AnswersEconomicsBusiness and Government

Practice Test Answers

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1
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What part does interest play in deficit spending?

A
Governments must pay interest on money they borrow when they take on debt.
B
Interest is not a factor when a government’s budget is in deficit.
C
Citizens must pay interest when their governments borrow money.
D
Governments may charge foreign countries interest when they borrow money.
2
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Which best explains why a sole proprietor would want a partner?

A
to take advantage of little government oversight.
B
to move into a more favorable tax bracket.
C
to reduce the number of responsibilities.
D
to make it easier to raise funds for expansion.
3

Among the changes that labor reformers wanted after the Industrial Revolution was

A
a ban on child factory workers.
B
more jobs for untrained workers.
C
jobs for women factory workers.
D
equal pay for owners and workers.
4

What is one difference between a vocational school and on-the-job training?

A
A vocational school degree takes weeks or months to earn. On-the-job training takes two years or fewer.
B
A vocational school is usually paid for by the employer. On-the-job training is usually paid for by the worker.
C
A vocational school degree takes one year to earn. On-the-job training takes two or more years.
D
A vocational school is usually paid for by the worker. On-the-job training is usually paid for by the employer.
5

Which best describes a difference between the views of Milton Friedman and John Maynard Keynes on the economy?

A
Keynes believed in little government intervention in the economy, while Friedman said government should play an active role.
B
Friedman said that monetary policy should be used to influence aggregate demand, while Keynes believed the best approach was fiscal policy.
C
Friedman said that fiscal policy should be used to influence aggregate demand, while Keynes believed the best approach was monetary policy.
D
Keynes believed the economy was too complicated to think of aggregates, while Friedman said higher aggregate demand could solve issues.
6

Which body manages the Fed?

A
the Federal Open Markets Committee
B
the Federal Reserve Board
C
the Appropriations Committee
D
the Economic Policy Subcommittee
7

Expansionary spending takes place when a government makes the decision to

A
raise taxes to run a budget surplus.
B
put a freeze on the number of its employees.
C
raise spending to stimulate the economy.
D
raise taxes to balance its budget.
8

What is the job outlook for a US postal worker?

A
The career is growing and will provide more opportunities over time.
B
The career is shrinking and will provide fewer opportunities over time.
C
The career is shrinking and will provide more opportunities over time.
D
The career is growing and will provide fewer opportunities over time.
9

Articles of partnership establish

A
what business taxes are paid.
B
how businesses can raise capital.
C
how profits and losses are divided.
D
what is included in a charter.
10

Which statement explains a way how the Securities and Exchange Commission upholds fair business practices?

A
The SEC generally oversees banking practices.
B
The SEC makes sure that banks follow federal laws.
C
The SEC generally oversees financial advisers.
D
The SEC tries to limit risk in the financial system.
11

The development of many new businesses helps limit

A
risk.
B
taxation.
C
revenue.
D
unemployment.
12

Which describes an example of the economic system known as free enterprise?

A
People are free to shop around for products, but manufacturers dictate what is available.
B
People are free to shop for the best price on products because there is open competition.
C
Government regulations ensure that everyone has the freedom to shop for the best deals.
D
Government oversight of business gives people freedom to shop for the best deals.
13

Labor unions were certain to advocate for the best interests of workers because

A
the government required all labor unions to promote workplace reform.
B
the labor unions were created by workers and made up of workers.
C
the top factories were run by owners who wanted to retain their workers.
D
the government shut down factories that did not improve work conditions.
14

Which best describes why governments collect taxes?

A
to keep the government running
B
to fund government programs
C
to ensure surplus funds
D
to control the value of currency
15

The EPA tries to balance protecting business interests with protecting

A
food.
B
consumer products.
C
air.
D
medical devices.
16

Which group does the Fed serve?

A
government bodies
B
financial institutions
C
consumers
D
bankers
17

Which best describes a regressive tax?

A
a tax that charges high-income earners a lower percentage than low-income earners
B
a tax that charges an equal percentage to all
C
a tax that charges low-income earners a lower percentage than high-income earners
D
a tax that charges earners based on their professions
18

Successful entrepreneurs contribute to the economy by

A
expanding markets.
B
creating business strategies.
C
encouraging free trade.
D
becoming wealthy.

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