the information sheet that came with your course materials. Unit 1 Evaluation BUSH 035 BLANK PAGE
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