Exam 2: Understanding Economics and How It Affects Business

Both socialism and communism are variations of

When the market price of a good is above its equilibrium value, and all other determinants are unchanged

Like most nations, the United States has a mixed economy.

A young couple living in rural west-central Missouri heard about the closing of a local grocery store. Although a small operation, it served a small community that would now have to travel another 20 miles to the nearest grocery store. With help from a local realtor and banker, the couple purchased the store, remodeled it, and reopened it. As new storeowners, they had to carefully watch cash flow. As their customer base began to grow, they began offering hot food, and hired others to help with the operation. The economic benefit created in this story is called:

Which of the following would be a topic emphasized in a macroeconomics course?

________ refers to a general rise in the price level of goods and services over time.

Under capitalism,

Resource development is the study of how to increase resources and to create the conditions that will make better use of those resources.

In a mixed economy, the government's goal is to grow the economy and maintain some measure of social equality.

Disinflation refers to a situation in which prices continue to rise, but not at the rate they were rising previously.

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

The major benefit of socialism is that it creates strong incentives to work hard and take the risks associated with starting and operating a business.

Adam Smith's research focused on determining the best way to distribute a fixed amount of resources, rather than on how to create more wealth.

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

Studies about the effects of population growth on the economy are part of macroeconomics.

In free-market economies, the government plays a major role in deciding which goods are produced and who will get them.

Colby is a new college graduate who just started a job as an engineering trainee for a sizeable defense company. Now that he is earning good money, he hopes to start saving for his first house and also make contributions to his retirement plan. As he looks over his monthly bills, Colby is concerned that he'll never get ahead of the game. His grocery bill, car payment, and mounting gas payments keep him in the "just making ends meet" group. As his mind wonders back to his college days, he reflects on a time when gas and food seemed a lot more reasonable. Chase is experiencing the effects of

Javier left his home country to become a gardener for a family in a suburb of San Francisco, California. One of the benefits of his new job is he can attend the community college near the family's home. However, when he arrived, he experienced the differences from a predominately socialist nation and a capitalist nation. Javier was dismayed to learn that public transportation in California was limited and expensive, making it difficult to get to school. For a negligible fee, the government in his home country provided public transportation for everyone. Javier's home country's economic system was more characteristic of ________.

An oligopoly is a market that is characterized by

If the quantity supplied in a market exceeds the quantity demanded, a shortage will exist.