True/False
Indicate whether the sentence or statement is true
or false.
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1.
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The
public is sector is the part of the economy controlled by the
government.
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2.
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Demand is the amount of a good or service available to
consumers.
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3.
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Interest rates (%) are charged on the principal of a loan so that banks can make
money.
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4.
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Wants
are the items that a person cannot live without, such as food, water, and shelter.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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5.
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Which
term best describes the principle that the government should not interfere with private
business, industry, and the economy? a. | socialism | c. | communism | b. | laissez-faire | d. | capitalism | | | | |
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6.
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What
determines how much should be produced in a free-enterprise/capitalistic economy? a. | 5 year
plans | c. | labor
unions | b. | the government | d. | private individuals and businesses | | | | |
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7.
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The
Dow Jones recently closed at an all-time high. When stock prices go up it tells and economist
that a. | the economy is
strong. | c. | the stock market
tells economists nothing. | b. | the economy is weak. | d. | who should be the next president. | | | | |
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8.
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The
Federal Reserve Bank system and its 12 district banks, is responsible for a. | regulating the
speed of the economy. | c. | making change
for parking meters. | b. | printing money. | d. | deciding what to produce. | | | | |
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9.
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The
Federal Depositors Insurance Corporation (FDIC) is important because a. | guarantees bank
accounts up to $100,000. | c. | provides
security for all of America’s banks. | b. | controls the speed of the
economy. | d. | the President
keeps his/her money there. | | | | |
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10.
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To
determine a price a business will use which of the following a. | consumer demand
and the cost of production. | c. | prices assigned
by the government. | b. | the highest price someone is willing to
pay. | d. | a magic 8
ball. | | | | |
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11.
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If we
woke up tomorrow and McDonalds was the only fast food chain, besides a bad stomachache what other
problems do we face witha monopoly? a. | higher prices | c. | no competition | b. | less customer
service | d. | all of the
above | | | | |
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12.
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The
rising of prices over a short period of time, that decreases the value of money is
called a. | inflation. | c. | interest
rate | b. | debt. | d. | laissez
faire | | | | |
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13.
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This
year the government spent more money than it collected in taxes. This is
called a. | deficit
spending. | c. | revenues. | b. | market indexing. | d. | expenditures. | | | | |
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14.
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Which
of the following are factors of production, the resources used to create a finished good or
service? a. | land or natural
resource | c. | labor | b. | capital | d. | all of the above | | | | |
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15.
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What
is the purpose of taxes? a. | to pay for services such as repairing roads and military
defense | c. | to pay
Congress’ salaries | b. | to pay for a police department | d. | all of the above | | | | |
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Completion
Complete each sentence or
statement.
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16.
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Unfortunately, humans have ____________ wants and needs. Unfortunately, there are
__________________ resources to meet these wants and needs.
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17.
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When
the supply is high but the demand is low the final price will be
_____________.
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18.
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When
the supply is low but the demand is high the final price will be
____________.
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Short Answer
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19.
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Define Capitalism. Be sure to explain how this system answers the key questions
of what and how much to produce. Who makes theses decisions? Provide an example of one nation
that uses this system.
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20.
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Define communism. Be sure to explain how this system answers the key questions
of what and how much to produce. Who makes these decision? Provide and example of one
nation that uses this system.
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