Economics Quiz: Money and Trade Concepts

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which type of money is declared legal tender by a government?

Representative Money

Fiat Money (correct)

Counterfeit Money

Commodity Money

What characterizes representative money?

It has no intrinsic value.

It is composed of precious metals.

It is backed by a physical commodity held elsewhere. (correct)

It is printed without government approval.

What is intrinsic value in relation to commodity money?

It is dependent on government backing.

It has value even when not used as money. (correct)

It has value solely as a currency.

It can only be exchanged for goods.

Which term describes currency produced without government legal sanction?

Counterfeit Money Signup and view all the answers

What happens to prices of goods and services when a country's currency depreciates?

They become cheaper for foreign buyers. Signup and view all the answers

What is the primary benefit of free trade according to Adam Smith?

It enables countries to specialize based on comparative advantage. Signup and view all the answers

Which type of economy is characterized by the government controlling investments, prices, and income?

Command Economy Signup and view all the answers

What describes the difference between needs and wants?

Needs are essential for survival, while wants are luxuries. Signup and view all the answers

How do import tariffs affect the economy?

They raise costs and reduce the flow of goods. Signup and view all the answers

What is a characteristic of a mixed economy?

It includes both private and government-run businesses. Signup and view all the answers

What does a point inside the Production Possibility Curve (PPC) indicate?

An inefficiency in resource utilization Signup and view all the answers

What effect do natural disasters have on the Production Possibility Curve (PPC)?

They cause the PPC to shrink Signup and view all the answers

Which of the following factors does NOT affect demand?

Input prices Signup and view all the answers

What is a significant outcome of technological advancements on production?

Increased production efficiency Signup and view all the answers

Which business structure is characterized by minimal legal costs and no state requirements?

Sole proprietorship Signup and view all the answers

What is a price ceiling?

A maximum price that can be charged for a product or service Signup and view all the answers

Which stage follows the peak in the business cycle?

Recession Signup and view all the answers

What does fiscal policy involve?

Government spending and taxation strategies Signup and view all the answers

Which of the following is a type of unemployment caused by economic shifts?

Structural unemployment Signup and view all the answers

What does the circular flow model illustrate?

The flows of goods, resources, income, and expenditure Signup and view all the answers

What does a commodity price floor represent?

A legally established lower boundary on the price of a commodity. Signup and view all the answers

What is depicted in the Circular Flow Model?

The flow of goods, services, resources, and income. Signup and view all the answers

Which best describes fiscal policy?

The use of government spending and taxation to influence the economy. Signup and view all the answers

What type of unemployment is characterized by temporary job transitions?

Frictional unemployment. Signup and view all the answers

Who is considered a significant figure in economic policy discussions?

Adam Smith. Signup and view all the answers

What occurs during the contraction (recession) stage of the business cycle?

The government might implement fiscal policy. Signup and view all the answers

Which of the following describes the post-recession stage?

The early signs of economic recovery. Signup and view all the answers

What is the primary effect of tariffs on imported goods?

They increase the cost of imported goods. Signup and view all the answers

What happens to the supply of goods when their prices increase?

Supply increases as producers are incentivized to produce more. Signup and view all the answers

What is meant by comparative advantage in trade?

Producing goods with the lowest opportunity cost for trade benefits. Signup and view all the answers

What impact does a stronger foreign currency have on a country with local currency earnings?

It increases profits when converting local earnings. Signup and view all the answers

What was the main goal of NAFTA?

To eliminate tariffs and trade barriers between the U.S., Canada, and Mexico. Signup and view all the answers

Study Notes

Types of Money

Fiat money: A type of currency declared legal tender by a government but has no fixed value, and is not backed up by silver or gold.
Representative money: Money that represents a commodity being held elsewhere.
Commodity money: Money that has intrinsic value, meaning that it has value even if it is not used as money.
Counterfeit money: Currency that is produced without the legal sanction of the state or government to resemble some official form of currency. Usually enough to confuse genuine currency.

Currency Effects

Depreciation: As a currency for a country depreciates, the price of goods and services in that country becomes cheaper for foreign buyers.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your understanding of key economic concepts such as legal tender, representative money, and the implications of free trade. This quiz also covers various types of economies and their characteristics. Challenge your knowledge about the relationship between currency value, tariffs, and production possibilities.