Question 1

A) A consumer must decide between purchasing a new cell phone or renting a new car. Why might determining the opportunity cost be uncertain?(1 point)

There is no uncertainty because the consumer has all the required information.

There is no uncertainty because the consumer has all the required information.

The cost to the producer for making the items is not known to the consumer.

The cost to the producer for making the items is not known to the consumer.

The price of the cell phone or car rental might change.

The price of the cell phone or car rental might change.

The benefit of each choice is not easily quantified, so the comparison can be vague.

The benefit of each choice is not easily quantified, so the comparison can be vague.

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Question 2

A)

Use the following table to determine the answer.

Tablets	Laptops
250	50
200	60
150	70
100	80
50	90

The table shows the production possibilities for a technology company that produces both tablets and laptops thatutilizethe same resources. What is the opportunity cost of producing a single laptop?

(1 point)

The opportunity cost of producing 1 laptop is15of a tablet.

The opportunity cost of producing 1 laptop is, 1 fifth, of a tablet.

The opportunity cost of producing 1 laptop is 5 tablets.

The opportunity cost of producing 1 laptop is 5 tablets.

The opportunity cost of producing 1 laptop is 50 tablets.

The opportunity cost of producing 1 laptop is 50 tablets.

The opportunity cost of producing 1 laptop is 10 tablets.

The opportunity cost of producing 1 laptop is 10 tablets.

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Question 3

A) Which of the following principles of a free enterprise system can explain why a business will have problems if it tries to set prices too high in a well-established market?(1 point)

property rights

property rights

voluntary exchange

voluntary exchange

profit

profit

open opportunity

open opportunity

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Question 4

A) In resource markets, households receive income in the form of interest in exchange for what factor of production?(1 point)

labor

labor

land

land

capital

capital

entrepreneurship

entrepreneurship

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Question 5

A) A local electronics store recently increased the price of a portable speaker it sells from$15to$18. The owner of the store noticed that the store went from selling 100 units a month to 70 speakers a month. Which of the following choices correctly describes the price elasticity of demand for the portable speaker?(1 point)

The demand for the portable speaker is perfectly inelastic.

The demand for the portable speaker is perfectly inelastic.

The demand for the portable speaker is unit elastic.

The demand for the portable speaker is unit elastic.

The demand for the portable speaker is price inelastic.

The demand for the portable speaker is price inelastic.

The demand for the portable speaker is price elastic.

The demand for the portable speaker is price elastic.

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Question 6

A) Which of the following would result in a shift to the right in the supply curve?(1 point)

The price of a good or service is expected to rise in the future.

The price of a good or service is expected to rise in the future.

Sellers leave the market.

Sellers leave the market.

The price of a substitute in production increases.

The price of a substitute in production increases.

The input costs for a good or service decrease.

The input costs for a good or service decrease.

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Question 7

A) In a market for milk, it is easy for new businesses to enter the market since there are no barriers to entry.Prices are also determined by supply and demand, so the businesses are not able to set their own price. What type of market structure does the given situation represent?(1 point)

monopolistically competitive market

monopolistically competitive market

perfectly competitive market

perfectly competitive market

a monopoly

a monopoly

an oligopoly

an oligopoly

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Question 8

A) How are management decisions executed in a corporation?(1 point)

The shareholder with the largest controlling stake gets ownership status and is entitled to make all management decisions.

The shareholder with the largest controlling stake gets ownership status and is entitled to make all management decisions.

The shareholders elect a board of directors that is responsible for management decisions and day-to-day operations.

The shareholders elect a board of directors that is responsible for management decisions and day-to-day operations.

A board of directors is formed to make management decisions, consisting of every shareholder with at least a 10% stake in ownership of the corporation.

A board of directors is formed to make management decisions, consisting of every shareholder with at least a 10% stake in ownership of the corporation.

The shareholders are tasked with appointing corporate officers that are responsible for management decisions.

The shareholders are tasked with appointing corporate officers that are responsible for management decisions.

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Question 9

A) A labor union has been established at a local retail store. New employees are invited to join the union, but there is no penalty if they choose not to. This scenario describes(1 point)

a non-union shop.

a non-union shop.

an open shop.

an open shop.

a union shop.

a union shop.

a closed shop.

a closed shop.

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Question 10

A) Which act established the FDIC?(1 point)

Banking (Glass-Steagall) Act of 1933

Banking (Glass-Steagall) Act of 1933

Financial Services Modernization Act of 1999

Financial Services Modernization Act of 1999

Home Owners' Loan Act of 1933

Home Owners' Loan Act of 1933

Banking Act of 1935

Banking Act of 1935

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Question 11

A) Which of the following correctly identifies the trade-off between risk, liquidity, and return for investment in a savings account?(1 point)

low risk, high liquidity, and high returns

low risk, high liquidity, and high returns

low risk, high liquidity, and low returns

low risk, high liquidity, and low returns

high risk, low liquidity, and moderate returns

high risk, low liquidity, and moderate returns

high risk, high liquidity, and high returns

high risk, high liquidity, and high returns

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Question 12

A) William purchases a savings bond from the United States Treasury. The principal amount of the bond is$3,000, and the terms of the bond are a5%yield with a maturity date set for 8 years in the future from the date of purchase. William is trying to calculate hisreturn on his investment. What is the amount of interest William can expect to earn over the lifetime of the bond?(1 point)

$4,200

4,200 dollars

$3,150

3,150 dollars

$1,200

1,200 dollars

$150

150 dollars

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Question 13

A)

Use the table to answer the question.

	2000	2020
	Price ($)	Quantity	Price ($)	Quantity
Cars	10,000	5,000	15,000	9,000
Trucks	12,000	3,000	18,000	8,000

An economy is analyzingtrends in the automobile industry and wants to determine the economic output adjusted for changes in price over the last 20 years. Using 2000 as the base year, what is the Real GDP of the automobile industry in the given economy in 2020?

(1 point)

279 million dollars

279 million dollars

188 million dollars

188 million dollars

186 million dollars

186 million dollars

86 million dollars

86 million dollars

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Question 14

A) The government in an economy recently reduced the tax rates on income for individuals. This prompted an increase in consumer spending, as consumers' income was effectively increased by the reduction in tax rates. The government notices that since the change in tax rates, prices have begun to increase throughout the economy and the inflation rate is increasing. What type of inflation is occurring in the economy?(1 point)

deflation

deflation

demand-pull inflation

demand-pull inflation

cost-push inflation

cost-push inflation

disinflation

disinflation

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Question 15

A) Which type of tax is designed for higher-income individuals to pay a larger percentage of their earnings compared with lower-income individuals?(1 point)

proportional tax

proportional tax

progressive tax

progressive tax

regressive tax

regressive tax

payroll tax

payroll tax

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Question 16

A) What would be the long-term implications of the government implementing expansionary fiscal policies indefinitely?(1 point)

Higher individual and corporate tax rates and greater government spending limit growth of the private sector economy.

Higher individual and corporate tax rates and greater government spending limit growth of the private sector economy.

Decreases in federal government revenue and increasing expenses cause large deficits and add to the national debt, straining the economy.

Decreases in federal government revenue and increasing expenses cause large deficits and add to the national debt, straining the economy.

Individual and corporate tax rates decrease along with spending for social programs, both of which would lead the economy to slow down or contract.

Individual and corporate tax rates decrease along with spending for social programs, both of which would lead the economy to slow down or contract.

Increases to the corporate income tax rate lead to faster economic growth and drive inflation upwards.

Increases to the corporate income tax rate lead to faster economic growth and drive inflation upwards.

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Question 17

A) How do the functions of the Federal Reserve district banks compare to the Federal Open Market Committee?(1 point)

The Federal Open Market Committeeoversees open market operations and sets the target federal funds rate, while the Federal Reserve district banks overlook the banking industry and implement the policies from the Federal Open Market Committee.

The Federal Open Market Committeeoversees open market operations and sets the target federal funds rate, while the Federal Reserve district banks overlook the banking industry and implement the policies from the Federal Open Market Committee.

The Federal Open Market Committeeoverlooks the banking industry and implements the policies from the Board of Governors, while the Federal Reserve district banks oversee theFederal Open Market Committee and set the target federal funds rate.

The Federal Open Market Committeeoverlooks the banking industry and implements the policies from the Board of Governors, while the Federal Reserve district banks oversee theFederal Open Market Committee and set the target federal funds rate.

The Federal Open Market Committee sets the discount rate and reserves requirements on banks, while the Federal Reserve district banks overlook the banking industry and implement the policies from the Federal Open Market Committee.

The Federal Open Market Committee sets the discount rate and reserves requirements on banks, while the Federal Reserve district banks overlook the banking industry and implement the policies from the Federal Open Market Committee.

The Federal Open Market Committee directs monetary policy, whilethe Federal Reserve district banks oversee open market operations as well as set the target federal funds rate and discount rate.

The Federal Open Market Committee directs monetary policy, whilethe Federal Reserve district banks oversee open market operations as well as set the target federal funds rate and discount rate.

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Question 18

A)

Use the table to answer the question.

	Refrigerators	Microwaves
United States	100 million	300 million
China	50 million	100 million

The table above gives the maximum production of refrigerators and microwaves by China and the United States in one year. Which of the following is correct?

(1 point)

China has the comparative advantage in microwave production, while the United States has the absolute advantage.

China has the comparative advantage in microwave production, while the United States has the absolute advantage.

The United States has the comparative and absolute advantage in microwave production.

The United States has the comparative and absolute advantage in microwave production.

The United States has the comparative advantage in microwave production, while China has the absolute advantage.

The United States has the comparative advantage in microwave production, while China has the absolute advantage.

China has the comparative and absolute advantage in microwave production.

China has the comparative and absolute advantage in microwave production.

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Question 19

A) In an effort to protect domestic industry, Congress is considering implementing a quota or a tariff. If both options reduce imports from 1 billion a year to 500 million a year, which option should Congress select and why?(1 point)

Congress should select the quota because it will have less of a negative impact on domestic consumers.

Congress should select the quota because it will have less of a negative impact on domestic consumers.

Congress should select the tariff because it will generate government revenue.

Congress should select the tariff because it will generate government revenue.

Congress should select the tariff because it will have less of a negative impact on domestic consumers.

Congress should select the tariff because it will have less of a negative impact on domestic consumers.

Congress should select the quota because it will generate government revenue.

Congress should select the quota because it will generate government revenue.

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Question 20

A) If the Canadian dollar appreciateswith respect to the Mexican peso, what is the likely impact on Canada's balance of trade with Mexico?(1 point)

The stronger dollar decreases imports from Mexico, increasing Canada's balance of trade with Mexico.

The stronger dollar decreases imports from Mexico, increasing Canada's balance of trade with Mexico.

The stronger dollar decreases imports from Mexico, decreasing Canada's balance of trade with Mexico.

The stronger dollar decreases imports from Mexico, decreasing Canada's balance of trade with Mexico.

The stronger dollar increases imports from Mexico, increasing Canada's balance of trade with Mexico.

The stronger dollar increases imports from Mexico, increasing Canada's balance of trade with Mexico.

The stronger dollar increases imports from Mexico, decreasing Canada's balance of trade with Mexico.

The stronger dollar increases imports from Mexico, decreasing Canada's balance of trade with Mexico.