Exam 2: Understanding How Economics Affects Business

The producer price index measures what is happening to prices at the wholesale level. Level of Learning 1: Knowledge of key terms

Danny was laid off from his job five months ago.At first,he looked for a new job every day.During the past six weeks,however,Danny became depressed about his employment status and quit trying to find a job.According to the criteria used by the government,Danny is a civilian whose job status is included in computing the national unemployment rate. Level of Learning 3: Application of principles

There is general agreement in the United States on the degree to which the government should be involved in the economy. Level of Learning 1: Knowledge of key terms

Resource development is concerned with finding the best way to utilize the fixed amount of resources a society has available. Level of Learning 1: Knowledge of key terms

If the quantity supplied in a market exceeds the quantity demanded,a shortage will exist. Level of Learning 1: Knowledge of key terms

Keynesian economic theory suggests:

The quantity of a good or service that producers are willing to sell at different prices during a specific time period is known as the:

As indicated in "Prospering in Foreign Lands",Reaching Beyond Our Borders box: Companies founded in the U.S.under a capitalistic system are seldom successful in breaking through the communistic and socialistic systems when they go global. Level of Learning 1: Knowledge of key terms

During the recession of 2008-2010,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:

A prediction that GDP will increase significantly over the next six months is bad news for most businesspeople. Level of Learning 2: Understanding of concepts and principles

Adapting to changes in demand is easy for businesses to do. Level of Learning 1: Knowledge of key terms

Lance owns Lance Lawns Irrigation Systems,LLC,a company that installs and maintains underground lawn irrigation systems.Business is down due to new housing starts being negatively impacted by a deep recession.To make things worse,his bank called yesterday to inform him that his credit limit (interest fee of 12.5%)will be cut from $30,000 per year to $15,000 per year,unless he is willing to pay a higher interest rate of 20%.As Lance drives to the first job this morning,he knows that his last task of the day will be to reduce the hours for his two employees.He can't afford to work employees eight hours per day,with only a $15,000 line of credit.Which of the following strategies will help Lance's situation?

The best way to avoid national budget deficits is to increase our exports and decrease our imports. Level of Learning 2: Understanding of concepts and principles

Core inflation figures omit healthcare prices,but not energy prices. Level of Learning 1: Knowledge of key terms

The CPI measures the pace of inflation or deflation. Level of Learning 1: Knowledge of key terms

Government spending on defense decreases the national deficit. Level of Learning 2: Understanding of concepts and principles

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. Level of Learning 3: Application of principles

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

The National Coalition on Healthcare Reform reports that nearly 18% of the U.S.population under the age of 65 is without healthcare.If this advocacy group succeeds in convincing the current administration and Congress to vote for basic healthcare for everyone,which of the following is likely to occur?

Macroeconomics looks at long run economic problems while microeconomics examines short run economic problems. Level of Learning 2: Understanding of concepts and principles