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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
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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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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2.
One consequence of scarcity is that
the production of goods and services is constant.
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products which are plentiful have relatively high prices.
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there is full employment of resources.
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people have to make choices among alternatives.
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3.
The opportunity cost of a decision is the
total benefit expected from all forgone opportunities.
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value of the next best alternative not chosen.
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worst choice that could have been made.
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money spent making a choice.
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4.
Which of the following is typically true?
People’s choices have consequences for the future.
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Voluntary trade causes winners and losers.
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People do not respond to incentives.
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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?
Command economy.
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Market economy.
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Political economy.
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Traditional 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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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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Most societies have an equal distribution of goods and services.
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8.
What is the most likely reason why a business would cut the price of a product it sells?
To decrease the number of workers.
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To reduce the economic profit.
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To increase investment in other business operations.
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To encourage more people to purchase the product.
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9.
Expansion of international trade usually
decreases worldwide living standards.
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increases worldwide production.
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increases worldwide unemployment.
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decreases worldwide interdependence.
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10.
If a high tariff was placed on steel shipped into the U.S.,
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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the price of steel would go down.
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foreigners would buy more goods from the U.S.
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11.
Specialization and trade lead to
less economic interdependence.
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fewer exchanges of goods and services.
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lower costs of goods and services.
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fewer choices 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
businesses and consumers.
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workers and labor unions.
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businesses and the government.
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consumers and the government.
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13.
Why are diamonds more expensive than water even though water is necessary for life and diamonds are not?
The demand for water is decreasing.
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Diamonds are more scarce than water.
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Water is more scarce than diamonds.
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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 raising the price.
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surplus by lowering the price.
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surplus by raising the price.
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shortage by lowering the price.
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15.
A market-clearing price occurs when
deficits equal surpluses.
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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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16.
Chicken and fish are substitutes for each other. If the cost of raising chickens increases, then the price of chicken will
increase and people will buy more fish.
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decrease and people will buy less fish.
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decrease and people will buy more fish.
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increase and people will buy less 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 amount of corn sold.
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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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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?
Lower product price.
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Less output produced in the market.
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Lower product quality.
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Less service.
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20.
Which is most likely to influence the level of competition in markets?
The amount of wages and salaries.
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The number of buyers and sellers.
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The size of the government budget.
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The market-clearing price of a product.
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21.
Banks make most of their profits by charging
fees for advice on investments in stocks.
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higher rates of interest to borrowers than they pay depositors.
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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
proprietorship.
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corporation.
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collective.
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partnership.
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23.
Amy is saving ten percent of her income a month. The money she saved is primarily functioning as a
store of value.
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unit of account.
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terms of trade.
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medium of exchange.
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24.
Which one of the following is correct?
It just takes money to produce goods and services.
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Most nations create their own currency for use as money.
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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
imports and exports.
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lawyers and bankers.
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savers and investors.
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supply and demand.
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26.
Which will result from an increase in the demand for construction workers?
A decrease in the supply of housing.
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An increase in unemployed construction workers.
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A decrease in the price of housing.
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An increase in the wage of construction workers.
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27.
Workers’ wages usually increase when
the supply of workers 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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demand for the products they produce increases.
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28.
Most entrepreneurs start a new business because they expect to
earn a profit.
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decrease work hours.
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increase their human capital.
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avoid risk.
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29.
Advances in technology result in
a decrease in output.
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an increase in productivity.
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a decrease in wages.
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an increase in prices.
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30.
What usually causes the standard of living in a country to increase over time?
Conservation of natural resources.
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High taxes.
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High tariffs.
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Increased output per worker.
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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 causes pollution and noise.
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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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32.
A major economic role that government is supposed to perform in a market economy is to
guarantee profits.
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establish production targets.
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maintain competition.
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set wages and salaries.
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33.
A sales tax is a tax on
investment.
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consumption.
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property.
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income.
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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 total assets and liabilities of a nation.
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The market value of final goods and services produced in a year.
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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
inflation rate.
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population.
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square miles.
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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 part-time cashier who is unhappy with her wage and looking for a full-time position.
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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 college student who decides not to work during the school year.
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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
prices of goods and services.
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government spending and taxes.
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interest rates.
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prices on the stock market.
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39.
Government spending less than taxes collected during a year is called
a budget deficit.
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the balanced budget.
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a budget surplus.
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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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Federal Reserve System.
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Federal Trade Commission.
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Internal Revenue Service.
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