Exam 2: Understanding Economics and How It Affects Business

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all.

How is it that people working in their own self-interest produce goods, services, and wealth for others?

Due to the fundamental rights afforded to us by a free-market capitalistic system, people are more willing to take calculated risks.

_____________ refers to a general rise in the price level of goods and services over time.

Senator Gong Lee is alarmed at the state of the economy. Unemployment is high and GDP is low. Senator Lee has called for Congress to take action to increase government spending and cut taxes in order to stimulate the economy. The actions called for by Senator Lee are examples of:

During the recent recession, the administrations of Presidents George W. Bush and Barack Obama flooded several banking, financial services, and insurance firms with government funds in exchange (at least temporarily) for government ownership rights. The unprecedented move signaled the government's concern that the global banking system might collapse if these firms ended up in bankruptcy. The decision for active government involvement in the operations of these firms demonstrates:

Several years ago, the nation of Florentina had a government-owned telecommunication system that lagged far behind other nations. In several of its rural areas, there was only one phone for an entire village of people. Government taxes collected for the purpose of maintaining the telephone system were very meager, so the notion of expanding service was almost impossible. The government of Florentina decided to sell the phone company to a private firm. The private firm expanded rapidly. It reported that even poor consumers were willing to pay for a private phone line. This government decision and subsequent sale was:

State capitalism is the combination of free markets and government control.

The social and economic goals of __________ include private ownership of land and business.

The economic and political system in which the government owns almost all the major factors of production is called:

As the term "global" become "local", and as we see more opportunities to compete in the global market,

Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time.

One of the drawbacks of free markets is the fact that competition in such markets undermines the ability of price to adjust to its equilibrium value in the long run.

Sweetland is a nation that publicly supports a free market economy with private ownership of businesses. Over time, the government of Sweetland has developed policies designed to help the needy and reduce the level of income inequality. It pays for these programs by levying relatively high taxes on businesses and workers. These arrangements suggest that the economy of Sweetland is trending toward pure capitalism.

According to the box, Spotlight on Small Business, when Florida's orange crop was significantly affected by a dry spell and gnat swarms:

Resource development is the study of how to increase resources and to create the conditions that will make better use of those resources.

The nation of Florentina is in the midst of a serious economic downturn. The nation's GDP has declined steadily for over five years and is now at its lowest level in over fifty years. Florentina's unemployment rate is at an all time high and the nation's CPI is falling. Florentina's economic condition is referred to as a:

Resource development is:

A professor of economics at a prominent university recently urged government policy makers to cut taxes and increase government spending in order to pull the economy out of its current downturn. The policy measures called for by the professor are examples of fiscal policy.

According to the Reaching Beyond Our Borders box, Africa has been one of the fastest-growing regions in the 21^st century.