Question 1

In a market system,who ultimately determines what is produced?

Accepted Answer

A) Consumers 
B) Business managers 
C) Entrepreneurs 
D) The government 
E) Stockholders 
A) Consumers 
B) Business managers 
C) Entrepreneurs 
D) The government 
E) Stockholders

Question 2

In a market system,consumer demands dictate _____ and the search for profit defines _____.

Accepted Answer

A) for whom goods and services are produced; how goods and services are produced 
B) what is produced; for whom goods and services are produced 
C) where goods and services are produced; for whom goods and services are produced 
D) what is produced; where goods and services are produced 
E) what is produced; how goods and services are produced 
A) for whom goods and services are produced; how goods and services are produced 
B) what is produced; for whom goods and services are produced 
C) where goods and services are produced; for whom goods and services are produced 
D) what is produced; where goods and services are produced 
E) what is produced; how goods and services are produced

Question 3

The circular flow of income model shows:

Accepted Answer

A) the flow of output and income within one sector of the economy. 
B) how different sectors of the economy are linked together. 
C) that income is rarely equal to output. 
D) how business firms interact with one another. 
E) how businesses sell their resource services to households. 
A) the flow of output and income within one sector of the economy. 
B) how different sectors of the economy are linked together. 
C) that income is rarely equal to output. 
D) how business firms interact with one another. 
E) how businesses sell their resource services to households.

Question 4

The figure given below represents the equilibrium price and output in the market for restaurant meals and delivery meals. Figure 4.1  
- Refer to Figure 4.1.The demand for Restaurant Meals shift in one direction while the demand for Delivery meals shift in another direction.This implies:

Accepted Answer

A) the demand for Restaurant Meals increased while that for Delivery Meals decreased. 
B) the demand for Restaurant Meals decreased while that for Delivery Meals increased. 
C) the demand for Restaurant Meals increased while that for Delivery Meals increased. 
D) the demand for Restaurant Meals decreased while that for Delivery Meals decreased. 
E) the demand for Restaurant Meals and the demand for Delivery Meals adds up to 1. 
A) the demand for Restaurant Meals increased while that for Delivery Meals decreased. 
B) the demand for Restaurant Meals decreased while that for Delivery Meals increased. 
C) the demand for Restaurant Meals increased while that for Delivery Meals increased. 
D) the demand for Restaurant Meals decreased while that for Delivery Meals decreased. 
E) the demand for Restaurant Meals and the demand for Delivery Meals adds up to 1.

Question 5

In 2009,household spending was the smallest component of total spending in the U.S.economy.

Accepted Answer

A) True 
 B)False

Question 6

Spending on goods and services by all levels of government in the U.S.combined is smaller than investment spending but larger than consumption.

Accepted Answer

A) True 
 B)False

Question 7

According to the theory of consumer sovereignty,the preferences of the business sector alone determines the equilibrium price and output of a good or service in a market.

Accepted Answer

A) True 
 B)False

Question 8

A country is categorized as a low-income economy by the World Bank if its per capita income is below:

Accepted Answer

A) $1,000. 
B) $100. 
C) $10,000 
D) $50. 
E) $5,000. 
A) $1,000. 
B) $100. 
C) $10,000 
D) $50. 
E) $5,000.

Question 9

The United States is the largest consumer and importer of grains and other agricultural output in the world.

Accepted Answer

A) True 
 B)False

Question 10

If a corporation cannot pay its debts,creditors cannot seek payment from shareholders' personal wealth.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true of fiscal spending at the federal,state,and local levels of the U.S.government?

Accepted Answer

A) In 2009,total government spending equalled around $1 billion. 
B) Investment expenditure in the U.S.exceeds the total spending at all levels of government. 
C) Government spending at federal,state,and local levels declined steadily from the 1960s until about 1980. 
D) Through the 1950s and 1960s,the U.S.government maintained a balanced budget. 
E) Federal government spending exceeds state and local government spending in the U.S. 
A) In 2009,total government spending equalled around $1 billion. 
B) Investment expenditure in the U.S.exceeds the total spending at all levels of government. 
C) Government spending at federal,state,and local levels declined steadily from the 1960s until about 1980. 
D) Through the 1950s and 1960s,the U.S.government maintained a balanced budget. 
E) Federal government spending exceeds state and local government spending in the U.S.

Question 12

Which of the following is true of a freely functioning market?

Accepted Answer

A) Markets lead to morally correct outcomes. 
B) Market allocation leads to the most equitable distribution of resources. 
C) Market outcomes are decided by firms. 
D) Markets move resources to where they are least valued. 
E) Markets do not allow obsolescence and inefficiency to thrive. 
A) Markets lead to morally correct outcomes. 
B) Market allocation leads to the most equitable distribution of resources. 
C) Market outcomes are decided by firms. 
D) Markets move resources to where they are least valued. 
E) Markets do not allow obsolescence and inefficiency to thrive.

Question 13

In the market for digital photo frames,any change in the price of a digital photo frame would lead to a change in the overall demand for other photo frames.

Accepted Answer

A) True 
 B)False

Question 14

The replacement of film-based still cameras by digital cameras and recently by digital SLR cameras exemplifies creative destruction.

Accepted Answer

A) True 
 B)False

Question 15

The _____ illustrates the money flows that connect the various sectors in the economy.

Accepted Answer

A) aggregate demand and aggregate supply diagram 
B) circular flow diagram 
C) liquidity preference theory 
D) income-expenditure diagram 
E) quantity theory of money 
A) aggregate demand and aggregate supply diagram 
B) circular flow diagram 
C) liquidity preference theory 
D) income-expenditure diagram 
E) quantity theory of money

Question 16

A household consists of only related family members like a father,mother,and children and not unrelated members like two students sharing a rented apartment.

Accepted Answer

A) True 
 B)False

Question 17

Financial intermediaries are best described as:

Accepted Answer

A) informal institutions that provide funds to the government to manage budget deficits. 
B) institutions that accept deposits and make loans. 
C) institutions that control the money supply in the economy. 
D) institutions that invest in various business ventures. 
E) individuals who manage their client's investment portfolios. 
A) informal institutions that provide funds to the government to manage budget deficits. 
B) institutions that accept deposits and make loans. 
C) institutions that control the money supply in the economy. 
D) institutions that invest in various business ventures. 
E) individuals who manage their client's investment portfolios.

Question 18

A person obtains income is obtained by selling the services of the resources that he or she owns.

Accepted Answer

A) True 
 B)False

Question 19

Empirical evidence on the U.S.economy suggests that household spending and income have an inverse relationship.

Accepted Answer

A) True 
 B)False

Question 20

'Walkmans' that played audio cassettes were withdrawn from the market by Sony Corporations soon after MP3 players became popular among consumers.Which of the following factors is most likey to have led to this outcome?

Accepted Answer

A) Scarcity 
B) Corporate governance 
C) Consumer sovereignty 
D) Corporate social responsibility 
E) Tragedy of Commons 
A) Scarcity 
B) Corporate governance 
C) Consumer sovereignty 
D) Corporate social responsibility 
E) Tragedy of Commons

Exam 4: The Market System and the Private and Public Sector

In a market system,who ultimately determines what is produced?

In a market system,consumer demands dictate _____ and the search for profit defines _____.

The circular flow of income model shows:

The figure given below represents the equilibrium price and output in the market for restaurant meals and delivery meals. Figure 4.1 - Refer to Figure 4.1.The demand for Restaurant Meals shift in one direction while the demand for Delivery meals shift in another direction.This implies:

In 2009,household spending was the smallest component of total spending in the U.S.economy.

Spending on goods and services by all levels of government in the U.S.combined is smaller than investment spending but larger than consumption.

According to the theory of consumer sovereignty,the preferences of the business sector alone determines the equilibrium price and output of a good or service in a market.

A country is categorized as a low-income economy by the World Bank if its per capita income is below:

The United States is the largest consumer and importer of grains and other agricultural output in the world.

If a corporation cannot pay its debts,creditors cannot seek payment from shareholders' personal wealth.

Which of the following is true of fiscal spending at the federal,state,and local levels of the U.S.government?

Which of the following is true of a freely functioning market?

In the market for digital photo frames,any change in the price of a digital photo frame would lead to a change in the overall demand for other photo frames.

The replacement of film-based still cameras by digital cameras and recently by digital SLR cameras exemplifies creative destruction.

The _____ illustrates the money flows that connect the various sectors in the economy.

A household consists of only related family members like a father,mother,and children and not unrelated members like two students sharing a rented apartment.

Financial intermediaries are best described as:

A person obtains income is obtained by selling the services of the resources that he or she owns.

Empirical evidence on the U.S.economy suggests that household spending and income have an inverse relationship.

'Walkmans' that played audio cassettes were withdrawn from the market by Sony Corporations soon after MP3 players became popular among consumers.Which of the following factors is most likey to have led to this outcome?

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

In a market system,consumer demands dictate _ and the search for profit defines _.