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Exam 2: Understanding Economics and How It Affects Business

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Question 141

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Economists study how people use resources to produce and distribute goods and services for consumption among competing groups and individuals.

A) True
B) False

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Question 142

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The economic and political system in which the government owns almost all the major factors of production is called

A) communism.
B) capitalism.
C) ethnocentrism.
D) socialism.

E) All of the above
F) C) and D)

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Question 143

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As productivity increases, the cost of producing goods and services is likely to fall.

Which of the following statements would a follower of Adam Smith most likely make?

Marco has noticed that as older adults purchase tablets, they do not know much about how to use them and are frequently aggravated. He decided he could earn a nice profit by developing courses and offering one-on-one help to aid his customers in overcoming their deficiencies. Although the business struggled at first, he is experiencing a good deal of success now. Marco has many satisfied customers, and the business has grown to the point where he now employs several workers, some of whom were previous clients. Marco's experience is an example of

Dan and Susan Greene are purchasing their first home in Savannah, Georgia. They are seeking pre-qualification on a home loan. The unemployment rate for Georgia is 10.2% and GDP is declining. Chances are pretty good that the Fed will raise interest rates in order to loosen the supply of money, resulting in a more expensive loan for Dan and Susan.

One of the benefits of communism is that it allows individuals a great deal of freedom to make their own economic decisions.

When the federal government's collection of tax revenues is less than what it spends in a given year, it results in a

If businesses are producing at capacity, and the nation is experiencing almost full employment (a very low rate of unemployment-less than 2%) , the Fed may decide to

When describing the state of the U.S. economy, reporters often refer to the nation's GDP, its unemployment rate, and the CPI. Explain what each of these terms means and why each measure is significant.

The total value of a country's output of final goods and services in a given year is known as the gross domestic product (GDP).

Workers in socialist countries often get longer vacations and more social benefits than workers in free-market economies.

Explain the significance of "price" in a free-market economic system.

Communist values are disappearing because

________ is considered by some to be the father of modern economics.

Socialists believe that the primary economic function of the government is to promote rapid economic growth.

History shows that free-market capitalism leads to a fair and equitable distribution of wealth.

The most fundamental of all rights in capitalism is the right to private property.

Glittering Gems is a popular fashion jewelery company. Although it is gaining in popularity among younger women, its promotional strategy continues to focus on the tarnish-free finish that is applied to every earring, necklace, and ring. Due to the fact that its industry faces monopolistic competition, the company knows that it must continue to differentiate itself from the competition.

Socialism and communism are both variations of a free-market economy.