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What is a basic principle of the law of demand?
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Why does even a free market economy need some government intervention?
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Economics exam
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| Question | Answer |
|---|---|
| What is a basic principle of the law of demand? | when a good's price is lower, people will buy more of it |
| Why does even a free market economy need some government intervention? | to provide for things that the marketplace does not address |
| Cash that banks must keep in the vault. | required reserves |
| Use of resources in a way that maximizes output of goods and services | Efficiency |
| Which of the following is a good that might not be bought when prices rise? | luxury |
| Which of the following is a critical rule for determining whether something is a public good? | the total benefits to society are greater than the total cost |
| A standard renters insurance policy would cover each EXCEPT… A TV and some sneakers, stolen in a robbery A new window when a baseball breaks the original one A week of hotel reservations when the tenant has to move out due to fire damage | A small TV and some sneakers, stolen in a robbery !!A new window when a baseball breaks the original one!! A week of hotel reservations when the tenant has to move out due to fire damage |
| This is the minimum required by law, only repairs the vehicle you hit, not your own | Liability |
| The rate of inflation is most commonly measured by use of | the consumer price index |
| Which of the following is characteristic of a traditional economy? | children tend to have the same jobs as their parents did |
| What is the opportunity cost of a decision? | the most desirable alternative given up for the decision |
| Fiscal policy is actions taken by ______________ to stabilize the economy. | the government |
| An efficient economy is one that ____. | uses its resources to make the most goods and services |
| The resources used to make all goods and services are the ____. | factors of production |
| Your renter's insurance policy costs $20/month and has a $1,000 deductible. A thief breaks into your apartment and steals your $800 TV set. How much would your insurance company pay? | $0 |
| Explain the concept of compound interest in the context of savings and retirement planning. | Compound interest refers to the interest calculated on the initial principal and also on the accumulated interest of previous periods, which can significantly impact savings and retirement planning. |
| Which of the following scenarios would cause the nation’s money supply to INCREASE? | Lowering interest rates |
| The purpose of a production possibilities graph is to _____. | show alternative ways to use an economy's resources |
| When buyers will purchase exactly as much as sellers are willing to sell, what is the condition that has been reached? | equilibrium |
| What determines the price and quantity produced of most goods? | the interaction of supply and demand |
| Any resources that are made by humans and used to create other goods and services are called _____. | Capital |
| What is inflation? | Inflation is an economic term that describes a general increase in prices 📈 and a fall in the purchasing power of money 📉. |
| Each of these is considered an "out-of-pocket" expense EXCEPT… Your monthly premium A copay of $15 to fill a prescription A $1000 deductible if you're in an auto accident | !!!!!Your monthly premium!!!! A copay of $15 to fill a prescription A $1000 deductible if you're in an auto accident |
| What happens to the money circulation, when the FED orders a "tight" money policy? | less money is put into circulation |
| When would Congress most likely use contractionary fiscal policy? | During periods of high inflation |
| What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future? | store the goods until the price rises |
| What is the purpose of creating a budget? | To track and manage expenses, prioritize spending, and achieve financial goals. |
| Someone broke into Sam’s car by smashing the passenger window. Which type of auto insurance coverage will help cover the cost to get the window replaced? | Comprehensive cc |
| What is an APR in the context of credit cards? | Annual Percentage Rate, which represents the yearly interest rate charged on outstanding balances |
| What is the impact of interest rates on savings accounts? | Higher interest rates lead to higher returns on savings |
| Which is an example of expansionary fiscal policy? | The government increases spending by building more infrastructure |
| Land, labor, and capital | Factors of production |
| What does it mean when the demand for a product is inelastic? | a price increase does not have a significant impact on buying habits |
| Which of the following is the best example of the law of supply? | a sandwich shop increases the number of sandwiches they supply every day when the price is increased |
| Which of the following is not an example of a public good? shopping malls national parks highways municipal libraries | shopping malls |
| Situation in which quantity demanded is greater than quantity supplied | Shortage |
| What happens to a market in equilibrium when there is an increase in supply? | Quantity supplied will exceed quantity demanded, so the price will drop |
| On which kinds of goods do governments generally place price ceilings? | Those that are essential but too expensive for some consumers |
| hose that are essential but too expensive for some consumers | goods for which the demand falls when income rises |
| Expansionary fiscal policies are laws aimed at reducing unemployment. How might Congress use expansionary fiscal policy? | Increase government spending and decrease taxes |
| Why are all goods and services scarce? | All resources are scarce |
| The primary role of the Federal Reserve Bank is to steer the economy by | controlling the money supply. |
| Paid effort that people devote to a task | Labor |
| Explain the difference between fixed and variable expenses in a budget. | Fixed expenses are regular, predictable costs that remain constant each month, while variable expenses are costs that can fluctuate from month to month. |
| What shows the quantities of products demanded at each price by all consumers in a market? | a market demand schedule |
| How is future price related to current demand? | If the price is expected to rise, current demand will rise |
| How does a credit score impact an individual's financial health? | It affects their ability to access credit, the interest rates they receive, and their overall financial stability. |
| During a recession, the Fed should use _____ to help the economy grow and create jobs. | an expansionary policy |
| What is one of the most important advantages of a free market? | it encourages growth |
| Use of fewer resources than the economy is capable of using | Underutilization |
| The lack of which of the following represents a scarcity? | enough workers to finish two jobs because there's a limited supply of worker |
| A shift in the demand curve means which of the following? | a change in demand at every price |
| Contractionary fiscal policy are law aimed at reducing inflation. How might Congress use contractionary fiscal policy? | Decrease government spending and increase taxes |
| The most attractive alternative that is given up when an economic decision is reached. | Opportunity Cost |
| What is a factory building an example of? | physical capital |
| The tools of fiscal policy are... | Taxes and Government spending |
| What incentive motivates a manufacturer to sell a product? | making profits on sales |
| Lowering interest rates to stimulate the economy is called: | Expansionary monetary policy |
| An example of a shortage is limited amounts of ______. | food available because the trucks carrying it are on strike |
| What is the historical relationship between interest rates (as measured by the federal funds rate) and US recessions? | interest rates fall during recessions |
| This is what you have to pay before the insurance company will pay anything | deductible |
| The opportunity cost of a decision can be examined by using a ____. | Production possibilities graph |
| Frank has an auto policy with a coverage limit of $30,000 and a deductible of $1,000. He gets into an accident and the damages to his car total $6,200. Fortunately, he has collision coverage. How much will Frank need to pay out-of-pocket? | $1,000 |
| When financial planning, what should you determine first? | needs & goals |
| Which policy would help fight inflation? | Contractionary |
| What is an insurance premium? | Your monthly payment to your insurer, regardless of whether you use any services |
Created by:
vilaboy