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Consumer Economics
final exam review
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Economics Final Exam Review


1.      macroeconomics                

2.      microeconomics                 

3.   opportunity cost                 

4.      scarcity                              

5.      capital resource                 

6.      voluntary exchange            

7.      property right                     

8.  An Economy based on voluntary exchange operates automatically when

9.  In a free enterprise system

10.  When resources are privately owned,

11.  In a market economy prices provide information.  This means that prices

12.  Entrepreneurship

13.  An economy with many entrepreneurs would probably

14. Give examples of what illustrates a market?

15. In a market economy, what organizes and coordinates the production of goods and


16.  Economists say that scarcity is a relative concept.  What does this mean?

17.  Opportunity cost

18. According to your notes, what are the economic decisions nations

and businesses need to address?

19. What type of economy is most like that of today’s China?

20. While the utility is increasing what is diminishing?

Define and give examples of

21.  Explicit Cost?

22.  Sunk Cost?

23.  Ignored Costs?

24.  What term best describes that there is no incentive to maintain objects that are held in common in a society?

25.  In resource markets businesses compete against

26.  Most businesses earn their profits by

Study the following diagram

  1. expanding frontier?
  2. inside frontier?

Study the circular flow model


  1. According to this diagram, in which market does business give money payments to households in exchange for their productive resources?
  2. In which market do households give money payments to businesses in exchange for goods and services?
  3.  If (MC)> (MB) then do what?
  4.  If (MC)< (MB) then do what?
  5. Do Preferred stock holders receive their dividends before common share stockholders?
  6. By buying bonds, are you lending a corporation money?
  7. Can Municipal governments can issue bonds?
  8. Are United States government bonds  issued and paid off by the U.S. Treasury Department?
  9. Should you always buy high, sell low or buy low and sell high?
  10. Do Mutual Funds shares usually fluctuate up and down slowly?
  11. Can Yield  be defined as the percent of return on your investment?
  12. Which has less liquidity Passbook savings accounts or CD’s and Money Markets?
  13. Can you take an itemized deduction on your taxes for the cost of your work uniform?
  14. Owning what makes you an owner in the company?
  15. If you are filing your taxes jointly with your spouse and you have one child, who is responsible for the information on the tax form?
  16. If you are married with one child and are filing a joint tax return whose social security numbers must be on the return?
  17. What are allowed as itemized tax deductions?
  18. Why are Mutual Fund shares are popular with investors?
  19. A portion of a companies profits distributed to a stockholder on the basis of their ownership of a share of stock in the corporation is called
  20. List four types of investments from least riskiest to riskiest
  21. To buy or sell stock you must call
  22. If the rate of return is the amount earned divided by the original investment, what is your rate of return if you earned $70 on a $700 investment?
  23. By saving money in your piggy bank you run the risk of someone stealing your money.  Which type of risk would this be?
52.  What are the four types of investment risk?
  1. Which stock buying option means, buying a stock @ a current price but paying back the loan at a future price, betting on the value of the payback being lower than the value @ time of purchase?
  2. Put the following investments in order from lowest risk to highest risk.  Money Market, Collectibles, Stocks
  3. Loans in which interest is paid at intervals, the principal is paid at end of loan period.

56.  The rule of 72 tells you how many years it will take to ___________ your money by dividing 72 by the interest rate of your return on an investment.

  1. Diversifying your portfolio helps you survive weak markets.  What is the securities industry term for this type of market?
  2. Low interest savings account very liquid and safe if insured.
  3. If the number of shares available outweigh the quantity demanded the price will go __________.
  4. What type of investment diversifies your stock investments with some possible fees and expenses?
  5. Funds that charge a commission are called ____________.
  6. A savings account that gives you a fixed rate of return, but you must remain locked in for a fixed period of time is called a _______________.
  7. Interest earned on interest after it is added to the principal is called ___________.
  8. What is money made when selling stock that is claimed as gross income?
  9. What is the term meaning that you are not buying into a company you are lending them money?
  10. Ownership in this type of security allows you a voice in corporate decision making by voting     
  11. Insurance that banks and credit unions hold to guarantee your deposits
  12. What are the three C’s of credit and what do they mean?
  13. What are some ways to establish good credit?
  14. What type of report shows late payments made to creditors?
  15. Which type of credit is a car loan?
  16. Which type of credit is a credit card?
  17. Which type of credit is a home loan?
  18. If you have a credit card charging 12 percent annual interest, what is the monthly interest rate?
  19. A company calls you and offers an investment opportunity with very high returns.  All you have to do is recruit some of your friends who will also invest and soon your checks will start rolling in.  This is a description of which type of investment fraud?
  20. An obligation, responsibility, or debt is known as what?
77.  In the Wheat Market Simulation, what was the relationship between the amount of wheat people wanted to buy and the price?
78.  Define the law of demand
79.  Define equilibrium

80. Other things constant, what could cause a change in the demand(shift in the                                              demand curve) for Coca Cola?

81. Define the Law of Supply

82. When the price of an item changes, producers will usually:

83.  What item will not change the supply for a good or service?

84.  Which direction does the supply curve shift for the following scenarios?

85.  The supply of cars when open-trade agreements bring in new producers.

86.  The supply of coffee when freezing temperatures hit the major coffee-producing regions of Brazil and Costa Rica.

87.  The supply of gasoline today if there is an expected shortage and higher prices likely to occur next week.

Which direction does the demand curve shift for the following scenarios?

88.       The demand for cars when people get a tax refund.

89.       The demand for gloves after the first snow storm

90.       The demand for hot dogs when the price of hot dog buns rises.













91. Price ceilings create a _________________.

92. Price floors create a _______________.















93.       The equilibrium price and quantity are




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