Exam 3: Economics: The Framework for Business

The fundamental rights of capitalism guarantee that businesses will be profitable and taxes will be low, thus providing a strong motivation to start a business.

Manufacturing jobs have migrated overseas due to increased productivity and low wages of workers in other countries. What type of unemployment does this cause in Canada?

What do we call a period in which GDP declines for at least two consecutive quarters?

Unfortunately, depressions are a common problem in most free-market economies.

Everlene's Bakery competes against many other bakeries in the same city. However, each bakery uses different recipes and each claims to offer better products than their rivals. For example, Everlene's advertises that it produces the "World's Best" chocolate-chip cookies. This suggests that Everlene's market is an example of pure competition.

Communism is an economic and political system in which a strong central government owns and controls virtually all enterprises.

Fiscal policy is the government's effort to influence the economy through taxation and spending decisions to encourage growth and boost employment while curbing inflation.

Why can changes in the producer price index (PPI) predict changes in the consumer price index (CPI)?

What does the economy represent as a system?

Equilibrium price is the point at which the supply curve intersects the demand curve.

What is the main economic goal of the government in a socialist economy?

Less expensive labour pools overseas might create layoffs at a Canadian-based engine plant. This is an example of structural unemployment.

What is unemployment rate? Identify and describe the four types of unemployment.

The Shero nation was founded on a capitalistic market system. The newly elected prime minister won by campaigning on the platform based on socialist principles. If the prime minister of Shero implements campaign promises, which of the following trends will the citizens of the country be most likely to experience?

An entrepreneur with limited funds who wants to start a new business would probably be most successful in an oligopolistic market, because the amount of competition in such markets is very limited.

Microeconomics is the study of broad, economy-wide issues such as the unemployment rate, gross domestic product, and inflation.

What do firms in oligopolistic markets tend to do?

What occurs when tax revenue is higher than government expenditures?

Natasha is very unhappy with conditions in her country. She has very little economic or political freedom. Virtually all productive enterprises are owned by the government, and they seem to be run very inefficiently. The result is frequent shortages and surpluses of goods and services. These conditions suggest that Natasha's country relies on what type of economic system?

The few nations that still rely on a communist economic system have actually seen major improvements in their economic performance over the past decade.