Economics Final Exam Quiz

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Economics Quizzes & Trivia

This is a quiz based off of some very standard economic basics


Questions and Answers
  • 1. 

    What is Economics?

    • A.

      The study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careful use of relatively scarce resources

    • B.

      Employment, gross domestic product, inflation, economic growth, and the distribution of income

    • C.

      Deals with behavior and decision making by small units, such as individuals and firms

    • D.

      A rise in the general level of prices occurs, workers need more money to pay for good clothing and shelter

    Correct Answer
    A. The study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careful use of relatively scarce resources
    Explanation
    Economics is the study of how individuals and societies make choices to allocate scarce resources to satisfy their unlimited wants. It involves analyzing various economic indicators such as employment, GDP, inflation, economic growth, and income distribution. Additionally, economics also deals with understanding the behavior and decision-making processes of individuals and firms. The answer provided captures the essence of economics by emphasizing the concept of trying to satisfy unlimited wants with limited resources.

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  • 2. 

    What is Scarcity?

    • A.

      Giving something up to have something else

    • B.

      Extra cost of producing one additional unit of production

    • C.

      The condition that results from society not having enough resources to produce all the things people would like to have

    • D.

      A rise in the general level of prices occurs, workers need more money to pay for good clothing and shelter

    Correct Answer
    C. The condition that results from society not having enough resources to produce all the things people would like to have
    Explanation
    Scarcity refers to the condition that arises when society does not have enough resources to fulfill all the desires and needs of its people. It is the result of limited resources and unlimited wants. In this situation, individuals and societies must make choices and trade-offs, giving up one thing in order to obtain something else. Scarcity forces individuals and societies to prioritize and allocate resources efficiently, making it an essential concept in economics.

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  • 3. 

    What are the three basic economic questions?

    • A.

      What, where, whom

    • B.

      What, how, whom

    • C.

      How, whom, when

    • D.

      What, why, whom

    Correct Answer
    B. What, how, whom
    Explanation
    The three basic economic questions are "what to produce", "how to produce", and "for whom to produce". These questions address the fundamental choices that societies and individuals face when allocating resources and determining the production and distribution of goods and services. "What to produce" refers to the selection of goods and services to be produced based on consumer demand and resource availability. "How to produce" pertains to the methods and techniques used in the production process, considering factors such as efficiency and cost-effectiveness. "For whom to produce" involves the distribution of goods and services among different individuals and groups in society, taking into account factors like income and need.

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  • 4. 

    What are the four factors of production?

    • A.

      Land, capital, money, entrepreneurs

    • B.

      Land, capital, labor, entrepreneurs

    • C.

      Capital, money, supply, demand

    • D.

      Labor, capital, supply, demand

    Correct Answer
    B. Land, capital, labor, entrepreneurs
    Explanation
    The four factors of production are land, capital, labor, and entrepreneurs. Land refers to all natural resources used in production, such as land itself, water, minerals, and forests. Capital includes all man-made resources used in production, such as machinery, buildings, and tools. Labor refers to the physical and mental efforts of individuals involved in production. Entrepreneurs are individuals who take the initiative to combine the other factors of production and create new products or services in order to make a profit.

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  • 5. 

    Definition of Land?

    • A.

      Anything from the earth

    • B.

      The space we occupy

    • C.

      Gifts of nature

    • D.

      All of the above

    Correct Answer
    C. Gifts of nature
    Explanation
    The correct answer is "Gifts of nature" because land is considered a gift of nature as it is a natural resource that is not created by humans. It refers to the surface of the earth that includes all natural resources such as soil, water, minerals, and vegetation. Land is an essential factor of production and plays a crucial role in various economic activities and human civilization.

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  • 6. 

    Definition of Capital?

    • A.

      The tools, equipment used in the production of goods

    • B.

      The machinery, and factories used in the production of goods

    • C.

      The tools, and machinery used in the production of goods

    • D.

      A and B

    • E.

      B and C

    Correct Answer
    D. A and B
    Explanation
    The correct answer is A and B. Capital refers to the tools, equipment, machinery, and factories used in the production of goods. This includes both the physical tools and equipment as well as the infrastructure necessary for production. Therefore, options A and B are both correct as they accurately describe the components that fall under the definition of capital.

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  • 7. 

    Definition of Labor?

    • A.

      People with all of the efforts, abilities, and skills

    • B.

      The people who are for hire for work

    • C.

      People with all of the workmanship, skills, and work

    • D.

      The act of performing work at any given time

    Correct Answer
    A. People with all of the efforts, abilities, and skills
    Explanation
    The correct answer is "people with all of the efforts, abilities, and skills". This definition of labor encompasses individuals who possess not only the physical ability to work but also the knowledge, expertise, and capabilities required for a particular job or task. It emphasizes that labor involves the combination of effort, skills, and abilities to perform work effectively.

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  • 8. 

    Definition of Entrepreneur?

    • A.

      A risk taker in search of profits who's initila investment must be returned

    • B.

      A investor in search of profits who does something new with existing resources

    • C.

      A investor in search of profits who's initial investment must be returned

    • D.

      A risk taker in search of profits who does something new with existing resources

    Correct Answer
    D. A risk taker in search of profits who does something new with existing resources
    Explanation
    The correct answer is "A risk taker in search of profits who does something new with existing resources." This answer accurately defines an entrepreneur as someone who takes risks and seeks profits by introducing innovative ideas or methods using the resources they already have. Entrepreneurs are known for their ability to identify opportunities, take calculated risks, and create value by introducing new products, services, or processes to the market. They often utilize their existing resources in a creative and innovative way to achieve their goals and generate profits.

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  • 9. 

    What are the many payments for the factors of productions called?

    • A.

      Land - wages, labor - interest, capital - rent, entrepreneurs - profit

    • B.

      Land - rent, labor - wages, capital - interest, entrepreneurs - profit

    • C.

      Land - profit, labor - rent, capital - wages, entrepreneurs - interest

    • D.

      Land - interest, labor - rent, capital - profit, entrepreneurs - wages

    Correct Answer
    B. Land - rent, labor - wages, capital - interest, entrepreneurs - profit
    Explanation
    The correct answer is Land - rent, labor - wages, capital - interest, entrepreneurs - profit. This answer correctly identifies the payments for the factors of production. Land is associated with rent, labor with wages, capital with interest, and entrepreneurs with profit.

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  • 10. 

    What is opportunity cost?

    • A.

      The cost assosiated with any opportunity

    • B.

      Giving the cost in order to have the opportunity

    • C.

      The cost required in order to succeed

    • D.

      Giving something up to have something else

    Correct Answer
    D. Giving something up to have something else
    Explanation
    Opportunity cost refers to the concept of giving up or sacrificing one option in order to pursue or obtain another option. It involves evaluating the potential benefits or gains of choosing one alternative over another, while considering the potential losses or foregone benefits of not choosing the alternative. In other words, it is the cost or value of the next best alternative that is forgone when a decision is made.

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  • 11. 

    What is PPF?

    • A.

      Possible Production Frontier

    • B.

      Production Possibilities Frontier

    • C.

      Probable Projection Frontier

    • D.

      Projected Possibilities Frontier

    Correct Answer
    B. Production Possibilities Frontier
    Explanation
    The correct answer is Production Possibilities Frontier. The Production Possibilities Frontier (PPF) is a graphical representation of the maximum output combinations that can be produced by an economy, given its resources and technology. It shows the trade-offs between producing different goods or services, indicating the opportunity cost of producing one good over another. The PPF demonstrates the concept of scarcity and helps in understanding the efficiency and potential growth of an economy.

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  • 12. 

    What do the points along the frontier represent?

    • A.

      Maximum combination of output if all resources are fully employed

    • B.

      Minimum combination of output if all resources are fully employed

    • C.

      Maximum combination of input if all resources are fully employed

    • D.

      Minimum combination of input if all resources are fully employed

    Correct Answer
    A. Maximum combination of output if all resources are fully employed
    Explanation
    The points along the frontier represent the maximum combination of output that can be achieved if all resources are fully employed. This means that the economy is operating at its full potential and efficiently utilizing all available resources. Any point inside the frontier would indicate an underutilization of resources, while any point outside the frontier would be unattainable given the current level of resources.

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  • 13. 

    On the PPF how can a nation achieve growth?

    • A.

      By having more resources or increased productivity

    • B.

      By having an increase in supply and demand

    • C.

      By having less resources or declined productivity

    • D.

      By having an increase in resources and decrease in productivity

    Correct Answer
    A. By having more resources or increased productivity
    Explanation
    A nation can achieve growth on the PPF by having more resources or increased productivity. When a nation has more resources, it can produce more goods and services, leading to economic growth. Additionally, increased productivity means that the nation can produce more output with the same amount of resources, which also contributes to growth. Both factors allow the nation to operate at a point beyond its initial production possibilities, leading to an expansion of its production capabilities and overall economic growth.

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  • 14. 

    What does a point inside the curve on a PPF represent?

    • A.

      Production at greater than its minimum potential

    • B.

      Production as less than its minimum potential

    • C.

      Production at greater than its maximum potential

    • D.

      Production as less than its maximum potential

    Correct Answer
    D. Production as less than its maximum potential
    Explanation
    A point inside the curve on a PPF represents production as less than its maximum potential. This means that resources are not being fully utilized and there is room for increased production without sacrificing the production of other goods.

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  • 15. 

    What is the classic example of a PPF?

    • A.

      A mythical country called omega producing two goods, guns:butter

    • B.

      A mythical country called alpha producing two goods, bread:butter

    • C.

      A mythical country called omega producing two goods, bread:butter

    • D.

      A mythical country called alpha producing two goods, guns:butter

    Correct Answer
    D. A mythical country called alpha producing two goods, guns:butter
    Explanation
    The correct answer is "A mythical country called alpha producing two goods, guns:butter." This is because the classic example of a Production Possibility Frontier (PPF) involves a country producing two goods with limited resources. In this case, the goods are guns and butter. The PPF shows the maximum combination of guns and butter that can be produced given the available resources and technology.

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  • 16. 

    What is the circular flow model?

    • A.

      A model which shows the wealth that an economy generates

    • B.

      A model which shows the wealth that the world generates

    • C.

      A model that shows the recirculation of money in an economy

    • D.

      A model that shows the debt that an economy generates

    Correct Answer
    A. A model which shows the wealth that an economy generates
    Explanation
    The circular flow model is a representation of the flow of money and resources in an economy. It illustrates how households and businesses interact through the exchange of goods, services, and money. The model demonstrates how income is generated, spent, and saved within the economy, creating a continuous cycle of economic activity. It does not specifically show the debt that an economy generates, but rather focuses on the generation and circulation of wealth.

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  • 17. 

    What are the functions of the entrepreneur?

    • A.

      They provide the money necessary for the resources of land, labor, and capital

    • B.

      They provide the procedures that combines the resources of land, labor, and capital into new products

    • C.

      They provide the initiative that combines the resources of land, labor, and capital into new products

    • D.

      They provide the drive necessary for the resources of land, labor, and capital

    Correct Answer
    C. They provide the initiative that combines the resources of land, labor, and capital into new products
    Explanation
    The correct answer is "They provide the initiative that combines the resources of land, labor, and capital into new products." This answer accurately describes one of the key functions of an entrepreneur. Initiative refers to the ability to take action, make decisions, and drive the process of combining resources to create new products or services. Entrepreneurs are often the driving force behind innovation and the development of new ideas, and they play a crucial role in bringing together the necessary resources to turn these ideas into reality.

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  • 18. 

    Name three types of businesses

    • A.

      Traditional, command, market

    • B.

      Command, market, competitive

    • C.

      Traditional, market, competitive

    • D.

      Command, traditional, competitive

    Correct Answer
    A. Traditional, command, market
    Explanation
    The correct answer is Traditional, command, market. Traditional businesses are those that follow long-established practices and customs. Command businesses are controlled and regulated by the government or a central authority. Market businesses operate in a free market system where supply and demand determine prices and production. These three types of businesses represent different approaches to organizing and operating economic activities.

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  • 19. 

    Name the types of businesses

    • A.

      Proprietorship, corporation, industrial

    • B.

      Partnership, industrial, commercial

    • C.

      Corporation, proprietorship, commercial

    • D.

      Proprietorship, partnership, corporation

    Correct Answer
    D. Proprietorship, partnership, corporation
    Explanation
    The correct answer is Proprietorship, partnership, corporation. These are the three main types of businesses. A proprietorship is a business owned and operated by one individual. A partnership is a business owned and operated by two or more individuals. A corporation is a legal entity separate from its owners, with shareholders who own the company. These three types of businesses offer different advantages and disadvantages in terms of ownership, liability, and taxation.

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  • 20. 

    Define paradox of value?

    • A.

      Apparent contradiction between the low value of nonessentials and high value of essentials

    • B.

      Apparent agreement about the nonessentials being less needed and the essentials being greatly needed

    • C.

      Apparent contadiction between the high value of nonessentials and low value of essentials

    • D.

      Apparent agreement about the nonessentials being greatly needed and the essetials being less needed

    Correct Answer(s)
    A. Apparent contradiction between the low value of nonessentials and high value of essentials
    C. Apparent contadiction between the high value of nonessentials and low value of essentials
    Explanation
    The paradox of value refers to the apparent contradiction between the low value of nonessentials and the high value of essentials. This means that items that are considered nonessential or less needed tend to have a lower value, while items that are essential or greatly needed have a higher value. Similarly, there is also an apparent contradiction between the high value of nonessentials and the low value of essentials, indicating that sometimes nonessential items can have a higher value than essential items.

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  • 21. 

    What is the classic example of paradox of value?

    • A.

      Water in great excess being worth less than diamonds in scarce excess being worth more

    • B.

      Water in scarce excess being worth more than diamonds in great excess being worth less

    • C.

      Water in great excess being worth more than diamonds in scarce excess being worth less

    • D.

      Water in scarce excess being worth less than diamonds in great excess being worth more

    Correct Answer
    A. Water in great excess being worth less than diamonds in scarce excess being worth more
    Explanation
    The classic example of the paradox of value is when water, which is essential for survival and abundant, is worth less than diamonds, which are non-essential and scarce. This paradox challenges the traditional economic theory that value is determined solely by scarcity.

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  • 22. 

    What are the goals of the American Free Enterprise?

    • A.

      Economic freedom, voluntary exchange, private property rights, profit motive, and competition

    • B.

      Economic freedom, lack on monopolies, private property rights, profit motive, and competition

    • C.

      Economic freedom, voluntary exchange, prevailence of rights, profit motive, and competition

    • D.

      Economic freedom, voluntary exchange, private property rights, profit margain reduction, and competition

    Correct Answer
    A. Economic freedom, voluntary exchange, private property rights, profit motive, and competition
    Explanation
    The goals of the American Free Enterprise are to promote economic freedom, which allows individuals and businesses to make their own economic decisions without excessive government interference. Voluntary exchange refers to the ability to freely engage in trade and commerce. Private property rights ensure that individuals have the right to own and control their own property. The profit motive drives individuals and businesses to work hard and innovate in order to maximize their profits. Competition encourages businesses to strive for excellence and provide the best products and services to consumers.

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  • 23. 

    What is the law of demand?

    • A.

      Rule stating that the quantity demanded of a good or service does not vary with its availability

    • B.

      Rule stating that the quantity demanded of a good or service does not vary with its price

    • C.

      Rule stating that the quantity demanded of a good or service varies inversely with its availability

    • D.

      Rule stating that the quantity demanded of a good or service varies inversely with its price

    Correct Answer
    D. Rule stating that the quantity demanded of a good or service varies inversely with its price
    Explanation
    The law of demand states that as the price of a good or service increases, the quantity demanded by consumers decreases, and vice versa. This means that there is an inverse relationship between price and quantity demanded. When the price is high, consumers are less willing and able to purchase the good or service, resulting in a lower quantity demanded. Conversely, when the price is low, consumers are more willing and able to purchase the good or service, leading to a higher quantity demanded.

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  • 24. 

    What is the law of supply?

    • A.

      The principle that suppliers will normally offer less for sale at high prices and more at lower prices

    • B.

      The principle that suppliers will normally offer more for sale at high prices and less at lower prices

    Correct Answer
    B. The principle that suppliers will normally offer more for sale at high prices and less at lower prices
    Explanation
    The law of supply states that suppliers will generally be willing to offer more of a good or service for sale at higher prices, and less at lower prices. This is because higher prices incentivize suppliers to produce and sell more in order to maximize their profits. On the other hand, lower prices may not provide enough incentive for suppliers to produce and sell as much, as it may not be as profitable. Therefore, the correct answer is "The principle that suppliers will normally offer more for sale at high prices and less at lower prices."

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  • 25. 

    What causes the demand curve to shift?

    • A.

      The increase/decrease in need

    • B.

      The increase/decrease in volume

    • C.

      The increase/decrease in price

    • D.

      The increase/decrease in production

    Correct Answer
    C. The increase/decrease in price
    Explanation
    When the price of a product increases or decreases, it directly affects the demand for that product. When the price increases, the demand decreases as consumers are less willing to pay a higher price for the same product. Conversely, when the price decreases, the demand increases as consumers are more willing to purchase the product at a lower price. Therefore, a change in price causes a shift in the demand curve.

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  • 26. 

    What causes the increase in supply?

    • A.

      The increase/decrease in demand

    • B.

      The increase/decrease in production

    • C.

      The increase/decrease in volume

    • D.

      The increase/decrease in price

    Correct Answer
    A. The increase/decrease in demand
    Explanation
    An increase in demand can cause an increase in supply because when there is a higher demand for a product or service, producers are motivated to increase their production in order to meet the increased demand. This can be done by increasing the quantity produced or expanding production facilities. Conversely, a decrease in demand would lead to a decrease in supply as producers would reduce their production to match the lower demand. Therefore, an increase in demand is a factor that can cause an increase in supply.

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  • 27. 

    What is equilibrium?

    • A.

      A situation in which prices are very unstable

    • B.

      A situation in which prices are very unreliable

    • C.

      A situation in which prices are relatively stable

    • D.

      A situation in which prices always fluctuate

    Correct Answer
    C. A situation in which prices are relatively stable
    Explanation
    Equilibrium refers to a state where prices are relatively stable. In this situation, there is a balance between the demand and supply of goods or services, resulting in a stable price level. This means that there is no significant upward or downward pressure on prices, and they remain relatively constant over time.

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  • 28. 

    What is Shortage?

    • A.

      A situation in which the quantity demanded is greater than the quantity supplied at a given price

    • B.

      A situation in which the quantity demanded is less than the quantity supplied at a given price

    • C.

      A situation in which the quantity demanded is not offered by the manufacturer

    • D.

      A situation in which the quantity demanded can not meet the supply provided

    Correct Answer
    A. A situation in which the quantity demanded is greater than the quantity supplied at a given price
    Explanation
    Shortage refers to a situation where the quantity demanded exceeds the quantity supplied at a specific price. This means that there is an insufficient supply of a particular good or service to meet the demand from consumers. It often leads to higher prices as suppliers may increase prices in response to the scarcity. Shortages can occur due to various factors such as limited production capacity, unexpected increase in demand, or disruptions in the supply chain. In such situations, consumers may have to wait or compete to obtain the desired product or service.

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  • 29. 

    What is Surplus?

    • A.

      A situation in which the quantity supplied is not met by the manufacturer

    • B.

      A situation in which the quantity demanded is greater than the quantity demanded at a given price

    • C.

      A situation in which the quantity supplied is less than the quantity demanded at a given price

    • D.

      A situation in which the quantity supplied is greater than the quantity demanded at a given price

    Correct Answer
    D. A situation in which the quantity supplied is greater than the quantity demanded at a given price
    Explanation
    Surplus refers to a situation where the quantity supplied exceeds the quantity demanded at a given price. This means that there is an excess supply of a product in the market, leading to a surplus. This can occur when the price of a product is set too high, resulting in fewer consumers willing to purchase it, while producers continue to supply the product at higher quantities. As a result, there is an imbalance between supply and demand, leading to a surplus.

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  • 30. 

    What is a price ceiling?

    • A.

      A minimum legal price in order to maintain agreement

    • B.

      A maximum legal price in order to maintain agreement

    • C.

      A maximum legal price that can be charged for a product

    • D.

      A minimum legal price that can be charged for a product

    Correct Answer
    C. A maximum legal price that can be charged for a product
    Explanation
    A price ceiling refers to a maximum legal price that can be charged for a product. This means that the price of the product cannot exceed a certain limit set by the government or regulatory authority. The purpose of a price ceiling is to protect consumers by ensuring that they do not have to pay excessively high prices for essential goods or services. It is often implemented in situations where there is a concern about price gouging or monopolistic practices. By setting a maximum price, the government aims to make the product more affordable and accessible to the general public.

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  • 31. 

    What is a price floor?

    • A.

      Highest legal price that can be paid for a good or service

    • B.

      Lowest legal price that can be paid for a good or service

    • C.

      Highest legal price that can be charged in order to maintain agreement

    • D.

      Lowest legal price that can be charged in order to maintain agreement

    Correct Answer
    B. Lowest legal price that can be paid for a good or service
    Explanation
    A price floor is the lowest legal price that can be paid for a good or service. It is a government-imposed regulation that sets a minimum price that sellers are allowed to charge. This is done in order to protect producers and ensure that they receive a fair income for their products. By setting a price floor, the government aims to prevent prices from falling too low and potentially causing financial difficulties for producers.

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  • 32. 

    What is elastic?

    • A.

      When a given change in price causes a relatively larger change in quantity demanded

    • B.

      When a given change in quantity demanded causes a relatively larger change in price

    • C.

      When a given change in price causes a relatively smaller change in quantity demanded

    • D.

      When a given change in quantity demanded causes a relatively smaller change in price

    Correct Answer
    A. When a given change in price causes a relatively larger change in quantity demanded
    Explanation
    Elasticity refers to the responsiveness of quantity demanded to a change in price. When a given change in price causes a relatively larger change in quantity demanded, it indicates that the demand is elastic. This means that consumers are highly sensitive to price changes and a small increase or decrease in price can lead to a significant increase or decrease in the quantity demanded. In other words, when demand is elastic, consumers are more likely to adjust their purchasing behavior in response to price fluctuations.

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  • 33. 

    What is inelastic?

    • A.

      When a given change in quantity demanded causes a relatively smaller change in price

    • B.

      When a given change in price causes a relatively larger change in the quantity demanded

    • C.

      When a given change in price causes a relatively smaller change in the quantity demanded

    • D.

      When a given change in quantity demanded causes a relatively larger change in price

    Correct Answer
    C. When a given change in price causes a relatively smaller change in the quantity demanded
    Explanation
    When a given change in price causes a relatively smaller change in the quantity demanded, it indicates that the demand for the product is inelastic. This means that consumers are not very responsive to changes in price and are willing to pay a higher price for the product. Inelastic demand typically occurs for essential goods or products with limited substitutes, where consumers have few alternatives and are therefore less sensitive to price changes.

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  • 34. 

    What is unit elastic?

    • A.

      If change in quantity demanded causes a proportional change in price

    • B.

      If change in price does not cause a proportional change in quantity demanded

    • C.

      If change in price causes a proportional change in quantity demanded

    • D.

      If change in quantity demanded does not cause a proportional change in price

    Correct Answer
    C. If change in price causes a proportional change in quantity demanded
    Explanation
    Unit elastic refers to a situation where the percentage change in quantity demanded is equal to the percentage change in price. In other words, when there is a proportional change in price, there will be a proportional change in quantity demanded. This means that the demand for a product is neither highly responsive nor unresponsive to changes in price. For example, if the price of a product increases by 10%, the quantity demanded will decrease by 10%. Similarly, if the price decreases by 10%, the quantity demanded will increase by 10%.

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  • 35. 

    If prices and revenue move in opposite directions demand is?

    • A.

      Increased

    • B.

      Decreased

    • C.

      Unit elastic

    • D.

      Unit inelastic

    Correct Answer
    C. Unit elastic
    Explanation
    If prices and revenue move in opposite directions, it means that as prices increase, revenue decreases, and vice versa. In such a scenario, demand is considered to be unit elastic. This means that the change in price has an equal and proportional effect on the change in quantity demanded. In other words, the percentage change in quantity demanded is equal to the percentage change in price.

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  • 36. 

    What is microeconomics?

    • A.

      The area of economics that deals with the behavior and decision making by small units

    • B.

      The area of economics that deals with the behavior and decision of the whole world

    • C.

      The branch of economics that deals with the economy as a whole

    • D.

      The branch of economics that deals with the monetary value

    Correct Answer
    A. The area of economics that deals with the behavior and decision making by small units
    Explanation
    Microeconomics is the branch of economics that focuses on the behavior and decision making of individual units, such as households, firms, and industries. It analyzes how these units make choices regarding the allocation of resources and the production and consumption of goods and services. Microeconomics examines factors such as supply and demand, market equilibrium, pricing, and market failures. It provides insights into the functioning of specific markets and helps understand the behavior of economic agents at a smaller scale.

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  • 37. 

    What is macroeconomics?

    • A.

      The branch of economics that deals with the monetary value

    • B.

      The area of economics that deals with behavior and decision making by small units

    • C.

      The branch of economics that deals with the economy as a whole

    • D.

      The are of economics that deals with the behavior and decision making of your personal life

    Correct Answer
    C. The branch of economics that deals with the economy as a whole
    Explanation
    Macroeconomics is the branch of economics that focuses on the economy as a whole. It examines aggregate economic indicators such as GDP, inflation, and unemployment to understand and analyze the overall performance and behavior of an economy. Macroeconomics looks at factors that influence the economy on a large scale, such as government policies, international trade, and monetary policy. It aims to study and explain the fluctuations and trends in economic activity at the national and global levels.

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  • 38. 

    What is a collusion?

    • A.

      A formal agreement to set prices or to otherwise behave in a cooperative manner

    • B.

      An agreement to have a meeting discussing prices

    • C.

      An informal agreement to set prices or to otherwise behave in a uncooperative manner

    • D.

      A disagreement upon having a meeting discussing prices

    Correct Answer
    A. A formal agreement to set prices or to otherwise behave in a cooperative manner
    Explanation
    A collusion refers to a formal agreement between parties to set prices or to behave in a cooperative manner. This agreement is typically made to manipulate the market and gain an unfair advantage over competitors. It involves coordination and cooperation among the involved parties to control prices, restrict competition, and maximize profits. This behavior is often illegal and can result in severe penalties and consequences for those involved.

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  • 39. 

    What are the three functions of money?

    • A.

      Measure of value, store of value, and direction of value

    • B.

      Medium of exchange, measure of value, and store or value

    • C.

      Measure of value, medium of exchange, and compliance of value

    • D.

      Medium of exchange, store of value, direction of value

    Correct Answer
    B. Medium of exchange, measure of value, and store or value
    Explanation
    The three functions of money are medium of exchange, measure of value, and store of value. Money serves as a medium of exchange, allowing individuals to trade goods and services. It also acts as a measure of value, providing a common unit of measurement for the worth of different goods and services. Lastly, money serves as a store of value, allowing individuals to save and accumulate wealth over time.

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  • 40. 

    What are the characteristics of money?

    • A.

      Durability, divisibility, limited availability, countability

    • B.

      Divisibility, durability, portability, countability

    • C.

      Limited availability, portability, durability, countability

    • D.

      Portablility, durability, divisibility, limited availability

    Correct Answer
    D. Portablility, durability, divisibility, limited availability
    Explanation
    Money needs to be portable so that it can be easily carried and exchanged. It also needs to be durable, meaning it can withstand wear and tear over time. Divisibility is important because money should be able to be divided into smaller units for transactions. Lastly, limited availability ensures that money retains its value and is not easily counterfeited or inflated.

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  • 41. 

    What is commodity money?

    • A.

      Money that has a primary value in being a commodity

    • B.

      Money that has been borrowed from the bank as a loan

    • C.

      Money that has an alternative use as an economic good, or commodity

    • D.

      Money that has an alternative use as a external way of paying for goods or services

    Correct Answer
    C. Money that has an alternative use as an economic good, or commodity
    Explanation
    Commodity money refers to a type of currency that has intrinsic value as a commodity itself, rather than just representing value. It is a form of money that can be used for other purposes besides being a medium of exchange. For example, gold and silver have historically been used as commodity money because they have value in industries such as jewelry and electronics. This distinguishes commodity money from fiat money, which has no intrinsic value and is only valuable because it is accepted as a means of payment by a government or society.

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  • 42. 

    What is the FED

    • A.

      The central bank

    • B.

      The federal bank

    • C.

      The commision bank

    • D.

      The world bank

    Correct Answer
    A. The central bank
    Explanation
    The correct answer is "The central bank." The Federal Reserve System, also known as the Fed, is the central banking system of the United States. It is responsible for conducting monetary policy, regulating and supervising banks, and maintaining financial stability in the country. The Fed plays a crucial role in managing the economy by controlling interest rates, influencing inflation, and promoting economic growth. It is not the same as the federal bank, commission bank, or the World Bank, which have different functions and roles in the global financial system.

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  • 43. 

    What is the FOMC?

    • A.

      Federal Opinion Money Committee

    • B.

      Federal Open Minded Committee

    • C.

      Federal Open Market Committee

    • D.

      Federal Option Money Committee

    Correct Answer
    C. Federal Open Market Committee
    Explanation
    The correct answer is Federal Open Market Committee. The FOMC is a committee within the Federal Reserve System that is responsible for making decisions regarding monetary policy in the United States. It consists of members from the Federal Reserve Board and presidents of regional Federal Reserve Banks. The FOMC meets regularly to discuss economic conditions and determine the appropriate course of action to achieve the Federal Reserve's dual mandate of price stability and maximum employment. They have the power to set interest rates and implement other policies to influence the economy.

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  • 44. 

    How many district banks?

    • A.

      13

    • B.

      12

    • C.

      22

    • D.

      16

    Correct Answer
    B. 12
    Explanation
    The correct answer is 12. This implies that there are 12 district banks.

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  • 45. 

    What are the three tools of the FED?

    • A.

      Open market operations, discount rate, and reserve requirement

    • B.

      Open market operations, increased rate, and reserve requirement

    • C.

      Closed market operations, increased rate, and reserve requirement

    • D.

      Closed market operations, discount rate, and reserve requirement

    Correct Answer
    A. Open market operations, discount rate, and reserve requirement
    Explanation
    The three tools of the FED are open market operations, discount rate, and reserve requirement. Open market operations refer to the buying and selling of government securities to control the money supply. The discount rate is the interest rate at which commercial banks can borrow funds from the central bank. The reserve requirement is the percentage of deposits that banks are required to hold as reserves. These tools are used by the FED to regulate the economy, manage inflation, and stabilize the financial system.

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  • 46. 

    Who is the chairman of the FED?

    • A.

      Bob Bernanke

    • B.

      Ben Bernanke

    • C.

      Big Bird Bernanke

    • D.

      Bubba Sparks Bernanke

    Correct Answer
    B. Ben Bernanke
    Explanation
    Ben Bernanke is the correct answer because he served as the chairman of the Federal Reserve System, commonly known as the FED, from 2006 to 2014. During his tenure, Bernanke played a crucial role in steering the U.S. economy through the financial crisis of 2008. He implemented various measures to stabilize the financial system and promote economic growth. Bernanke's expertise and leadership during this challenging period earned him recognition and made him a well-known figure in the field of economics.

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  • 47. 

    What is inflation?

    • A.

      A fall in the general level of prices occurs, workers need more money to pay for goods, clothing, and shelter

    • B.

      A rise in the general level of prices occurs, workers need less money to pay for goods, clothing and shelter

    • C.

      A fall in the general level of prices occurs, workers need less money to pay for goods, clothing and shelter

    • D.

      A rise in the general level of prices occurs, workers need more money to pay for goods, clothing, and shelter

    Correct Answer
    D. A rise in the general level of prices occurs, workers need more money to pay for goods, clothing, and shelter
    Explanation
    Inflation refers to a rise in the general level of prices. When inflation occurs, the cost of goods, clothing, and shelter increases. As a result, workers need more money to afford these essential items.

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  • 48. 

    What is recession?

    • A.

      A period during which real GDP increases for 2 quarters in a row, or 6 consecutive months

    • B.

      A period during which real GDP declinces for 6 quarters in a row, or 2 consecutive months

    • C.

      A period during which real GDP declines for 2 quarters in a row, or 6 consecutive months

    • D.

      A period during which real GDP increases for 6 quarters in a row, or 2 consecutive months

    Correct Answer
    C. A period during which real GDP declines for 2 quarters in a row, or 6 consecutive months
    Explanation
    A recession is a period during which real GDP declines for 2 quarters in a row, or 6 consecutive months. This means that the overall economic output of a country decreases for a sustained period of time. This can be caused by various factors such as a decrease in consumer spending, a decline in business investments, or a decrease in government spending. During a recession, there is usually a decrease in employment rates and an increase in unemployment rates. This can have a significant impact on the overall economic health of a country.

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  • 49. 

    What is "easy money"?

    • A.

      The FED allows the money supply to grow and the interest rates to fall, which normally stimulates the economy

    • B.

      The FED stops the money supply from growing and the interest rates to grow, which normally stimulates the economy

    • C.

      The FED allows the money supply to grown and the interest rates to grow, which normally deprives the economy

    • D.

      The FEW stops the money supply from growing and the interest rates to fall, which normally deprives the economy

    Correct Answer
    A. The FED allows the money supply to grow and the interest rates to fall, which normally stimulates the economy
    Explanation
    "Easy money" refers to a situation where the Federal Reserve (FED) allows the money supply to increase and interest rates to decrease. This policy is typically implemented to stimulate the economy as it encourages borrowing and spending. By making money more readily available and cheaper to borrow, businesses and individuals are more likely to invest and consume, which can boost economic activity.

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  • 50. 

    What is "tight money" policy?

    • A.

      The FED restricts the growth of the money supply, which drives interest rates up

    • B.

      The FED allows the growth of the money supply, which drives the interest rates down

    • C.

      The FED restricts the growth of the money supply, which drives the interest rates down

    • D.

      The FED allows the growth of the money supply, which drives the interest rates up

    Correct Answer
    A. The FED restricts the growth of the money supply, which drives interest rates up
    Explanation
    A tight, or contractionary, monetary policy is implemented by central banks like the Federal Reserve. Its purpose is to decelerate rapid economic growth, restrict spending in a quickly accelerating economy, or alleviate fast-rising inflation.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

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  • Jan 12, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Oct 22, 2014
    Quiz Created by
    Clibuser
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