Question 1

__________ is the study of how a society employs its limited resources to produce goods and services and how it distributes them among competing groups and individuals.

Accepted Answer

A)  Economics
B)  Capitalism
C)  Marketing
D)  SocialismE) A) and B)
F) B) and C)

Question 2

Ben recently lost his job at a major U.S.auto plant in one of the rust belt states.After looking unsuccessfully for work in a similar industry for several months,he plans to start interviewing with road and bridge repair companies.He speculates that if the government begins to contract with companies that repair highways and bridges,he may find steady work,at least in the short term.Which of the following statements best describes the strategy behind his thoughts?

Accepted Answer

A)  The best way for the government to reign in on too much money floating around the system is to hire people and pay them wages.
B)  Ben doesn't understand the causes of unemployment.We obviously don't need any more autos on the roads if the plant has closed.Repairs will slow down rather than increase.
C)  If the current administration asks the Fed to raise interest rates,it will do more than if the current administration begins contracting with road repair companies.
D)  By increasing government spending through road and bridge repair and construction,the government will intervene in the free-market economic system to help jump-start a weak economy.E) None of the above
F) A) and D)

Question 3

In a free market economic system,the mechanism of __________ is the key determinant used to signal to producers what to produce and how much to produce.

Accepted Answer

A)  the market curve
B)  trend
C)  price
D)  quantityE) All of the above
F) C) and D)

Question 4

While scanning the movies section in your local online newspaper,you click on the business section by mistake.While you're there,you quickly scan a report that says government spending will again exceed tax revenues in the current year.This means that the:

Accepted Answer

A)  Total national debt is likely to increase.
B)  National deficit is likely to decrease.
C)  Rate of inflation is likely to fall.
D)  Monetary policies pursued by the Fed need tightening.E) A) and B)
F) B) and C)

Question 5

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) None of the above
F) A) and C)

Question 6

Senator Spendital made a speech deploring the continuous deficits in the federal budget.He is proposing an increase in tax rates to raise more revenue for the government and thus gradually reduce the size of the national debt over a period of several years.The strategy Senator Spendital is proposing is a common type of monetary policy.

Accepted Answer

A) True 
 B)False

Question 7

A surplus currently exists for a product called widgets.In a free market system,the government must step in and buy any widgets that consumers do not buy in order to eliminate the surplus and establish equilibrium.

Accepted Answer

A) True 
 B)False

Question 8

The measure used to report price changes at the wholesale level is the:

Accepted Answer

A)  gross domestic product GDP) .
B)  consumer price index CPI) .
C)  wholesale price index WPI) .
D)  producer price index PPI) .E) B) and C)
F) None of the above

Question 9

Gabby and Gus Malloy recently got pre-approved on a loan for their first house purchase.They are speculating on how much they should bid on their number one choice - a small,three-bedroom bungalow near a major college town.Which of the following indicators may be an important factor in whether they are able to successfully put in a low bid?

Accepted Answer

A)  The federal tax rate in that area
B)  The unemployment rate in that area
C)  The producer's price index in that area
D)  The CMI - consumer's marginal indexE) A) and D)
F) All of the above

Question 10

A rare and scarce earth metal known as Neodymium is used in many consumer and military products including smart-phones,smart-bombs,laptop computer monitors,and electric/hybrid cars.In one year's time,the price of Neodymium has gone from $19/lb.to $129/lb.Under these circumstances and the fact that at least 1 kilogram is used in each electric car that is assembled,a graph of the supply and demand for this product would show:

Accepted Answer

A)  The current price of Neodymium to be below the equilibrium price for this rare earth metal.
B)  The price of Neodymium to be above the equilibrium price for this rare earth metal.
C)  The price of Neodymium to reflect the adjustment of quantity demanded and quantity supplied.
D)  Consumer demand for a product such as electric cars to shift to the right indicating the desire to purchase the rare earth metal at any price.E) All of the above
F) B) and C)

Question 11

In perfect competition,each firm produces a product that is clearly differentiated from the products of other firms in the same market.

Accepted Answer

A) True 
 B)False

Question 12

Government spending on defense decreases the national deficit.

Accepted Answer

A) True 
 B)False

Question 13

Over the years,the government of Montivia has focused on implementing programs that promote equality.On the short-term,though,Montivia legislators are concerned about the very slow rate of growth that has plagued its national economy.In order to address this problem,the government is likely to:

Accepted Answer

A)  Take control of more major industries.
B)  Reduce taxes and cut back on some social programs.
C)  Make sure to balance its budget.
D)  Avoid the use of fiscal policies and reduce the supply of money in circulation.E) All of the above
F) B) and C)

Question 14

When prices are free to adjust over time,in the long run,the market price of a good tends to:

Accepted Answer

A)  Rise above the equilibrium price in the long run.
B)  Equal the equilibrium price.
C)  Fall below the equilibrium price in the long run.
D)  Have no specific relationship to the equilibrium price.E) A) and D)
F) B) and C)

Question 15

__________ unemployment refers to loss of jobs due to a recession or a similar downturn in the economy.

Accepted Answer

A)  Frictional
B)  Structural
C)  Cyclical
D)  SeasonalE) A) and B)
F) B) and C)

Question 16

Monetary policy is implemented to ease the up and down swings of business cycles,while fiscal policy is implemented to create swings when the cycle is stalled in an economic boom.

Accepted Answer

A) True 
 B)False

Question 17

When the government runs a continual budget deficit,it increases the:

Accepted Answer

A)  National debt.
B)  Balance of payments deficit.
C)  Federal capital account.
D)  Money supply.E) B) and D)
F) A) and D)

Question 18

One of the drawbacks of free markets is the fact that competition in such markets undermines the ability of price to adjust to its equilibrium value in the long run.

Accepted Answer

A) True 
 B)False

Question 19

Resource development is concerned with finding the best way to utilize the fixed amount of resources a society has available.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 2: Understanding Economics and How It Affects Business

In a free market economic system,the mechanism of __________ is the key determinant used to signal to producers what to produce and how much to produce.

Correct Answer
verified

A surplus currently exists for a product called widgets.In a free market system,the government must step in and buy any widgets that consumers do not buy in order to eliminate the surplus and establish equilibrium.

Correct Answer
verified

Correct Answer
verified

__________ unemployment refers to loss of jobs due to a recession or a similar downturn in the economy.

Correct Answer
verified

Government spending on defense decreases the national deficit.

Correct Answer
verified

Correct Answer
verified

When the government runs a continual budget deficit,it increases the:

Correct Answer
verified

When prices are free to adjust over time,in the long run,the market price of a good tends to:

Correct Answer
verified

One of the drawbacks of free markets is the fact that competition in such markets undermines the ability of price to adjust to its equilibrium value in the long run.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

__________ is the study of how a society employs its limited resources to produce goods and services and how it distributes them among competing groups and individuals.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Resource development is concerned with finding the best way to utilize the fixed amount of resources a society has available.

Correct Answer
verified

Monetary policy is implemented to ease the up and down swings of business cycles,while fiscal policy is implemented to create swings when the cycle is stalled in an economic boom.

Correct Answer
verified

Over the years,the government of Montivia has focused on implementing programs that promote equality.On the short-term,though,Montivia legislators are concerned about the very slow rate of growth that has plagued its national economy.In order to address this problem,the government is likely to:

Correct Answer
verified

While scanning the movies section in your local online newspaper,you click on the business section by mistake.While you're there,you quickly scan a report that says government spending will again exceed tax revenues in the current year.This means that the:

Correct Answer
verified

In perfect competition,each firm produces a product that is clearly differentiated from the products of other firms in the same market.

Correct Answer
verified

The measure used to report price changes at the wholesale level is the:

Correct Answer
verified

Exam 2: Understanding Economics and How It Affects Business

In a free market economic system,the mechanism of __________ is the key determinant used to signal to producers what to produce and how much to produce.

Correct AnswerverifiedShow Answer

A surplus currently exists for a product called widgets.In a free market system,the government must step in and buy any widgets that consumers do not buy in order to eliminate the surplus and establish equilibrium.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

__________ unemployment refers to loss of jobs due to a recession or a similar downturn in the economy.

Correct AnswerverifiedShow Answer

Government spending on defense decreases the national deficit.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the government runs a continual budget deficit,it increases the:

Correct AnswerverifiedShow Answer

When prices are free to adjust over time,in the long run,the market price of a good tends to:

Correct AnswerverifiedShow Answer

One of the drawbacks of free markets is the fact that competition in such markets undermines the ability of price to adjust to its equilibrium value in the long run.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

__________ is the study of how a society employs its limited resources to produce goods and services and how it distributes them among competing groups and individuals.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Resource development is concerned with finding the best way to utilize the fixed amount of resources a society has available.

Correct AnswerverifiedShow Answer

Monetary policy is implemented to ease the up and down swings of business cycles,while fiscal policy is implemented to create swings when the cycle is stalled in an economic boom.

Correct AnswerverifiedShow Answer

Over the years,the government of Montivia has focused on implementing programs that promote equality.On the short-term,though,Montivia legislators are concerned about the very slow rate of growth that has plagued its national economy.In order to address this problem,the government is likely to:

Correct AnswerverifiedShow Answer

While scanning the movies section in your local online newspaper,you click on the business section by mistake.While you're there,you quickly scan a report that says government spending will again exceed tax revenues in the current year.This means that the:

Correct AnswerverifiedShow Answer

In perfect competition,each firm produces a product that is clearly differentiated from the products of other firms in the same market.

Correct AnswerverifiedShow Answer

The measure used to report price changes at the wholesale level is the:

Correct AnswerverifiedShow Answer

Correct Answer
verified

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Correct Answer
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verified

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Correct Answer
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