Exam 2: Understanding Economics and How It Affects Business

In the long run, the market price tends to adjust toward the equilibrium point.

Product differentiation is a key to success in monopolistic competition.

Efforts by the Federal Reserve Bank (the Fed) to control the money supply and interest rates are known as ________ policy.

One of the greatest concerns associated with capitalism is that

Subtle differences, such as the right to one's religious preference, make the command economic system known as communism more like a mixed economy than a socialistic system.

Which of the following statements most accurately identifies a limitation of the free-market economic system?

The U.S. strongly relies on GDP data. However, it is only the total value of finished goods produced by the country. Officials are looking to measure total sales volume at all stages of production. What statistic would be most useful to them?

Communism is an economic and political system in which the state makes almost all economic decisions and owns almost all the major factors of production.

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

The Fed is concerned that the economy is growing too rapidly. Given these concerns, it is likely to pursue policies to restrict the supply of money and raise interest rates.

The market price of corn is falling. In a free-market economy, the most likely explanation of this price change is that:

One strength of a free-market economic system is that it emphasizes the fair and humane treatment of the less fortunate in society.

Which of the following strategies may have a net effect on inflation?

In the service sector of the economy, the influx of machinery such as computers increases output per worker, but does little to improve the quality of services.

Fatima resides in a country where the economic system is primarily based on free-market capitalism. Fatima is likely to have the freedom to buy and sell property.

There are innovations involving new ways to produce and conserve energy. If we can turn this new technology into marketable products and services that produce energy to run our businesses and homes, the U.S. could see a surge in output of goods and services. What would be measured to document this surge?

A ________ is a severe recession that is usually accompanied by deflation.

Which of the following people would tend to favor a communist economy?

Just a few sellers dominate the markets for laundry detergents, soft drinks, and automobiles. Economists would classify these markets as

The total value of final goods and services produced within a nation's borders in a given year is known as that nation's