PRETEST ECONOMICS
1. Which is always present in an economic system? (a) central planning, (b) strikes, (c) scarce resources, (d) market decision-making
2. Which of the following taxes is mostly based on the ability to pay? (a) property tax, (b) sales tax, (c) social security tax, (d) income tax
3. Caveat emptor means (a) the public’s right to obtain land, (b) let the buyer beware, (c) citizen’s right to own property, (d) noninterference by government, (e) special concessions to business
4. Who controls the money in circulation? (a) Treasury, (b) Federal Deposit of Insurance Corporation, (d) Federal Reserve, (c) Banks
5. An underdeveloped country is basically (a) industrial in nature, (b) receiving a favorable balance of trade, (c) automated, (d) agrarian in nature
6. The total value of goods and services produced in a given year is called (a) national income, (b) national wealth, (consumer debt, (d) gross domestic product
7. Federal government expenditures in the market are the greatest in which of the following areas: (a) defense, (b) debt, (c) welfare, (d) foreign aid
8. Supply and demand in the market determine (a) utility, (b) cost, (c) production, (d) price
9. Name the three basic economic systems in the world:
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10. The opportunity cost of a new public high school is the (a) money cost of hiring teachers for the new school, (b) cost of constructing the new school at a later date, (c) change in the annual tax rate to pay for the new school, (d) other goods and services that must be given up to build the new school
11. Assuming little or not government interference in the market which of the following “drives” the market? (a) competition, (b) price, (c) stock market, (d) regulation
12. Which government agency regulates antitrust formations? (a) Supreme Court, (b) Congress, (c) Federal Trade Commission, (d) State courts
13. FICA which is reported in your paycheck stands for what deduction?___________________
14. What is monetary policy?______________________________________________________
15. What is fiscal policy?_________________________________________________________
16. What does CPI stand for?______________________________________________________
17. What does CPI measure?_______________________________________________________
18. Names the three basic factors of production
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19. One example of a capital good would be (a) bank deposits, (b) roofing machine, (c) coal, (d) ink
20. Of the following, which is the most general cause of low individual incomes in the United States? (a) lack of valuable productive services to sell, (b) discrimination against nonunion workers, (c) unwillingness to work, (d) progressive tax rates
21. To promote economic growth a country must (a) increase investment (b) increase consumption, (c) use the market system, (d) use central economic planning
22. A government budget deficit exists when (a) government spending exceeds tax revenues, (b) government spending is increased, (c) the national debt is decreasing, (d) taxes are reduced
23. Ceteris paribus means (a) who cares, (b) the money is inflated, (c) all other things being equal, (d) the money should be equally distributed
24. Laissez faire means (a) government can seize your land, (b) the market should be in equilibrium, (c) government should not get involved, (d) government drives the market
25. Who wrote the Wealth of Nations?____________________________________________
26. What type of business formation is the most common in the U.S.?___________________
27. What constitutes a favorable balance of trade?________________________________-
28. Which security pays interest, a stock or a bond?______________________________
29. What are the four market models in the U.S.?_____________________
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30. What three questions does every economy ask?
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31. What is the motivating force of a free enterprise economy?