Exam 2: Understanding How Economics Affects Business

Workers in socialist countries often get longer vacations and more social benefits than workers in free market economies. Level of Learning 1: Knowledge of key terms

_________ is considered by some to be the father of modern economics.

In a mixed economy,the government's goal is to grow the economy and maintain some measure of social equality. Level of Learning 3: Application of principles

The major benefit of socialism is that it creates strong incentives to work hard and take the risks associated with starting and operating a business. Level of Learning 1: Knowledge of key terms

Socialists believe that wealth should be more evenly distributed than what actually occurs in a free-market capitalistic system. Level of Learning 1: Knowledge of key terms

Adam Smith believed that since businesspeople are motivated to improve their own prosperity,their actions are unlikely to benefit society as a whole. Level of Learning 2: Understanding of concepts and principles

Thomas Malthus was pessimistic about the ability of a society to achieve high standards of living for most of its citizens because he believed that:

Brain drain is the loss of the best and brightest people to other countries. Level of Learning 1: Knowledge of key terms

Your professor showed you an Internet video of the chair of the Federal Reserve Bank speaking to the American public.The message he is conveying indicates that Fed economists are worried about inflation and believe the best course of action would be to slow the economy.Which of the following policies is the Fed most likely to pursue?

Resource development is:

A collapse in Buldovia's banking system eventually led to companies unable to borrow money to run their businesses.Firms terminated employees.These circumstances cut into consumer's purchasing power,causing a severe decline in the prices of goods and services,better known as _______.

Which of the following statements provides the most accurate comparison of socialism and communism?

Economist Thomas Malthus believed that ______________ would limit economic progress.

Socialism and communism are both variations of a free-market economy. Level of Learning 1: Knowledge of key terms

Which of the following is a basic right under capitalism?

The national deficit is the difference between our nation's exports and its imports. Level of Learning 1: Knowledge of key terms

Explain the difference between fiscal policy and monetary policy.Discuss how each of these approaches can be used to influence the state of the economy.

Adam Smith believed the self-interest of businesspeople would lead them to create needed goods,services,and jobs. Level of Learning 1: Knowledge of key terms

As productivity increases,the cost of producing goods and services is likely to fall. Level of Learning 1: Knowledge of key terms

Under the basic principle of supply,as the price goes down,manufacturers and suppliers of a product tend to supply less of the product to the market. Level of Learning 1: Knowledge of key terms