Exam 2: Economics: The Framework of Business

In the context of monetary policy, the _____ is a rule set by the Fed, which specifies the minimum amount of funds a bank must hold, expressed as a percentage of the bank's deposits.

Which of the following statements is true about socialist economy?

Rolliand Bank is going through a financial crisis. Therefore, it takes a loan from the Federal Reserve. The bank has to repay the loan within a year, and it also has to pay a monthly interest of 6% to the Fed. In this case, the 6% interest rate that the Fed charges from Rolliand Bank is the _____.

The gross domestic product (GDP) includes output produced within households.

In the context of planned economies, countries that adopted communism in 1900s developed:

The central banking system in the country of Darmos issues a notice to all its commercial banks stating that they must hold funds that are equal to 48% of the deposits held by their customers. In the given scenario, the central banking system's notice exemplifies _____.

Fiscal strategies are closely tied to political philosophy.

The economic system of the East Asian nation of Xinzen calls for public ownership of all businesses. The government has complete control over the market, and individuals do not have individual rights and the freedom to make choices. In this scenario, the economic system followed by Xinzen is _____.

The government of Laslow, an Asian nation, earned more revenue than its total expenditure in the last fiscal year. Given this information, the government of Laslow incurred a _____.

Danny is a citizen of Finiz, a North American country. He is able to run his handicraft business without any intervention from the government because Finiz has an economic system that encourages private ownership. He is able to make independent decisions for his business and has the freedom to decide the prices of his products. In this scenario, Finiz most likely has a _____.

The government of the South Asian nation of Albana is unable to maintain the electronics business effectively because of slack in management and lack of skilled employees. It sells the business to a company called Ramington Electricals. The company has no association with the government, and it operates on its own terms. The sale of the government-owned electronics business to Ramington Electricals is an example of _____.

Deflation refers to a period of falling average prices across an economy, which is a sign of economic trouble that goes hand-in-hand with very high unemployment.

_____ refers to Federal Reserve decisions that shape the economy by influencing interest rates and the supply of cash.

During a period of inflation in the United States, the Federal Reserve sells treasury bonds. Buyers of these bonds write checks to the Fed, and the Fed cashes these checks from banks. Given this information, the banks will most likely:

A capitalist system depends on fair competition among businesses to:

A newly appointed government in the United States requests Congress to raise the amount of money that the government can borrow. This borrowed money is intended to be used to cover the costs of the major policies that the government plans to implement. In this scenario, the government has asked the Congress to hike its _____.

A drawback of communism, which was adopted by some countries in the 1900s, was the inability of people to make basic choices such as where to work or what to buy.

The amount of input divided by the amount of output equals productivity.

In the context of monetary policy, which of the following statements is true of the discount rate?

The economic system of the United States is called _____.