Econ test CH 8-19

Question 1

Comparative advantage

Answer 1

One group produces more than the other

Question 2

Economic development is important in countries because

Answer 2

Reduces poverty and increases social and political stability

Question 3

Connection between money and interest rates

Answer 3

Contraction of money supply= higher interest rates

Question 4

For whose guidance was the council of economic advisers created

Answer 4

The US president

Question 5

Which of these is a prominent feature of monetary policy

Answer 5

Adjusting interest rates to stimulate the economy

Question 6

Progressive income tax is an example of

Answer 6

An automatic stabilizer

Question 7

In Keynes’s view, a short term budget deficit due to government spending or tax cuts is

Answer 7

Sometimes necessary to help stimulate the economy

Question 8

GDP= C+ I + G + (X-M). G stands for:

Answer 8

Government spending

Question 9

If there is an increase in federal tax rates, then it was caused by

Answer 9

Congress

Question 10

Which type of tax is levied on the sale of an asset held for 12 months or longer

Answer 10

Capital gains tax

Question 11

What would happen to the economy if it were not interrupted by alternating periods of recession and recovery

Answer 11

Trend line

Question 12

The federal deposit insurance corporation was created to

Answer 12

Restore public confidence in America’s financial industry

Question 13

Intermediate product

Answer 13

Products used in the production process to make other goods

Question 14

An import quota will result in

Answer 14

An increase in domestic employment

Question 15

Which of these is true of US fertility rate at present

Answer 15

Slightly below the replacement population rate

Question 16

Name of fee paid for an insurance policy

Answer 16

Premium

Question 17

Something that is used for money but also has intrinsic value in some other use is known as

Answer 17

Commodity money

Question 18

Which of the following can cost you money in large interest payments

Answer 18

Credit card

Question 19

In collective bargaining, who represents the interests of the workers

Answer 19

Elected union officials

Question 20

A combination of firms involved in different steps in manufacturing or marketing is known as

Answer 20

Vertical merger

Question 21

A combination of firms producing the same kind of product is known as a

Answer 21

Horizontal merger

Question 22

The government document that grants permission to establish a corporation is called a

Answer 22

Charter

Question 23

According to the theory of comparative advantage, a nation should

Answer 23

Produce and export goods that have low opportunity costs

Question 24

A government order prohibiting the movement of goods to a country is known as an

Answer 24

Embargo

Question 25

GPD= C+ I+ G+ (X-M) What does the “I‘ stand for?

Answer 25

Investment

Question 26

What are the feds three main tools for conducting monetary policy

Answer 26

The reserve requirement, open market operations, and the discount rate

Question 27

Which of the following groups does supply side policy target through stimulation

Answer 27

Producers

Question 28

Policies based on demand side economics is sometimes referred to as

Answer 28

Keynesian economics

Question 29

As a result of a progressive tax system, as incomes increase, the average tax rate will

Answer 29

Increase

Question 30

Elementary schools, police departments, and electrical service are typically paid for by

Answer 30

Local governments

Question 31

The sum of all persons under age sixteen and above who are either employed or actively seeking employment is known as

Answer 31

The civilian labor force

Question 32

Inflation characterized by rising input costs, especially energy and organized labor, driving up the cost of production

Answer 32

Cost push inflation

Question 33

Members of the federal reserve board of governors are rarely subject to political pressure because

Answer 33

They are appointed by the president to 14 year terms

Question 34

Federal reserve can change the money supply except by

Answer 34

Changing current tax rate

Question 35

Which activity is illegal with a right to work law

Answer 35

Requiring union membership