Question 1

The foundation of the U.S.economic system is based on:

Accepted Answer

A) Capitalism. 
B) The ideas of Thomas Malthus. 
C) Equality. 
D) The saying,"from each according to ability,to each according to need." 
A) Capitalism. 
B) The ideas of Thomas Malthus. 
C) Equality. 
D) The saying,"from each according to ability,to each according to need."

Question 2

According to the Reaching Beyond our Borders box,"Prospering in Foreign Lands",the success of Yum!Brands' (owner of KFC,Taco Bell,and Pizza Hut)global attempts is mixed.In some cases,opening stores in communist and socialist nations has proven to be profitable;in others,it has proven to be a more costly venture.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

A) True 
 B)False

Question 3

Economic progress can occur when business owners provide jobs and economic growth for their employees,their communities,and themselves.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 4

In the long run,the market price tends to adjust toward the equilibrium point.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 5

A contemporary economic challenge is creating profitable businesses by selling goods and services that contribute toward a healthier environment.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 6

Due to the fundamental rights afforded to us by a free-market capitalistic system;persons are more willing to take calculated risks.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 7

Subtle differences such as the right to one's religious preference make the command economic system known as communism more like a mixed economy than a socialistic system.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an important premise of Smith's conclusions about economic prosperity?

Accepted Answer

A) Individual freedom is necessary if a society is to prosper. 
B) Understanding the concept of survival of the fittest will lead to prosperity. 
C) Determining what motivates people will lead to prosperity. 
D) Command economies and structured markets must be in place before we can work toward prosperity. 
A) Individual freedom is necessary if a society is to prosper. 
B) Understanding the concept of survival of the fittest will lead to prosperity. 
C) Determining what motivates people will lead to prosperity. 
D) Command economies and structured markets must be in place before we can work toward prosperity.

Question 9

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

Accepted Answer

A) the long-term trend is for most nations to operate as mixed economies. 
B) disagreements about the best economic system to embrace will cause many nations to close their doors to outside commerce. 
C) the only industries that governments will want to own are the ones that are profitable. 
D) the forecast is for socialist nations to trend toward communism (Cuba is the example)and for capitalist nations to trend toward socialism. 
A) the long-term trend is for most nations to operate as mixed economies. 
B) disagreements about the best economic system to embrace will cause many nations to close their doors to outside commerce. 
C) the only industries that governments will want to own are the ones that are profitable. 
D) the forecast is for socialist nations to trend toward communism (Cuba is the example)and for capitalist nations to trend toward socialism.

Question 10

According to Adam Smith,the "invisible hand" refers to the government's effort to always keep a check on the wealth creation of individuals,so that no one business would control a market for a particular good or service.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 11

_________ is the name of a free-market economic system in which most of the factors of production and distribution - such as land,factories,railroads,and stores - are owned by individuals.

Accepted Answer

A) Socialism 
B) Capitalism 
C) Communism 
D) Marginalism 
A) Socialism 
B) Capitalism 
C) Communism 
D) Marginalism

Question 12

Gabby and Gus Malloy recently got pre-approved on a loan for their first house purchase.They are speculating on how much they should bid on their number one choice - a small,three-bedroom bungalow near a major college town.Which of the following indicators may be an important factor in whether they are able to successfully put in a low bid?

Accepted Answer

A) The federal tax rate in that area 
B) The unemployment rate in that area 
C) The producer's price index in that area 
D) The CMI - consumer's marginal index 
A) The federal tax rate in that area 
B) The unemployment rate in that area 
C) The producer's price index in that area 
D) The CMI - consumer's marginal index

Question 13

Which of the following statements about the Federal Reserve Bank (the Fed)is most accurate?

Accepted Answer

A) The Fed is an agency of the U.S.Treasury Department that has the responsibility of collecting tax receipts for the IRS. 
B) The Fed manages the U.S.money supply and interest rates. 
C) The Fed is the primary government agency involved in carrying out our nation's fiscal policies. 
D) The Fed is the agency of the government that ensures the U.S.maintains enough gold reserves to pay any foreign debts that result from international trade. 
A) The Fed is an agency of the U.S.Treasury Department that has the responsibility of collecting tax receipts for the IRS. 
B) The Fed manages the U.S.money supply and interest rates. 
C) The Fed is the primary government agency involved in carrying out our nation's fiscal policies. 
D) The Fed is the agency of the government that ensures the U.S.maintains enough gold reserves to pay any foreign debts that result from international trade.

Question 14

To jump-start the economy,the FED is likely to lower interest rates,in order to encourage individuals and businesses to spend money.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

A) True 
 B)False

Question 15

Communism is an economic and political system in which the state makes almost all economic decisions and owns almost all the major factors of production.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 16

Like most nations,the United States has a mixed economy.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 17

A simple supply curve shows that an increase in the price of a good will cause the quantity supplied to:

Accepted Answer

A) Decrease. 
B) Increase. 
C) Remain constant. 
D) Fluctuate randomly around its equilibrium value. 
A) Decrease. 
B) Increase. 
C) Remain constant. 
D) Fluctuate randomly around its equilibrium value.

Question 18

The size of the national debt increases when the federal government runs a deficit.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 19

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.
Level of Learning 3: Application of principles

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 2: Understanding How Economics Affects Business

The foundation of the U.S.economic system is based on:

Economic progress can occur when business owners provide jobs and economic growth for their employees,their communities,and themselves. Level of Learning 1: Knowledge of key terms

In the long run,the market price tends to adjust toward the equilibrium point. Level of Learning 1: Knowledge of key terms

A contemporary economic challenge is creating profitable businesses by selling goods and services that contribute toward a healthier environment. Level of Learning 1: Knowledge of key terms

Due to the fundamental rights afforded to us by a free-market capitalistic system;persons are more willing to take calculated risks. Level of Learning 1: Knowledge of key terms

Subtle differences such as the right to one's religious preference make the command economic system known as communism more like a mixed economy than a socialistic system. Level of Learning 2: Understanding of concepts and principles

Which of the following is an important premise of Smith's conclusions about economic prosperity?

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

According to Adam Smith,the "invisible hand" refers to the government's effort to always keep a check on the wealth creation of individuals,so that no one business would control a market for a particular good or service. Level of Learning 1: Knowledge of key terms

_________ is the name of a free-market economic system in which most of the factors of production and distribution - such as land,factories,railroads,and stores - are owned by individuals.

Which of the following statements about the Federal Reserve Bank (the Fed)is most accurate?

To jump-start the economy,the FED is likely to lower interest rates,in order to encourage individuals and businesses to spend money. Level of Learning 2: Understanding of concepts and principles

Communism is an economic and political system in which the state makes almost all economic decisions and owns almost all the major factors of production. Level of Learning 1: Knowledge of key terms

Like most nations,the United States has a mixed economy. Level of Learning 1: Knowledge of key terms

A simple supply curve shows that an increase in the price of a good will cause the quantity supplied to:

The size of the national debt increases when the federal government runs a deficit. Level of Learning 1: Knowledge of key terms

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

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

Adapting Organizations to Todays Markets

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employee-Management Issues and Relationships

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

Bonus A: Using Technology to Manage Information

Bonus B: Managing Risk

Bonus C: Managing Your Personal Finances

Appendix: Working Within the Legal Environment

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