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Test of Economic Knowledge
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Last updated: July 3, 2022
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| First submitted | July 3, 2022 |
| Times taken | 27 |
| Average score | 82.5% | Report this quiz | Report |
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1.
The economic problem of scarcity means that for individuals, governments, and societies the
costs of producing goods and services are greater than the benefits of having them.
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prices of goods and services are greater than the value of consuming them.
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supply of goods and services is greater than the demand for them.
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wants for goods and services are greater than the available resources to meet them.
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2.
One consequence of scarcity is that
there is full employment of resources.
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people have to make choices among alternatives.
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products which are plentiful have relatively high prices.
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the production of goods and services is constant.
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3.
The opportunity cost of a decision is the
total benefit expected from all forgone opportunities.
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money spent making a choice.
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worst choice that could have been made.
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value of the next best alternative not chosen.
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4.
Which of the following is typically true?
Voluntary trade causes winners and losers.
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People do not respond to incentives.
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People’s choices have consequences for the future.
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Correct choices have no costs.
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5.
It will cost Amanda an extra $30 to purchase a warranty for a $400 new camera that she is buying. If Amanda decides to buy the warranty she has concluded that the
cost of the warranty is greater than its benefit.
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cost of the camera is greater than the cost of the warranty.
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benefit of the camera is greater than the benefit of the warranty.
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benefit of the warranty is greater than its cost.
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6.
There is little government ownership of farms and businesses in the country of Mala. People may change jobs and start new businesses. The government does not control prices and wages. What type of economy is Mala?
Traditional economy.
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Market economy.
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Command economy.
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Political economy.
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7.
Which is true about who gets the goods and services that are produced?
All societies use the same method for distributing goods and services.
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Most societies have an equal distribution of goods and services.
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No method of distributing goods and services will satisfy everyone.
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All methods of distributing goods and services will satisfy everyone.
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8.
What is the most likely reason why a business would cut the price of a product it sells?
To reduce the economic profit.
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To decrease the number of workers.
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To encourage more people to purchase the product.
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To increase investment in other business operations.
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9.
Expansion of international trade usually
decreases worldwide interdependence.
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decreases worldwide living standards.
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increases worldwide production.
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increases worldwide unemployment.
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10.
If a high tariff was placed on steel shipped into the U.S.,
the price of steel would go down.
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foreigners would buy more goods from the U.S.
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U.S. reserves of iron ore would last a longer time.
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U.S. consumers would pay more for steel.
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11.
Specialization and trade lead to
fewer choices of goods and services.
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lower costs of goods and services.
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less economic interdependence.
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fewer exchanges of goods and services.
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12.
In the United States, prices for most goods and services are determined by the actions of
workers and labor unions.
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consumers and the government.
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businesses and the government.
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businesses and consumers.
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13.
Why are diamonds more expensive than water even though water is necessary for life and diamonds are not?
Water is more scarce than diamonds.
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Diamonds are more scarce than water.
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The demand for water is decreasing.
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The supply of diamonds is increasing.
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14.
At the end of winter, retail clothing stores still have many winter coats for sale. The retail store owner can eliminate the
shortage by lowering the price.
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surplus by raising the price.
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surplus by lowering the price.
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shortage by raising the price.
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15.
A market-clearing price occurs when
total assets equal total liabilities.
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quantity demanded equals quantity supplied.
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shortages equal surpluses.
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deficits equal surpluses.
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16.
Chicken and fish are substitutes for each other. If the cost of raising chickens increases, then the price of chicken will
decrease and people will buy less fish.
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increase and people will buy less fish.
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increase and people will buy more fish.
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decrease and people will buy more fish.
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17.
If there is a large decrease in demand for corn and no change in supply,
there will be no change in the price of corn.
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consumers will pay a higher price for corn.
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there will be no change in the amount of corn sold.
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consumers will pay a lower price for corn.
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18.
The price of DVDs will decrease if the
supply of DVDs decreases.
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demand for DVDs increases.
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demand for DVDs increases and the supply decreases.
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supply of DVDs increases.
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19.
There used to be one producer of a good in a market and now there are many competing producers. What is most likely to be the result?
Less service.
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Less output produced in the market.
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Lower product quality.
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Lower product price.
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20.
Which is most likely to influence the level of competition in markets?
The number of buyers and sellers.
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The market-clearing price of a product.
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The amount of wages and salaries.
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The size of the government budget.
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21.
Banks make most of their profits by charging
higher rates of interest to borrowers than they pay depositors.
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fees for advice on investments in stocks.
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fees for using automatic teller machines (ATMs).
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lower rates of interest to borrowers than they pay depositors.
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22.
Jody bought shares of stock in a company. She and the other stockholders voted to elect its board of directors. The company is a
corporation.
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partnership.
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proprietorship.
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collective.
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23.
Amy is saving ten percent of her income a month. The money she saved is primarily functioning as a
unit of account.
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terms of trade.
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store of value.
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medium of exchange.
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24.
Which one of the following is correct?
Most nations create their own currency for use as money.
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It just takes money to produce goods and services.
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Money is useful for saving, but not investing.
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Trade is more difficult with money compared with barter.
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25.
Most wages and salaries in the United States are determined by
savers and investors.
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supply and demand.
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lawyers and bankers.
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imports and exports.
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26.
Which will result from an increase in the demand for construction workers?
An increase in unemployed construction workers.
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An increase in the wage of construction workers.
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A decrease in the price of housing.
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A decrease in the supply of housing.
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27.
Workers’ wages usually increase when
the supply of workers increases.
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demand for the products they produce increases.
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businesses face more competition in selling their product.
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the unemployment rate increases.
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28.
Most entrepreneurs start a new business because they expect to
avoid risk.
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decrease work hours.
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increase their human capital.
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earn a profit.
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29.
Advances in technology result in
a decrease in wages.
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an increase in productivity.
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an increase in prices.
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a decrease in output.
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30.
What usually causes the standard of living in a country to increase over time?
High tariffs.
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Increased output per worker.
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Conservation of natural resources.
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High taxes.
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31.
In what way is a fireworks display a public good?
It can be seen by those who do not pay for it.
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It can be provided by several businesses.
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It requires expenditures for public safety.
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It causes pollution and noise.
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32.
A major economic role that government is supposed to perform in a market economy is to
set wages and salaries.
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guarantee profits.
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establish production targets.
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maintain competition.
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33.
A sales tax is a tax on
consumption.
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income.
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property.
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investment.
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34.
What does the gross domestic product (GDP) measure?
The wages and salaries paid for productive work done during a year.
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The market value of final goods and services produced in a year.
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The total assets and liabilities of a nation.
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The market value of products government buys each year.
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35.
When comparing the standard of living in one nation’s economy to another nation’s economy, GDP is typically adjusted in each nation by dividing GDP by a nation’s
population.
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square miles.
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inflation rate.
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unemployment rate.
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36.
Inflation is the term used to describe
an increase in interest rates.
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a decrease in interest rates.
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a general decrease in prices.
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a general increase in prices.
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37.
Which of the following people would the U.S. government count as unemployed?
A college student who decides not to work during the school year.
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A retired scientist who is living on her pension.
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A high school graduate who has not yet found a job but continues looking.
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A part-time cashier who is unhappy with her wage and looking for a full-time position.
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38.
To know if an increase in wages over a period of time has led to an increase in the standard of living, we must also look at changes in
government spending and taxes.
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prices on the stock market.
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interest rates.
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prices of goods and services.
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39.
Government spending less than taxes collected during a year is called
a budget surplus.
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the balanced budget.
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a budget deficit.
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the national debt.
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40.
The control of the money supply is the main responsibility of the
Department of Commerce.
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Internal Revenue Service.
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Federal Trade Commission.
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Federal Reserve System.
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