Wednesday, October 20, 2004

VII - Economics

1)   (True/False)  A country is more prosperous if the National economy grows and everyone is better off than they were before the growth, though some benefited more from the growth than others

2)   (True/False) The poor aspire to have income because it is needed. The rich aspire to have income because they are greedy

3)   (True/False) No one should be forced to work to “make ends meet”

4)   (True/False)  If a survey  indicates that one in 10 adults lives in poverty, they are  always the same adults from survey to survey

5)   Prices are

a)    Decided by evil corporations

b)   Arbitrary social conventions

c)    Less fair when they are high

d)   More fair when they are low

e)    Determined by the relative scarcity of the item, the cost of its transportation to point of sale, the cost of its production, overhead and other factors

f)    A way to force consumers to share scarce resources


6)   Wages are

a)    Decided by evil corporations

b)   Plucked from the air

c)    Less fair when they are low

d)   More fair when they are high

e)    Determined by the scarcity of the labor, the skill set required and the economics of the product produced


7)   Wages should be based solely on:

a)    Effort

b)   Productivity

c)    Merit

d)   Societal contribution

e)    Business profits

f)    Portions of National Economic Output

g)   Worker’s race

h)   Worker’s gender

i)    The needs of the worker’s ego


8)   When someone accepts a job, some of the factors they consider are:

a)    Flexibility of schedule

b)   Wage

c)    Insurance Coverage

d)   Pension

e)    Savings Plan

f)    Distance and Type of Commute

g)   Office Environment

h)   Personal Enjoyment of work (seeing results etc)

i)    Location

9)   The gap between the wages of CEOs and other high-level executives and the Average Worker should be small because

a)    They do the same work

b)   They have the same skills

c)    They have the same Experience

d)   Investors and Stockholders increase their backing to a venture if it is run poorly

e)    Wages are the result of a voluntary agreement between two parties

f)    It is more fair that way


10)  Fixing prices at arbitrary levels in a market economy will

a)    Result in a surplus when prices are set too high

b)   Result in shortage when prices are set too low

c)    Require a government bailout or subsidy

d)   Nullify and repeal the laws of supply and demand


11)  A good has a single fair price that should be charged everywhere because:

a)    Every neighborhood requires the same security precautions against crime

b)   The cost of transporting goods to any location on earth is the same

c)    The cost of storing a good until it is needed is zero

d)   The quality of like-goods is always the same

e)    The expertise the merchant is always the same

f)    The warrantees and return polices of every merchant are the same

g)   It’s the same physical object no matter where it is located


12)  Price gouging after a disaster should be illegal because

a)    A change in  the circumstances of supply and/or demand will cause prices to accurately reflect the new conditions

b)   Higher prices discourage hoarding and encourage the rationing of scarce goods

c)    Higher prices will encourage external  resources to converge on the affected areas

d)   Its not fair


13)  Minimum wage Laws:

a)    Help teenagers obtain jobs

b)   Increase unemployment amongst the least qualified workers

c)    Allow easier discrimination against minorities because there is a surplus of workers

d)   Provide incentives for employers to hire and retain more workers

e)    Deprive the least qualified from opportunities to gain job experience and promotions

f)    Add more people to welfare rolls

g)   Help the poor


14)  Rent control and affordable housing laws help the poor by:

a)    Reducing the incentives a landlord has to keep existing housing in good repair

b)   Creating housing shortages by removing the profit incentives to build new housing

c)    Increasing the number of homeless families

d)   Allowing landlords to use shortages to more easily discriminate against minorities

e)    Allowing some of the poor to afford nicer housing while leaving others on the street

f)    Keeping prices fair

15)  Monopolies hurt the consumer by

a)    Raising the consumer’s cost of buying a product

b)   Providing products that have lower quality than what might be demanded in a free marketplace

c)    Providing bigger dividends to stockholders out of the businesses increased profits

d)   Decreasing the number of people who could afford the product

e)    Preventing Competition that will result in a better, more competitive product on the world market


16)  Unions help the workers by

a)    Raising the employer’s cost of buying labor

b)   Providing work rules that result in lower productivity than what would be provided in a free marketplace

c)    Providing bigger contributions to the Democratic Party out of  the workers increased wages

d)   Decreasing the number of workers an employer can afford to hire

e)    Preventing labor Competition that will result in a more competitive employer better able to survive in the world market and provide jobs to workers


17)  Federal Employees need to be unionized because (check all that apply):

a)    The unions allow the workers to share the profits of the government

b)   The workers need to have input to the management practices of  the government

c)    Mandatory Dues and Agency fees can be transferred directly from the taxpayer to the Union to fund the Democratic Party regardless of union members’ party affiliation

d)   The power to shutdown government agencies which provide police, fire and other critical services should not be in the hands of elected officials


18)  The total amount of money collected by the government:

a)    Is called tax rates

b)   Is called tax receipts

c)    Is related to the income generated by the economy

d)   Is absolutely determined by the tax rate charged

e)    Always goes up when tax rates are high

f)    Always goes down when tax rates are low


19)  Income Distribution is

a)    The mathematical distribution of the values of a discrete function of income vs. household in the United States

b)   The result of many complex variables in a market economy

c)    The result of the intentions of millions of rich  entrepreneurs and investors

d)   The same thing as fairness

e)    How the Government gives out income to members of the population


20) When looking at the United States Income distribution as measure of class inequity what factors need to be considered:

a)    Household distribution in each Income Quintile (Married, Single, Children etc)

b)   How much “Personal Income Tax” comes from Small Businesses

c)    Number of People in each Income Quintile

d)   The effect of income ranges of each quintile differing from year to year

e)    The effect of differing numbers of people in each quintile from year to year

f)    The effect of differing numbers and types of households in each from year to year

g)   The age distribution of people in each quintile

h)   The income distribution within each quintile

i)    The frequency with which households move from one Quintile to the next

j)    The after-tax income distribution across the board an in each quintile

k)   Income added by Welfare and Tax Credits and other government entitlement programs

l)    Hours of Work per Household or Per person

m)  The job status (unemployed) of  persons within the households over the period

n)   Other forms of wealth and capital (houses) not reported as income until realized

o)   The difference between the maximum amount earned and the minimum amount earned

p)   The average income of each quintile


21)  In a slumping economy the government should spend taxpayer money on  government programs to help the poor because:

a)    Accumulations of capital are not required to start or grow businesses.

b)   The wealthy typically invest “surplus income”

c)    The poor commonly save their money in banks where it can loaned out

d)   Every dollar spent rather than directly invested is subject to sales tax

e)    Every dollar spent rather than directly invested is subject to corporate tax

f)    More businesses are started when accumulations of capital are broken up

g)   Its more fair


22) Social Security is

a)    An insurance program regulated by same laws that apply to private insurance firms

b)   Insurance for the unwise and/or unlucky paid for by the wise and/or lucky 

c)    A retirement saving plan where the reward is commensurate with the money put in.

d)   A government run pyramid scheme with mandatory participation that relies on expanding populations to allow each new generation to pay for the previous one

e)    Necessary to promote fairness


23) Providing welfare recipients with food, shelter, clothing and other services and resources

a)    Creates an incentive to get a job, and work hard to support themselves

b)   Encourages teen pregnancy by lowering the costs incurred by having a child

c)    Encourages unwed motherhood  by paying mothers per child

d)   Discourages marriage  by providing greater assistance for single parents families

e)    Transfers the cost of a struggling individual from their relatives to the government

f)    Helps the poor

g)   Gives the poor dignity

24) A planned economy is superior to Capitalism because

a)    Goods are produced more cheaply if profits do not need to be provided

b)   Workers are happier and more productive when they labor for the common good rather than for their own self-interest

c)    The products of labor should be distributed to all regardless of the effort contributed by any given individual.

d)   The co-ordination of the millions of decisions and tradeoffs to determine what resources should be allotted to the production of what goods, at what quantity and what price are best left to a few human beings who know what the entire population wants and needs.

e)    The only reason a planned economies have not worked where they have been tried is that  the right people haven’t been doing the planning


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