Exam 2: Understanding Economics and How It Affects Business

________ studies the operation of a nation's economy as a whole.

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

An economist is examining how consumers in the automobile market have responded to recent price increases by car manufacturers. He is examining a microeconomic situation.

Prestigious economics professor, Tom Ruland, recently urged government policy makers to cut taxes and increase government spending in order to pull the economy out of a downturn. The policy measures called for by the professor are examples of fiscal policy.

Recently the government of Evensplitia announced that it is standing behind the concept of state-owned utilities and public schools in the nation. Although not all its industries are owned and managed by the government, this would lead one to believe that Evensplitia has a preference for socialism.

You read the Electricity City Utility Company has problems. Its headquarters had an expansive retaining wall collapse during a flood last week. This led to toxic coal ash flows that buried homes and even caused a few fatalities. An editorial claims that the company will not be held accountable to the same standards as the asbestos companies that paid severe fines and even went out of business due to their lack of attention to environmental clean-up. You agree with the writer because you recently studied about the various competitive markets and utility companies clearly fall under monopolistic competition.

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.

Adam Smith believed the self-interest of businesspeople would lead them to create needed goods, services, and jobs.

The CPI measures the pace of inflation or deflation.

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

Countries that rely on a free market system are plagued by persistent shortages or surpluses of goods and services.

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

In one of her weekly live videos, the Federal Reserve Chairman remarked that inflation had begun to tick upward. However, unemployment in the U.S was still quite high and economic growth had slowed. With short-term interest rates close to 0 (zero), the Chair did not visualize that ________ policy would be able to do anything for the high unemployment problem. She felt that ________ policy would be more useful for bolstering employment, but that would require local and state governments and the federal government to provide tax breaks for corporations.

In order to restrict spending by businesses and households, the Fed would take measures designed to lower interest rates.

Besides a slowdown in the general economy, Coop's Consulting faces threats of competition from several other companies that provide engineering consulting services. In order to gain more business, Cooper tries to convince potential clients that his company offers better service than the competition. He has advertised heavily in professional magazines, often quoting some of his highly satisfied clients. The market Coop's Consulting operates in is an example of

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all.

The nation of Forlornia is in the middle of a severe financial crisis. The prime minister has increased government spending by trillions, in order to revive the ailing economy. Her strategy followed the economic theory known as

As you drive to school in the morning, you will probably flip through several radio stations before deciding to settle on one for the duration of the drive. For instance: you can listen to a "fair and balanced" talk show; an "intelligent talk" program; an interactive "call-in" talk show; a "self-improvement" talk show; and, even an "all sports" talk show. With so much monopolistic competition in radio programming, radio stations focus on offering you something just a little different.

Cooper's native country of Evensplitia was much different from the United States. In addition to its higher tax rates, the government offered more extensive social programs that were designed to redistribute income and reduce inequality. Although small businesses were privately owned and operated in Evensplitia, many basic industries were owned and operated by the government. From this information, you would classify Evensplitia's economic system as ________.

Which of the following statements about business cycles in the U.S. is most accurate?