Economic Exam Review

What is the best definition of elasticity in economics? * Elasticity of supply measures how the amount of a good changes when the producer hires more employees. * Elasticity of supply measures how the amount of a good changes when the producer uses new materials. * Elasticity of demand measures how the amount of a good changes when its price goes up or down. * Elasticity of demand measures how the amount of a good changes when its distribution expands.

Why does an increase in literacy rates often accompany an increase in per capita income? * People who have higher-paying jobs often have the time available to develop literacy skills. * Developing countries have higher-than-average literacy rates, which typically leads to higher income. * People who can read and who receive an education are eligible for higher-paying jobs. * Developed countries often attempt to raise low literacy rates to improve income.

What does it mean to be Cyclically unemployed?

As a result of decreased production, David lost his job designing cars. Which terms can be used to describe David? Check all that apply. * cyclically unemployed * Domestically unemployed * frictionally unemployed * structurally unemployed * still employed * unemployed

Land is considered a resource because it * is always available to use. * is used to produce things. * costs little or nothing to use. * requires labor to be useful.

What does it mean to be structurally unemployed?

What does it mean to be frictionally unemployed?

Which best describes a regressive tax? * a tax that charges low-income earners a lower percentage than high-income earners * a tax that charges an equal percentage to all * a tax that charges earners based on their professions * a tax that charges high-income earners a lower percentage than low-income earners

Which of the following best describes the circular flow model? * The model represents the movement of money throughout the economy. * The model represents the interactions within sectors. * The model represents the flow of goods and services between sectors. * The model represents the changing relationships between actors.

Why do developing countries usually have less variety in their economic activities? * Limited access to education means that people are not trained to work in industry or technology. * Focusing on one or two economic activities leads to more rapid economic development. * Developing countries are usually small and have limited populations and resources. * People prefer the lifestyle that accompanies traditional activities such as farming.

Which of the following statements about opportunity cost are true? CHECK ALL THAT APPLY. * It exists because resources are scarce. * It influences consumers. * It influences producers. * It assists in anticipating profits. * It encourages people to spread their resources around.

Among the changes that labor reformers wanted after the Industrial Revolution was * more jobs for untrained workers. * a ban on child factory workers. * jobs for women factory workers. * equal pay for owners and workers.

What happens when a bank is required to hold more money in reserve? * It has less money for loans. * It has less money for operations. * It has less money for interest payments. * It has less money for withdrawals.

Which of these are goals of an expansionary policy? Check all that apply. * increased available credit * decreased available credit * increased money supply * increased inflation * increased interest rates * decreased interest rates

The _____ is designed to help increase US productivity, GDP, and employment.

What is the purpose of the US International Trade Association? * to help countries establish free trade * to help businesses create viable exports * to limit levels of investment in trade opportunities * to limit trade opportunities for competing companies

How did NAFTA affect the economies of participating countries? * by creating unrestricted trade benefits * by raising employment rates and standards of living * by creating a balance of exports and imports * by increasing the overall volume of production

What type of economic growth do most developed economies experience? * rapid growth * unpredictable growth * moderate growth * slow growth

Which federal regulatory agency would most likely bring a civil suit against a business that broke securities laws? * the SEC * the FDA * OSHA * the FDIC

A pure market economy is sometimes called pure _____

Why is compound interest preferable to simple interest? * Compound interest pays at least double the interest on the principal during each month. * Compound interest is paid by the week or by the month, not only once during a year. * Compound interest is based on the entire principal, not just a percentage of the principal. * Compound interest pays interest on the principal and the interest earned in each period.