Unit 4 Economics Review

Which of the following is an advantage of sole proprietorship? 

• There are almost no requirements
• The owner makes all the decisions
• The owner keeps all the profits
• All of the above statements are true.

A person who wishes to incorporate a business needs to ______ . 

• find stockholders
• pay the government dividends
• file for permission with the government
• do all of the above

Limited life applies to ______ .

• Multinationals
• Nonprofit Organizations
• Sole Proprietorships
• Corporations

Which of the following best expresses the idea that higher education often results in higher earnings? 

• signaling theory
• market theory of wage determination
• fact-finding
• theory of negotiated wages

Which statement is the best explanation of the market theory of wage determination? 

•   A worker’s value in the labor market is determined primarily by that worker’s seniority.
• Management is more willing to pay a high wage to a worker with advanced education
•  worker’s pay rate is set by supply of and demand for that worker’s skills
• Management tends to pay a lower wage to workers who support unions.

One of the primary functions of financial institutions in an economy is to — 

• prepare taxes for individuals and businesses
• provide access to capital for people and businesses
• create investment portfolios for venture capitalists 
• offer incentives to people for investing

A line of credit that allows a borrower to repeatedly use it within a certain monetary amount is considered to be —      

• close-ended credit
• retirement account
• a secured loan
• open-ended credit

What is one advantage to placing savings in a high-risk investment as oppose to putting savings in a low-risk investment?         

• The potential rate of return on investment is higher.
• The money is more secure in a high-risk investment.
• The amount of money needed to invest is lower. 
• The tax rate on high-risk investments is lower.   

Which of the following actions would improve a credit score?          

• paying off all debts
• consolidating credit card balances
• checking credit reports on a regular basis
• keeping credit card balances as high as possible

Which of the following retirement investment options is usually offered as a benefit of employment?       

• Mutual Funds
• College Tuition Reimbursement
• 401(k)
• Bonds