Question 1

Large educated populations can contribute to an economy by offering knowledge and entrepreneurship.

Accepted Answer

A) True 
 B)False

Question 2

In the small nation of Equalia, the government owns several of the key businesses and provides a wide range of social services. The government places a great deal of emphasis on eliminating large disparities in people's incomes. These features of Equalia's economy are consistent with a socialist economic system.

Accepted Answer

A) True 
 B)False

Question 3

A free-market economic system is one in which the market of buyers and sellers decides what is produced, how much is produced, and how it is distributed.

Accepted Answer

A) True 
 B)False

Question 4

Under capitalism:

Accepted Answer

A)  most of the means of production and distribution are privately owned and operated for profit. 
B)  T	he primary function of the government is to distribute wealth more evenly. 
C)  utilities, health care, education, and other important services are operated by the government. 
D)  markets operate to carry out the decisions made by central planners. 
A)  most of the means of production and distribution are privately owned and operated for profit. 
B)  T	he primary function of the government is to distribute wealth more evenly. 
C)  utilities, health care, education, and other important services are operated by the government. 
D)  markets operate to carry out the decisions made by central planners.

Question 5

Efforts by the Federal Reserve Bank (the Fed) to control the money supply and interest rates are known as:

Accepted Answer

A)  fiscal policy. 
B)  incomes policy 
C)  monetary policy 
D)  securities policy. 
A)  fiscal policy. 
B)  incomes policy 
C)  monetary policy 
D)  securities policy.

Question 6

To be classified as unemployed, a person must be at least 16 years old and trying to find a job within the past four weeks.

Accepted Answer

A) True 
 B)False

Question 7

Countries that rely on a free market system are plagued by persistent shortages or surpluses of goods and services.

Accepted Answer

A) True 
 B)False

Question 8

The main goal of resource development is to find ways to:

Accepted Answer

A)  increase the amount of resources and create conditions that will make better use of those resources. 
B)  allocate existing resources more efficiently among competing uses. 
C)  find the right balance between policies that promote economic growth and policies designed to promote other goals such as a fair distribution of income. 
D)  promote the central planning of resource utilization so that resources can be allocated to the uses that will benefit society the most. 
A)  increase the amount of resources and create conditions that will make better use of those resources. 
B)  allocate existing resources more efficiently among competing uses. 
C)  find the right balance between policies that promote economic growth and policies designed to promote other goals such as a fair distribution of income. 
D)  promote the central planning of resource utilization so that resources can be allocated to the uses that will benefit society the most.

Question 9

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

Accepted Answer

A)  a shortage will exist in the market. 
B)  the quantity demanded will exceed the quantity supplied. 
C)  both the supply curve and the demand curve will shift to the right. 
D)  a surplus will exist in the market. 
A)  a shortage will exist in the market. 
B)  the quantity demanded will exceed the quantity supplied. 
C)  both the supply curve and the demand curve will shift to the right. 
D)  a surplus will exist in the market.

Question 10

Maureen is the office manager of a service company. She recently approved the installation of new computers and office equipment for all workers in her office. If Maureen's company is like most service companies, she will probably see a big jump in the productivity figures reported for workers in her office.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements about government deficit spending is most accurate?

Accepted Answer

A)  The federal government violates the law by running deficits because the U.S. Constitution requires the government to balance its budget each year. 
B)  Although the government used to run big deficits, it has consistently run surpluses since the late 1980s. 
C)  The government has used deficit spending to lower the national debt. 
D)  One reason the government has a hard time reducing deficits is that there is a great deal of pressure on the government to expand its spending each year. 
A)  The federal government violates the law by running deficits because the U.S. Constitution requires the government to balance its budget each year. 
B)  Although the government used to run big deficits, it has consistently run surpluses since the late 1980s. 
C)  The government has used deficit spending to lower the national debt. 
D)  One reason the government has a hard time reducing deficits is that there is a great deal of pressure on the government to expand its spending each year.

Question 12

The consumer price index (CPI) measures what is happening to prices at the wholesale level.

Accepted Answer

A) True 
 B)False

Question 13

If a shortage exists in a market for a good, the price of that good will tend to fall.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The government of Velovia made progress in its efforts to bring rapid inflation under control. Although prices are still rising, the rate of increase has slowed considerably. This suggests that Velovia is experiencing disinflation.

Accepted Answer

A) True 
 B)False

Question 16

__________ is a condition in which the average level of prices is actually falling.

Accepted Answer

A)  Deflation 
B)  Disinflation 
C)  Stagflation 
D)  Uniflation 
A)  Deflation 
B)  Disinflation 
C)  Stagflation 
D)  Uniflation

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Recently, Juanita Martinez, the Prime Minister of Vuvuzela announced that she is standing behind the concept of state owned utilities and public schools in her nation. Although not all industry is owned and managed by the government, her ideas would lead one to believe that he has a preference for socialism.

Accepted Answer

A) True 
 B)False

Question 19

Marina left her native land in Eastern Europe in order to become a nanny for a family in a western suburb of Chicago, Illinois. One of the benefits of her arrangement was that she could attend the community college near her family's residence. When she arrived at her new job, she experienced the differences from a predominately socialist nation and a capitalist nation. Marina noted that public transportation in northern Illinois was limited and expensive, making it difficult to get to school. For a negligible fee, the government in her native country provided public transportation for everyone. Marina's native country's economic system was more characteristic of socialism.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 2: Understanding Economics and How It Affects Business

Large educated populations can contribute to an economy by offering knowledge and entrepreneurship.

A free-market economic system is one in which the market of buyers and sellers decides what is produced, how much is produced, and how it is distributed.

Under capitalism:

Efforts by the Federal Reserve Bank (the Fed) to control the money supply and interest rates are known as:

To be classified as unemployed, a person must be at least 16 years old and trying to find a job within the past four weeks.

Countries that rely on a free market system are plagued by persistent shortages or surpluses of goods and services.

The main goal of resource development is to find ways to:

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

Which of the following statements about government deficit spending is most accurate?

The consumer price index (CPI) measures what is happening to prices at the wholesale level.

If a shortage exists in a market for a good, the price of that good will tend to fall.

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

The government of Velovia made progress in its efforts to bring rapid inflation under control. Although prices are still rising, the rate of increase has slowed considerably. This suggests that Velovia is experiencing disinflation.

__________ is a condition in which the average level of prices is actually falling.

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

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

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 Union and 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

Managing the Marketing Mix: Product, Price, Place and Promotion

Extension: Working Within the Legal Environment

Extension: Using Technology to Manage Information

Extension: Managing Risk

Extension: Managing Personal Finances

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