Exam 2: Economics: the Framework of Business

Explain why most of today's nations have mixed economies.

Which of the following is a security that the Federal Reserve does NOT buy or sell?

Karl Marx envisioned communism as a system that would improve the lot of the common worker.

The amount of goods and services produced by an economy divided by the amount of resources used to make those goods and services equals:

If low­cost solar power were to become a viable energy source in households across the United States, what would be the economic impact on energy prices?

An economy is both a social and a financial system.

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Natasha is very upset about conditions in her country. She has very little economic or political freedom. Virtually all productive enterprises are owned by the government, and they seem to be run very inefficiently. The result is a frequent shortage of necessary goods and services. These conditions suggest that Natasha's country relies on a _____ economic system.

GDP, as the measurement of the total value of goods and services, includes the output produced within households and output produced by illegal activities.

Everlene's Bakery competes against many other bakeries in the same city. However, each bakery uses different recipes and each claims to offer better products than their rivals. For example, Everlene's advertises that it produces the "World's Best" chocolate chip cookies. This suggests that Everlene's Bakery shows an example of pure competition.

Euxnpdlearinst agtreodss i ndo amn e esctiocn pormoydu? ct. What are the reasons for it to be

The discount rate is the interest rate the Fed charges on its loans to commercial banks.

An entrepreneur, with limited funds, who wants to start a new business would probably be most successful in a monopolistic market because the amount of competition in such markets is very limited.

Over the past 30 years, tax reforms in formerly planned economies have created new incentives for the:

In a planned economy, the government plays only a minor role in the operation of the economy.

The government experiences a budget surplus when its tax revenue exceeds its expenditures.

M1 and M2 are commonly used definitions for money supply. If you use the debit card connected to your checking account to make purchases, it would be referred to as M1.

The U.S. federal government is the nation's largest employer.

Morgan's Moped and Bicycle Store is located on the property of a five­star resort in southern Florida. Rental cost of the mopeds and bikes is based on one­hour increments. Morgan lowers his standard prices to attract patrons during daily rainstorms in June and August. This is an example of decreasing supply.

The federal government creates regulations that prohibit competition and stimulate consumers to work.