Question 1

________ is the name of a free-market economic system in which most of the factors of production and distribution -- such as land, factories, railroads, and stores -- are owned by individuals.

Accepted Answer

A)   Socialism
B)   Capitalism
C)   Communism
D)   MarginalismE) B) and C)
F) A) and D)

Question 2

According to the invisible hand concept, the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to

Accepted Answer

A)   permit government-owned industries, such as telecommunications, transportation, and energy, and operate these firms as nonprofit organizations.
B)   allow private ownership of businesses, but use extensive regulations to force businesses to behave as the government wishes.
C)   allow entrepreneurs personal freedom to follow their own self-interest.
D)   impose high taxes on individuals, and use the revenue to subsidize businesses to encourage them to produce the maximum rate of output.E) B) and C)
F) A) and B)

Question 3

The Federal Reserve Bank is responsible for controlling the money supply.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would be a topic emphasized in a microeconomics class?

Accepted Answer

A)   How a nation's GDP is computed
B)   The nation's unemployment rate
C)   How market conditions determine the price of a specific product
D)   How the government can provide adequate healthcareE) A) and B)
F) All of the above

Question 5

One reason the CPI is monitored very closely by government, businesses, and workers is that

Accepted Answer

A)   it indicates whether we are running a budget surplus or a deficit.
B)   some wages, interest rates, tax rates, and government benefits are tied to changes in the value of the CPI.
C)   it is the best measure of worker productivity in the service sector.
D)   the gross domestic product is computed from the reported increases in the CPI.E) None of the above
F) A) and C)

Question 6

Sarah owns a candle shop. She had been charging $5 for each scented jar candle. At this price her customers bought an average of 421 jars each week. For the last few weeks, she has reduced her price to $3.95 per candle, and her customers have purchased an average of 695 jar candles each week. These results are consistent with the economic concept of demand.

Accepted Answer

A) True 
 B)False

Question 7

The study of how to increase the amount of available resources and create conditions that will make better use of these resources is known as

Accepted Answer

A)   human resource management.
B)   microeconomics.
C)   econology.
D)   resource development.E) A) and D)
F) C) and D)

Question 8

________ is a condition in which the average level of prices is actually falling.

Accepted Answer

A)   Deflation
B)   Disinflation
C)   Stagflation
D)   UniflationE) C) and D)
F) A) and C)

Question 9

State capitalism is the combination of freer markets and some government control.

Accepted Answer

A) True 
 B)False

Question 10

The social and economic goals of ________ include private ownership of land and business.

Accepted Answer

A)   capitalism
B)   socialism
C)   communism
D)   a mixed economyE) B) and D)
F) A) and D)

Question 11

Meredith notices that just a few big companies produce most of the flavored teas she sees in the grocery store. She would be correct in describing the flavored tea industry as an oligopoly.

Accepted Answer

A) True 
 B)False

Question 12

The presence of competition in free markets

Accepted Answer

A)   is undesirable because it results in unnecessary duplication of efforts.
B)   usually results in better quality and lower prices.
C)   is rare, since most markets eventually evolve into monopolies.
D)   is undesirable, because one big firm can usually produce goods more efficiently than a large number of small firms.E) All of the above
F) A) and B)

Question 13

Colin lives in a nation whose government embraces capitalism. He owns his own home and car, as well as his own business and building. Colin maintains ownership due to

Accepted Answer

A)   eminent domain.
B)   the freedom of choice.
C)   the right to own private property.
D)   the freedom of competition.E) None of the above
F) A) and C)

Question 14

Which of the following strategies may have a net effect on inflation?

Accepted Answer

A)   Decreasing interest rates and decreasing taxes
B)   Proportionately increasing wages and increasing prices
C)   Decreasing prices and decreasing taxes
D)   Proportionately increasing prices and decreasing wagesE) A) and B)
F) A) and C)

Question 15

Fiscal policy refers to the federal government's efforts to keep the economy stable by controlling the amount of money in circulation.

Accepted Answer

A) True 
 B)False

Question 16

The size of the national debt increases when the federal government runs a deficit.

Accepted Answer

A) True 
 B)False

Question 17

When the government attempts to stabilize the economy by changing taxes or government expenditures, it is using fiscal policy.

Accepted Answer

A) True 
 B)False

Question 18

Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time.

Accepted Answer

A) True 
 B)False

Question 19

Brain drain is the loss of the best and brightest people from their home countries to other countries.

Accepted Answer

A) True 
 B)False

Question 20

A ________ is a severe recession that is usually accompanied by deflation.

Accepted Answer

A)   stagflation
B)   retraction
C)   depression
D)   dissolutionE) B) and C)
F) A) and B)

Exam 2: Understanding Economics and How It Affects Business

Which of the following would be a topic emphasized in a microeconomics class?

Correct Answer
verified

Meredith notices that just a few big companies produce most of the flavored teas she sees in the grocery store. She would be correct in describing the flavored tea industry as an oligopoly.

Correct Answer
verified

The Federal Reserve Bank is responsible for controlling the money supply.

Correct Answer
verified

The size of the national debt increases when the federal government runs a deficit.

Correct Answer
verified

A ________ is a severe recession that is usually accompanied by deflation.

Correct Answer
verified

The study of how to increase the amount of available resources and create conditions that will make better use of these resources is known as

Correct Answer
verified

________ is a condition in which the average level of prices is actually falling.

Correct Answer
verified

Which of the following strategies may have a net effect on inflation?

Correct Answer
verified

Fiscal policy refers to the federal government's efforts to keep the economy stable by controlling the amount of money in circulation.

Correct Answer
verified

The social and economic goals of ________ include private ownership of land and business.

Correct Answer
verified

When the government attempts to stabilize the economy by changing taxes or government expenditures, it is using fiscal policy.

Correct Answer
verified

One reason the CPI is monitored very closely by government, businesses, and workers is that

Correct Answer
verified

The presence of competition in free markets

Correct Answer
verified

Colin lives in a nation whose government embraces capitalism. He owns his own home and car, as well as his own business and building. Colin maintains ownership due to

Correct Answer
verified

According to the invisible hand concept, the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to

Correct Answer
verified

Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time.

Correct Answer
verified

Correct Answer
verified

State capitalism is the combination of freer markets and some government control.

Correct Answer
verified

________ is the name of a free-market economic system in which most of the factors of production and distribution -- such as land, factories, railroads, and stores -- are owned by individuals.

Correct Answer
verified

Brain drain is the loss of the best and brightest people from their home countries to other countries.

Correct Answer
verified

Exam 2: Understanding Economics and How It Affects Business

Which of the following would be a topic emphasized in a microeconomics class?

Correct AnswerverifiedShow Answer

Meredith notices that just a few big companies produce most of the flavored teas she sees in the grocery store. She would be correct in describing the flavored tea industry as an oligopoly.

Correct AnswerverifiedShow Answer

The Federal Reserve Bank is responsible for controlling the money supply.

Correct AnswerverifiedShow Answer

The size of the national debt increases when the federal government runs a deficit.

Correct AnswerverifiedShow Answer

A ________ is a severe recession that is usually accompanied by deflation.

Correct AnswerverifiedShow Answer

The study of how to increase the amount of available resources and create conditions that will make better use of these resources is known as

Correct AnswerverifiedShow Answer

________ is a condition in which the average level of prices is actually falling.

Correct AnswerverifiedShow Answer

Which of the following strategies may have a net effect on inflation?

Correct AnswerverifiedShow Answer

Fiscal policy refers to the federal government's efforts to keep the economy stable by controlling the amount of money in circulation.

Correct AnswerverifiedShow Answer

The social and economic goals of ________ include private ownership of land and business.

Correct AnswerverifiedShow Answer

When the government attempts to stabilize the economy by changing taxes or government expenditures, it is using fiscal policy.

Correct AnswerverifiedShow Answer

One reason the CPI is monitored very closely by government, businesses, and workers is that

Correct AnswerverifiedShow Answer

The presence of competition in free markets

Correct AnswerverifiedShow Answer

Colin lives in a nation whose government embraces capitalism. He owns his own home and car, as well as his own business and building. Colin maintains ownership due to

Correct AnswerverifiedShow Answer

According to the invisible hand concept, the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to

Correct AnswerverifiedShow Answer

Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

State capitalism is the combination of freer markets and some government control.

Correct AnswerverifiedShow Answer

________ is the name of a free-market economic system in which most of the factors of production and distribution -- such as land, factories, railroads, and stores -- are owned by individuals.

Correct AnswerverifiedShow Answer

Brain drain is the loss of the best and brightest people from their home countries to other countries.

Correct AnswerverifiedShow Answer

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