Economics Pretest
Economics Pretest 1. Maria is deciding between attending the University of Georgia or Kennesaw State University in the fall. Both colleges have accepted her as a full time student. If she decides to attend Kennesaw State University, what is the opportunity cost of her decision? a. Leaving her high school friends b. The money she could have saved on college tuition c. Attending the University of Georgia d. the money she could have saved on personal expenses 2. Erin just graduated from college. She takes a job at Coca-Cola in Atlanta working in the marketing department. What factor of production does Erin represent? a. Capital b. Land c. Labor d. Entrepreneurship 3. Scarcity is the problem that forces all economic systems to make decisions on how to allocate their scarce resources. Which explanation best explains why that is true. a. because resources are scarce, you cannot have all the goods and services that you want b. because resources are scarce, there are not enough to satisfy all of our wants and needs c. because even though our wants and needs are endless, our resources are not d. all of the above 4. Please refer to the following production possibilities curve to answer question number 4. A B
.
Cell phones
C
MP3 players When looking at this production possibilities curve, which point represents a production level that is unattainable? a. Point A b. Point B c. Point C d. None of the above
5. Which of the following is a strength of a Command economic system? a. The system tends to have more job security because the government ensures all people have a job. b. The system tends to offer more innovativeness by allowing specialization c. The system is more likely to experience growth due to innovativeness d. The system has a high profit motive which encourages everyone to work hard Supply and Demand for Car Stereos
Price
Quantity
6. If the Supply curve for car stereos shift right, but the demand curve for car stereos shifted left, how would this affect the equilibrium price and quantity?
a. b. c. d.
Price Increase Decrease Increase Decrease
Quantity increase decrease decrease increase
7. Logan is shopping for a new car. After researching different types of vehicles to purchase, he finds that they all have similar features and prices. However, they all try to differentiate their vehicles. He also finds that the American vehicles that he is considering are produced by three manufactures: Ford, General Motors, and Chrysler/Dodge. What market structure is Logan shopping if he is considering only American cars? a. b. c. d.
Perfect Competition Monopolistic Competition Oligopoly Monopoly
Please refer to the following chart to answer question 8.
Product Market Households
Business Resource Market
8. After reviewing the above chart, what assumption can be made about this economy? a. The economy is self sufficient b. The economy is interdependent c. The economy is a communism system d. The economy is dependent on the government 9. Which of the following scenarios would result in the supply curve shifting to the right? a. An new type of ice cream being used b. A decrease in demand c. A new technology that increases production d. A decrease in the number of producers 10. Ramona is opening a hair salon. She cannot open this business by herself because she does not have the funds to do so. Therefore, Ramona asks her friend Bethany to open the business with her. Bethany is only contributing money to the business; she is not running the day to day aspects of the business. What type of business organization is this an example of? a. A limited partnership b. A general partnership c. Sole proprietorship d. Corporation 11. If the government bought a new tank, what part of the formula for Gross Domestic Product would this fall under? a. Consumer purchases b. Government purchases c. Net exports d. Business investments
12. Which of the following is the BEST example of inflation? a. A new game system becomes available on the market that is more expensive than the other systems available? b. A loaf of bread purchased in 1980 was $1.00 and in 2009 an identical loaf of bread cost $1.30 c. A greater availability of resources are available each new year d. Labor productivity has increased from 1990 to the year 2010 13. Which of the following would be an example of structural unemployment? a. A college student working at a grocery store over her summer vacation b. A truck driver laid off due to a recession c. A computer consultant not hired for a job because he is not familiar with the new computer programs on the market d. A woman to makes a career change and takes three months off to look for a new job
Please refer to the graph to answer question 14
Point C Point A
GDP Point B
Time
14. When looking at the above business cycle, imagine the nation of Padonia is experiencing a decrease in their unemployment rate, an increase in GDP, and an increase in their price level. What point on the business cycle does this nation appear to be at? a. Point A b. Point B c. Point c d. none of the above
15. If Fiscal Policy is trying to promote stability and economic growth through tax cuts, what type of policy is Fiscal policy using? a. Expansionary Fiscal Policy b. Restrictive Fiscal Policy c. Easy Money Policy d. Tight Money Policy 16. If Mexico is examining its balance of trade and find that they are exporting more than they are importing, what can be said about Mexico’s trade? a. They have a trade deficit b. They have a trade surplus c. They have a self sufficient economy d. They have increased the demand for their domestic products
17. If a country wanted to limit trade with another country to improve domestic production, what is this country’s policy on trade? a. Free Trade b. Trade surplus c. Protectionist d. A positive balance of trade
18. Which of the following is a cost of a country utilizing trade barriers? a. They help domestic businesses b. They help maintain safety standards to ensure the public is purchasing safe products c. Jobs are more protected due to the push for domestic production d. Variety could be limited due to the limited competition allowed
Use the table to answer question 19 Workers
mowing
trimming
Jack
4
3
Andy
3
6
19. Jack and Andy work for a landscaping company mowing and trimming lawns. Based on the table above, who should mow and who should trim to increase productivity? a. Jack should mow and trim because he can work faster alone b. Andy should mow and trim because he can work faster alone c. Jack should trim and Andy should mow d. Andy should trim and Jack should mow
20. Elena was traveling in Mexico and she purchased a cheeseburger for 52 pesos. How many dollars did she spend if the exchange rate is $1=10 pesos? a. b. c. d.
$5.20 $10.20 $6.90 $7.20
21. Why would a consumer choose to invest in stock that has high risk associated with it? a. The amount of ownership in the corporation would double giving the consumer more control in that company b. The amount of simple interest earned on the investment is greater c. The amount of return could be higher due to the high risk d. All of the above Use the table to answer questions number 22 Credit Score
Rating
Interest rate
750-850
Excellent
3.1%
690-750
Good
4.22%
610-690
Fair
5.9%
300-610
Poor
7.81%
22. Based on the chart, what can be said about credit ratings and interest rates? a. The better the rate, the lower the interest b. The better the rate, the higher the interest c. The lower the rate, the lower the interest d. The lower the rate, the cost of the loan is lower
23. Lana has a daughter that needs braces. The bill from the Orthodontist for treatment is $3,000. Lana will have to borrow the money to pay for the braces. Which of the following would be the best option for Lana? e. Utilize a payday loan institution f. Put it on her credit card that has a limit of $8,000, but currently has a balance of $4,000 g. Finance the braces with the Orthodontist. If she pays if off in a year there is 0% finance charged h. Go to her local credit union to take out a loan
24. Jan is contacting her insurance company about replacing her roof due to a recent tornado. Her insurance company tells her that her deductible is $500. What does that mean for Jan? a. The money Jan must pay first before repairs are made b. The money the Jan will get back from the insurance company when the repairs are finished c. The money that Jan must have in her checking account before repairs are made d. The money that the insurance company is responsible for and Jan must pay for the rest of the expenses 25. If Nora wanted to purchase a car that was $8,000 at an interest rate of 5.1% and put $500 down, what would Nora’s monthly payment be on a 5 year loan? a. $156.88 b. $167.33 c. $146.42 d. $31.87
.
Cell phones
C
MP3 players When looking at this production possibilities curve, which point represents a production level that is unattainable? a. Point A b. Point B c. Point C d. None of the above
5. Which of the following is a strength of a Command economic system? a. The system tends to have more job security because the government ensures all people have a job. b. The system tends to offer more innovativeness by allowing specialization c. The system is more likely to experience growth due to innovativeness d. The system has a high profit motive which encourages everyone to work hard Supply and Demand for Car Stereos
Price
Quantity
6. If the Supply curve for car stereos shift right, but the demand curve for car stereos shifted left, how would this affect the equilibrium price and quantity?
a. b. c. d.
Price Increase Decrease Increase Decrease
Quantity increase decrease decrease increase
7. Logan is shopping for a new car. After researching different types of vehicles to purchase, he finds that they all have similar features and prices. However, they all try to differentiate their vehicles. He also finds that the American vehicles that he is considering are produced by three manufactures: Ford, General Motors, and Chrysler/Dodge. What market structure is Logan shopping if he is considering only American cars? a. b. c. d.
Perfect Competition Monopolistic Competition Oligopoly Monopoly
Please refer to the following chart to answer question 8.
Product Market Households
Business Resource Market
8. After reviewing the above chart, what assumption can be made about this economy? a. The economy is self sufficient b. The economy is interdependent c. The economy is a communism system d. The economy is dependent on the government 9. Which of the following scenarios would result in the supply curve shifting to the right? a. An new type of ice cream being used b. A decrease in demand c. A new technology that increases production d. A decrease in the number of producers 10. Ramona is opening a hair salon. She cannot open this business by herself because she does not have the funds to do so. Therefore, Ramona asks her friend Bethany to open the business with her. Bethany is only contributing money to the business; she is not running the day to day aspects of the business. What type of business organization is this an example of? a. A limited partnership b. A general partnership c. Sole proprietorship d. Corporation 11. If the government bought a new tank, what part of the formula for Gross Domestic Product would this fall under? a. Consumer purchases b. Government purchases c. Net exports d. Business investments
12. Which of the following is the BEST example of inflation? a. A new game system becomes available on the market that is more expensive than the other systems available? b. A loaf of bread purchased in 1980 was $1.00 and in 2009 an identical loaf of bread cost $1.30 c. A greater availability of resources are available each new year d. Labor productivity has increased from 1990 to the year 2010 13. Which of the following would be an example of structural unemployment? a. A college student working at a grocery store over her summer vacation b. A truck driver laid off due to a recession c. A computer consultant not hired for a job because he is not familiar with the new computer programs on the market d. A woman to makes a career change and takes three months off to look for a new job
Please refer to the graph to answer question 14
Point C Point A
GDP Point B
Time
14. When looking at the above business cycle, imagine the nation of Padonia is experiencing a decrease in their unemployment rate, an increase in GDP, and an increase in their price level. What point on the business cycle does this nation appear to be at? a. Point A b. Point B c. Point c d. none of the above
15. If Fiscal Policy is trying to promote stability and economic growth through tax cuts, what type of policy is Fiscal policy using? a. Expansionary Fiscal Policy b. Restrictive Fiscal Policy c. Easy Money Policy d. Tight Money Policy 16. If Mexico is examining its balance of trade and find that they are exporting more than they are importing, what can be said about Mexico’s trade? a. They have a trade deficit b. They have a trade surplus c. They have a self sufficient economy d. They have increased the demand for their domestic products
17. If a country wanted to limit trade with another country to improve domestic production, what is this country’s policy on trade? a. Free Trade b. Trade surplus c. Protectionist d. A positive balance of trade
18. Which of the following is a cost of a country utilizing trade barriers? a. They help domestic businesses b. They help maintain safety standards to ensure the public is purchasing safe products c. Jobs are more protected due to the push for domestic production d. Variety could be limited due to the limited competition allowed
Use the table to answer question 19 Workers
mowing
trimming
Jack
4
3
Andy
3
6
19. Jack and Andy work for a landscaping company mowing and trimming lawns. Based on the table above, who should mow and who should trim to increase productivity? a. Jack should mow and trim because he can work faster alone b. Andy should mow and trim because he can work faster alone c. Jack should trim and Andy should mow d. Andy should trim and Jack should mow
20. Elena was traveling in Mexico and she purchased a cheeseburger for 52 pesos. How many dollars did she spend if the exchange rate is $1=10 pesos? a. b. c. d.
$5.20 $10.20 $6.90 $7.20
21. Why would a consumer choose to invest in stock that has high risk associated with it? a. The amount of ownership in the corporation would double giving the consumer more control in that company b. The amount of simple interest earned on the investment is greater c. The amount of return could be higher due to the high risk d. All of the above Use the table to answer questions number 22 Credit Score
Rating
Interest rate
750-850
Excellent
3.1%
690-750
Good
4.22%
610-690
Fair
5.9%
300-610
Poor
7.81%
22. Based on the chart, what can be said about credit ratings and interest rates? a. The better the rate, the lower the interest b. The better the rate, the higher the interest c. The lower the rate, the lower the interest d. The lower the rate, the cost of the loan is lower
23. Lana has a daughter that needs braces. The bill from the Orthodontist for treatment is $3,000. Lana will have to borrow the money to pay for the braces. Which of the following would be the best option for Lana? e. Utilize a payday loan institution f. Put it on her credit card that has a limit of $8,000, but currently has a balance of $4,000 g. Finance the braces with the Orthodontist. If she pays if off in a year there is 0% finance charged h. Go to her local credit union to take out a loan
24. Jan is contacting her insurance company about replacing her roof due to a recent tornado. Her insurance company tells her that her deductible is $500. What does that mean for Jan? a. The money Jan must pay first before repairs are made b. The money the Jan will get back from the insurance company when the repairs are finished c. The money that Jan must have in her checking account before repairs are made d. The money that the insurance company is responsible for and Jan must pay for the rest of the expenses 25. If Nora wanted to purchase a car that was $8,000 at an interest rate of 5.1% and put $500 down, what would Nora’s monthly payment be on a 5 year loan? a. $156.88 b. $167.33 c. $146.42 d. $31.87
