Exam 2: Understanding Economics and How It Affects Business

America's business success is largely due to an economic and social climate that allows businesses to operate freely.

Brain drain has occurred in many socialistic nations because:

Both socialism and communism are variations of:

Adam Smith believed that countries would prosper if businesspeople were free to start and run their own businesses.Businesspeople would make a profit by providing the goods,services and ideas that others in the economy wanted,and they would hire others to help increase those profits,leading to social and economics benefits for many.This idea was called the __________.

Maureen is the office manager of a service company.She recently approved the installation of new computers and office equipment for all workers in her office.If Maureen's company is like most service companies,she will probably see a big jump in the productivity figures reported for workers in her office.

Emily recently quit her job at a major corporation because she saw little chance for advancement.Although she is still searching for a new position,Emily believes the economy is healthy and she hears that several firms are hiring people with her qualifications.Which of the following statements about Emily's current situation is most accurate? Emily is:

Danny was laid off from his job five months ago.At first,he looked for a new job every day.During the past six weeks,however,Danny became depressed about his employment status and quit trying to find a job.According to the criteria used by the government,Danny is a civilian whose job status is included in computing the national unemployment rate.

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

The foundation of the U.S.economic system is based on:

If the government wants to jump-start the economy resulting in more consumer spending,it will raise taxes.

Deanne is a vocal critic of socialism.She likes to point out that in recent years the governments in many socialistic nations have cut back on government services and have reduced taxes.Deanne believes that this trend will ultimately result in all nations adopting pure capitalistic ideals.Recent evidence suggests that Deanne's views are essentially correct.

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

In a free market economic system,the lack of government control and regulation means that businesses find it easy to take advantage of customers by offering poor quality products at high prices.

It is understandable that productivity is rising faster in the service sector because service businesses have newer technologies than the manufacturing sector and fewer laborers.

In the past,socialist nations have realized that some of the government run businesses do not grow as quickly as businesses that operate for a profit.

In the boxed material "Making Ethical Decisions," the textbook describes corruption practices in developing nations.These practices include payoffs to government officials in order to get an edge on competing better in one's industry.Which of the following statements best describes the ethical message explained in this box?

Although mixed economies tend to improve economic conditions,moral values prevent communist nations such as China and Vietnam from progressing in this direction.Overall,economic progress continues to be very slow in these nations.

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

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

__________ exists when the entire supply of a good is controlled by a single seller.