CTHS PFLE Unit 1 & 2

What is scarcity in economics?

• The unlimited availability of resources

• The limited nature of resources compared to wants

• The process of making choices

• The act of saving money

Which of the following best defines opportunity cost?

• The total cost of all options

• The value of the next best alternative forgone

• The price paid for a product

• The amount of money saved

In the circular flow model, which group provides labor to firms?

• Households

• Governments

• Banks

• Foreign countries

Which of the following is a non-price determinant of demand?

• Price of the good itself

• Consumer income

• Quantity supplied

• Cost of production

Which type of tax takes a larger percentage of income from low-income earners than from high-income earners?

• Progressive tax

• Regressive tax

• Proportional tax

• Direct tax

What is the main function of the Federal Reserve System?

• Collecting taxes

• Controlling the money supply and monetary policy

• Setting fiscal policy

• Producing goods and services

Which of the following best describes a mixed economic system?

• Only the government makes economic decisions

• Only private individuals make economic decisions

• Both government and private individuals make economic decisions

• No one makes economic decisions

Which market in the circular flow model is where households purchase goods and services?

• Resource market

• Product market

• Labor market

• Capital market

Which of the following is an example of a progressive tax?

• Sales tax

• Income tax with increasing rates

• Flat tax

• Property tax

What does the law of supply state?

• As price increases, quantity supplied increases

• As price increases, quantity supplied decreases

• As price decreases, demand increases

• As price decreases, supply remains constant