Question 1

Thomas Malthus believed that overpopulation was a major cause of poverty.

Accepted Answer

A) True 
 B)False  True

Question 2

Peace and prosperity will flourish if we can find the one best way to divide existing resources among nations.

Accepted Answer

A) True 
 B)False  False

Question 3

As you're checking out the online edition of your local newspaper, you quickly scan a report in the business section that says government spending will again exceed tax revenues in the current year. What does this mean for the economy?

Accepted Answer

A)  The total national debt is likely to increase. 
B)  The national deficit is likely to decrease. 
C)  The rate of inflation is likely to fall. 
D)  The monetary policies pursued by the Fed need tightening. 
A)  The total national debt is likely to increase. 
B)  The national deficit is likely to decrease. 
C)  The rate of inflation is likely to fall. 
D)  The monetary policies pursued by the Fed need tightening. A

Question 4

Which of the following statements provides the most accurate comparison of socialism and communism?

Accepted Answer

A)  Under socialism, the government owns most businesses, while under communism the church owns most businesses. 
B)  Both socialism and communism strive to achieve a more equal distribution of income and wealth, but under communism, the government takes greater control. 
C)  Socialism strives for an equal distribution of income but communism wants income to go primarily to those who own and operate private businesses. 
D)  Communism believes that the government should always strive to balance its budget, while socialism accepts deficit spending as the price of achieving true equality. 
A)  Under socialism, the government owns most businesses, while under communism the church owns most businesses. 
B)  Both socialism and communism strive to achieve a more equal distribution of income and wealth, but under communism, the government takes greater control. 
C)  Socialism strives for an equal distribution of income but communism wants income to go primarily to those who own and operate private businesses. 
D)  Communism believes that the government should always strive to balance its budget, while socialism accepts deficit spending as the price of achieving true equality.

Question 5

This morning on Facebook, you clicked a link to an article about the downfall of a multinational entertainment company. The report shows that despite profits plummeting 35%, the company's CEO received a 9% raise. As you read on, you learn that the company's board of directors approved undeserved salary increases. This is an example of how inequality and greed can infiltrate the free-market economic system.

Accepted Answer

A) True 
 B)False

Question 6

Capitalism is the foundation of the U.S. economic system.

Accepted Answer

A) True 
 B)False

Question 7

If the national debt is $20 trillion, the national deficit will be considerably higher.

Accepted Answer

A) True 
 B)False

Question 8

Economic progress can occur when business owners provide jobs and economic growth for their employees, their communities, and themselves.

Accepted Answer

A) True 
 B)False

Question 9

Over the past decade, socialist economies have proven to be more successful at creating wealth and jobs than capitalist economies.

Accepted Answer

A) True 
 B)False

Question 10

Most countries throughout the world can be classified as either purely capitalist or purely socialist.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  monopolistic competition. 
B)  perfect competition. 
C)  oligopolies. 
D)  monopolies. 
A)  monopolistic competition. 
B)  perfect competition. 
C)  oligopolies. 
D)  monopolies.

Question 12

Thomas Malthus believed that people in most countries would never be able to achieve high standards of living unless the problems of overpopulation were addressed.

Accepted Answer

A) True 
 B)False

Question 13

One way to lessen the U.S. government budget deficit is to

Accepted Answer

A)  cut spending. 
B)  increase spending. 
C)  call in government savings bonds. 
D)  increase government social programs such as welfare, food stamps, and Medicare. 
A)  cut spending. 
B)  increase spending. 
C)  call in government savings bonds. 
D)  increase government social programs such as welfare, food stamps, and Medicare.

Question 14

In the United States, laws prohibit the creation of most types of monopolies.

Accepted Answer

A) True 
 B)False

Question 15

Aubrey is the office manager of a service company. Recently, she approved the request for new computers and office equipment for the entire office. If Aubrey's company is like most service companies, she will probably see a big jump in the productivity figures reported for workers in her office.

Accepted Answer

A) True 
 B)False

Question 16

Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain.

Accepted Answer

A) True 
 B)False

Question 17

If a shortage exists for a good in a free-market economy, the

Accepted Answer

A)  price of the good will rise. 
B)  price of the good will fall. 
C)  government will order suppliers to increase the production of that good. 
D)  government must establish a rationing system to make sure that the good is fairly distributed. 
A)  price of the good will rise. 
B)  price of the good will fall. 
C)  government will order suppliers to increase the production of that good. 
D)  government must establish a rationing system to make sure that the good is fairly distributed.

Question 18

Over dinner with his friend Nathan, Dominic complained about how prices have increased a great deal over the past year. Nathan disagreed and said that the prices of some goods have gone up a bit, but other prices have declined, noting that you can get some good buys on houses right now. Nathan feels that the average price of consumer goods hasn't changed. Nathan and Dominic can refer to the ________ to learn how government economists currently view the price situation.

Accepted Answer

A)  GDP 
B)  CPI 
C)  PPI 
D)  MEW 
A)  GDP 
B)  CPI 
C)  PPI 
D)  MEW

Question 19

A depression is a severe recession that is often accompanied by deflation.

Accepted Answer

A) True 
 B)False

Question 20

Resource development is

Accepted Answer

A)  the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals. 
B)  the study of how to increase the amount of available resources and create conditions that will make better use of these resources. 
C)  the part of economics that looks at the operation of a nation's economy as a whole. 
D)  the part of economics that looks at particular markets. 
A)  the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals. 
B)  the study of how to increase the amount of available resources and create conditions that will make better use of these resources. 
C)  the part of economics that looks at the operation of a nation's economy as a whole. 
D)  the part of economics that looks at particular markets.

Exam 2: Understanding Economics and How It Affects Business

Thomas Malthus believed that overpopulation was a major cause of poverty.

Peace and prosperity will flourish if we can find the one best way to divide existing resources among nations.

As you're checking out the online edition of your local newspaper, you quickly scan a report in the business section that says government spending will again exceed tax revenues in the current year. What does this mean for the economy?

Which of the following statements provides the most accurate comparison of socialism and communism?

Capitalism is the foundation of the U.S. economic system.

If the national debt is $20 trillion, the national deficit will be considerably higher.

Economic progress can occur when business owners provide jobs and economic growth for their employees, their communities, and themselves.

Over the past decade, socialist economies have proven to be more successful at creating wealth and jobs than capitalist economies.

Most countries throughout the world can be classified as either purely capitalist or purely socialist.

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

Thomas Malthus believed that people in most countries would never be able to achieve high standards of living unless the problems of overpopulation were addressed.

One way to lessen the U.S. government budget deficit is to

In the United States, laws prohibit the creation of most types of monopolies.

Aubrey is the office manager of a service company. Recently, she approved the request for new computers and office equipment for the entire office. If Aubrey's company is like most service companies, she will probably see a big jump in the productivity figures reported for workers in her office.

Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain.

If a shortage exists for a good in a free-market economy, the

A depression is a severe recession that is often accompanied by deflation.

Resource development is

Taking Risks and Making Profits Within the Dynamic Business Environment

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Working Within the Legal Environment

Using Technology to Manage Information

Managing Risk

Managing Personal Finances

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