Exam 3: Economics: The Framework for Business

The government experiences a budget surplus when its tax revenue exceeds its expenditures.

Why does the government have laws against monopolies?

The Rainland government enjoys a socialist economic system, but in recent years it has found that new business growth has stalled. In an effort to stimulate more economic growth, what will the government probably do?

What is gross domestic product (GDP)? How well does it measure what it is intended to measure?

The price paid for goods and services will rise when the quantity demanded exceeds quantity supplied.

Contraction is a period of economic downturn marked by rising unemployment, business cutbacks, and decreases in consumer spending.

The Consumer Price Index (CPI) is a measure of inflation that evaluates the change in the weighted-average price of goods and services that the average consumer buys each month.

GeeGee's is a community-based bakery known for its scrumptious tea cakes. The recipe calls for expensive spices imported from Asia. Recently, the cost of these spices has risen dramatically, leading GeeGee's to consider increasing its prices. What could GeeGee's management perform in order to analyze how this change would affect consumer choices?

Which of the following would be studied in the greatest detail in a macroeconomics course?

Consumers will see prices fall when the quantity demanded exceeds quantity supplied.

The nation of High Land has seen a steady increase in the output of goods and services produced within its borders in the last year. What would this indicate?

The Producer Price Index (PPI) is a measure of inflation that evaluates the hyperinflation as it relates to productivity.

What decreases when it takes more resources (inputs) to produce a given amount of goods and services (outputs) than in the past?

Countries from France to China have experienced sometimes violent demonstrations in response to economic restructuring toward a more mixed economy.

Which economic measure provides the most information about what is happening to prices of consumer goods?

Members of the Canadian Parliament have voted themselves an annual pay raise while the country is operating under a budget deficit. What will be the result of a pay raise for all Members of Parliament?

The two key terms relating to the business cycle are contraction and expansion.

If there is a cold spell that ruins many crops of oranges growing in Florida, how will this affect consumers' purchasing behaviour of oranges?

Luke is taking an economics class that focuses on decisions made by individual business firms and consumers. Luke's class is concerned with microeconomic issues.

Capitalism is based on private ownership, economic freedom, and fair competition.