AnswersCHS EconomicsUnit Test

Unit Test — Unit test Answers

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What term is used in macroeconomics to describe the total supply and the total demand?

A
capital
B
inflation
C
aggregate
D
equilibrium
3

What are the signs of low inflation? Check all that apply.

A
Demand steadily rises.
B
Demand steadily falls.
C
Prices continue to increase.
D
Prices continue to decrease.
E
The economy grows in a healthy way.
F
The economy stagnates and struggles.
4

In the circular flow model, factors of production flow to firms. Which of the following are the primary factors of production? Check all that apply.

A
labor
B
capital
C
goods
D
land
E
services
5

Which is the most liquid form of money?

A
cash and currency in circulation
B
investment accounts
C
savings accounts
D
demand accounts
6

Why do developing countries usually have less variety in their economic activities?

A
Limited access to education means that people are not trained to work in industry or technology.
B
Focusing on one or two economic activities leads to more rapid economic development.
C
Developing countries are usually small and have limited populations and resources.
D
People prefer the lifestyle that accompanies traditional activities such as farming.
7

What is the difference between inflation and deflation?

A
Inflation can result from falling demand and boosts the value of money. Deflation can result from rising demand and reduces the value of money.
B
Inflation can result from rising demand and boosts the value of money. Deflation can result from falling demand and reduces the value of money.
C
Inflation can result from falling demand and reduces the value of money. Deflation can result from rising demand and boosts the value of money.
D
Inflation can result from rising demand and reduces the value of money. Deflation can result from falling demand and boosts the value of money.
8

Which statement best describes the main cause of the 2008 housing market crash in the United States?

A
Many people could not buy new homes during a weak economy.
B
Many homes could not sell because housing prices rose too fast.
C
Many homes could not sell because banks charged high interest.
D
Many people could not make home payments during a weak economy.
9

How do bank loans help the nation’s economy?

A
They ensure consumer spending and confidence.
B
They ensure the success of new businesses.
C
They allow businesses to expand and improve.
D
They allow consumers to quickly pay off debts.
10

Does a depression always follow a recession?

A
Yes, the trough is always considered a depression.
B
No, a depression is indicated when the recession is exceptionally long.
C
Yes, for recovery to occur, the trough must be reached.
D
No, the economy could decline quickly and bypass recession.
11

Cost-push inflation occurs when

A
consumers begin purchasing more goods.
B
producers need more money to make and distribute goods.
C
the government prints more money and pushes prices up.
D
consumers have more money to spend on goods and services.
12

What role does the Federal Reserve play? Check all that apply.

A
Regulate the banking industry
B
Loan money to banks
C
Give individual loans
D
Give corporate loans
E
Transfers any profits to the Treasury

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