Economics Review Fall 2009 Semester. Economics Review Who wrote “The Wealth of Nations” describing a new economic system based on freedom called capitalism?

Economics ReviewEconomics Review

Fall 2009 SemesterFall 2009 Semester

Economics ReviewEconomics Review Who wrote “Who wrote “The Wealth of Nations”The Wealth of Nations”

describing a new economic system describing a new economic system based on freedom called capitalism?based on freedom called capitalism?

Adam SmithAdam Smith Karl MarxKarl Marx Milton FreemanMilton Freeman Samuel Adams Samuel Adams

Economics ReviewEconomics Review Adam SmithAdam Smith

Economics ReviewEconomics Review Under modified capitalism in the Under modified capitalism in the

United States, which of the following United States, which of the following is not done by the government?is not done by the government?

Distributor of ResourcesDistributor of Resources Protector of Workers and ConsumersProtector of Workers and Consumers Provider of Goods and ServicesProvider of Goods and Services Regulator of BusinessesRegulator of Businesses

Economics ReviewEconomics Review Distributor of ResourcesDistributor of Resources

Economics ReviewEconomics Review A business that is owned and A business that is owned and

managed by one person is a/an managed by one person is a/an

CorporationCorporation Limited PartnershipLimited Partnership Sole ProprietorshipSole Proprietorship TreasuryTreasury

Economics ReviewEconomics Review Sole ProprietorshipSole Proprietorship

Economics ReviewEconomics Review When the market is dominated by a When the market is dominated by a

few large, profitable firms, this is few large, profitable firms, this is known as ____.known as ____.

Monopolistic CompetitionMonopolistic Competition MonopolyMonopoly Pure CompetitionPure Competition OligopolyOligopoly

Economics ReviewEconomics Review OligopolyOligopoly

Economics ReviewEconomics Review The process in which union and The process in which union and

company representatives meet company representatives meet to negotiate a new labor to negotiate a new labor contract is known as –contract is known as –

ArbitrationArbitration Cooperative Work Cooperative Work Collective BargainingCollective Bargaining MediationMediation

Economics ReviewEconomics Review Collective BargainingCollective Bargaining

Economics ReviewEconomics Review A person cannot be required to join a A person cannot be required to join a

union as a condition of getting or union as a condition of getting or keeping a job if there are –keeping a job if there are –

Labor ContractsLabor Contracts Minority RightsMinority Rights Right to Work Laws Right to Work Laws Open Market OperationsOpen Market Operations

Economics ReviewEconomics Review Right to Work Laws Right to Work Laws

Economics ReviewEconomics Review If you are denied credit, you have the If you are denied credit, you have the

right to –right to –

see your credit filessee your credit files get a credit cardget a credit card fill out a credit application fill out a credit application throw a fitthrow a fit

Economics ReviewEconomics Review see your credit filessee your credit files

Economics ReviewEconomics Review Which of the following is not a phase Which of the following is not a phase

of the business cycle?of the business cycle?

ExpansionExpansion PeakPeak InflationInflation TroughTrough

Economics ReviewEconomics Review InflationInflation

Economics ReviewEconomics Review Concentrating on producing what a Concentrating on producing what a

country can do best and importing country can do best and importing other goods is defined as –other goods is defined as –

an assembly linean assembly line specializationspecialization industrializationindustrialization trade advantagetrade advantage

Economics ReviewEconomics Review specializationspecialization

Economics ReviewEconomics Review The price at which currency is The price at which currency is

bought and sold is known as –bought and sold is known as –

exchange rateexchange rate absolute valueabsolute value stock pricestock price monetary unionmonetary union

Economics ReviewEconomics Review exchange rateexchange rate

Economics ReviewEconomics Review A business owned and managed by A business owned and managed by

a single individual is known as –a single individual is known as –

PartnershipPartnership CorporationCorporation Sole ProprietorshipSole Proprietorship Non-profit OrganizationNon-profit Organization

Economics ReviewEconomics Review Sole ProprietorshipSole Proprietorship

Economics ReviewEconomics Review An association that operates to An association that operates to

benefit a cause, charity, etc., is benefit a cause, charity, etc., is known as a –known as a –

PartnershipPartnership CorporationCorporation Sole ProprietorshipSole Proprietorship Non-profit OrganizationNon-profit Organization

Economics ReviewEconomics Review Non-profit OrganizationNon-profit Organization

Economics ReviewEconomics Review Which of the following would be an Which of the following would be an

advantage of a franchise?advantage of a franchise?

There is product identity.There is product identity. If the business goes bankrupt, the If the business goes bankrupt, the

owner owes nothing.owner owes nothing. No one can sue the store.No one can sue the store. The profits are tax free.The profits are tax free.


There is product identity.There is product identity.

Economics ReviewEconomics Review In which of the following business In which of the following business

organizations would the owner organizations would the owner have total liability and receive all of have total liability and receive all of the profits?the profits?

Non-profit organizationNon-profit organization PartnershipPartnership Sole ProprietorshipSole Proprietorship CorporationCorporation


Sole ProprietorshipSole Proprietorship

Economics ReviewEconomics Review At which point (s) along the PPF can At which point (s) along the PPF can

this society produce efficiently?this society produce efficiently?

Economics ReviewEconomics Review Points A and BPoints A and B

Economics ReviewEconomics Review At which point along the PPF does At which point along the PPF does

the society under produce?the society under produce?

Economics ReviewEconomics Review Point DPoint D

Economics ReviewEconomics Review Can this society produce at Point CCan this society produce at Point C

along the PPF Curve?along the PPF Curve? How?How?

Economics ReviewEconomics Review By adding new technology or By adding new technology or

resources in an economyresources in an economy

Economics ReviewEconomics Review Which of the following has the most Which of the following has the most

regulations and is difficult to start regulations and is difficult to start up?up?

Cottage industryCottage industry Sole proprietorshipSole proprietorship PartnershipPartnership CorporationCorporation


CorporationCorporation

Economics ReviewEconomics Review Which of the following is provided to Which of the following is provided to

retired and disabled workers and retired and disabled workers and their survivors?their survivors?

Social SecuritySocial Security Demand aideDemand aide Compensation Compensation UnemploymentUnemployment

Economics ReviewEconomics Review Social SecuritySocial Security

Economics ReviewEconomics Review The largest source of tax income for The largest source of tax income for

the federal government is – the federal government is –

Excise taxesExcise taxes Personal Income tax Personal Income tax Social Security taxesSocial Security taxes Tariffs Tariffs

Economics ReviewEconomics Review Personal Income tax Personal Income tax

Economics ReviewEconomics Review Which of the following is not a Which of the following is not a

problem in developing nations?problem in developing nations?

IlliteracyIlliteracy Limited natural resourcesLimited natural resources Stable governmentStable government Poor health carePoor health care

Economics ReviewEconomics Review Stable GovernmentStable Government

Economics ReviewEconomics Review Which is not an economic goal of the Which is not an economic goal of the

United States?United States?

Economic EquityEconomic Equity Economic GrowthEconomic Growth High UnemploymentHigh Unemployment Price StabilityPrice Stability

Economics ReviewEconomics Review High UnemploymentHigh Unemployment


A shortage will cause the price A shortage will cause the price to –to –

FallFall Rise Rise FluctuateFluctuate Stay the sameStay the same


RiseRise


A surplus will cause the price to A surplus will cause the price to –– FallFall Rise Rise FluctuateFluctuate Stay the sameStay the same

Economics ReviewEconomics Review FallFall

Economics ReviewEconomics Review Which generalization is valid based on the Which generalization is valid based on the

information learned in the class?information learned in the class?

Countries with low literacy rates have a high Countries with low literacy rates have a high per capita G.D.P.per capita G.D.P.

People tend to live longer lives in developing People tend to live longer lives in developing nations.nations.

Countries with a high per capita G.D.P. tend to Countries with a high per capita G.D.P. tend to have high literacy rates.have high literacy rates.

In nations with a high per capita G.D.P., people In nations with a high per capita G.D.P., people usually have a short life expectancy.usually have a short life expectancy.

Economics ReviewEconomics Review Countries with a high per capita G.D.P. Countries with a high per capita G.D.P.

tend to have high literacy rates.tend to have high literacy rates.

Economics ReviewEconomics Review The main reason that some US The main reason that some US

businesses moved their factories to businesses moved their factories to other countries in the 1900s was other countries in the 1900s was ____________.____________.

better workersbetter workers better climatebetter climate cheaper wagescheaper wages more modern factoriesmore modern factories

Economics ReviewEconomics Review cheaper wagescheaper wages

Economics ReviewEconomics Review Which of the following summarizes the cause and Which of the following summarizes the cause and

effect relationship intended by the North American effect relationship intended by the North American Free Trade Agreement?Free Trade Agreement?

Removal of trade restrictions among United States, Removal of trade restrictions among United States, Canada, and Mexico; stimulation of economic growthCanada, and Mexico; stimulation of economic growth

Removal of trade restrictions among United States, Removal of trade restrictions among United States, Canada, and Mexico; takeover of markets favored by Canada, and Mexico; takeover of markets favored by the European Unionthe European Union

Tightening of trade restrictions among United States, Tightening of trade restrictions among United States, Canada, and Mexico; establishment of more Canada, and Mexico; establishment of more industries in the United States industries in the United States

Imposition of stricter import and export regulations; Imposition of stricter import and export regulations; greater regulation of American industrygreater regulation of American industry

Economics ReviewEconomics Review Removal of trade restrictions among Removal of trade restrictions among

United States, Canada, and Mexico; United States, Canada, and Mexico; stimulation of economic growthstimulation of economic growth


Which is not a way to increase Which is not a way to increase productivity?productivity?

Poorly educated and poorly trained Poorly educated and poorly trained workersworkers

More capital goods per workerMore capital goods per worker New and better technologyNew and better technology Better allocation of resourcesBetter allocation of resources

Economics ReviewEconomics Review Poorly educated and poorly trained Poorly educated and poorly trained

workersworkers

Economics ReviewEconomics Review Which is NOT one of the three Which is NOT one of the three

fundamental economic questions?fundamental economic questions?

Who consumes goods and services?Who consumes goods and services? How should goods and services be How should goods and services be

produced?produced? What goods and services should be What goods and services should be

produced?produced? Why to produce?Why to produce?

Economics ReviewEconomics Review Why to produce?Why to produce?

Economics ReviewEconomics Review Which of the following is not a Which of the following is not a

characteristic of capitalism?characteristic of capitalism?

Economic FreedomEconomic Freedom Equal IncomeEqual Income Private PropertyPrivate Property Voluntary ExchangeVoluntary Exchange


Equal IncomeEqual Income


If supply exceeds demand there If supply exceeds demand there is (a/an) – is (a/an) –

BankruptcyBankruptcy InflationInflation SurplusSurplus ShortageShortage


SurplusSurplus


If demand exceeds supply there If demand exceeds supply there is (a/an) – is (a/an) –

BankruptcyBankruptcy InflationInflation SurplusSurplus ShortageShortage


ShortageShortage

Economics ReviewEconomics Review When the business and owners are When the business and owners are

legally separated so that the owners legally separated so that the owners aren’t responsible for the debts of aren’t responsible for the debts of the business, you have –the business, you have –

a cooperativea cooperative a holding companya holding company limited liabilitylimited liability unlimited lifeunlimited life


limited liabilitylimited liability

Economics ReviewEconomics Review Issued by state and local Issued by state and local

governments, they pay a lower rate governments, they pay a lower rate of interest but are tax-free.of interest but are tax-free.

Penny Stock Penny Stock Municipal Bonds “Munis”Municipal Bonds “Munis” Preferred StockPreferred Stock Treasury NotesTreasury Notes

Economics ReviewEconomics Review Municipal Bonds “Munis”Municipal Bonds “Munis”

Economics ReviewEconomics Review Amount of interest charged member Amount of interest charged member

banks for temporary loans by the banks for temporary loans by the Fed is called –Fed is called –

Reserve RequirementReserve Requirement Insider TradingInsider Trading Insured DepositInsured Deposit Discount Rate Discount Rate

Discount RateDiscount Rate

Economics ReviewEconomics Review Dollar value of all final goods Dollar value of all final goods

and services produced within a and services produced within a country’s borders in a year is country’s borders in a year is known as –known as –

Gross Domestic ProductGross Domestic Product Personal Consumption RatePersonal Consumption Rate Quality of LifeQuality of Life Wealth DistributionWealth Distribution

Economics ReviewEconomics Review Gross Domestic ProductGross Domestic Product

Economics ReviewEconomics Review Which of the following insurance Which of the following insurance

covers your vehicle for anything covers your vehicle for anything other than collision, such as other than collision, such as theft, broken glass, water, etc.?theft, broken glass, water, etc.?

ComprehensiveComprehensive CollateralCollateral No liabilityNo liability ReplacementReplacement


ComprehensiveComprehensive

Economics ReviewEconomics Review Country A can produce cars at a Country A can produce cars at a

lower cost than Country B. Country lower cost than Country B. Country A has a (n) _____ Advantage.A has a (n) _____ Advantage.

Trade AdvantageTrade Advantage Favorable AdvantageFavorable Advantage Comparative AdvantageComparative Advantage Absolute AdvantageAbsolute Advantage

Economics ReviewEconomics Review Absolute AdvantageAbsolute Advantage

Economics ReviewEconomics Review Bill Gates’ goal for his company was Bill Gates’ goal for his company was

to –to –

form a utopia by everyone giving from form a utopia by everyone giving from each of their abilities to each of their each of their abilities to each of their needs needs

have a computer on every desk and in have a computer on every desk and in every home, all running his softwareevery home, all running his software

create a new system based on no create a new system based on no taxation without political representationtaxation without political representation

allow customers to have it there way allow customers to have it there way while encouraging competitionwhile encouraging competition

Economics ReviewEconomics Review have a computer on every desk have a computer on every desk

and in every home, all running his and in every home, all running his softwaresoftware

Economics ReviewEconomics Review All of the following are true All of the following are true

concerning a corporation except –concerning a corporation except –

stockholders own the companystockholders own the company the owners receive dividendsthe owners receive dividends the owners are liablethe owners are liable policies are set by a board of policies are set by a board of

directorsdirectors


the owners are liablethe owners are liable

Economics ReviewEconomics Review In which of the following can the In which of the following can the

company be owned by outside company be owned by outside investors to increase capital investors to increase capital availability?availability?

PartnershipPartnership CorporationCorporation Non-profit OrganizationNon-profit Organization Sole ProprietorshipSole Proprietorship

Economics ReviewEconomics Review CorporationCorporation

Given the above table and graph, determine at what prices (s) equilibrium will occur.

A $1.00

B $2.00

C $3.00

D $4.00


$3.00


Given the above table and graph, determine at what quantity equilibrium will occur.

A. 4,000B. 7,000C. 8,000D. 10,000


7,0007,000


If the demand curve remains If the demand curve remains unchanged and the supply curve unchanged and the supply curve shifts to the right – shifts to the right –

quantity would increase and the price quantity would increase and the price would decreasewould decrease

both supply and price would increaseboth supply and price would increase the change in demand would cause the change in demand would cause

the shift in supplythe shift in supply the equilibrium price would increasethe equilibrium price would increase

Economics ReviewEconomics Review The price would decrease and the The price would decrease and the

quantity would increasequantity would increase

Economics ReviewEconomics Review If the supply curve remains If the supply curve remains

unchanged and the demand unchanged and the demand curve curve shifts to the left – shifts to the left –

both supply and price would increaseboth supply and price would increase the change in demand would cause the change in demand would cause

the shift in supplythe shift in supply quantity would decrease and the price quantity would decrease and the price

would increasewould increase the equilibrium price would increasethe equilibrium price would increase

Economics ReviewEconomics Review quantity would decrease and the quantity would decrease and the

price would increaseprice would increase

Economics ReviewEconomics Review If there was a freeze in Northern If there was a freeze in Northern

Florida that destroyed 40% of the Florida that destroyed 40% of the oranges in the state, what will oranges in the state, what will happen to the supply of oranges? happen to the supply of oranges?

increaseincrease not change at allnot change at all decreasedecrease demand would increasedemand would increase


decreasedecrease

Economics ReviewEconomics Review If the demand curve shifts to the If the demand curve shifts to the

left and the supply curve left and the supply curve shifts to the left – shifts to the left –

price would increase and quantity price would increase and quantity would increasewould increase

price would decrease and quantity price would decrease and quantity would increasewould increase

price would decrease and quantity price would decrease and quantity would decreasewould decrease

price would remain unchanged and price would remain unchanged and quantity would decreasequantity would decrease

Economics ReviewEconomics Review price would remain unchanged and price would remain unchanged and

quantity would quantity would decreasedecrease

Economics ReviewEconomics Review If the demand curve shifts to the If the demand curve shifts to the

right and the supply curve right and the supply curve shifts to shifts to the right –the right –

price would increase and quantity would price would increase and quantity would increaseincrease

price would decrease and quantity would price would decrease and quantity would increaseincrease

price would decrease and quantity would price would decrease and quantity would remain unchangedremain unchanged

price would remain unchanged and price would remain unchanged and quantity would increasequantity would increase

Economics ReviewEconomics Review price would remain unchanged and price would remain unchanged and

quantity would increasequantity would increase


The FDIC –The FDIC –

provides protection for citizens provides protection for citizens traveling to other traveling to other

countriescountries insures major corporationsinsures major corporations collects federal income taxescollects federal income taxes insures customer deposits if a insures customer deposits if a

bank failsbank fails

Economics ReviewEconomics Review insures customer deposits if a insures customer deposits if a

bank failsbank fails

Economics ReviewEconomics Review In which of the following business In which of the following business

organizations are decisions shared organizations are decisions shared by the few owners?by the few owners?

Non-profit OrganizationNon-profit Organization Sole ProprietorshipSole Proprietorship PartnershipPartnership CorporationCorporation


PartnershipPartnership


Which of the following is a true statement Which of the following is a true statement concerning fiscal policy?concerning fiscal policy?

The Federal Reserve Bank monitors The Federal Reserve Bank monitors and oversees.and oversees.

Has an immediate effect on the Has an immediate effect on the economyeconomy

Interest rates are used to correct for Interest rates are used to correct for unemploymentunemployment

Government taxation and spending Government taxation and spending are the tools usedare the tools used

Economics ReviewEconomics Review Government taxation and Government taxation and

spending are the tools usedspending are the tools used


What is Scarcity? What is Scarcity?

only applies to those living in poverty only applies to those living in poverty means that there are limited resources means that there are limited resources

to satisfy unlimited wantsto satisfy unlimited wants has been overcome by nations has been overcome by nations

establishing coloniesestablishing colonies occurs most often in North Americaoccurs most often in North America


means that there are limited means that there are limited resources to satisfy unlimited resources to satisfy unlimited wantswants

Economics ReviewEconomics Review In a partnership –In a partnership –

the owners are not liable for the owners are not liable for

losseslosses two or more people own the two or more people own the

companycompany stocks are sold on the NASDAQstocks are sold on the NASDAQ the company continues even the company continues even

upon the death of an upon the death of an ownerowner


two or more people own the two or more people own the companycompany

Economics ReviewEconomics Review Which of the following is a deduction Which of the following is a deduction

on personal income taxes if a person on personal income taxes if a person itemizes?itemizes?

Interest on three or more homesInterest on three or more homes Campaign ContributionsCampaign Contributions Property TaxesProperty Taxes All of the aboveAll of the above

Economics ReviewEconomics Review Property TaxesProperty Taxes

Economics ReviewEconomics Review Based on this excerpt, what is the Based on this excerpt, what is the

relationship between American relationship between American exports and American economic exports and American economic growth?growth?

There is no relationship.There is no relationship. Exports account for one-third of Exports account for one-third of

America’s economic growth.America’s economic growth. The American economy depends totally The American economy depends totally

on exports.on exports. Over half of the economy’s growth can Over half of the economy’s growth can

be attributed to exports.be attributed to exports.

Economics ReviewEconomics Review Exports account for one-third of Exports account for one-third of

America’s economic growth.America’s economic growth.

Economics ReviewEconomics Review Protectionism is incompatible with a Protectionism is incompatible with a

pure market economy because in a pure market economy because in a pure market economy. pure market economy.

governments do not existgovernments do not exist government does not interfere in the government does not interfere in the

economyeconomy nations are self-sufficient and do not nations are self-sufficient and do not

trade with one anothertrade with one another the government regulates the economy the government regulates the economy


government does not interfere in government does not interfere in the economythe economy

What role do households play in the production of businesses’ products and government’s goods and services? Households –

A provide the taxes that make production possible

B provide the wages and rents that make production possible.

C produce and sell business and government goods and services.

D provide the resources that make production possible.


provide the resources that make production possible.

Economics ReviewEconomics Review A group of government planners makes all A group of government planners makes all

economic decisions. The group assigns natural, economic decisions. The group assigns natural, human, and capital resources to the production of human, and capital resources to the production of those goods and services it wants. They decide those goods and services it wants. They decide how to produce and then how to distribute them.how to produce and then how to distribute them.

The description above best applies to theThe description above best applies to the

Feudal economy of 13th-century EuropeFeudal economy of 13th-century Europe Traditional economy of the SwahiliTraditional economy of the Swahili Free enterprise system of the United StatesFree enterprise system of the United States Command economy of the former Soviet UnionCommand economy of the former Soviet Union

Economics ReviewEconomics Review Command economy of the former Command economy of the former

Soviet UnionSoviet Union

Economics ReviewEconomics Review Which of the following questions might an Which of the following questions might an

economist ask in order to develop a economist ask in order to develop a hypothesis about consumer spending in the hypothesis about consumer spending in the United States after World War I?United States after World War I?

What products did households buy in the What products did households buy in the 1920s?1920s?

How many labor strikes occurred in the How many labor strikes occurred in the 1920s?1920s? What was the average hourly wage in the What was the average hourly wage in the

1920s?1920s? How long did it take to produce a car in the How long did it take to produce a car in the

1920s?1920s?

Economics ReviewEconomics Review What products did households buy What products did households buy

in the 1920s?in the 1920s?

Economics ReviewEconomics Review Before 1800, most goods were created start to finish, by Before 1800, most goods were created start to finish, by

a single artisan or crafts person. By 1800, factory a single artisan or crafts person. By 1800, factory workers completed smaller steps in the manufacturing workers completed smaller steps in the manufacturing process over and over. The goods were then transferred process over and over. The goods were then transferred to another person or machine to complete another step in to another person or machine to complete another step in the process.the process.

The process described in the latter part The process described in the latter part of the passage is known as –of the passage is known as – technological innovationstechnological innovations negative externalitynegative externality creative entrepreneurshipcreative entrepreneurship increased competitionincreased competition

Economics ReviewEconomics Review technological innovationstechnological innovations

Economics ReviewEconomics Review Which economic activity could be Which economic activity could be

carried out just as well in suburban, carried out just as well in suburban, rural, or urban environments?rural, or urban environments?

A service activity such as teaching.A service activity such as teaching. A primary activity such as mining or A primary activity such as mining or

logging.logging. A processing activity such as A processing activity such as

manufacturing.manufacturing. A primary activity such as farming or A primary activity such as farming or

fishing.fishing.

Economics ReviewEconomics Review A service activity such as A service activity such as

teaching.teaching.

Economics ReviewEconomics Review The new technologies of the late twentieth The new technologies of the late twentieth

century have changed how some people century have changed how some people satisfy their basic needs by-satisfy their basic needs by-

encouraging people to be more productive encouraging people to be more productive during their vacationsduring their vacations

increasing the number of hours people work to increasing the number of hours people work to produce goods and servicesproduce goods and services

facilitating communication that leads to the facilitating communication that leads to the production of goods and servicesproduction of goods and services

allowing families to meet their basic needs allowing families to meet their basic needs through subsistence agriculturethrough subsistence agriculture

Economics ReviewEconomics Review facilitating communication that facilitating communication that

leads to the leads to the production of production of goods and servicesgoods and services

Economics ReviewEconomics Review Why will deficit spending end a Why will deficit spending end a

depression?depression?

It increases purchasing power and It increases purchasing power and stimulates economic growth.stimulates economic growth.

The national government takes over and The national government takes over and operates businesses more operates businesses more

efficiently.efficiently. The national government turns its The national government turns its

revenue over to the states.revenue over to the states. It encourages investment through lower It encourages investment through lower

interest rates.interest rates.


It increases purchasing power It increases purchasing power and stimulates economic and stimulates economic growth.growth.


Be able to read a chart and Be able to read a chart and graph.graph.

Documents

Economics Review Fall 2009 Semester. Economics Review Who wrote “The Wealth of Nations” describing a new economic system based on freedom called capitalism?