Indicator
1: MAKE ECONOMIC DECISIONS BASED ON AN
ECONOMIC WAY OF THINKING.
1. What is the most basic economic issue for all
societies? A
A Scarcity
B Taxation
C Inflation
D Recession
A company decides to install more machines and lay off
workers. Which economic question is
addressed directly? A
A How to produce
B What to produce
C For whom to produce
D Where to produce
In economic terms, what are land, labor, capital and
entrepreneurship? B
A Production possibility
B Factors of production
C Production trade-offs
D Opportunity
costs
Jenny has enough money to buy either a CD or to go to a
movie with her friends. In economics,
what is the choice that Jenny “gives up” called? C
A Positive cost
B Negative cost
C Opportunity
cost
D. Marginal cost
What is the main idea behind the study of
economics? C,
A. Monetary
policy
B Efficiency of production
C Allocation of scarce resources
D Business decisions
Read the statement below.
“There is no free lunch.”
In economic terms, what does this mean? A
A Someone must pay for everything.
B All production is designed to reduce
scarcity.
C Choices are never based on
self-interest.
D People only think of others when making
choices.
How does the process of specialization change an economy?
C
A Eliminates unemployment
B Decreases competition
C Improves efficiency of production
D Increases government to control
Use the following “equation” to answer the two questions
below.
Unlimited
Wants + Limited Resources = ?????
|
Which of the following best completes the above
“equation”? A
A Scarcity
B Competition
C Savings
D Equilibrium
To deal with the problem described in the “equation”
above, societies establish which of the following? B
A Governments
B Economic systems
C Hierarchies
D Private businesses
In every economic system, what must people choose to
do? B
A Satisfy all the wants of their society
B Make the best use of scarce
resources
C Create an equal distribution of
income
D Save money to reduce the
national debt
Which of the following
is an opportunity cost of building a new public high school?
D
A Cost of hiring teachers for all
subjects at the new school
B Change in the annual tax rate to pay
for the new school
C Cost of constructing the new school at
a later date
D Other goods and services given up in
order to build the school
Which of the following
is a result of the specialization of labor? C
A Increased inflation
B Identical income
C Increased output
D Less interdependence
In which of the
following economic systems is the “factors of production” privately owned? A
A Capitalism
B Socialism
C Socialism
D Confucianism
Indicator 2: IDENTIFY PERSONAL INVESTMENT STRATEGIES.
In economic terms, what is a “stock”?
Indicator 2: IDENTIFY PERSONAL INVESTMENT STRATEGIES.
In economic terms, what is a “stock”?
A A share, or part ownership, of a
company
B Pieces of paper that represent money
C Ownership of an entire company
D A place where individuals raise money
Which of the
following decisions will guarantee that a person will make money
in the stock market? E2
B
A Buying the stock of a big company like
Microsoft
B Nothing will guarantee making money in
the market
C Buying the stock of a small company
like Starbucks Coffee
D Purchasing stocks after the market has
dropped for a week
What is “compounding interest?” B
A Interest subtracted from the principle
once or twice a year
B Interest gained on the principle and
on interest already earned
C Adding 5% or more interest to an item
purchased the previous year
D Liquefying your assets when a decision
to move to another state is made
What is the greatest advantage to diversification in a
stock portfolio? C
A Investors get more annual reports.
B Investors concentrate on one stock.
C Investors reduce their risks.
D Investors are guaranteed a profit.
Which of the following is true of an investment in bonds? C
A They are insured by the Federal Deposit
Insurance Corporation.
B They are held for three to six weeks,
then sold.
C They are a low-risk investment.
D They entitle the holder to a share of
ownership in a corporation.
Why is investing in a money-market mutual fund a higher risk than investing in a certificate of deposit? B
Why is investing in a money-market mutual fund a higher risk than investing in a certificate of deposit? B
A It is not insured by the Federal
Deposit Insurance Corporation.
B It does not earn a fixed rate of
interest.
C It is not protected by the Securities
and Exchange Commission.
D It must be held for a preset amount of
time.
Which of the following describes what you are doing
when you invest in a mutual fund? D
A Getting insurance from the Federal Deposit Insurance Corporation
B Getting a fixed return on your investment
C Investing money in insurance policies from the federal
government
D Investing in a variety of stocks and bonds
In June, Leslie won a cash prize of $2,000. She
plans to use this money to pay her tuition bill four months later in September. Why would Leslie put this money in a savings
account instead
of a 1- year, 12 month, and certificate of deposit? C
A Get a higher rate of
return
B Avoid paying property taxes
C Assure liquidity of the account
D Make a long-term investment
Which of the following statements
will help to maximize your stock investment? C
A Buy low, sell low
B Buy high, sell low
C Buy low, sell high
D Buy high, sell high
Which of the following is the
Rule of 72 intended to approximate? B
A Net gain from a stock purchase
B Number of years to double an
investment
C Risk profile of an investment
D Average rate of return on an investment
Because bonds are considered a safe investment, which characteristic would you expect them to have? D
A They take a short time to mature.
B They have high interest rates.
C They take a long time to mature.
D They have lower rates of return.
Which of the following describes a publicly held
corporation? B
A Stocks are not available to company
owners.
B Large numbers of stockholders can
buy/sell stock
C Stocks are not usually traded at stock
exchanges
D Family members are excluded from
holding stock
Your running shoes were designed in the United States and assembled in Asia .
What type of a enterprise does this involve? B
A General partnership
B Multinational corporation
C Trade association
D Domestic monopoly
Why invest in mutual funds instead of a
single stock? E2 B
A To diversify capital
B To reduce risk
C To increase profits
D To decrease profits
Which strategy is most
likely to improve a person’s financial situation over his/her lifetime? B
A Using credit to spend more than one earns each pay period
B Starting to save as soon as one begins earning an income
C Gaining work experience early instead of staying in school
D Making each financial decision quickly based on a hunch
Indicator 3: COMPARE AND CONTRAST
ECONOMIC SYSTEMS.
In a market economy, what is the government’s role? C
A Decides what goods are manufactured
B Owns and operates major industries
C Encourage
competition among businesses
D Sets
prices on goods and services
There is a country in which the government owns all the
industries, businesses, and farms. The
government sets production and wages.
The government provides all education, childcare, and medical care for
all the people. What type of economy
does this describe? C
A Market
B Traditional
C Command
D Transitional
When comparing a traditional economy with a
command economy, which of the following is true of both? A
A Slow economic growth
B Freely fluctuating prices
C Private ownership of business
D Support of business competition
What is the economic system in which customs and religion of previous generations determine how the economy will use its scarce resources? D
A Market
B Transitional
C Command
D Traditional
Which of the following is a characteristic of traditional
economies? D
A Fast growing communities
B High standard of living
C Light industrial production
D Slow economic growth
A government sets quotas and prints and distributes
posters to inspire workers to increase their productivity. In which type of
economy would this most likely take place? A
A Command
B Traditional
C Market
D Transitional
What is the benefit of competition in a free market system?
B
A Make sure everyone gets an equal share
of resources
B Create a variety of new and cheaper
products
C Cause producers to try to put each
other out of business
D Follow the traditional methods of
production
In general, what type of economy does the United States
A Transitional
A Transitional
B Market
C Command
D Traditional
What is the primary incentive that motivates a
manufacturer to sell a product? A
A Making profits on sales
B Putting others out of business
C Pleasing the government
D Reputation of the product
Which type of economy produces the highest
standard of living for its citizens? B
A Transitional
B Market
C Traditional
D Command
Why would an inefficient factory close down under capitalism?
A
A Low or
negative profits
B Government
mandates
C A central
planner’s decision
D Adverse
effects on income distribution
Which of the
following countries exhibit the characteristics of a market economy? A
A United States
B Cuba
C North Korea
D China
Which characteristic
best describes a traditional economy? B
A Labor unions
and wages
B Customs and
religions
C Communism and
inflation
D Markets and
systems
Which of the
following is a main feature of a command economy? B
A Private
ownership
B Central
planning
C Heavy
reliance on markets
D Profit driven
decision making
15 How are the basic questions of economics answered in a traditional economy?
A People rely heavily on how things have
always been done.
B Large corporations compete
for business.
C The
government generally owns all means of production.
D Technological
advancements encourage growth.
Indicator 4: EXPLAIN HOW THE PRICE
SYSTEM AFFECTS PRODUCERS AND CONSUMERS.
In a market economy, what determines the price and
quantity of most goods produced? B
A Substitute goods
B Supply and demand
C Economic policies
D Quality of goods
In a market economy, when consumers and producers act in
their own self-interest, which is most likely to be the overall result? C
A The market will have less variety and
fewer products will be made.
B The consumer will pay excessively high
prices for goods and services.
C The producers are likely to earn a
profit making products people want.
D The individuals or businesses will lose
money no matter what they sell.
What is the most likely to happen when consumers
want to buy more scooters than the store has available for sale? B
A Profit
on scooter sales will be smaller.
B Price
of the scooter will increase.
C Manufacturers
will stop making it.
D Stores
will make a different model.
Assume the government subsidizes the production of a good
every year. Which of these would be the most likely result if that
government stopped the subsidies? C
A Increase
in the number of producers
B Better
selection of products
C Increase
in the price of products
D Better
wages for workers
On a supply and demand
graph, what is the point called at which quantity demanded equals quantity
supplied?
B
A Surplus
B Equilibrium
C Shortage
D Equidistant
Sugar is an important
input in the production of cookies. If
the price of sugar decreases, what would we expect to happen to the supply of
cookies? B
A No change
B Increases
C Decreases
D Disappears
Which of the following is
the best example of the law of supply? A
A A sandwich shop increases the number of sandwiches when the
price increases.
B A supplier provides
more shoes to local stores as prices of ladies shoes fall.
C A catering company buys
a new dishwasher to make employees’ work easier.
D A milling company builds
a new factory to process flour to export.
Which of these actions
would most likely result in a decrease in consumer spending?
A
A Increasing income taxes
B Decreasing the interest
rate
C Increasing government
spending
D Decreasing the reserve
requirement
If a government sets a
maximum price for a good or service, what does it create? A
A Price ceiling
B Price floor
C Inflated price
D Illegal price
What is the result of a price ceiling which is a price set below
the equilibrium price? A
A Shortage
B Surplus
C Equilibrium
D Equidistant
A hurricane hit Florida
A Demand for
oranges will rise
B The price of
oranges will fall
C The price of
oranges will increase
D Supply of
oranges will increase
How many businesses
make up an oligopoly? A
A Few
B None
C One
D Most
Which of the
following describes a market in which one firm controls the supply and pricing
of a good or service? D
A Monopolist
competition
B Oligopoly
C Perfectly
competitive
D Monopoly
Which factor will
decrease the demand for a product? B
A Increased
popularity of a product
B A decrease
in the number of buyers
C A decrease in
the price of a complementary good
D An increase
in the price of a substitute good
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