1. In communist country, the following holds true EXCEPT __________.
a. productive resources are owned by government
b. the citizens vote on some economic policies
c. the government determines what shall be produced and in what quantity
d. the government sets wages and prices
Ans. : B
2. What is that economic situation where one company controls the supply of a unique kind of product?
a. Inflation
b. Monopoly
c. Equilibrium
d. Economic stability
Ans. : B
3. The growth of a free economy follows the path of a roller coaster. Which one is referred to as the belief and small decline in business activity?
a. Depression
b. Recession
c. Boom
d. stability
Ans. : B
4. A free economy has its glorious and not so glorious periods. Which one is referred to as the period of above average business activity?
a. depression
b. recession
c. boom
d. stability
Ans. : C
5. The growth of a free economy follows the ups and downs of a roller coaster. Which one is a referred to as large drops in economic growth for a comparatively longer period of time?
a. Stability
b. Recession
c. Boom
d. Depression
Ans. : D
6. The following happen during a recession on a depression EXCEPT ___________.
a. people love their jobs
b. business rake bigger profits
c. total spending drops
d. production slows down
Ans. : B
7. Two most important methods used by nations to restrict world trade are:
I. tariff
II. import quota
III. monopoly
IV. cartel
a. I and II
b. I and III
c. I and IV
d. II and IV
Ans. : A
8. Which economic principle states that each country should concentrate in producing those goods it can make most efficiently and buy from other countries those goods it cannot produced as efficiently?
a. Comparative advantage
b. Economic stability
c. Competition
d. Monopoly
Ans. : A
9. Nations create world trade barriers for which healthy reason?
I. To protect local enable to complete with foreign more efficient producers. II. To discourage dependence on foreign sources of supply in the event
III. To protect infant industries
IV. For local industries to gain monopoly over certain products.
a. II, III, IV
b. I, II, IV
c. I, III, IV
d. I, II, III
Ans. : D
10. The value of all goods and services produced by a country in a given period refers to _________ .
a. National income
b. Gross national product
c. Net income
d. Per capita
Ans. : B
11. The law which state that the opportunity cost of each additional unit of output of a good over a period increases as more of that good is produced is the law of __________.
a. increasing cost
b. diminishing marginality
c. supply and demand
d. supply
Ans. : A
