EOCT REVIEW
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Transcript of EOCT REVIEW
EOCT REVIEW
1.Which of the following is a
microeconomic calculation?
• A. Calculating GDP• B. Calculating the unemployment
rate• C. Calculating the interest rate on a
loan• D. Calculating the Consumer Price
Index
C
2.Which of the following benefits from the declining
value of money during a period of high inflation?
• A. a person with a savings account• B. A person with investments• C. a person who has borrowed money• D. A bank that has lent money
C
3.Which of these is the MOST likely effect of a
weak US Dollar?• A. Travel abroad will become more
affordable for Americans• B. Goods imported from other
countries will become more expensive• C. Foreigners will buy fewer US exports• D. Foreign investment in US
businesses will decline
B
4.If the government’s fiscal policy is designed to end a
recession, which action would congress MOST
likely take?• A. lower income taxes• B. raise income taxes• C. reduce government spending• D. raise the discount rate
A
1. In a market economy, the allocation of goods and services is determined
MOSTLY by• A. regulations of the federal government• B. decisions of advertisers• C. the needs of individuals• D. the incomes of individuals
D
2. When people use their resources so that marginal benefits exceed marginal
costs, they • A. make rational economic decisions• B. make irrational economic decisions• C. Eliminate the opportunity costs of
decisions• D. Fail to use resources efficiently
A
3. The main function of the Federal Reserve System in
the US economy is to • A. establish monetary policy• B. establish fiscal policy• C. establish trade policy• D. balance the federal budget
A
4. A major problem that both producers and
consumers face in market economies is
• A. lack of freedom• B. lack of efficiency• C. lack of profit motive• D. lack of economic security
D
1. Which sentence describes the MOST likely
effect of a US quota on Japanese imports?
• A. reduced trade barriers for American exports to Japan
• B. increased trade barriers for American exports to Japan
• C. a positive trade balance• D. more choices and lower prices for
American consumers.
B
2. Which of the following is an example of a capital investment for a retail
store?• A. hiring sales clerks and managers• B. renting retail space at a mall• C. Buying ads in a local newspaper• D. buying cash registers and displays
D
3. In which of the following situations are two nations NOT
likely to trade?• A. each nation has an absolute advantage in
producing one of the two products both want• B. Each nation has a comparative advantage
in producing one of the two products both want
• C. Neither nation has an absolute advantage in producing the product
• D. Neither nation has a comparative advantage in producing either product
D
4. When a product is selling at its equilibrium price
• A. producers cannot supply enough of it
• B. consumers want more of it than is available
• C. producers supply as much as consumers demand
• D. the price changes from day to day
C
1.What is one advantage of choosing an insurance
policy with a higher deductible, rather than a
lower deductible?• A. Lower premiums• B. lower out-of-pocket costs for
claims• C. higher coverage limit• D. lower coverage limit
A
2. When a society invests in education, it improves its
standard of living by improving its
• A. Labor• B. Capital Goods• C. Human Capital• D. Entrepreneurship
C
3. Which of the following is a total ban on the import of
items from a particular country?
• A. Quota• B. Embargo• C. Tariff• D. Standard
B
4. In which situation might the Federal Reserve buy
gov’t securities and lower the discount rate?
• A. In a recession• B. When the inflation rate is too high• C. When aggregate demand is too
high• D. When the economy is expanding
A
1. When is it a benefit for workers to have a contract
with a cost of living adjustment?
• A. During a recession• B. During a depression• C. During an inflationary period• D. During a strike, or work
stoppage
C
2. Which type of business organization has the
advantage of specialization but the disadvantage of unlimited
liability?• A. Sole Proprietorship• B. Partnership• C. Corporation• D. Oligopoly
B
3. Which form of credit has the disadvantages of
variable interest rates and finance charges
compounded monthly?• A. Bank Loans• B. Credit Union Loans• C. Installment Plans• D. Credit Cards
D
4. If aggregate demand begins decreasing, followed by a
decrease in aggregate supply, which stage of the business
cycle is the economy entering?• A. A period of expansion• B. A period of slowdown• C. An inflationary period• D. A period of equilibrium
B
1. Why does every economic decision involve an opportunity
cost?• A. Because resources are scarce and
wants are unlimited• B. Because few decisions have a marginal
benefit• C. Because prices in a market economy
are always too high• D. Because trade-offs are impossible to
make in rational decisions
A
2.When people invest in stocks, rather than bonds,
what trade-off are they making?
• A. Lower risks for lower returns• B. Higher risks for higher returns• C. Lower risks for higher returns• D. Higher risks for lower returns
B
3. The shampoo market has a structure of monopolistic competition. What is one
important feature of this market structure?
• A. One large firms controls prices in the market• B. A few large firms fix prices and control the
market• C. A few large firms are interdependent and
engage in frequent price wars• D. Firms with many similar products depend on
product differentiation, or branding
D
4. Keisha deposited $400 in a savings account that pays a simple interest of 3.5%/year. If she made no other deposits or withdrawals, how much interest had she earned
at the end of the 3 years.• A. $14• B. $28• C. $42• D. $50
C
1. If a nation’s imports for one year are worth $8.6 billion and
its exports are worth $8.5 billion the same year, that
nation definitely has • A. A trade deficit• B. A trade surplus• C. A negative balance of payments• D. A positive balance of payments
A
2. Among the Native Americans, beads were once used as a
medium of exchange. The main reason why this type of money served its function was that it
was • A. Easy to carry• B. Accepted as payment• C. Easily divisible into units• D. A precious metal in its community
B
3. In a command economy, the means of
production are owned by• A. Individuals• B. Family groups, or clans• C. Religious leaders• D. The government
D
4. If in one year, the federal government takes in $100 billion in taxes and spends
$99 billion, the nation definitely has
• A. A budget deficit for that year• B. A budget surplus for that year• C. No national debt• D. A positive balance of payments
B
1. An example of a technological monopoly
• A. A public utility that serves everyone in a large city
• B. A drug company with a patent for a new life-saving medicine
• C. A software company that drives competitors out of business in a price war
• D. A steel company that receives government subsidies.
B
2. Which of these is NOT one of the major roles that the US gov’t plays in the
economy• A. Providing private goods and
services• B. Redistributing income through
transfer payments• C. Protecting property rights• D. Resolving market failures
A
3. The most important factor that determines a
nation’s economic growth is• A. How fast its labor force increases• B. How quickly it can discover new
resources• C. How much it can improve productive
efficiency• D. How much its government improves its
fiscal policy
C
4. What kind of insurance pays you a monthly income if you are NOT able to work for an extended period of time?• A. Term life insurance• B. Whole life insurance• C. Disability insurance• D. Health insurance
C
1. If inflation rates are sharply increasing, which
fiscal policy would make the MOST sense?
• A. Reduce government spending• B. Reduce income taxes• C. Reduce sales tax• D. Reduce the discount rate
A
2. What kind of economy do MOST nations in the world
have today?• A. Market• B. Command• C. Traditional• D. Mixed
D
3. The best solution to problem of cyclical unemployment is
• A. Using fiscal policy to expand the economy and create more jobs
• B. Raising the minimum wage so that untrained workers earn as much as trained workers
• C. Encouraging workers who have lost high-paying jobs to take lower-paying jobs
• D. Retraining those whose skills are no longer marketable
A
4. The automobile industry is controlled by a few companies
whose pricing are interdependent. This market
is an example of• A. Monopoly• B. Oligopoly• C. Monopolistic Competition• D. Perfect Competition
B
1. The minimum wage is an example of a
• A. Market failure• B. Market equilibrium price• C. Price floor• D. Price ceiling
C
2. The Federal Deposit Insurance Company (FDIC)
is a government agency that
• A. Provides health insurance for low-income people
• B. Provides mortgage insurance for homeowners
• C. Protects banks from the risks of bankruptcy
• D. Protects the savings of people who deposit their money in banks
D
3. Payments for the use of land and capital are
called• A. Rent and interest• B. Rent and wages• C. Interest and wages• D. Interest and profits
A
4. If a bank pays 3% interest on saving accounts,
how much interest will it charge for loans?
• A. 3%• B. Less than 3%• C. More than 3%• D. The discount rate
C
1. A division of labor improves efficiency on the
job because it involves• A. Specialization• B. Voluntary exchange• C. Job security• D. Diversification
A
2. In a market economy, how do people obtain
MOST of the things they want and need?
• A. Government transfer payments• B. Public goods and services• C. Voluntary exchange• D. Bartering and communal sharing
C
3. What choice describes a macroeconomic
calculation?• A. Calculating a families monthly
budget• B. Calculating a firm’s annual profits• C. Calculating the unemployment rate• D. Calculating the interest on a
personal loan
C
4. When the US gov’t buys airplanes from an aircraft
company, it makes a transaction in the
• A. Factor Market• B. Product Market• C. Property Market• D. Public Market
B
1. An increase in the demand for US exports will
usually result in• A. An increase in the international
value of the dollar• B. A decrease in the international
value of the dollar• C. An increase in the value of foreign
currency in the US• D. An increase in the price of imported
goods in the US
A
2. The BEST way to improve your credit rating
is to• A. Never get a credit card• B. Never borrow money from a bank• C. Never forget to pay your bills on
time• D. Never accumulate assets or
collateral
C
3. If the unemployment rate is slowly beginning to fall and the GDP is slowly beginning to rise,
which phase of the business cycle are you in?
• A. Recovery or expansion• B. Downturn, or contraction• C. Recession• D. An inflationary spiral
A
4.Which gov’t institution regulates the money supply
of the US economy?• A. The United States Treasury• B. The United States Mint• C. The Federal Reserve System• D. The Securities and Exchange
Commission
C
1. A tax on an imported good
• A. Tariff• B. Quota• C. Embargo• D. Subsidy
A
1. If the price of milk increases slightly, the demand for milk will NOT change very much. This market situation is an
example of • A. Demand elasticity• B. Demand inelasticity• C. Supply elasticity• D. Supply inelasticity
B
2. Janice decides to spend $20 on a ticket to a concert instead of buying a new blouse. What is the opportunity cost of her
decision?• A. $20• B. The benefit of having a new blouse• C. The enjoyment of the concert• D. The opportunity to go out with
friends.
B
3. How is NAFTA similar to the EU?
• A. Each increases trade barriers among neighboring nations
• B. Each aims to eliminate trade barriers among neighboring nations
• C. Each promotes free trade with all nations of the world
• D. Each promotes protectionist policies against nations around the world
B