Deck 1: Financial and Economic Concepts

Question 1

An organized effort where goods and services are freely exchanged is known as a

A)market.
B)business.
C)government.
D)religion.

Answer 1

market.

Question 2

There are several markets in the United States.The market where stocks,bonds,and money is exchanged is the

A)commodity market.
B)retail market.
C)financial market.
D)real estate market.
E)none of the above.

Answer 2

financial market.

Question 3

When Bill Gates developed MS- DOS and founded Microsoft to market this product,he was using a

A)natural resource.
B)human resource.
C)entrepreneurial resource.
D)capital resource.

Answer 3

entrepreneurial resource.

Question 4

If the Fed sells $10,000 in government securities it will have the effect of

A)having no effect on the money supply.
B)changing the money supply,but the direction is not clear.
C)decreasing the money supply.
D)increasing the money supply.
E)unable to tell with the information provided.

Question 5

The price paid for money is

A)the actual payment made by the borrower to the lender.
B)the amount borrowed from the lender.
C)the principal and interest rate charged by the lender.
D)the interest rate charged by the lender.
E)There is no price paid for money as it is not for sale.

Question 6

The supply of money saved includes all of the following except

A)savings accounts in banks.
B)money market mutual funds in brokerage houses.
C)demand deposits in banks.
D)stocks held for investors by brokerage houses.
E)All of the above represent money which is saved.

Question 7

Which of the following is included in Gross Income?

A)profit made by an entrepreneur
B)interest earned on savings accounts
C)rental income on property
D)wages and tips
E)All of the above are included in Gross Income.

Question 8

John Gates made $25,000 last year and paid $2,500 in taxes.What percentage of his income did John pay in taxes?

A)1%
B)9%
C)10%
D)90%
E)impossible to calculate with the information provided

Question 9

The probability that the desired return on an investment will be different from the desired return is defined as

A)risk.
B)open market operations.
C)reserve requirements ratio.
D)discount rate.
E)unable to tell with the information provided.

Question 10

Which of the following can be used to finance a small business?

A)using one's own savings
B)cash generated from current sales
C)borrowing from other individuals
D)borrowing money from financial institutions
E)all of the above

Question 11

John's friend just gave him a pair of concert tickets to see his favorite rock group perform this weekend.Each ticket sells for $25.John's boss asked him to work overtime the same weekend and at the same time as the concert.John currently makes $10.00 an hour and his overtime pay for the four hours his boss asked him to work is double the hourly rate.If John decides to go to the concert his opportunity cost is

A)$50.00 for the two tickets.
B)$50.00 because that is what his friend paid for the tickets.
C)$40.00 in lost pay.
D)$80.00 in lost pay.
E)nothing because the concert tickets were free for John.

Question 12

When the supply of money saved exceeds the demand for money,then banks will

A)increase interest rates to attract more savers.
B)lower interest rates to discourage savers.
C)put money on sale by making loans more attractive.
D)both A and B above.
E)both B and C above.

Question 13

Which of the following is an example of a regressive tax?

A)sales tax
B)income tax
C)flat tax
D)property tax
E)All taxes are regressive taxes.

Question 14

John Gates made $25,000 last year and paid taxes on this income of $2,500.Jane Smith made $30,000 last year and paid taxes on this income of $2,700.What type of tax is the government using?

A)proposed taxes
B)proportional taxes
C)regressive taxes
D)progressive taxes
E)impossible to calculate with the information provided

Question 15

When a college hires a professor they are employing a

A)entrepreneurial resource.
B)capital resource.
C)natural resource.
D)human resource.

Question 16

The highest value surrendered when a decision is made is

A)absolute cost.
B)marginal cost.
C)opportunity cost.
D)capital cost.
E)economic cost.

Question 17

There are several markets in the United States.The market where final goods and services are exchanged is the

A)real estate market.
B)commodity market.
C)retail market.
D)financial market.
E)none of the above.

Question 18

If the Fed purchases $10,000 in government securities it will have the effect of

A)increasing the money supply.
B)having no effect on the money supply.
C)changing the money supply,but the direction is not clear.
D)decreasing the money supply.
E)unable to tell with the information provided.

Question 19

When the Federal Reserve notifies banks that they must hold fifteen cents for every dollar that is deposited,it is controlling the money supply by using which of the following tools?

A)reserve requirements ratio
B)open market operations
C)discount rate
D)risk
E)unable to tell with the information provided

Question 20

Which of the following is not an example of economic capital?

A)a delivery truck used by Federal Express
B)an electric plant used by your local utility to generate electricity
C)a desk in a classroom
D)a share of stock issued by IBM
E)All of the above are examples of economic capital.

Question 21

You read an article in the paper that stated the Federal Reserve bank sold $500 million of government securities on Tuesday of last week.When the Fed did this they were controlling the money supply by using which of the following tools?

A)open market operations
B)risk
C)discount rate
D)reserve requirements ratio
E)unable to tell with the information provided

Question 22

The users of funds in the United States are

A)governments.
B)households.
C)businesses.
D)all of the above.
E)none of the above.

Question 23

Jane just graduated from college with a Bachelor of Science Degree in Computer Information Systems.She received the following job offers.Jones and Associates at a starting salary of $30,000.Smith Brothers at a starting salary of $33,000.Joan Cannery Consulting at a starting salary of $35,000.Consultants- R- We at a starting salary of $32,000.Andrews Computer Vendors at a starting salary of $36,000.If she takes the job with Andrews Computer Vendors her opportunity cost is

A)$30,000.
B)$32,000.
C)$33,000.
D)$35,000.
E)nothing because she took the job with the highest salary.

Question 24

John Gates made $25,000 last year and paid taxes on this income of $2,500.Jane Smith made $30,000 last year and paid taxes on this income of $3,000.What type of tax is the government using?

A)proposed taxes
B)progressive taxes
C)proportional taxes
D)regressive taxes
E)impossible to calculate with the information provided

Question 25

Which of the following is an example of a progressive tax?

A)Social Security tax
B)income tax
C)property tax
D)sales tax
E)All taxes are progressive taxes.

Question 26

Which of the following is an example of a progressive tax?

A)flat tax
B)income tax
C)sales tax
D)property tax
E)Both A and B above were noted in the text as progressive taxes.

Question 27

There are several markets in the United States.The market where property is exchanged is the

A)commodity market.
B)real estate market.
C)financial market.
D)retail market.
E)none of the above.

Question 28

Changing the supply of money to expand or contract economic activity is

A)judicial policy.
B)presidential policy.
C)congressional policy.
D)monetary policy.
E)legislative policy.

Question 29

A local computer manufacturer hires an additional worker and pays $10.00 per hour for an eight- hour day.The worker is capable of assembling 3 computers an hour.The firm sells each computer for $1,500.What is the marginal physical product of this worker?

A)$10.00 per hour
B)3 computers per hour
C)$1,500 per unit produced
D)$80.00 per day

Question 30

There are several markets in the United States.The market where television sets are exchanged is the

A)financial market
B)commodity market.
C)real estate market.
D)retail market.
E)none of the above.

Question 31

Jerry Jones has a VISA card with the Very Big Interstate Bank.He notices that the interest rate charged on this card is 19.5% per annum.Jerry has been employed by the same company for fifteen years,and has excellent credit.The company has a Credit Union that will issue Jerry a VISA card with an interest rate of 14.6%.The Credit Union offered Jerry this reduced rate because

A)all VISA credit cards charge the same rate.
B)the unsystematic risk is lower for credit union members than it is for the general population.
C)the credit union manager likes Jerry.
D)the systematic risk is lower for credit union members than it is for the general population.

Question 32

Which of the following is not a primary participant in the financial marketplace?

A)businesses
B)individual households
C)governments
D)military units

Question 33

Albert Jones went to his local department store to purchase a pair of Levi's.He thought that the style of Levi that he wanted would sell for about $30 a pair.When he got to the store,he saw a sign which said,Levi's,all styles,$18 a pair.Albert bought three pairs of Levi's.The behavior of Albert is consistent with

A)the law of demand.
B)ceteris paribus.
C)the law of supply and demand.
D)the law of supply.
E)can't tell with the information provided.

Question 34

Which of the following is not a viable source of financing for the small business?

A)issuing bonds to the general public
B)cash generated from current sales
C)borrowing from other individuals
D)using one's own savings
E)borrowing money from financial institutions

Question 35

The four basic factors that affect the price paid (interest rate)for money are

A)the demand for money saved,the supply for borrowed funds,Federal Reserve policy,and risk
B)the supply of money saved,the demand for borrowed funds,Federal Reserve policy,and risk.
C)the supply of money saved,the supply for borrowed funds,Federal Reserve policy,and risk
D)the demand for money saved,the demand for borrowed funds,Federal Reserve policy,and risk.

Question 36

A tree in a forest is an example of

A)entrepreneurial resource.
B)human resource.
C)natural resource.
D)capital resource.

Question 37

A union has negotiated a contract which states the following,work up to 40 hours per week will be paid at a base rate of $10 per hour.All work in excess of 40 hours,but less than 48 hours will be paid at a rate equal to 1 ¹ times the base rate.Any work in excess of 48 hours will be paid at 2
Double time.This pay scale agrees with

A)ceteris paribus.
B)the law of supply and demand.
C)the law of demand.
D)the law of supply.
E)can't tell with the information provided.

Question 38

John Gates made $25,000 last year and paid taxes on this income of $1,500.Jane Smith made $30,000 last year and paid taxes on this income of $3,000.What type of tax is the government using?

A)regressive taxes
B)proportional taxes
C)progressive taxes
D)proposed taxes
E)impossible to calculate with the information provided

Question 39

Human beings have wants and desires for goods and services.They also have financial means with which to pay for them.

A)limited;unlimited
B)limited;limited
C)unlimited;unlimited
D)unlimited;limited

Question 40

Which of the following is not an example of economic capital?

A)a desk in a classroom
B)a bond issued by IBM
C)a delivery truck used by Federal Express
D)an electric plant used by your local utility to generate electricity
E)All of the above are examples of economic capital.

Question 41

Jane just graduated from college with a Bachelor of Science Degree in Computer Information systems.She received the following job offers.Jones and Associates at a starting salary of $30,000.Smith Brothers at a starting salary of $33,000.Joan Cannery Consulting at a starting salary of $35,000.Consultants- R- We at a starting salary of $32,000.Andrews Computer Vendors at a starting salary of $36,000.If she takes the job with Jones and Associates,her opportunity cost

A)$30,000.
B)$32,000.
C)$33,000.
D)$35,000.
E)$36,000.

Question 42

In market transactions,when one party wins,the other usually feels as though he or she lost.

Question 43

The Federal Reserve is the central bank of the United States.

Question 44

The cost associated with hiring one more unit of labor is

A)capital cost.
B)absolute cost.
C)marginal cost.
D)opportunity cost.
E)economic cost.

Question 45

In order to increase the money supply,the Fed will sell government securities.

Question 46

As the price of an item increases,the quantity of the item provided to the market place will increase,ceteris paribus.

Question 47

The law of demand states that as the price of an item falls,the quantity demanded will decrease,ceteris paribus.

Question 48

The Medicare tax of 1.45% is a proportionate tax for all.

Question 49

Jane Smith made $30,000 last year and paid $8,400 in taxes.What percentage of her income did Jane pay in taxes?

A)2)8%
B)3)57%
C)7)2%
D)28%
E)72%

Question 50

Which of the following is an example of financial capital?

A)a desk in a classroom
B)a share of stock issued by IBM
C)an electric plant used by your local utility to generate electricity
D)a delivery truck used by Federal Express
E)All of the above are examples of economic capital.

Question 51

Which of the following is not a form of taxes that governments use?

A)proposed taxes
B)proportional taxes
C)regressive taxes
D)progressive taxes
E)All of the above are forms of taxes that governments use.

Question 52

When the Federal Reserve increases the interest rate it charges banks to borrow reserves,it is controlling the money supply by using which of the following tools?

A)reserve requirements ratio
B)risk
C)open market operations
D)discount rate
E)unable to tell with the information provided

Question 53

First National Bank is the central bank of the United States.

Question 54

A market economy is one where all goods and services are exchanged free.

Question 55

Wheat,soybeans,oil and gold are commodities.

Question 56

The primary savers of funds in the United States are

A)households.
B)businesses.
C)governments.
D)all of the above.
E)none of the above.

Question 57

The classroom on a college campus is an example of a

A)capital resource.
B)natural resource.
C)entrepreneurial resource.
D)human resource.

Question 58

A person making less than the cut off rate for Social Security pays 6.2 percent of his income in Social Security taxes.

Question 59

There are several markets in the United States.The market where corn,wheat,soybeans,and oil are exchanged is the

A)retail market.
B)commodity market.
C)real estate market.
D)financial market.
E)none of the above.

Question 60

Social Security tax is regressive to the person making less than the cut off rate.

Question 61

An athlete making 7,000,000 pays 6.2% on the full 7,000,000 dollars in Social Security Taxes.

Question 62

A dividend is an after tax payment that must be made by all stock companies to the stockholders each year.

Question 63

The stocks and bonds issued by a corporation are the economic capital resources of the corporation.

Question 64

A person making $90,000 or less pays 6.2% of his salary in social security.

Question 65

The United States operates with a free enterprise system.

Question 66

The stocks and bonds issued by a corporation are the financial capital resources of the corporation.

Question 67

The mental and physical talents of human beings are entrepreneurial resources.

Question 68

Finance is any transaction where money is exchanged for money or a money like instrument.

Question 69

Finance is any transaction where money is exchanged for goods and services.