1. The reason people must choose which goods to buy and consume is:
-specialization
Scarcity
An abundance of free resources
People engaging in exchange

2. The reason people must choose which goods to buy and consume is:
-specialization
Scarcity
An abundance of free resources
People engaging in exchange

3. Decide the amount of each resource to produce
Decide the amount of each resource to produce. Analyze how labor intensive it will be to produce. Analyze how capital intensive it will be to produce.
These statements are closely related to which of the basic economic questions:
What to produce.
For whom to produce
How to produce
What to sell

4. Decide the amount of each resource to produce
Decide the amount of each resource to produce. Analyze how labor intensive it will be to produce. Analyze how capital intensive it will be to produce.
These statements are closely related to which of the basic economic questions:
What to produce.
For whom to produce
How to produce
What to sell

5. Entrepreneurs are people who-
Put together land, labor, and capital to create new businesses
Help settle labor disputes
Work on the floor of the stock exchange
Produce all of a country’s guns and butter

6. Entrepreneurs are people who-
Put together land, labor, and capital to create new businesses
Help settle labor disputes
Work on the floor of the stock exchange
Produce all of a country’s guns and butter

7. The circular flow model emphasizes:
The relationship of buyers and sellers within a market
The government collection of taxes from firms
The government purchases of goods from producers
Firms selling resources to households

8. The circular flow model emphasizes:
The relationship of buyers and sellers within a market
The government collection of taxes from firms
The government purchases of goods from producers
Firms selling resources to households

9. It would increase revenue for firms and the government
Imagine that households decide to increase their spending. Based on the circular-flow model, how would this event be reflected in the economy?
It would increase revenue for firms and the government
It would increase current purchasing power and cause expansion
It would withdraw income, or current purchasing power, from the system
It would increase the amount of imports purchased by consumers

10. It would increase revenue for firms and the government
Imagine that households decide to increase their spending. Based on the circular-flow model, how would this event be reflected in the economy?
It would increase revenue for firms and the government
It would increase current purchasing power and cause expansion
It would withdraw income, or current purchasing power, from the system
It would increase the amount of imports purchased by consumers

11. What does it mean that a company is going public?
The company takes large loans from the government
The company holds a press conference to release new products
The company sells ownership shares, otherwise known as stock, to the general public.
The company sells bonds to the general public

12. What does it mean that a company is going public?
The company takes large loans from the government
The company holds a press conference to release new products
The company sells ownership shares, otherwise known as stock, to the general public.
The company sells bonds to the general public

13. Restrictions on occupational choices Limits on competition
The U.S. free enterprise system encourages private property ownership through-
Restrictions on occupational choices
Limits on competition
Increased government regulation
Tax incentives for homeowners

14. Restrictions on occupational choices Limits on competition
The U.S. free enterprise system encourages private property ownership through-
Restrictions on occupational choices
Limits on competition
Increased government regulation
Tax incentives for homeowners

15. Opportunity costs arise in production because-
Resources must be shifted away from producing one good in order to produce another
Resources are unlimited
Monetary costs of inputs usually outweigh non-monetary costs
Wants are limited in society

16. Opportunity costs arise in production because-
Resources must be shifted away from producing one good in order to produce another
Resources are unlimited
Monetary costs of inputs usually outweigh non-monetary costs
Wants are limited in society

17. What are the three basic economic questions a free market economy answers?
What to produce, how much to produce, when to produce
What to produce, how to produce, how much to produce
What to produce, how to produce, and for whom to produce
How to produce, how much to produce, and for whom to produce

18. What are the three basic economic questions a free market economy answers?
What to produce, how much to produce, when to produce
What to produce, how to produce, how much to produce
What to produce, how to produce, and for whom to produce
How to produce, how much to produce, and for whom to produce

19. Which is a unique characteristic of corporations?
Lack of special taxation
Limited life
Enjoys the legal rights of an individual
Subject to less regulations

20. Which is a unique characteristic of corporations?
Lack of special taxation
Limited life
Enjoys the legal rights of an individual
Subject to less regulations

21. Risk of decline in value Risk of lost purchasing power
Manuel would like to invest his money so it can grow. There are always risks. Which of the following is not a risk he should consider?
Risk of decline in value
Risk of lost purchasing power
Risk of liquidity
Risk of failure of default

22. Risk of decline in value Risk of lost purchasing power
Manuel would like to invest his money so it can grow. There are always risks. Which of the following is not a risk he should consider?
Risk of decline in value
Risk of lost purchasing power
Risk of liquidity
Risk of failure of default

23. What is an important benefit of the U.S. free market system?
Government intervention in all industry sectors
Freedom of choice for consumers and producers
Freedom of choice for consumers and borrowers
Limited variety of goods and services

24. What is an important benefit of the U.S. free market system?
Government intervention in all industry sectors
Freedom of choice for consumers and producers
Freedom of choice for consumers and borrowers
Limited variety of goods and services

25. To say that a country has an absolute advantage in the production of steel is to say that-
Its opportunity cost of producing steel is lower than any other country’s
The relative proice of steel is higher in that country than in any other
It can produce more steel with a given amount of resources than any other country can
Its opportunity cost of producing steel is greater than any other country’s

26. To say that a country has an absolute advantage in the production of steel is to say that-
Its opportunity cost of producing steel is lower than any other country’s
The relative price of steel is higher in that country than in any other
It can produce more steel with a given amount of resources than any other country can
Its opportunity cost of producing steel is greater than any other country’s

27. International trade is based on specialization, as countries specialize in products they have a comparative advantage. What determines a comparative advantage?
Absolute advantage
Relative price
Sectors of the economy
Opportunity cost

28. International trade is based on specialization, as countries specialize in products they have a comparative advantage. What determines a comparative advantage?
Absolute advantage
Relative price
Sectors of the economy
Opportunity cost

29. Why is NAFTA important to trade?
It eliminates barriers to trade and smoothes the progress of the cross-border movement of goods and services throughout N. America
It is the only international organization whose main function is to ensure that trade flows smoothly, predictably, and freely
It is an organization created to provide goods and services to European countries torn apart after two World Wars
It is an agreement that ensures consistent trade between the U.S. , Russia, and China

30. Why is NAFTA important to trade?
It eliminates barriers to trade and smoothes the progress of the cross-border movement of goods and services throughout N. America
It is the only international organization whose main function is to ensure that trade flows smoothly, predictably, and freely
It is an organization created to provide goods and services to European countries torn apart after two World Wars
It is an agreement that ensures consistent trade between the U.S. , Russia, and China

31. Consumers; government Labor; consumers Consumers; labor
The group that benefits the most from free international trade is _____, and the group that benefits the least is ____.
Consumers; government
Labor; consumers
Consumers; labor
Government; labor

32. Consumers; government Labor; consumers Consumers; labor
The group that benefits the most from free international trade is _____, and the group that benefits the least is ____.
Consumers; government
Labor; consumers
Consumers; labor
Government; labor

33. What is one of the effects of trade barriers on economic activity?
Tariffs and quotas increase the price of an imported product
Quotas increase the number of a product exported to a country
Tariffs decrease the price of an imported product
Trade barriers guide consumers toward the purchase of imported goods

34. What is one of the effects of trade barriers on economic activity?
Tariffs and quotas increase the price of an imported product
Quotas increase the number of a product exported to a country
Tariffs decrease the price of an imported product
Trade barriers guide consumers toward the purchase of imported goods

35. Pierre is an importer of US corn
Pierre is an importer of US corn. The cost of corn is $2500 per 5000 bushels. Pierre wants to import 60,000 bushels. If the exchange rate is 1C = 1.50 USD, how many Euros will Pierre need to convert to US dollars?
30,000 C
20,000 C
25,000 C
7500 C

36. Pierre is an importer of US corn
Pierre is an importer of US corn. The cost of corn is $2500 per 5000 bushels. Pierre wants to import 60,000 bushels. If the exchange rate is 1C = 1.50 USD, how many Euros will Pierre need to convert to US dollars?
30,000 C
20,000 C
25,000 C
7500 C

37. 1. Free Enterprise 2. Socialism 3. Communism
What set best completes the chart?
1. Little Freedom, Total Freedom, No Freedom
2. Little Freedom, No Freedom, Total Freedom
3. Total Freedom, No Freedom, Little Freedom
4. Total Freedom, Little Freedom, No Freedom

38. 1. Free Enterprise 2. Socialism 3. Communism
What set best completes the chart?
1. Little Freedom, Total Freedom, No Freedom
2. Little Freedom, No Freedom, Total Freedom
3. Total Freedom, No Freedom, Little Freedom
4. Total Freedom, Little Freedom, No Freedom

39. Allowing for strong free markets
What idea advocated by John Maynard Keynes was attempted to pull the US economic system out of recession.
Allowing for strong free markets
Little government intervention in the economy
Job specialization and division of labor to increase the productivity of an economy
Increased role of government to correct instability in a country’s economy

40. Allowing for strong free markets
What idea advocated by John Maynard Keynes was attempted to pull the US economic system out of recession.
Allowing for strong free markets
Little government intervention in the economy
Job specialization and division of labor to increase the productivity of an economy
Increased role of government to correct instability in a country’s economy

41. The demand for butter should increase
Assume that consumers consider butter and bread complementary goods. If the price of bread increases by 25%, what will be the expected consequence for butter?
The demand for butter should increase
The demand for butter should decrease
The demand for butter remains the same
The price of butter should decrease

42. The demand for butter should increase
Assume that consumers consider butter and bread complementary goods. If the price of bread increases by 25%, what will be the expected consequence for butter?
The demand for butter should increase
The demand for butter should decrease
The demand for butter remains the same
The price of butter should decrease

43. Which of the following exemplifies monopolistic market structure?
Large number of sellers, substantial barriers to entry, some control over price
One seller, no opportunity to enter the market, complete control over price
Large number of sellers, few barriers to entry, no control over price
A few sellers, substantial barriers to entry, some control over price.

44. Which of the following exemplifies monopolistic market structure?
Large number of sellers, substantial barriers to entry, some control over price
One seller, no opportunity to enter the market, complete control over price
Large number of sellers, few barriers to entry, no control over price
A few sellers, substantial barriers to entry, some control over price.

45. Which of the following is the best title for the list above
Zoning laws ordinances regulating noise building safety and sanitation preservation of historic buildings
Which of the following is the best title for the list above
Gov’t restrictions placed on businesses
Costs and benefits of business property
Monopolistic competition
Economic interdependence

46. Which of the following is the best title for the list above
Zoning laws ordinances regulating noise building safety and sanitation preservation of historic buildings
Which of the following is the best title for the list above
Gov’t restrictions placed on businesses
Costs and benefits of business property
Monopolistic competition
Economic interdependence

47. According to the law of supply…
The quantity of a product supplied will decrease as buyers’ incomes decrease
Producers will not supply a product if there is an opportunity cost attached to acquiring the product
There is a direct relationship between the price of a product and the quantity of the product supplied
There is an inverse relationship between the price of a product and the quantity of the product supplied

48. According to the law of supply…
The quantity of a product supplied will decrease as buyers’ incomes decrease
Producers will not supply a product if there is an opportunity cost attached to acquiring the product
There is a direct relationship between the price of a product and the quantity of the product supplied
There is an inverse relationship between the price of a product and the quantity of the product supplied