Economic Unit Test Review example #60807

Which statement best describes the main cause of the 2008 housing market crash in the United States? Many people could not buy new homes during a weak economy. Many homes could not sell because housing prices rose too fast. Many homes could not sell because banks charged high interest. Many people could not make home payments during a weak economy.

Which statement best explains the role of producers in economics? Producers supply goods and services. Producers purchase goods and services. Producers create theories about the market. Producers sell shares for companies in the market.

The graph shows a point of equilibrium. If quantity demanded exceeds quantity supplied, what most likely needs to happen to achieve equilibrium? The supply needs to increase The price needs to decrease The price needs to increase The demand needs to increase

Which statements correctly explain price floors and price ceilings? Check all that apply. Ineffective price floors tend to be too high. Ineffective price ceilings tend to be too low. Price floors help producers by raising prices. Price ceilings help consumers by lowering prices. Effective price floors are set above equilibrium. Effective price ceilings are set below equilibrium.

Why are utilities, such as electricity and water, examples of natural monopolies? The cost of production restricts competition in the market. There are limited natural resources to meet demand. Consumers only trust known companies to provide these essentials. There is no need for alternative options.

Which best describes why investing can be such a challenge? All investments involve major risks. There is never a sure way to predict the likelihood of success. There are no guaranteed investments. The market is totally unpredictable.

Look at the chart comparing the price of graphic T-shirts to the quantity supplied. This chart is an example of a demand curve. demand schedule. supply curve. supply schedule.

Why is pure competition considered an unsustainable system? Price differentiation is often too minimal to matter. Few barriers exist to entry, meaning that the market inevitably floods. Consumers cannot distinguish between products. Producers cannot make a profit if they keep dropping their prices.

A monopoly is a market that has few competing businesses. many sellers of the same item. many sellers of a variety of products. a single supplier of a good or service.

Equilibrium occurs when supply and demand coordinate to set excess demand. set prices and production. maintain excess supply. raise prices and production.

What role does the Federal Reserve play? Check all that apply. Regulate the banking industry Loan money to banks Give individual loans Give corporate loans Transfers any profits to the Treasury

A clothing store has ordered a new supply of jeans for the fall season and wants to sell off the remaining items from the previous spring. What action would the store owner most likely take? The store owner would most likely raise the price of the spring jeans to encourage producers. The store owner would most likely lower the price of the spring jeans to encourage producers. The store owner would most likely raise the price of the spring jeans to encourage consumers. The store owner would most likely lower the price of the spring jeans to encourage consumers.

The graph shows the percentage changes in the investment rate and the gross domestic product (GDP) between 2008 and 2012. The graph demonstrates that changes in investment can show if the economy is growing or shrinking. occur only when the economy is shrinking. occur only when the economy is growing. have no relation to changes to the GDP.

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.

Which best describes the economic impact of defaulting on bank loans? The economy suffers because banks have less money to loan to others. The economy suffers because people have less money to spend. The economy suffers because businesses are scared to take out loans. The economy suffers because people are scared to take out loans.