1. Inflation is low but the unemployment rate is the highest seen in several years. Economists report signs that show in six months the economy is likely to improve. The economy is likely in
A) contraction
B) expansion
C) a peak
D) a trough
2. Which of the following circumstances usually comes before a period of economic contraction?
A) Decreasing inflation
B) High unemployment
C) Low GDP
D) Peak production
3. Which is an example of a natural monopoly?
A). A company that enters the market and requires new infrastructure
B). A group of companies that own all the sources of production
C). A milk product that is produced by multiple companies
D). A single source for electricity in your community
4. Which describes a benefit from government regulation of a natural monopoly?
A).After flooding destroys homes in a small town, rent goes up.
B). Livy's gas utility bill does not go up during a natural gas shortage.
C). The corn syrup in Marcus's candy was cheaper to use than sugar.
D). Two lumber suppliers compete to offer the best price for paper mills.
5. Which of these is the result of a government-regulated natural monopoly?
A). Fewer pricing plans and options for the consumer
B). Greater number of service interruptions
C). Multiple installations of gas, water, and electric lines
D). Unfairly high prices due to lack of competition
6. The Federal Reserve includes twelve
A). governing bodies
B). regional banks
C). member offices
D). city officials
7. Credit unions and other depository institutions differ from member banks of the Federal Reserve mainly in that they
A). are exempt from federal oversight
B). are not subject to regulation
C). do not have stock in Federal Reserve Banks
D). serve a nationwide consumer base
8. How does the president most directly influence the Federal Reserve System?
A). By participating in the Federal Open Market Committee
B). By setting national monetary policy
C). Through appointments to the Board of Governors
D). Through leadership of Federal Reserve Banks
9. Unemployment is low and inflation is rising, but slowly. Gross Domestic Product is also rising. The Federal Reserve may increase the reserve requirement at this point in order to
A). ensure that the growth continues at a brisk pace
B). raise unemployment to levels that indicate a mobile workforce
C). protect the public from the potential of inflation rising out of control
D). encourage banks to give out more loans, fostering further economic growth.