Question 1

________ policy involves changes in the government's revenues and expenditures to stimulate a slow economy or dampen a growing economy that is in danger of overheating and causing inflation.

Accepted Answer

A)Fiscal policy involves changes in the government's revenues and expenditures to stimulate a slow economy or dampen a growing economy that is in danger of overheating and causing inflation.
B)Fiscal policy involves changes in the government's revenues and expenditures to stimulate a slow economy or dampen a growing economy that is in danger of overheating and causing inflation.
C)Fiscal policy involves changes in the government's revenues and expenditures to stimulate a slow economy or dampen a growing economy that is in danger of overheating and causing inflation.
D)Fiscal policy involves changes in the government's revenues and expenditures to stimulate a slow economy or dampen a growing economy that is in danger of overheating and causing inflation.
E)Fiscal policy involves changes in the government's revenues and expenditures to stimulate a slow economy or dampen a growing economy that is in danger of overheating and causing inflation.

Question 2

________ laws limit what businesses can and cannot do to ensure that all competitors have an equal chance of succeeding.

Accepted Answer

A)Antitrust laws limit what businesses can and cannot do to ensure that all competitors have an equal chance of succeeding.
B)Antitrust laws limit what businesses can and cannot do to ensure that all competitors have an equal chance of succeeding.
C)Antitrust laws limit what businesses can and cannot do to ensure that all competitors have an equal chance of succeeding.
D)Antitrust laws limit what businesses can and cannot do to ensure that all competitors have an equal chance of succeeding.
E)Antitrust laws limit what businesses can and cannot do to ensure that all competitors have an equal chance of succeeding.

Question 3

Retail sales,on the day after Thanksgiving,are usually a good indicator of overall retail sales for the Christmas season.This is an example of a ________ indicator.

Accepted Answer

A)Leading indicators suggest changes that may happen to the economy in the future and are, therefore, valuable for planning.
B)Leading indicators suggest changes that may happen to the economy in the future and are, therefore, valuable for planning.
C)Leading indicators suggest changes that may happen to the economy in the future and are, therefore, valuable for planning.
D)Leading indicators suggest changes that may happen to the economy in the future and are, therefore, valuable for planning.
E)Leading indicators suggest changes that may happen to the economy in the future and are, therefore, valuable for planning.

Question 4

When a downward swing or recession is over,the economy enters into a period of ________.

Accepted Answer

A)When a downward swing or recession is over, the economy enters into a period of recovery.
B)When a downward swing or recession is over, the economy enters into a period of recovery.
C)When a downward swing or recession is over, the economy enters into a period of recovery.
D)When a downward swing or recession is over, the economy enters into a period of recovery.
E)When a downward swing or recession is over, the economy enters into a period of recovery.

Question 5

Which of the following types of unemployment is common in industries with predictable increases and decreases in customer demand?

Accepted Answer

A)Predictable increases and decreases in the need for workers in industries with seasonal fluctuations in customer demand, lead to seasonal unemployment. It is most common in agriculture, leisure and entertainment, retailing, and accounting services.
B)Predictable increases and decreases in the need for workers in industries with seasonal fluctuations in customer demand, lead to seasonal unemployment. It is most common in agriculture, leisure and entertainment, retailing, and accounting services.
C)Predictable increases and decreases in the need for workers in industries with seasonal fluctuations in customer demand, lead to seasonal unemployment. It is most common in agriculture, leisure and entertainment, retailing, and accounting services.
D)Predictable increases and decreases in the need for workers in industries with seasonal fluctuations in customer demand, lead to seasonal unemployment. It is most common in agriculture, leisure and entertainment, retailing, and accounting services.
E)Predictable increases and decreases in the need for workers in industries with seasonal fluctuations in customer demand, lead to seasonal unemployment. It is most common in agriculture, leisure and entertainment, retailing, and accounting services.

Question 6

________ unemployment is the natural movement of workers into and out of jobs,such as when a person quits one job without first lining up a new job.

Accepted Answer

A)Frictional unemployment is the natural movement of workers into and out of jobs, such as when a person quits one job without first lining up a new one.
B)Frictional unemployment is the natural movement of workers into and out of jobs, such as when a person quits one job without first lining up a new one.
C)Frictional unemployment is the natural movement of workers into and out of jobs, such as when a person quits one job without first lining up a new one.
D)Frictional unemployment is the natural movement of workers into and out of jobs, such as when a person quits one job without first lining up a new one.
E)Frictional unemployment is the natural movement of workers into and out of jobs, such as when a person quits one job without first lining up a new one.

Question 7

________ taxes,levied on retail purchases made by customers,are collected by retail businesses at the time of the sale and then forwarded to state governments.

Accepted Answer

A)Sales taxes are levied on retail purchases made by customers. Sales taxes are collected by retail businesses at the time of the sale and then forwarded to state governments.
B)Sales taxes are levied on retail purchases made by customers. Sales taxes are collected by retail businesses at the time of the sale and then forwarded to state governments.
C)Sales taxes are levied on retail purchases made by customers. Sales taxes are collected by retail businesses at the time of the sale and then forwarded to state governments.
D)Sales taxes are levied on retail purchases made by customers. Sales taxes are collected by retail businesses at the time of the sale and then forwarded to state governments.
E)Sales taxes are levied on retail purchases made by customers. Sales taxes are collected by retail businesses at the time of the sale and then forwarded to state governments.

Question 8

Which of the following is an example of deregulation?

Accepted Answer

A)Deregulation is the process of removing regulations to allow the market to prevent excesses and correct itself over time.
B)Deregulation is the process of removing regulations to allow the market to prevent excesses and correct itself over time.
C)Deregulation is the process of removing regulations to allow the market to prevent excesses and correct itself over time.
D)Deregulation is the process of removing regulations to allow the market to prevent excesses and correct itself over time.
E)Deregulation is the process of removing regulations to allow the market to prevent excesses and correct itself over time.

Question 9

When demand for goods and services drops,businesses reduce production,thereby requiring fewer workers.The unemployment resulting because of this phenomenon is known as ________ unemployment.

Accepted Answer

A)When demand for goods and services drops, businesses reduce production, thereby requiring fewer workers. This leads to cyclical unemployment.
B)When demand for goods and services drops, businesses reduce production, thereby requiring fewer workers. This leads to cyclical unemployment.
C)When demand for goods and services drops, businesses reduce production, thereby requiring fewer workers. This leads to cyclical unemployment.
D)When demand for goods and services drops, businesses reduce production, thereby requiring fewer workers. This leads to cyclical unemployment.
E)When demand for goods and services drops, businesses reduce production, thereby requiring fewer workers. This leads to cyclical unemployment.

Question 10

The Federal Trade Commission (FTC)is charged with which of the following duties?

Accepted Answer

A)The Federal Trade Commission (FTC)enforces laws and guidelines regarding unfair business practices and acts to stop false and deceptive advertising and labeling.
B)The Federal Trade Commission (FTC)enforces laws and guidelines regarding unfair business practices and acts to stop false and deceptive advertising and labeling.
C)The Federal Trade Commission (FTC)enforces laws and guidelines regarding unfair business practices and acts to stop false and deceptive advertising and labeling.
D)The Federal Trade Commission (FTC)enforces laws and guidelines regarding unfair business practices and acts to stop false and deceptive advertising and labeling.
E)The Federal Trade Commission (FTC)enforces laws and guidelines regarding unfair business practices and acts to stop false and deceptive advertising and labeling.

Question 11

________ taxes are levied on earnings of individuals to help fund Social Security,Medicare,and unemployment compensation.

Accepted Answer

A)Payroll taxes are levied on earnings of individuals to help fund Social Security, Medicare, and unemployment compensation. Also, corporations must match employee contributions.
B)Payroll taxes are levied on earnings of individuals to help fund Social Security, Medicare, and unemployment compensation. Also, corporations must match employee contributions.
C)Payroll taxes are levied on earnings of individuals to help fund Social Security, Medicare, and unemployment compensation. Also, corporations must match employee contributions.
D)Payroll taxes are levied on earnings of individuals to help fund Social Security, Medicare, and unemployment compensation. Also, corporations must match employee contributions.
E)Payroll taxes are levied on earnings of individuals to help fund Social Security, Medicare, and unemployment compensation. Also, corporations must match employee contributions.

Question 12

Workers in a country are unable to find jobs that match their qualifications and the employers are unable to find employees with the skills required to perform the job.This has led to ________ unemployment in this country.

Accepted Answer

A)When workers can't find jobs that match their qualifications, and employers can't find employees with the skills their job openings require, it leads to structural unemployment.
B)When workers can't find jobs that match their qualifications, and employers can't find employees with the skills their job openings require, it leads to structural unemployment.
C)When workers can't find jobs that match their qualifications, and employers can't find employees with the skills their job openings require, it leads to structural unemployment.
D)When workers can't find jobs that match their qualifications, and employers can't find employees with the skills their job openings require, it leads to structural unemployment.
E)When workers can't find jobs that match their qualifications, and employers can't find employees with the skills their job openings require, it leads to structural unemployment.

Question 13

Inflation is a major concern for consumers,businesses,and government leaders because it ________.

Accepted Answer

A)Inflation is a major concern for consumers, businesses, and government leaders because of its effect on purchasing power, or the amount of a good or service you can buy for a given amount of money. When prices go up, purchasing power goes down. If wages keep pace with prices, inflation is less worrisome, but if prices rise faster than wages, consumers definitely feel the pinch.
B)Inflation is a major concern for consumers, businesses, and government leaders because of its effect on purchasing power, or the amount of a good or service you can buy for a given amount of money. When prices go up, purchasing power goes down. If wages keep pace with prices, inflation is less worrisome, but if prices rise faster than wages, consumers definitely feel the pinch.
C)Inflation is a major concern for consumers, businesses, and government leaders because of its effect on purchasing power, or the amount of a good or service you can buy for a given amount of money. When prices go up, purchasing power goes down. If wages keep pace with prices, inflation is less worrisome, but if prices rise faster than wages, consumers definitely feel the pinch.
D)Inflation is a major concern for consumers, businesses, and government leaders because of its effect on purchasing power, or the amount of a good or service you can buy for a given amount of money. When prices go up, purchasing power goes down. If wages keep pace with prices, inflation is less worrisome, but if prices rise faster than wages, consumers definitely feel the pinch.
E)Inflation is a major concern for consumers, businesses, and government leaders because of its effect on purchasing power, or the amount of a good or service you can buy for a given amount of money. When prices go up, purchasing power goes down. If wages keep pace with prices, inflation is less worrisome, but if prices rise faster than wages, consumers definitely feel the pinch.

Question 14

In early December,it was reported that housing rates in October 2010 were at its 6-month low,which resulted in increased home purchases.This is an example of a ________.

Accepted Answer

A)Lagging indicators provide confirmation that something has occurred in the past.
B)Lagging indicators provide confirmation that something has occurred in the past.
C)Lagging indicators provide confirmation that something has occurred in the past.
D)Lagging indicators provide confirmation that something has occurred in the past.
E)Lagging indicators provide confirmation that something has occurred in the past.

Question 15

________ is a steady rise in the average prices of goods and services throughout the economy.

Accepted Answer

A)Inflation is a steady rise in the average prices of goods and services throughout the economy.
B)Inflation is a steady rise in the average prices of goods and services throughout the economy.
C)Inflation is a steady rise in the average prices of goods and services throughout the economy.
D)Inflation is a steady rise in the average prices of goods and services throughout the economy.
E)Inflation is a steady rise in the average prices of goods and services throughout the economy.

Question 16

A deep and prolonged recession is known as a(n)________.

Accepted Answer

A)A deep and prolonged recession can be considered a depression, which doesn't have an official definition but is generally considered to involve a catastrophic collapse of financial markets.
B)A deep and prolonged recession can be considered a depression, which doesn't have an official definition but is generally considered to involve a catastrophic collapse of financial markets.
C)A deep and prolonged recession can be considered a depression, which doesn't have an official definition but is generally considered to involve a catastrophic collapse of financial markets.
D)A deep and prolonged recession can be considered a depression, which doesn't have an official definition but is generally considered to involve a catastrophic collapse of financial markets.
E)A deep and prolonged recession can be considered a depression, which doesn't have an official definition but is generally considered to involve a catastrophic collapse of financial markets.

Question 17

________ taxes,levied on the earnings of individuals and businesses,are the government's largest single source of revenue.

Accepted Answer

A)Income taxes are levied on the income earned by individuals and businesses. They are the government's largest single source of revenue.
B)Income taxes are levied on the income earned by individuals and businesses. They are the government's largest single source of revenue.
C)Income taxes are levied on the income earned by individuals and businesses. They are the government's largest single source of revenue.
D)Income taxes are levied on the income earned by individuals and businesses. They are the government's largest single source of revenue.
E)Income taxes are levied on the income earned by individuals and businesses. They are the government's largest single source of revenue.

Question 18

________ policy involves adjusting the nation's money supply by increasing or decreasing interest rates.

Accepted Answer

A)Monetary policy involves adjusting the nation's money supply, the amount of "spendable" money in the economy at any given time, by increasing or decreasing interest rates.
B)Monetary policy involves adjusting the nation's money supply, the amount of "spendable" money in the economy at any given time, by increasing or decreasing interest rates.
C)Monetary policy involves adjusting the nation's money supply, the amount of "spendable" money in the economy at any given time, by increasing or decreasing interest rates.
D)Monetary policy involves adjusting the nation's money supply, the amount of "spendable" money in the economy at any given time, by increasing or decreasing interest rates.
E)Monetary policy involves adjusting the nation's money supply, the amount of "spendable" money in the economy at any given time, by increasing or decreasing interest rates.

Question 19

The term ________ is defined as having two consecutive quarters of decline in the country's gross domestic product.

Accepted Answer

A)If the period of downward swing is severe, the nation may enter into a recession, traditionally defined as two consecutive quarters of decline in the gross domestic product.
B)If the period of downward swing is severe, the nation may enter into a recession, traditionally defined as two consecutive quarters of decline in the gross domestic product.
C)If the period of downward swing is severe, the nation may enter into a recession, traditionally defined as two consecutive quarters of decline in the gross domestic product.
D)If the period of downward swing is severe, the nation may enter into a recession, traditionally defined as two consecutive quarters of decline in the gross domestic product.
E)If the period of downward swing is severe, the nation may enter into a recession, traditionally defined as two consecutive quarters of decline in the gross domestic product.

Question 20

________ taxes are implemented,in part,to help control potentially harmful practices,on selected items such as gasoline,tobacco,and liquor.

Accepted Answer

A)Often referred to as "sin" taxes, excise taxes are implemented, in part, to help control potentially harmful practices, on selected items such as gasoline, tobacco, and liquor.
B)Often referred to as "sin" taxes, excise taxes are implemented, in part, to help control potentially harmful practices, on selected items such as gasoline, tobacco, and liquor.
C)Often referred to as "sin" taxes, excise taxes are implemented, in part, to help control potentially harmful practices, on selected items such as gasoline, tobacco, and liquor.
D)Often referred to as "sin" taxes, excise taxes are implemented, in part, to help control potentially harmful practices, on selected items such as gasoline, tobacco, and liquor.
E)Often referred to as "sin" taxes, excise taxes are implemented, in part, to help control potentially harmful practices, on selected items such as gasoline, tobacco, and liquor.

Quiz 2: Understanding Basic Economics