ECONOMICS PRACTICE QUESTIONS: What is an economic system that relies on habit,

Questions and Answers custom, or ritual to decide questions of production

1. and consumption of goods and services?
What is the financial gain made in transactions? A. Capitalism
A. Profit B. Socialism
B. Resource C. Traditional system
C. Scarcity D. Barter system
D. Wage
8.
2. What is a payment made my an employer to an
If a person makes a necklace that only costs $2.00 to employee?
make, and then sells the necklace for $12.00, they A. Profit
made a $10.00 ____? B. Marginal
A. Wage C. Interest
B. Demand D. Wage
C. Profit
D. Equilibrium price 9.
What is a formal organization of producers that
3. agree to coordinate prices and production?
What is an economic or productive factor required Discuss
to accomplish an activity? A. Cartel
A. Specialization B. Traditional system
B. Resource C. Command system
C. Traditional system D. Corporation
D. Wage
10.
4. What are two goods that are bought and used
What is it called when you have limited quantities of together?
resources used to meet unlimited wants? A. Monopolistic competition
A. Profit B. Market system
B. Specialization C. Complementary goods
C. Cartel D. Efficiency
D. Scarcity
11.
5. What is a legal entity owned by individual
What is the concentration of the productive efforts stockholders?
of individuals and firms on a limited number of A. Capital
activities? B. Free enterprise
A. Socialism C. Specialization
B. Specialization D. Corporation
C. Factors of production
D. Free enterprise 12.
What is the desire to own something and the ability
6. to pay for it called?
What is a social and political philosophy based on A. Demand
the belief that democratic means should be used to B. Allocation
evenly distribute wealth throughout a society? C. Capital
A. Captialism D. Opportunity cost
B. Socialism
C. Traditional system 13.
D. Microeconomics What is the measure of how consumers react to a
change in price?
7. A. Elasticity
B. Marginal B. Canada
C. Equilibrium price C. United Kingdom
D. Scarcity
21.
14. Corporations are in business for what?
What is the point at which the quantity demanded A. Profit
and the quantity supplied are equal called? B. Non-profit
A. Elasticity C. Stockholders
B. Efficiency
C. Equilibrium price 22.
D. Production possibilites At full capacity, the KIA plant should produce how
many vehicles per year?
15. A. 250,000,000
What is the study of economic behavior and B. 1 billion
decision making of small units, such as individuals, C. 300,000
families, and businiesses called?
A. Macroeconomics 23.
B. Microeconomics When a state agrees to lower a tax rate for one
C. Economics corporation so that the corporation builds a plant or
D. Economic statistics factory in that state, it is an example of what?
A. Capitalism
16. B. Monopolistic competition
What is a market structure in which many C. Incentive
companies sell products that are similar but not
identical? 24.
A. Monopoly How much did it cost KIA to build their plant in
B. Traditional system Georgia?
C. Oligopoly Discuss
D. Monopolistic competition A. $1 billion
B. $2 billion
17. C. $3 billion
The KIA plant was built by which country?
A. North Korea 25.
B. South Korea What is financial compensation in exchange for
C. China labor?
A. Profit
18. B. Wage
The machines and robots at the KIA plant are an C. Capital
example of what?
A. Capital 26.
B. Economic technology What is the hourly wage at KIA?
C. Specialization A. $14-21/hr
B. $15-25/hr
19. C. $12-22/hr
The KIA plant was built in what Georgia city?
A. Middleton 27.
B. Atlanta When a consumer buys a car from a dealership, this
C. West Point is an example of what?
A. Macroeconomics
20. B. Microeconomics
Which country represents a substantial degree of C. Home Economics
socialism?
A. Denmark
BASIC ECONOMIC QUIZ C. Consumer taxes
Questions and Answers D. Employment figures
1. E. None of the above
If the CPI in 2000 is 100 and the CPI in 2008 is 110,
there has been: 7.
A. Slight inflation You own a farm that generates $100 K per year. You
B. Slight deflation discover it is sitting on top of an oil field that could
C. Extreme inflation generate $500 K per year. Your economic cost of
D. Extreme deflation continuing to farm on the land is:
E. Stagflation A. $100 K
B. $400 K
2. C. $200 K
Why are transfer payments not a component of D. $500 K
GDP? E. $1000 K
A. They are too large and would skew data
B. They are negligible in size and scope ECONOMIC PRETEST
C. They do not generate wealth Questions and Answers
D. They only measure a producer's impact on GDP 1.
E. They only measure the government's impact on For most people, the largest protion of their
GDP personal income comes from:
A. Rent paid to them on their property
3. B. Interest on stocks and bonds
What is the effect of a price ceiling in the long run? C. Wages and salries from their jobs
A. Equilibrium D. The federal and state governments.
B. Shortages
C. Surpluses 2.
D. Inflation When a person rents an apartment, who benefits
E. Deflation from the transaction?
A. Only the person renting the apartment
4. B. Only the landlord
You are an artist. It always takes you an hour to C. Both the renter and the landlord
produce one work of art. In other words, 1 work D. Mortgage companies
takes 1 hour, two works takes 2 hours, and so forth.
Time is your only cost. This violates the principle of 3.
A. Demand When deciding which of two items to purchase, you
B. Supply should always:
C. Ownership A. Choose after comparing costs and benefits of
D. Equilibrium both items
E. Diminishing marginal returns B. Choose the item that costs less
C. Chosse the item with the greatest benefits
5. D. Choose the item that you want
Which of the following is not a component of
demand? 4.
A. Consumer spending If the price of beef doubled and the price of poultry
B. Investment stayed the same, people would most likely buy:
C. Government spending A. Less poultry and more beef
D. Transfer payments B. More poultry and less beef
E. Exports C. The same amount of pultry and beef
D. Less poultry and beef
6.
Which of the following would cause a supply shift? 5.
A. A change in consumer tastes or preferences In the United States, who determines what goods
B. New technology and services will be porduced?
A. Producers and the government
B. Government
C. Consumers
D. Producers, consumers, and government
6.
Since the resources used in the production of goods
and services are limited, society must:
Discuss
A. Reduce the use of those resources
B. Try to get more resources
C. Focus on their most abundant resource
D. Make choices about how to use resources
7.
A large increase in the cost of producing jeans is
most likely to result in:
Discuss
A. Lower jean prices and more jeans bought
B. Higher jean prices and fewer jeans bought
C. No change
D. Lower jean prices and fewer jeans bought
8.
A person who starts a business to produce a new
product is known in the marketplace as:
Discuss
A. A bureaucrat
B. A manager
C. An entrepreneur
D. A Chief Executive Officer (CEO)
9.
Which of the following would most likely accelerate
innovation in the computer industry?
A. Taxing all new inventions in the industry
B. Investing more into research and development
C. Increased government regulation of the industry
D. Greater use of PCs by individuals
10.
If interest rates charged by banks decreased,
business would be most likely to:
Discuss
A. Increase investment spending
B. Decrease the number of employees
C. Increase their prices
D. See an increase in their stock prices
11.
The stock market is an example of an institution that
exists to help people achieve their goals. The
existence of the stock market:
Discuss
A. Helps predict stock prices
B. Helps predict corporate earnings
C. Brings together buyers and sellers of stocks
D. Generally increases the prices of stocks
12.
Which of the following statements about money is
true?
Discuss
A. It holds its value during times of inflation
B. It makes saving more difficult
C. It makes buying and selling easier
D. It doesn't hold its value
13.
Which of the following are most likely to be helped
by inflation?
A. Banks that loaned money at a fixed interest rate
B. People living on fixed incomes
C. People who borrowed money at fixed interest
rates
D. Businesses
14.
Assume that one US Dollar is the same as 10
Japanese Yen. If the Dollar becomes worth 15 Yen,
which of the following occurs?
Discuss
A. The price of all japanese goods increases
B. Japan will import more goods into the US
C. Americans in Japan will see that their dollar will
buy more goods and services
D. America will increase its exports to Japan
15.
If your city sets a maximum amount that landlords
can charge for rent, what is the most likely result?
A. Available apartments will equal the number of
people who want to rent them
B. There will be fewer apartments than people who
want to rent them
C. There will be more apartments than people who
want to rent them.
D. No change.
16.
Which of the following methods for reducing
pollution would most economists support?
A. Increased regulation on polluting companies
B. Eliminating all air pollution
C. Reducing air pollution until the cost of further
reductions outweighs the benefits
D. Government sponsored "green" automobiles

17.
If the United States stopped importing cars from
Japan, who would most likely benefit?
A. Japanese automakers
B. American automakers
C. American consumers
D. Japanese consumers

18.
If real Gross Domestic Product (GDP) has increased,
which of the following has also definitely increased?
Discuss
A. The amount of final goods and services produced
B. The number of resources used to produce goods
and services
C. Prices of final goods and services
D. Demand for final goods and services

19.
When a government's expenses for a year are higher
than its revenue for that year, the difference is
known a/an
A. Surplus
B. Shortage
C. Budget deficit
D. National debt