ECONOMICS PRETEST

(No grade taken- merely for your self-assessment)

WHAT IS ECONOMICS?

DEFINITION?

Which is always present in an economic system?

• (a) central planning

• (b) strikes

(c) scarce resources

(d) market decision-making

Which of the following taxes is mostly based on the ability to

pay?• A) property tax

• B)sales tax

• C) social security tax

• D) income tax

Caveat emptor means:

• A) the public’s right to obtain land

• B) let the buyer beware

• C) citizen’s right to own property

• D) noninterference by government

• E) special concessions to business

Who controls the money in circulation?

• A) Treasury

• B) Federal Deposit of Insurance Corporation

• C) Federal Reserve

• D) Banks

An underdeveloped country is basically

• A) industrial in nature

• B) receiving a favorable balance of trade

• C) automated

• D) agrarian in nature

The total value of goods and services produced in a given

year is called:• A) national income

• B) national wealth

• C) consumer debt

• D) gross domestic product

Federal government expenditures in the market are the greatest in

which of the following areas?

• A) defense• B) debt• C) welfare

d) foreign aid

Supply and demand in the market determine

• A) utility

• B) cost

• C)production

• D) price

Name the three basic economic systems in the world.

• A)_____________

• B)_____________

• C)_____________

The opportunity cost of a new public high school is the:

• A) money cost of hiring teachers for the new school

• B) cost of constructing the new school at a later date

• C) change in the annual tax rate to pay for the new school

• D)other goods and services that must be given up to build the new school

Assuming little or no government interference in the market, which of

the following is the lifeblood (internal engine) of the market?

• A) competition

• B) price

• C) stock market

• D) regulation

Which government agency regulates antitrust formations?• A) Supreme Court

• B) Congress

• C) Federal Trade Commission

• D) State Courts

FICA which is reported in your paycheck stands for what

deduction?• _____________________________• Federal Income Compensation Act.. (also called

payroll taxes)FICA taxes are paid into the Old Age Survivors and

Disability (OASDI) and Medicare trust accounts. For 2007, you pay 6.2% of your first $97,500 income to OASDI. Your employer also pays out of its pocket the same percentage. This results in a combined contribution equal to 12.4% of the amount of your income. If you are self-employed, you contribute 12.4% of your own income.

What is monetary policy?

• _________________________

What is fiscal policy?

• ___________________________

What does CPI measure and what does the acronym stand

for?• __________________________

Name the three basic factors of production

• A________________

• B________________

• C_________________

One example of a capital good would be:

• A) bank deposits

• B) roofing machine

• C) coal

• D) ink

Of the following, which is the most general cause of low

individual incomes in the U.S.?• A) lack of valuable productive services to

sell

• B) discrimination against nonunion workers

• C) unwillingness to work

• D) progressive tax rates

To promote economic growth, a country must:

• A) increase investment

• B) Increase consumption

• C) Use the market system

• D) Use central economic planning

A government budget deficit exists when:

• A) government spending exceeds tax revenues

• B) government spending is increased

• C) the national debt is decreasing

• D) taxes are reduced

Ceteris paribus means:

• A) who cares

• B) the money is inflated

• C) all other things being equal

• D) the money should be equally distributed

Who wrote the Wealth of Nations?

• _________________________

What type of business formation is the most common

in the U.S.?• _________________________

What constitutes a favorable balance of trade?

• __________________________

• Do we have one now?

Which security pays interest?

• A)stock

• B) bond

Name the four market models in the U.S.

• A)________________

• B)________________

• C)________________

• D)________________

How does the First Amendment begin?

• _____________________________

• Why is that important to know?

Name your Five Civil Liberties

• A)__________________

• B)__________________

• C)__________________

• D)__________________

• E)__________________

What three questions does every economy ask?

• A)_________________

• B)_________________

• C)_________________

What is the motivating force of a free enterprise economy?

• ____________________________

What does the acronym GDP stand for?

What are the component parts of GDP?

With time, a decrease in the dollar price of foreign currency would cause

(i.e. dollar is depreciated.)a. The nation’s imports to increase and

the exports to decrease.b. The nation’s exports to increase and the

imports to decrease.c. Both the imports and exports to

decreased. Both the imports and exports to

increase

What are the two evils of every economy?

WELCOME TO “ECON 101”

DOES ANY OF THIS STUFF AFFECT YOU?

“There can be no real freedom in the presence of economic insecurity.”

Chester Bowles