Economics Final Review 2

Which of the following type of tax is collected by state and local governments but not by the federal government?

• Excise tax

• Income tax

• Sales tax

• Tariffs

One advantage to using a debit card is that it allows the user to --

• access currency without carrying cash

• purchase goods without having any money

• build a strong credit score

• repay credit card debts faster

Money that has value simply because the government says it does is called --

• credit

• currency

• fiat money

• representative money

commodity money can best be described as --

• currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves

• a form of money which has an intrinsic value, meaning it is worth something in its own right rather than simply being a token of financial value

• trade goods or services between two people without the exchange of money

• money that consists of a token or certificate that can be exchanged for a specific good, such as gold, silver, or potentially water, oil, or food

Economic growth would most likely result from --

• decreased trade

• decreased sales or stock

• increases employment

• increased productivity

High levels of unemployment combined with high levels of inflation could indicate that the business cycle has entered into a period of --

• expansion

• investment

• stagflation

• recession

An expansionary period in the business cycle is distinguished by --

• declining sales

• low unemployment

• high inflation

• fewer excise taxes

*Few Sellers

*Some control over price

*High market entry barriers

*Some product differentiation

• Monopolistic competition

• Oligopoly

• Pure competition

• Natural monopoly

Recently, the government announced that it would discontinue the production of a particular military aircraft. How will this decision affect the circular flow model?

• There will be a reduction in the income of households resulting in reduced purchasing power.

• There will be an increase in the product market because aircraft makers will be more efficient.

• There will be a shift of government spending to the production of alternative products.

• There will be an increase in unemployment resulting in the creation of new types of jobs.

David's mother sends him to the grocery store to buy milk. While at the store, David decides he is hungry and buys a dozen doughnuts for a snack. At the cash register, David finds that after paying for the doughnuts, he doesn't have enough money to pay for the milk. David's mother decides it is time for him to get a job and earn his own money. David's best friend tells him that Deluxe Car Wash is hiring. He applies and is hired to become a car dryer. David is very excited about his new job and the money he will soon be earning.

-When David gets a job at the car wash, what is he doing?

• buying his resource

• selling his goods

• buying his goods

• selling his resource