Exam 2: Understanding How Economics Affects Business

Studies about the effects of population growth on the economy are part of macroeconomics. Level of Learning 1: Knowledge of key terms

In a free market economic system,the mechanism of __________ is the key determinant used to signal to producers what to produce and how much to produce.

At the onset of the 2008 - 2010 economic slowdown,prices at the grocery stores continued to rise.In some cases,products such as milk and bread almost doubled in price.In March 2008,a Boston newspaper reported,"The price of eggs was up 40% and milk was up 26%." Consumers were already being hit with high energy costs,and now their confidence in the economy was further shaken with job cuts and a loss of discretionary income due to increases in food prices.The economy was slowing,but prices were rising,signifying the potential for ___________.

Which of the following statements about business cycles in the U.S.is most accurate?

Mini-Case Gig Abite is a bright,hard-working engineer who once owned a successful engineering consulting firm in his native country of Frinezia.Gig became discouraged by the high tax rates in Frinezia,so he immigrated to the United States eleven years ago.Soon after moving to the U.S. ,Gig again started his own business,which he named Giganeers Consulting.The company struggled at first,and almost went under midway through its second year.However,Gig never lost faith,the company survived,and it soon developed a growing reputation for quality work and dependable service.Giganeers began experiencing sustained growth early in its fourth year.In fact,Gig hired additional employees over the next few years to keep up with the increasing workload.His company,which started with only Gig and 2 other full time workers,now provides jobs for 43 full-time employees as well as many part time workers. Despite these past successes,some clouds are on the horizon.The company recently suffered its first drop in business since its very early years.Gig is convinced that the problem is not with his company,but rather due to a downturn in the U.S.economy.He heard a national broadcast last week reporting that the value of the total output of final goods and services in the U.S.declined over the last quarter.The news anchor went on to state that many economists believe that this downward trend is likely to continue for several more months.Gig is concerned that he will have to lay off some of his employees if the economy doesn't improve.He hopes that the government does something soon to put the economy back on track. -The broadcast that reported a decline in total output for the United States probably got some of its information from the government's measurement of ___________.

Fourteen years ago,Sergio noticed that a lot of people who bought personal computers did not know much about how to use them and frequently suffered system crashes and other aggravations.He decided he could earn a nice profit by starting a consulting business to help other people overcome their computer woes.Although the business struggled at first,it has experienced a good deal of success for the past five years.Sergio has many satisfied customers,and the business has grown to the point where he now employs several workers.Sergio's experience is an example of:

One of the major ways the Fed influences economic conditions is through its control of interest rates. Level of Learning 1: Knowledge of key terms

The study of how to increase the amount of available resources and create conditions that will make better use of these resources is known as:

In most large cities there are a large number of bakeries.These bakeries produce similar,but not identical,products.Some bakeries claim to have the best cheesecakes in town,while others brag about their cookies or specialty breads.The bakery market in a large city is an example of:

A problem with the CPI is that it measures the price changes of only food and clothing,while ignoring what happens to the prices of such important items as medical care and energy. Level of Learning 2: Understanding of concepts and principles

Recently the U.S.national debt was a little more than:

Recently,Hugo Chavez,the Prime Minister of Venezuela,announced that he is standing behind the concept of state owned utilities,public schools,and the communications industry of his nation.Although not all industry is owned and managed by the government,his ideas would lead one to believe that he has a preference for:

Most countries throughout the world can be classified as either purely capitalist or purely socialist. Level of Learning 1: Knowledge of key terms

History shows that free-market capitalism leads to a fair and equitable distribution of wealth. Level of Learning 2: Understanding of concepts and principles

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

Joe and Tess McGreen are purchasing their first home in Durham,North Carolina.They are seeking pre-qualification on a home loan.The unemployment rate for North Carolina is 10.2% and GDP is declining.Chances are pretty good that the Fed will raise interest rates in order to loosen the supply of money,resulting in a more expensive loan for Joe and Tess. Level of Learning 3: Application of principles

the price indexes to measure the health of our economy. Level of Learning 1: Knowledge of key terms

In the U.S. ,the __________ has the role of managing the money supply and interest rates.

A simple supply curve shows a relationship between the:

The higher the measurement of productivity,the higher the likely costs of production. Level of Learning 1: Knowledge of key terms