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Economics

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[04.04]<OBJECT:STANDARD:FL,SS.912.E.1.10, NSS-EC.9-12.20>You are a member of Congress and your aide reports that unemployment continues to rise. You are due to report to the floor to vote on several bills. To address their concerns, you should recommend to vote for the proposed bill that aims to

increase spending on grants for small businesses.

increase taxes on large corporations.

regulate unemployment offices.

regulate cell phone towers.

Question 2(Multiple Choice Worth 3 points)

[04.05]<OBJECT:STANDARD:FL,SS.912.E.1.10, NSS-EC.9-12.20>The best measure of price stability is the

economic growth rate.

unemployment rate.

stagflation rate.

inflation rate.

Question 3(Multiple Choice Worth 3 points)

[04.04]<OBJECT:STANDARD:FL,SS.912.E.1.11, NSS-EC.9-12.20>

Use this image to answer the following question. When the economy is operating at point C, the U.S. Congress is most likely to follow

expansionary fiscal policy.

contractionary fiscal policy.

expansionary monetary policy.

contractionary monetary policy.

Question 4(Multiple Choice Worth 3 points)

[04.05]<OBJECT:STANDARD:FL,SS.912.E.1.11, NSS-EC.9-12.20>

Use this image to answer the following question. When the economy is operating at point B, the U.S. Congress is most likely to follow

expansionary fiscal policy.

contractionary fiscal policy.

expansionary monetary policy.

contractionary monetary policy.

Question 5(Multiple Choice Worth 3 points)

[04.05]<OBJECT:STANDARD:FL,SS.912.E.2.9, NSS-EC.9-12.20>The accumulation of years of spending more money than is collected in revenues over several years creates a budget

debt.

deficit.

surplus.

reversal.

Question 6(Multiple Choice Worth 3 points)

[04.05]<OBJECT:STANDARD:FL,SS.912.E.2.9, NSS-EC.9-12.20>Americans that support a balanced budget amendment believe it will

stabilize the economy.

end American greed.

help other countries.

end American poverty.

Question 7(Multiple Choice Worth 3 points)

[04.05]<OBJECT:STANDARD:FL,SS.912.E.2.9, NSS-EC.9-12.20>Which group best describes to whom the United States owes billions of dollars in debt to

government officials

bank owners

entrepreneurs

investors

Question 8(Multiple Choice Worth 3 points)

[04.05]<OBJECT:STANDARD:FL,SS.912.E.2.9, NSS-EC.9-12.20>To correct a federal budget surplus, Congress may

eliminate employees.

reduce programs.

raise taxes.

increase spending.

Question 9(Multiple Choice Worth 3 points)

[04.01]<OBJECT:STANDARD:FL,SS.912.E.1.12, NSS-EC.9-12.18>A graph of the business cycle over time most resembles a

roller coaster.

flat plain.

ladder.

circle.

Question 10(Multiple Choice Worth 3 points)

[04.01]<OBJECT:STANDARD:FL,SS.912.E.1.12, NSS-EC.9-12.18>The inflation rate is increasing and unemployment is decreasing. The economy is likely in

recession.

expansion.

a peak.

a trough.

Question 11(Multiple Choice Worth 3 points)

[04.01]<OBJECT:STANDARD:FL,SS.912.E.1.12, NSS-EC.9-12.18>

Use this image to answer the following question. In the business cycle phase marked “D,” economists expect the

inflation rate to begin dropping.

unemployment rate to start falling.

consumer sales rate to decrease.

banks to seek government aid.

Question 12(Multiple Choice Worth 3 points)

[04.01]<OBJECT:STANDARD:FL,SS.912.E.1.12, NSS-EC.9-12.18>Imagine that you just saw a headline on a news web site that read “High Inflation Could Be Ending: Fed Takes Strong Action.” The nation is most likely in which part of the Business Cycle?

recession.

expansion.

a peak.

a trough.

Question 13(Multiple Choice Worth 3 points)

[04.01]<OBJECT:STANDARD:FL,SS.912.E.1.12, NSS-EC.9-12.18>Which stage of the business cycle has the highest inflation rate?

expansion

peak

contraction

trough

Question 14(Multiple Choice Worth 3 points)

[04.04]<OBJECT:STANDARD:FL,SS.912.E.1.11, NSS-EC.9-12.20>If unemployment is rising rapidly, the Federal Reserve would most likely

increase the discount rate.

increase the reserve requirement.

sell securities in open market operations.

buy securities in open market operations.

Question 15(Multiple Choice Worth 3 points)

[04.04]<OBJECT:STANDARD:FL,SS.912.E.1.11, NSS-EC.9-12.20>Unemployment is on the rise though inflation is quite low. Gross Domestic Product is rising but more slowly than the goal rate. The Federal Reserve may buy government securities in open market operations in order to

increase the money supply and encourage economic growth.

decrease the money supply and encourage people to save in difficult times.

give consumers more money to open their own businesses.

force the banks to stop giving out loans in an uncertain economy.

Question 16(Multiple Choice Worth 3 points)

[04.04]<OBJECT:STANDARD:FL,SS.912.E.1.11, NSS-EC.9-12.20>Reducing the discount rate is an example of

expansionary fiscal policy.

contractionary fiscal policy.

expansionary monetary policy.

contractionary monetary policy.

Question 17(Multiple Choice Worth 3 points)

[04.04]<OBJECT:STANDARD:FL,SS.912.E.1.11, NSS-EC.9-12.20>

Use this image to answer the following question. When the economy is operating at point B, the Federal Reserve is most likely to follow

expansionary fiscal policy.

contractionary fiscal policy.

expansionary monetary policy.

contractionary monetary policy.

Question 18(Multiple Choice Worth 3 points)

[04.02]<OBJECT:STANDARD:FL,SS.912.E.2.4, NSS-EC.9-12.16>

Use this image to answer the following question. When government sets a price for a good above equilibrium, there will be

economic growth.

economic loss.

a shortage.

a surplus.

Question 19(Multiple Choice Worth 3 points)

[04.02]<OBJECT:STANDARD:FL,SS.912.E.2.4, NSS-EC.9-12.16>

In the diagram above, what will happen if the government sets the price for potatoes at point A?

There will be a shortage of potatoes.

There will be a surplus of potatoes.

The price of potatoes will rise to meet equilibrium.

The price of potatoes will fall to meet equilibrium.

Question 20(Multiple Choice Worth 3 points)

[04.02]<OBJECT:STANDARD:FL,SS.912.E.2.4, NSS-EC.9-12.16>Governments use wage and price controls in an attempt to

monitor business profits.

protect business interests.

encourage economic growth.

control citizens’ spending habits.

Question 21(Multiple Choice Worth 3 points)

[04.02]<OBJECT:STANDARD:FL,SS.912.E.2.4, NSS-EC.9-12.16>

In the diagram above, what will happen if the government sets the minimum wage at point B?

There will be a shortage of workers.

There will be a surplus of workers.

The minimum wage will rise to meet equilibrium.

The minimum wage will fall to meet equilibrium.

Question 22(Multiple Choice Worth 3 points)

[04.03]<OBJECT:STANDARD:FL,SS.912.E.2.10, NSS-EC.9-12.20>Meetings of Federal Reserve officials occur in

Boston.

New York.

Washington, D.C.

Chicago.

Question 23(Multiple Choice Worth 3 points)

[04.03]<OBJECT:STANDARD:FL,SS.912.E.2.10, NSS-EC.9-12.20>You have an account with Wells Fargo®. You cashed a check from your job on payday and requested newly minted currency. What Federal Reserve structure provides new currency to your bank?

Federal Open Market Committee

Federal Reserve Regional Bank

Board of Governors

Member Bank

Question 24(Multiple Choice Worth 3 points)

[04.03]<OBJECT:STANDARD:FL,SS.912.E.2.10, NSS-EC.9-12.20>Inflation is low and unemployment is high. The public is demanding action. Within the Federal Reserve, who has the power to act?

President of the Federal Reserve Bank of New York

Supreme Governor of the Board of Governors

Leader of the National Consumers Union

Federal Open Market Committee

Question 25(Multiple Choice Worth 3 points)

[04.03]<OBJECT:STANDARD:FL,SS.912.E.2.10, NSS-EC.9-12.20>The part of the Federal Reserve with the most impact on the money supply is the

Federal Open Market Committee.

Federal Reserve Regional Bank.

Board of Governors.

Member Banks.

Question 26(Multiple Choice Worth 3 points)

[04.03]<OBJECT:STANDARD:FL,SS.912.E.2.10, NSS-EC.9-12.20>If Wachovia® needed to borrow money, the bank manager would contact the

Federal Open Market Committee.

Federal Reserve Regional Bank.

Board of Governors.

Member Bank.

Question 27(Multiple Choice Worth 3 points)

[04.02]<OBJECT:STANDARD:FL,SS.912.E.2.6, NSS-EC.9-12.16>An example of a natural monopoly product is

electricity service.

an automobile.

a grocery store.

gasoline.

Question 28(Multiple Choice Worth 3 points)

[04.02]<OBJECT:STANDARD:FL,SS.912.E.2.6, NSS-EC.9-12.16>Natural monopolies are

food products with a monopoly market.

products that one supplier can produce most efficiently.

products where the government chooses a company to produce it.

markets for items where consumers have considerable price control.

Question 29(Multiple Choice Worth 3 points)

[04.02]<OBJECT:STANDARD:FL,SS.912.E.2.6, NSS-EC.9-12.16>The state legislature asks you to analyze several product markets for natural monopoly qualities. The legislature wishes to regulate one of the products to provide safer, more efficient, and standard quality to its citizens. Which product do you recommend?

road sign construction

camping facilities

automobile sales

house cleaning

Question 30(Multiple Choice Worth 3 points)

[04.02]<OBJECT:STANDARD:FL,SS.912.E.2.6, NSS-EC.9-12.16>One benefit of regulating a natural monopoly is that

consumers have many choices.

competition between products improves quality.

consumers do not have to research different companies.

the government ensures the supplier works safely and efficiently.

Question 31(Essay Worth 10 points)

[04.04]<OBJECT:STANDARD:FL,SS.912.E.1.11, NSS-EC.9-12.20>Respond to the following question in at least a complete paragraph of three to five sentences.

Housing sales are dropping and many worry this is a sign that the economy is heading into a recession. Discuss an example of how the Federal Reserve may use a tool of monetary policy in this situation and explain the goals of using the tool.