Question 1

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

Accepted Answer

A)  Fred prefers to live in a country with low marginal tax rates. 
B)  Lizzie prefers to live in a country that encourages rapid economic growth. 
C)  Kara prefers to live in a country where the government makes almost all of the economic decisions. 
D)  Bryan prefers to live in a country with limited government regulation. 
A)  Fred prefers to live in a country with low marginal tax rates. 
B)  Lizzie prefers to live in a country that encourages rapid economic growth. 
C)  Kara prefers to live in a country where the government makes almost all of the economic decisions. 
D)  Bryan prefers to live in a country with limited government regulation.

Question 2

A simple supply curve shows a relationship between the

Accepted Answer

A)  amount of labor a firm hires and the amount of output it can produce. 
B)  amount of time required to produce a good and the relevant production costs. 
C)  price of a good and the quantity of that good sellers are willing to offer for sale at a specific point in time. 
D)  amount of a good a firm produces and the amount demanded by consumers. 
A)  amount of labor a firm hires and the amount of output it can produce. 
B)  amount of time required to produce a good and the relevant production costs. 
C)  price of a good and the quantity of that good sellers are willing to offer for sale at a specific point in time. 
D)  amount of a good a firm produces and the amount demanded by consumers.

Question 3

Ben recently lost his job at a major U.S. auto plant in one of the rust belt states. After looking unsuccessfully for work in a similar industry for several months, he plans to start interviewing with road and bridge repair companies. He speculates that if the government begins to contract with companies that repair highways and bridges, he may find steady work, at least in the short term. Which of the following statements best describes the strategy behind his thoughts?

Accepted Answer

A)  The best way for the government to reign in on too much money floating around the system is to hire people and pay them wages. 
B)  Ben doesn't understand the causes of unemployment. We obviously don't need any more autos on the roads if the plant has closed. Repairs will slow down rather than increase. 
C)  If the current administration asks the Fed to raise interest rates, it will do more than if the current administration begins contracting with road repair companies. 
D)  By increasing government spending through road and bridge repair and construction, the government will intervene in the free-market economic system to help jump-start a weak economy. 
A)  The best way for the government to reign in on too much money floating around the system is to hire people and pay them wages. 
B)  Ben doesn't understand the causes of unemployment. We obviously don't need any more autos on the roads if the plant has closed. Repairs will slow down rather than increase. 
C)  If the current administration asks the Fed to raise interest rates, it will do more than if the current administration begins contracting with road repair companies. 
D)  By increasing government spending through road and bridge repair and construction, the government will intervene in the free-market economic system to help jump-start a weak economy.

Question 4

Compare and contrast fiscal policy and monetary policy. Discuss how each of these approaches can be used to influence the state of the economy.

Accepted Answer

Fiscal policy refers to changes in the l

Question 5

GDP figures do not include the value of illegal activities.

Accepted Answer

A) True 
 B)False

Question 6

The national deficit is the difference between our nation's exports and its imports.

Accepted Answer

A) True 
 B)False

Question 7

High tax rates in socialist countries are a major reason these nations have experienced a brain drain.

Accepted Answer

A) True 
 B)False

Question 8

Incentive to own and operate businesses is high in nations whose governments are proponents of socialistic practices.

Accepted Answer

A) True 
 B)False

Question 9

A free market is one in which decisions about what to produce and in what quantities are made by

Accepted Answer

A)  the Fed. 
B)  the president. 
C)  the market. 
D)  Congress. 
A)  the Fed. 
B)  the president. 
C)  the market. 
D)  Congress.

Question 10

The freedom of people to decide where they want to work and live, and what they want to buy or sell are basic capitalist rights under

Accepted Answer

A)  eminent domain. 
B)  freedom of expression. 
C)  freedom of choice. 
D)  freedom of competition. 
A)  eminent domain. 
B)  freedom of expression. 
C)  freedom of choice. 
D)  freedom of competition.

Question 11

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

Accepted Answer

A)  Free-market economies offer little opportunity for the poor to work their way out of poverty. 
B)  Free-market economies have been unable to create wealth as rapidly as other types of economic systems. 
C)  Free-market economies are generally plagued by shortages of needed consumer goods. 
D)  Free-market economies tend to result in unequal distribution of wealth. 
A)  Free-market economies offer little opportunity for the poor to work their way out of poverty. 
B)  Free-market economies have been unable to create wealth as rapidly as other types of economic systems. 
C)  Free-market economies are generally plagued by shortages of needed consumer goods. 
D)  Free-market economies tend to result in unequal distribution of wealth.

Question 12

In the small nation of Evensplitalia, the government owns several of the key businesses and provides a wide range of social services. The government strongly emphasizes income equality and eliminating the great income disparities among its citizens. These features of Evensplitalia's economy are consistent with a socialist economic system.

Accepted Answer

A) True 
 B)False

Question 13

The U.S. national debt equals the sum of government deficits over time,.

Accepted Answer

A) True 
 B)False

Question 14

Macroeconomics looks at long-run economic problems while microeconomics examines short-run economic problems.

Accepted Answer

A) True 
 B)False

Question 15

________ unemployment refers to persons who purposefully quit their jobs and have not yet found a new job.

Accepted Answer

A)  Frictional 
B)  Structural 
C)  Cyclical 
D)  Seasonal 
A)  Frictional 
B)  Structural 
C)  Cyclical 
D)  Seasonal

Question 16

A key to economic growth and development is to

Accepted Answer

A)  locate more deposits of gold and other precious metals. 
B)  emphasize a fair and equitable distribution of income. 
C)  provide people with better education. 
D)  allow government planning to guide the allocation of resources. 
A)  locate more deposits of gold and other precious metals. 
B)  emphasize a fair and equitable distribution of income. 
C)  provide people with better education. 
D)  allow government planning to guide the allocation of resources.

Question 17

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.

Accepted Answer

A) True 
 B)False

Question 18

Sasha is a well-educated entrepreneur who operated a small business in her home country of Evensplitia. At the encouragement of American relatives, Sasha recently immigrated to the United States and applied for citizenship. "In Evensplitia, tax rates were very high," Sasha complained. "The government used my taxes to finance all sorts of social programs to help the less fortunate. While I want to help, it has really undermined the profit incentive of individuals such as me. I feel those high taxes have stunted economic growth." Sasha's comments illustrate the reason many socialist countries are experiencing a(n)

Accepted Answer

A)  antitrust problem. 
B)  depression. 
C)  brain drain. 
D)  budget surplus. 
A)  antitrust problem. 
B)  depression. 
C)  brain drain. 
D)  budget surplus.

Question 19

A(n) ________ curve shows the relationship between the price of a good and the quantity of that good people are willing and able to buy in a given time period.

Accepted Answer

A)  demand 
B)  supply 
C)  utility 
D)  equilibrium 
A)  demand 
B)  supply 
C)  utility 
D)  equilibrium

Question 20

To jump-start the economy, the Fed is likely to lower interest rates, in order to encourage individuals and businesses to spend money.

Accepted Answer

A) True 
 B)False

Exam 2: Understanding Economics and How It Affects Business

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

A simple supply curve shows a relationship between the

Compare and contrast fiscal policy and monetary policy. Discuss how each of these approaches can be used to influence the state of the economy.

GDP figures do not include the value of illegal activities.

The national deficit is the difference between our nation's exports and its imports.

High tax rates in socialist countries are a major reason these nations have experienced a brain drain.

Incentive to own and operate businesses is high in nations whose governments are proponents of socialistic practices.

A free market is one in which decisions about what to produce and in what quantities are made by

The freedom of people to decide where they want to work and live, and what they want to buy or sell are basic capitalist rights under

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

The U.S. national debt equals the sum of government deficits over time,.

Macroeconomics looks at long-run economic problems while microeconomics examines short-run economic problems.

________ unemployment refers to persons who purposefully quit their jobs and have not yet found a new job.

A key to economic growth and development is to

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.

A(n) ________ curve shows the relationship between the price of a good and the quantity of that good people are willing and able to buy in a given time period.

To jump-start the economy, the Fed is likely to lower interest rates, in order to encourage individuals and businesses to spend money.

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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