Economics Quizzes/Short Essays

Tom works at a clothing store. He is paid by the store in a factor market, and buys his clothing at the store in a product market. This cycle of individual’s and business’ interaction is called…

– the flow of factor markets
– the circular flow of economic activity
– scarcity
– an economic process

the circular flow of economic activity
Land, labor, capital, and entrepreneurship are the…

– results of supply and demand
– factors of production
– results of production
– opportunity costs of businesses

factors of production
Choose which economic rule states that the additional satisfaction people get from consuming one more unit of a product will lessen with each additional unit they consume…

– real income effect
– substitution effect
– law of diminishing marginal utility
– law of demand

law of diminishing marginal utility
There is no such thing as a free lunch.

– true
– false

true
The four factors of production are the resources of land, labor, capital and…

– technology.
– work people do.
– entrepreneurship.
– services.

entrepreneurship.
The fundamental economic problem is the number of businesses that fail all over the world.

– true
– false

false
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Bill Gates is an example of an entrepreneur because he developed a company and started a business.

– true
– false

true
Another term for a capitalist system is a…

– mixed economy.
– laissez-faire system.
– command economy.
– market economy.

market economy.
Kelly, a rich businesswoman, finds that no matter how many pairs of shoes she buys, she can still find plenty more that she wants. Her salary only allows her to buy fifty pairs of shoes per year. She cannot buy as many shoes as she wants. Kelly is facing…

– the fundamental economic problem of scarcity
– a large opportunity cost for her shoes
– the fact that she cannot buy goods in a factor market
– a small opportunity cost for her shoes

the fundamental economic problem of scarcity
As an economic term, land includes…

– natural resources.
– machinery.
– work people do.
– knowledge.

natural resources.
A tire factory selling tires to a delivery company to use on its trucks is an example of a transaction that would take place in a product market.

– true
– false

false
In a trade-off, evaluate what the value of an opportunity cost is…

– scarce resources.
– the factors of production.
– the action that was chosen.
– the next best alternative.

the next best alternative.
You receive a coupon in the mail that gives you a free meal at your favorite restaurant. You go to the restaurant and enjoy your free meal. The next time you go to the restaurant, you notice the price of your favorite dish has been raised. This example illustrates the concept of…

– opportunity cost
– utility
– “there is no such thing as a free lunch”
– scarcity

“there is no such thing as a free lunch”
The need to make choices arises because…

– people need to share their resources.
– shortages are a constant situation.
– everything that exists is limited.
– some things are not limited.

everything that exists is limited.
The opportunity cost of buying a candy bar for one dollar rather than a bag of chips for one dollar is the bag of chips.

– true
– false

true
The person who starts a business and brings together and organizes land, labor, and capital in order to produce a product is known as…

– a stockholder.
– a partner.
– a manager.
– an entrepreneur.

an entrepreneur.
Which statement describes the critical role played by profits in a market economy?

– Profits cause inflation
– Profits encourage businesses to efficiently produce the things people want.
– Profits tell government planners how much consumers are spending.
– Governments discourage profits due to inequality of income

Profits encourage businesses to efficiently produce the things people want.
A businessman purchases flowers for his wife on the way home from work. The man purchased the flowers in a product market.

– true
– false

true
All economic choices involve

– shortages.
– trade-offs.
– destruction of resources.
– tax dollars.

trade-offs.
Use the following story to answer the question.
You are invited to a party on Thursday night. You have a test in economics on Friday. You make a list of all of the positives and negatives of studying and all of the positive and negatives of going to the party. You decide to go to the party.
You were practicing cost-benefit analysis to make an economic decision.

– true
– false

true
What are the opportunity costs of working part-time while you attend high school? In your opinion, do the benefits outweigh the costs? Be sure to justify your statements with the principles you learned in the course.
The opportunity costs of working while in school are the other things you could be doing with your time, such as going to the movies or studying, which are the next best alternatives. To me, the benefits don’t outweigh the costs. In a cost-benefit analysis, the benefits of studying (good grades, scholarships, etc.) are greater than the benefits of extra money and cost of less time to study.
What benefits from free enterprise (capitalism) can you identify in your own immediate family, extended family, or friends? Be sure to justify your statements with the principles you learned in the course.
Capitalism allows my family to have our own house with our own things because of private property rights. Free enterprise also enables us to pick the best products to buy because of unrestricted competition.
Identify who owns the factors of production and makes economic decisions in a market economy.

– individuals
– communities
– economists
– government

individuals
In a communist or command economic system, who answers the three basic economic questions?

– The government and the marketplace
– Individual citizens
– The government
– The marketplace (supply and demand)

The government
Which of the following is not considered an economic and social goal of society?

– economic growth
– entrepreneurship
– stability
– economic efficiency

entrepreneurship
The invisible hand is…

– a metaphor used by Adam Smith to explain that if all people were free to pursue their self-interest, nature would guide the economy
– a metaphor used by Adam Smith to explain the distribution of income equally to all
– the ability of societies to reach full employment by using every resource available to them
– the ability of the factors of production to make products without having to hire labor

a metaphor used by Adam Smith to explain that if all people were free to pursue their self-interest, nature would guide the economy
Since the mid-1900s, computers have evolved from the size of a large room to devices that fit in the palm of your hand. The technological capabilities of computers have increased production of many goods and services in the United States and throughout the world. Although computers have increased production, they have also eliminated many jobs. This is an example of…

– achieving economic growth, while not being able to achieve full employment
– achieving full employment, while not being able to achieve economic growth
– achieving equity, while not being able to achieve full employment
– achieving stability, while not being able to achieve full employment

achieving economic growth, while not being able to achieve full employment
According to Karl Marx, eventually the “have-nots” will…

– always be working to keep up with those who are more powerful in society
– move up in society and become “haves”
– rebel against the capitalist system and instigate socialism
– overpower the socialist rulers and begin capitalism

rebel against the capitalist system and instigate socialism
In a market economy, which of the following provides the primary incentive to produce goods and services?

– A desire for security
– Government purchases of goods and services
– Charity
– The profit motive

The profit motive
The invisible hand is a metaphor used by Adam Smith…

– to show the ability of the products to increase factors of production
– to explain that business owners pay workers less than the value of their labor
– to explain that if all people were free to pursue their self-interest, the economy would naturally be guided to achieve the best for all
– to explain the distribution of income equally to all

to explain that if all people were free to pursue their self-interest, the economy would naturally be guided to achieve the best for all
Distinguish what almost all economic systems today are.

– mixed economies.
– command economies.
– market economies.
– traditional economies.

mixed economies.
Classify what all economic systems do:

– must answer the same three basic questions. The US does not have as much oil as the Middle East for example
– produce the same goods.
– have the same resources.
– distribute products through majority rule.

must answer the same three basic questions. The US does not have as much oil as the Middle East for example
Economic decisions in a command economy are made by…

– competition
– government agencies
– private businesses
– assembly line workers

government agencies
Jamie works for the government in a factory. She works every day in order to fulfill government quotas. Her family lives in a modest apartment provided by the government. Jamie is part of a…

– command economy
– mixed economy
– market economy
-traditional economy

command economy
Identify which statement each of the following individuals would most likely support.
If given the opportunity, an economy will be run as if by an invisible hand. The government should use a laissez-faire approach when dealing with the economy.

– Adam Smith
– Karl Marx

Adam Smith
Adam’s incentive to open a new restaurant is profit. He knows that if he works hard and his restaurant is successful he will be able to earn a lot of money. Adam is…

– an entrepreneur in a capitalist economy
– going to fail because opening a new restaurant is difficult
– an entrepreneur in a traditional economy
– an entrepreneur in a command economy

an entrepreneur in a capitalist economy
A mixed economy is…

– an economy that does not allow any government regulation
– an economic system that combines elements of other economic systems
– usually a failure because of a lack of resources
– an economic system that mandates public ownership of the factors of production

an economic system that combines elements of other economic systems
What is a possible cause of the shift in the graph below?
(demand curve shifted left)

– The price of baseball mitts (a complimentary good) decreased.
– The price of softballs (a substitute) increased
– The price of baseball bats (a complimentary good) increased
– With new technology, the process to make a baseball became cheaper.

The price of baseball bats (a complimentary good) increased
The only factor that can cause a change in quantity demanded is price.

– true
– false

true
If there is a shortage of a good, its price will ___________________.

– increase
– decrease
– stay the same

increase
The government sets a price ceiling on cheeseburgers that is below the equilibrium price of cheeseburgers. This causes…

– a shortage of cheeseburgers
– a surplus of cheeseburgers
– no shortage of cheeseburgers
– none of these are correct

a shortage of cheeseburgers
It costs Balls-R-Us, a supplier of soccer balls, $3.00 to produce each soccer ball and $300.00 to make one hundred soccer balls. It is able to sell these soccer balls for $10.00 each. What is the marginal cost of producing soccer balls?

– $10.00
– $300.00
– $3.00
– $1.00

$3.00
Gruel is an inferior good. Hence, an increase in consumer income…

– decreases the supply of gruel
– increases the supply of gruel
– decreases the demand for gruel
– increases the demand for gruel

decreases the demand for gruel
The law of supply states that as the price of a good rises, the quantity supplied decreases.

– true
– false

false
What is the effect on the quantity of DVDs demanded if the price of videos increases?

– It stays the same
– It decreases
– It increases

It increases
Say that the government imposed a price floor of $200 for gaming systems. If the graph below represented this situation, would there be a shortage or surplus of gaming systems? How much shortage or surplus would there be?

– shortage of 30
– surplus of 10
– shortage of 20
– surplus of 30

surplus of 30
Equilibrium is defined as . . .

– a state of balance between opposing forces or powers
– the lack of a national debt
– a method of adjusting the price and quantity
– the optimum level of production in business

a state of balance between opposing forces or powers
The graph below illustrates a shift in supply. Which hypothetical situation is the most accurate cause of this shift?
(demand curve shifts left)

– technology has made it easier to produce glasses
– preference for contacts increased
– the number of glasses suppliers decreased
– the price of glasses are expected to decrease

the number of glasses suppliers decreased
According to the substitution effect, if two items satisfy the same need and the price of one rises…

– the demand will go up.
– people will buy something else.
– people will buy the higher priced item.
– people will buy the lower priced item.

people will buy the lower priced item.
If two products are complimentary goods, distinguish how will a decrease in the price of one affect the other?

– Demand will decrease.
– Price will increase.
– Price will decrease.
– Demand will increase.

Demand will increase.
The law of demand states that, as the price of a good rises, the quantity demanded decreases.

– true
– false

true
An increase in supply means movement up and rightward along the supply curve.

– true
– false

true
Which economic philosophy (Capitalism, Socialism, or Communism) do you agree most with? Why? Make sue to justify your opinion with the economic principles you have learned.
I agree with Capitalism the most. I think it is the most fair and efficient economic philosophy. It is fair because people and businesses are able to buy and sell freely without government control, which satisfies “equity.” It also gives the most opportunity for economic growth because it allows for competition.
Give an example of a good that is complementary to a tomatoes. What would happen to the price and quantity of the good you identified if there was a drought that decreased the number of tomatoes for sale? Justify your logic with economic principles.
Lettuce is complementary to tomatoes because they are often used together. If the number of tomatoes supplied decreased, the price would increase. Therefore, since lettuce is a complementary good to tomatoes, the price of lettuce would increase as well. This would cause the quantity demanded to decrease.
Which of the following is an economic responsibility of all businesses in the United States?

– Conduct all business in an honest and ethical manner.
– Draft a code of ethics and make all employees sign it.
– Close on all government regulated holidays.
– Spread negative information about the competition.

Conduct all business in an honest and ethical manner.
Distinguish which form of business would best suit two best friends intending to open a hot dog stand.

– Partnership
– Sole Proprietorship
– Corporation
– Limited Liability Company

Partnership
What is the difference between real and nominal GDP?

– Real GDP is exact, while nominal GDP is estimated.
– Real GDP is adjusted for inflation, while nominal GDP is not.
– Real GDP is estimated, while nominal GDP is exact.
– There is no difference.

Real GDP is adjusted for inflation, while nominal GDP is not.
One weakness of the sole proprietorship is that the…

– owner has no control
– owner has too many partners
– business depends solely on the owner
– business is in constant danger of bankruptcy

business depends solely on the owner
Monopolies face disadvantages that focus around…

– production
– prices
– inefficiency
– cost

inefficiency
What is the main difference between inflation and deflation?

– Inflation is an overall increase in price, and deflation is an overall decrease in price.
– Inflation is an overall decrease in price, and deflation is an overall increase in price.
– A high inflation rate means the economy is doing well, while a high deflation rate means the economy is doing poorly.
– A high inflation rate means the economy is doing poorly, while a high deflation rate means the economy is doing well.

Inflation is an overall increase in price, and deflation is an overall decrease in price.
A monopoly is dominated by a small number of firms who have to keep a close eye on each other.

– true
– false

false
The United States GDP, which is the market value of all final goods and services produced in the nation in a year, is calculated by…

– adding the expenditures of the four sectors of the economy
– multiplying production by consumption
– subtracting total imports from exports
– It is impossible to compute the GDP because it is impossible to measure all production data.

adding the expenditures of the four sectors of the economy
The increase in economic activity that follows the lowest point in the business cycle is called a…

– depression
– trough
– peak
– recovery

recovery
An example of a(n) ___________________ is an electrical company regulated by the government.

– natural monopoly
– monopolistic competition
– pure monopoly
– oligopoly

natural monopoly
In the 18th Century, inefficient transportation led to…

– economic growth and expansion of our economy.
– the transition from fiat money to an intrinsic monetary value medium of exchange.
– agriculture and industrial manufacturing being concentrated close to the centers of population.
– a shortage of supply and demand.

agriculture and industrial manufacturing being concentrated close to the centers of population.
Monopolies are typically created because…

– the government promotes the establishment of monopolies
– the industry has high barriers to entry that prevent many businesses from entering the industry
– increasing competition discourages new businesses from entering the industry
– there is a lack of business interest in an industry

the industry has high barriers to entry that prevent many businesses from entering the industry
One weakness of a sole proprietorship is that the…

– owner has no control
– owner has too many partners
– owner faces unlimited liability
– business will eventually go bankrupt

owner faces unlimited liability
Saving makes economic growth possible because…

– it means people have extra money and are spending less of it
– buyers and sellers are working together to make saving possible
– financial institutions lend the savings of others to those who will invest them
– saving is more important than investing

financial institutions lend the savings of others to those who will invest them
The shoe industry in the current American economy, where many different types and brands are offered, is an example of…

– a monopoly
– an oligopoly
– perfect competition
– monopolistic competition

monopolistic competition
One advantage of corporations is limited liability.

– true
– false

true
In order for people to use the savings of others, the economy must have a(n) _______ system, a network of savers, investors and financial institutions.

– saving
– investment
– transfer
– financial

financial
Factors affecting employee choice of where to live and work, today, are:

– Proximity to large industrial areas, number of heavy manufacturing plants, and historical heavy manufacturing.
– Inflation rate, unemployment rate, and the stock market growth.
– Historical traditions, labor union influence and power, and heavy manufacturing.
– Cost of living, quality of schools, crime rate, weather, recreation, and tax rates.

Cost of living, quality of schools, crime rate, weather, recreation, and tax rates.
When the Federal Reserve sells government securities, it results in a decrease in the money supply.

– true
– false

true
Today money consists of…

– only currency.
– only checking and savings deposits.
– only investment in stocks.
– currency, checking and savings deposits.

currency, checking and savings deposits.
Monetary policy alone is the most effective economic policy.

– true
– false

false
Which of the following is a function of our current banking system?

– determining the value of money
– acting as a medium of exchange
– lending money
– regulating the money supply

lending money
What economic concept do the Fourth and Fifth Amendments to the Constitution identify?

– private ownership of property
– competition among businesses
– regulation of monopolies
– the organization of the Federal Reserve

private ownership of property
The Department of Defense is an important part of the economy because…

– it develops military strategies during times of war
– it protects human health and the environment so consumers and businesses will be safe
– it provides consumers and businesses with protection and a sense of security when making economic decisions
– it provides banking insurance so depositors’ money is protected when it is placed in bank accounts

it provides consumers and businesses with protection and a sense of security when making economic decisions
Placing money in a checking account is an example of using money as…

– a store of value.
– a measure of value.
– a medium of exchange.
– barter.

a store of value.
What are the four main functions of banks today?

– storing money, producing money, multiplying money, and financial services
– storing money, producing money, lending money, and monetary aid
– extracting money, transferring money, lending money, and monetary aid
– storing money, transferring money, lending money, and financial services

storing money, transferring money, lending money, and financial services
Crazy Eight is very excited because he is opening a new business. He purchased a building, equipment, a license, and computers, and he remodeled his building. He also was able to acquire a patent for his new idea. He invested all his savings in the new business and he is hoping his new business will take off. Crazy Eight was able to open this new business because…

– he is leasing the building from the government under an agreement he will manufacture what the government orders
– the government guarantees he is able to own property and ideas
– he is a good businessman and will succeed
– he is able to bypass all the government regulations in order to open an illegal business

the government guarantees he is able to own property and ideas
In the United States, income tax is an example of a __________ tax, while sales tax is an example of a __________ tax.

– progressive; regressive
– regressive; progressive
– proportional; regressive
– progressive; proportional

progressive; regressive
George Sparks has just been laid off. He had an excellent job as a computer programmer, but due to company cutbacks he lost his job. While looking for another job, he is able to collect unemployment insurance. This is an example of…

– discretionary fiscal policy
– monetary policy
– an automatic stabilizer
– taxation

an automatic stabilizer
The Federal Reserve, our nation’s central bank, has been using a practice called Quantitative Easing (QE).

– Quantitative Easing causes the unemployment rate to rise.
– This facilitates the practice of investing in the stock market.
– This is implemented by printing money to buy or sell short term government bonds in order to keep interbank interest rates at a very low targeted value.
– This makes it easier to get a loan from a bank to buy a house or start a new business.

This is implemented by printing money to buy or sell short term government bonds in order to keep interbank interest rates at a very low targeted value.
In a recession, fiscal policy calls for the government to decrease taxes and increase spending.

– true
– false

true
John Furry purchased a vacation package from a telephone solicitor. The person asked John for a two-hundred-dollar deposit via credit card in order to reserve his package. John gave the solicitor his credit card number, but he never received the vacation. The agency responsible for investigating this fraud is…

– the Federal Trade Commission
– the Environmental Protection Agency
– the Consumer Product Safety Commission
– the Food and Drug Administration

the Federal Trade Commission
John Maynard Keynes believed that all economic problems are caused by…

– the GDP
– inflation
– unemployment
– decreases in business sector spending

decreases in business sector spending
The Environmental Protection Agency (EPA) impacts the economy by…

– developing and enforcing regulations that protect human health and the environment
– providing consumers and businesses with protection and a sense of security when making economic decisions
– providing banking insurance so depositors’ money is protected when it is placed in bank accounts
– creating and enforcing truth in advertising laws to protect consumers

developing and enforcing regulations that protect human health and the environment
Economic regulations help fulfill Adam Smith’s idea of a laissez-faire economy.

– true
– false

false
In order to control inflation, governments may…

– sell government securities
– increase taxes
– decrease government spending
– all of these are correct

all of these are correct
Why did the first national bank fail?

– Many felt the national bank didn’t have enough power, and the public didn’t produce enough financial transactions to maintain its operations.
– The national bank caused state banks to standardize their currency which raised the equilibrium price to unsustainable levels.
– Economists miscalculated the fiscal policy associated with the national bank and this caused the economy to plunge into a national debt
– Many felt the national bank gave the federal government too much power, and Congress refused to renew the twenty-year charter in 1811.

Many felt the national bank gave the federal government too much power, and Congress refused to renew the twenty-year charter in 1811.
The purpose of economic regulations in the United States is to…

– limit the individual freedoms of all Americans
– control population growth and birth rates
– undermine the free market economy
– promote economic growth, stability, and equity

promote economic growth, stability, and equity
What ethics (or moral code) do you believe all businesses and their employees should abide by? How would it benefit businesses and consumers if all businesses followed the ethics you described?
All businesses should abide by a standard moral code of honesty and integrity. This would benefit consumers by ensuring that they are fully informed about the products or services they are purchasing. Abiding my a moral code of honesty would let both businesses and consumers be more confident in spending and investing.
The economic system in the United States, a market economy, is founded on the principles of free enterprise or capitalism. This implies limited government interference or involvement. How much government involvement is too much?
Government involvement isn’t always a bad thing. However, when the government is doing more harm than good for the economy and general public, that means there is too much involvement. We shouldn’t lose sight of free enterprise.
Entry level economists typically must have a…

– GED
– high school diploma
– bachelor’s degree
– Ph.D.

bachelor’s degree
The economic prosperity of the 1990s was primarily due to…

– the new economy created by the Internet
– the development of the computer industry
– the dot-com businesses which developed in the 1990s
– all of these are correct

all of these are correct
The purpose of the Montgomery GI Bill was to…

– help all families recover after World War II
– help all disabled veterans receive medical care
– expand the military during the Cold War
– provide economic assistance, including education and housing assistance, to all veterans

provide economic assistance, including education and housing assistance, to all veterans
The Agriculture Adjustment Act brought much criticism because…

– it drove the price of food lower than it had ever been
– it offered farmers money to destroy crops and leave land uncultivated
– it decreased employment of farmers
– it increased the number of farms in the United States

it offered farmers money to destroy crops and leave land uncultivated
A labor union is…

– an organization of workers who seek better treatment for workers
– an organization that takes part in collective bargaining with employers
– an organization that may resort to going on strike if its demands are not met
– all of these are correct

all of these are correct
President Ronald Reagan’s new economic strategy, Reaganomics, included…

– raising taxes and increasing spending
– cutting taxes and decreasing government spending
– cutting taxes and increasing government spending on domestic programs
– raising taxes

cutting taxes and decreasing government spending
During the Hundred Days…

– Roosevelt awaited his inauguration and prepared a strategy
– Congress passed many major bills to help relieve the Great Depression
– Roosevelt developed a clear idea of how to solve the nation’s economic problems
– Congress delayed action on Roosevelt’s legislation

Congress passed many major bills to help relieve the Great Depression
During the Great Depression, the major reason for farmers receiving low prices for their crops was…

– underproduction
– corruption
– overproduction
– poor farming methods

overproduction
The labor movement resulted in…

– competition for jobs in the cities, making it hard for people to find work
– a large population of unskilled workers in the cities
– outlawing child labor, eight-hour work days, and safer working conditions
– the elimination of labor unions

outlawing child labor, eight-hour work days, and safer working conditions
The Social Security Act sought to help…

– the unemployed
– the unemployable
– the elderly
– all of these are correct

all of these are correct
Economists are hired by private businesses to…

– do general labor
– program computers
– analyze economic data
– manage companies

analyze economic data
Economic knowledge…

– is only important if you are an economist
– is only sought after by the government
– is important in every job
– is not important to anyone

is important in every job
In order to become an economist you need only a high school diploma.

– true
– false

false
During the Cold War, the United States government spent large amounts of money…

– on defense, including atomic warfare
– on the space program
– in order to outspend the Soviet Union and end the cold war.
– all of these are correct

all of these are correct
What event actually brought the United States completely out of the Great Depression?

– the New Deal
– the Second New Deal
– World War II
– World War I

World War II
Which of the following was a cause of the recession of the 1980s?

– insufficient production in the United States
– overproduction
– large government deficits and increased consumer spending
– increasing employment

large government deficits and increased consumer spending
In the United States, service jobs are the jobs of the future.

– true
– false

true
Labor movement refers to the…

– increasing number of jobs available to Americans in the nineteenth century
– movement of workers from farms to the industrial cities
– efforts of workers to improve their economic position
– building of the railroads

efforts of workers to improve their economic position
The most significant legacy of the New Deal was…

– a decrease in federal programs and the size of the Federal Government
– an increase in the size of the Federal Government and expansion of government
– separation of church and state
– the New Deal did not leave any lasting impact on the United States

an increase in the size of the Federal Government and expansion of government
___________________ exchange rates are set by a governing body or tied to the gold standard.

– fixed
– managed
– floating
– natural

fixed
Beta can produce either ten apples or three oranges. Cama can produce either twelve apples or three oranges. Which of the following is true?

– Cama has a comparative advantage in the production of oranges.
– Cama has an absolute advantage in the production of apples.
– Beta has an absolute advantage in the production of apples.
– Cama has an absolute advantage in the production of oranges.

Cama has an absolute advantage in the production of apples.
The importance and influence of technology has made it essential…

– learn keyboarding while still in elementary school.
– for young adults to get as much education and as develop as many skills as possible.
– to become more adept at gaming and social media.
– for families to buy a computer as soon as possible.

for young adults to get as much education and as develop as many skills as possible.
President George W. Bush, the 43rd President of the United States believes…

– participating in the world economy makes the U.S. economy stronger
– foreign trade is not very important in the U.S. economy
– free trade agreements are not necessary
– increasing trade restrictions is important to all U.S. industries.

participating in the world economy makes the U.S. economy stronger
Electronic commerce, or e-commerce, has made it possible for…

– decreased the need for social media marketing.
– businesses to reach customers anywhere in the world.
– young adults to spend more time with social media and on computer games.
– manufacturing jobs to be exported overseas.

businesses to reach customers anywhere in the world.
Technology creates economic…

– growth and efficiency.
– barriers to global trade.
– supply and demand.
– challenges for third world nations to keep up.

growth and efficiency.
Which is the best description of a nation’s Balance of Trade?

– The difference between a nation’s imports and exports.
– A man named Trade stands on one foot.
– The difference between a nation’s exports and it’s Gross Domestic Product.
– Everyone gets equal benefit from an exchange.

The difference between a nation’s imports and exports.
The ability of one country to produce a product at a lower opportunity cost than another country is known as…

– export advantage
– absolute advantage
– comparative advantage.
– import advantage

comparative advantage.
An import is…

– a good or service that is sent to a foreign country
– an example of a production deficiency
– a good or service that is brought from a foreign country
– an example of profitable trade

a good or service that is brought from a foreign country
Many economists argue that global free trade will…

– cause economic problems
– create protectionism
– promote economic efficiency
– result in the United States becoming poor

promote economic efficiency
The Hawley-Smoot Tariff is an example of…

– free trade
– dumping
– protectionism
– infant industry

protectionism
Technology has devalued labor and enhanced the value of…

– gaming and social media.
– joining a labor union.
– getting a job as soon as possible.
– information and knowledge.

information and knowledge.
NAFTA instituted a free trade policy between…

– Canada, Mexico, and the United States
– Europe and Asia
– Europe and Africa
– all world nations

Canada, Mexico, and the United States
The North American Free Trade Agreement (NAFTA)…

– developed new trading relationships between European and North American nations.
– reduced trade barriers among the US, Canada, Mexico, Chile, and Argentina.
– reduced trade barriers among the US, Canada, and Mexico
– reduced trade barriers between the US and Canada while increasing barriers to trade with European and Asian nations.

reduced trade barriers among the US, Canada, and Mexico
What is the purpose of a protective tariff?

– to raise the cost of imported goods and give domestic producers an advantage
– to restrict the number of a particular good that is allowed to come into the country
– to raise government revenue without restricting imports
– to protest another nation’s political actions

to raise the cost of imported goods and give domestic producers an advantage
A tax placed on an import is a…

– quota
– tariff
– ration
– opportunity cost

tariff
Since economics is the science of choice, the Internet has…

– increased the number of choices available to us.
– caused more scarcity of resources.
– reduced the number of choices available to us.
– not impacted the number of choices available to us.

increased the number of choices available to us.
___________________ is anything accepted as a medium of exchange.

– Money
– Trust Funds
– Stocks
– Bonds

Money
The ______ rate is the price of a nation’s currency in terms of another nation’s currency.

– foreign exchange
– floating exchange
– fixed exchange
– interest

foreign exchange
Many people believe that we need to put more taxes and quotas on imports so that we can protect businesses located in the U.S. What is your opinion? Justify your opinion with the economic principles you have learned in this course.
I believe that free international trade without taxes/quotas on imports could be a good thing. If each country worked together and participated in specialization, they could maximize economic efficiency.
In your opinion, what are the three most significant events in U.S. history that have had the greatest impact on our current economic principles and policies? Make sure to justify your opinion.
I believe that the most significant event that has had the greatest impact on our current economic principles is the creation of the Internet. It has completely changed the way people all over the world do business. Another significant event that had a great impact was the Great Depression. This changed the way people thought about how to best prepare the economy to prevent another depression. World War II also had a big impact. It turned the US into a command economy and brought us out the Great Depression