Question 1

Under the __________ system there is very little incentive to work hard or to produce quality goods or services.

Accepted Answer

A) capitalist 
B) socialist 
C) communist 
D) mixed economy 
A) capitalist 
B) socialist 
C) communist 
D) mixed economy

Question 2

If a shortage exists for a good in a free-market economy,the:

Accepted Answer

A) Price of the good will rise. 
B) Price of the good will fall. 
C) Government will order suppliers to increase the production of that good. 
D) Government must establish a rationing system to make sure that the good is fairly distributed. 
A) Price of the good will rise. 
B) Price of the good will fall. 
C) Government will order suppliers to increase the production of that good. 
D) Government must establish a rationing system to make sure that the good is fairly distributed.

Question 3

Peace and prosperity will flourish if we can find the one best way to divide existing resources among nations.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 4

____________ looks at the behavior of individual people and organizations in specific markets.

Accepted Answer

A) Macroeconomics 
B) Finite economics 
C) Microeconomics 
D) Nanoeconomics 
A) Macroeconomics 
B) Finite economics 
C) Microeconomics 
D) Nanoeconomics

Question 5

Under the __________ system the number of choices in the market is directly related to government involvement in markets.

Accepted Answer

A) capitalist 
B) socialist 
C) communist 
D) mixed economy 
A) capitalist 
B) socialist 
C) communist 
D) mixed economy

Question 6

According to the invisible hand concept,the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to:

Accepted Answer

A) Permit government owned industries,such as telecommunications,transportation,and energy,and operate these firms as nonprofit organizations. 
B) Allow private ownership of businesses,but make use of extensive regulation to force businesses to behave in a socially desirable way. 
C) Allow entrepreneurs personal freedom to follow their own self-interest. 
D) Impose high taxes on individuals,and use the revenue to subsidize businesses to encourage them to produce the maximum rate of output. 
A) Permit government owned industries,such as telecommunications,transportation,and energy,and operate these firms as nonprofit organizations. 
B) Allow private ownership of businesses,but make use of extensive regulation to force businesses to behave in a socially desirable way. 
C) Allow entrepreneurs personal freedom to follow their own self-interest. 
D) Impose high taxes on individuals,and use the revenue to subsidize businesses to encourage them to produce the maximum rate of output.

Question 7

Thomas Malthus believed that overpopulation was a major cause of poverty.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 8

If businesses are producing at capacity,and the nation is experiencing almost full employment (a very low rate of unemployment - less than 2%),the Fed may decide to:

Accepted Answer

A) Lower interest rates. 
B) Raise taxes. 
C) Lower taxes. 
D) Increase interest rates. 
A) Lower interest rates. 
B) Raise taxes. 
C) Lower taxes. 
D) Increase interest rates.

Question 9

Any output produced by U.S.firms is included in the value of U.S.GDP,even if the output was produced in a foreign country.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 10

A graphical representation of a demand curve for a product will show the price for any particular quantity on the X-axis.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 11

The nation of Desperia is reporting a significant decline in GDP for four consecutive years,with no relief in sight.With unemployment at record levels and businesses failing faster than at any time in the past century,Desperia is likely experiencing a depression.
Level of Learning 3: Application of principles

Accepted Answer

A) True 
 B)False

Question 12

When the government attempts to stabilize the economy by changing taxes or government expenditures,it is using fiscal policy.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 13

Under capitalism:

Accepted Answer

A) Most of the means of production and distribution are privately owned and operated for profit. 
B) The primary function of the government is to distribute wealth more evenly. 
C) Utilities,health care,education,and other important services are operated by the government. 
D) Markets operate to carry out the decisions made by central planners. 
A) Most of the means of production and distribution are privately owned and operated for profit. 
B) The primary function of the government is to distribute wealth more evenly. 
C) Utilities,health care,education,and other important services are operated by the government. 
D) Markets operate to carry out the decisions made by central planners.

Question 14

Which of the following indicators provides the clearest indication that an economy is experiencing deflation?

Accepted Answer

A) A decrease in the unemployment rate. 
B) A decrease in GDP. 
C) An increase in the PPI. 
D) A decrease in the CPI. 
A) A decrease in the unemployment rate. 
B) A decrease in GDP. 
C) An increase in the PPI. 
D) A decrease in the CPI.

Question 15

In recent years,U.S.manufacturing sector has experienced ___________ productivity.

Accepted Answer

A) rising 
B) relatively stable 
C) falling slowly 
D) falling very rapidly 
A) rising 
B) relatively stable 
C) falling slowly 
D) falling very rapidly

Question 16

Today,the economic systems of most nations could most accurately be classified as:

Accepted Answer

A) Pure capitalism. 
B) Pure socialism. 
C) Command economies. 
D) Mixed economies. 
A) Pure capitalism. 
B) Pure socialism. 
C) Command economies. 
D) Mixed economies.

Question 17

It is understandable that productivity is rising faster in the service sector because service businesses have newer technologies than the manufacturing sector and fewer laborers.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

A) True 
 B)False

Question 18

John complained to his buddy,Frank,that prices have increased a lot over the past year.Frank disagreed,saying that the prices of some goods have gone up a bit,but other prices have declined,noting that you can get some good buys on houses right now.Frank feels that the average price of consumer goods hasn't changed.Frank and John can refer to the __________ to learn how government economists currently view the price situation.

Accepted Answer

A) GDP 
B) CPI 
C) PPI 
D) MEW 
A) GDP 
B) CPI 
C) PPI 
D) MEW

Question 19

Reality Entertainment,Inc is a major producer of reality TV programming.The company faces fierce competition from three other major producers of similar shows.Together,Reality Entertainment and its three rivals control almost the entire reality TV programming.Their market environment is called:

Accepted Answer

A) An oligopoly. 
B) A duopoly. 
C) Monopolistic competition. 
D) A quasi-monopoly. 
A) An oligopoly. 
B) A duopoly. 
C) Monopolistic competition. 
D) A quasi-monopoly.

Question 20

A typical demand curve shows that:

Accepted Answer

A) As people earn more income,they buy more of a good. 
B) As supply increases,the amount purchased decreases. 
C) People tend to buy more of a good than they really want. 
D) People tend to buy more of a good when its price decreases. 
A) As people earn more income,they buy more of a good. 
B) As supply increases,the amount purchased decreases. 
C) People tend to buy more of a good than they really want. 
D) People tend to buy more of a good when its price decreases.

Exam 2: Understanding How Economics Affects Business

Under the __________ system there is very little incentive to work hard or to produce quality goods or services.

If a shortage exists for a good in a free-market economy,the:

Peace and prosperity will flourish if we can find the one best way to divide existing resources among nations. Level of Learning 1: Knowledge of key terms

____________ looks at the behavior of individual people and organizations in specific markets.

Under the __________ system the number of choices in the market is directly related to government involvement in markets.

According to the invisible hand concept,the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to:

Thomas Malthus believed that overpopulation was a major cause of poverty. Level of Learning 1: Knowledge of key terms

If businesses are producing at capacity,and the nation is experiencing almost full employment (a very low rate of unemployment - less than 2%),the Fed may decide to:

Any output produced by U.S.firms is included in the value of U.S.GDP,even if the output was produced in a foreign country. Level of Learning 1: Knowledge of key terms

A graphical representation of a demand curve for a product will show the price for any particular quantity on the X-axis. Level of Learning 1: Knowledge of key terms

When the government attempts to stabilize the economy by changing taxes or government expenditures,it is using fiscal policy. Level of Learning 1: Knowledge of key terms

Under capitalism:

Which of the following indicators provides the clearest indication that an economy is experiencing deflation?

In recent years,U.S.manufacturing sector has experienced ___________ productivity.

Today,the economic systems of most nations could most accurately be classified as:

It is understandable that productivity is rising faster in the service sector because service businesses have newer technologies than the manufacturing sector and fewer laborers. Level of Learning 2: Understanding of concepts and principles

Reality Entertainment,Inc is a major producer of reality TV programming.The company faces fierce competition from three other major producers of similar shows.Together,Reality Entertainment and its three rivals control almost the entire reality TV programming.Their market environment is called:

A typical demand curve shows that:

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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