Introduction to Economics quiz #1 Flashcards
Introduction to Economics quiz #1
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How is an excise tax different from a sales tax? An excise tax is levied on specific goods, such as gasoline or tobacco, while a sales tax is applied broadly to most goods and services at the point of sale. What is one way a command economy affects the lives of private citizens? In a command economy, the government makes most economic decisions, limiting private citizens' choices in production and consumption. What is one characteristic of a command economy? A command economy is characterized by government control over production and resource allocation. What is the difference between a flat tax rate and a progressive tax rate? A flat tax rate charges the same percentage to all income levels, while a progressive tax rate increases as income rises. What role do entrepreneurs play in economics? Entrepreneurs drive innovation, create jobs, and contribute to economic growth by starting and managing businesses. What might cause a change in the value of fiat money? Changes in government policy, inflation, or public confidence can affect the value of fiat money. Which event most likely explains renewed demand in a recovery period? Increased consumer confidence and spending typically explain renewed demand during economic recovery. What is a primary economic goal of governments? A primary economic goal of governments is to promote economic stability and growth. What is market saturation? Market saturation occurs when most potential customers already own or use a product, limiting further growth. Which nation has a command economy: Cuba, Norway, South Korea, or the United States? Cuba has a command economy. Which statement best describes why it is difficult to sell a home during a recession? During a recession, demand for homes falls due to lower incomes and uncertainty, making sales more difficult. Which of the following is recorded in a country’s balance of payments accounts? Transactions such as exports, imports, and financial transfers are recorded in the balance of payments. What is the difference between inflation and deflation? Inflation is a general rise in prices, while deflation is a general decline in prices. What are some reasons for studying economics? Choose three answers. To understand resource allocation, make informed decisions, and analyze market behavior. Which is the best definition of inflation? Inflation is the sustained increase in the general price level of goods and services. What is an example of goods: a hotel room, a good haircut, a car wash, or a hard cover book? A hard cover book is an example of goods. What are the three functions of money? Money serves as a medium of exchange, a unit of account, and a store of value. What is a private enterprise system? A private enterprise system is an economic system where individuals own and operate businesses for profit. Which of these best describes the invisible hand theory of Adam Smith? The invisible hand theory suggests that individuals pursuing their own interests unintentionally benefit society. Which are major decisions that must be addressed by an economic system? What to produce, how to produce, and for whom to produce. What is voluntary exchange? Voluntary exchange is the act of buyers and sellers freely and willingly engaging in market transactions. Why are entrepreneurs important to the economy? Entrepreneurs create jobs, foster innovation, and drive economic growth. Which of the following occur in the resource market? Households sell resources like labor to firms in exchange for income. What is one way that economics can influence your daily life? Economics affects decisions about spending, saving, and investing. Which of the following is not a function of money? Providing entertainment is not a function of money. A country in the first stage of the demographic transition demonstrates which of the following? High birth and death rates. Which of the following is an advantage of a sole proprietorship? A sole proprietorship offers full control to the owner. What are the 4 main types of economic systems? Traditional, command, market, and mixed economies. What are the three basic economic questions all societies must answer? What to produce, how to produce, and for whom to produce. Which of the following is an example of a sunk cost? Money spent on non-refundable tickets is a sunk cost. What area of economics focuses on the interactions between individual consumers and producers? Microeconomics focuses on individual consumers and producers. What is one advantage of direct distribution channels? Direct channels allow producers to interact directly with consumers. Which of the following does competition require? Competition requires multiple buyers and sellers. Which of the following is positively correlated with gross domestic product (GDP) per capita? Higher standards of living are positively correlated with GDP per capita. Which of the following can be stated as potentially true about any economy? Scarcity of resources is true for any economy. Economics is the study of what? Economics is the study of how society manages scarce resources. What type of economic system is used in the United States? The United States uses a mixed-market economy. Which statement best explains the role of producers in economics? Producers create goods and services to satisfy consumer needs. Which statement describes a disadvantage of a command economy? A command economy often lacks efficiency and innovation. Which of the following typically occurs during an expansionary phase of a business cycle? Economic growth and rising employment typically occur.
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