Question 1

Due to the rights and freedoms afforded under capitalism:

Accepted Answer

A) people feel safe and don't feel the need to take added risks by starting businesses. 
B) people are motivated to take calculated risks. 
C) people don't have to choose where they will work. 
D) the prices of necessities are always very low. 
A) people feel safe and don't feel the need to take added risks by starting businesses. 
B) people are motivated to take calculated risks. 
C) people don't have to choose where they will work. 
D) the prices of necessities are always very low.

Question 2

Identify and describe the 4 basic rights that form the foundation of capitalism.

Accepted Answer

The four basic rights are the right to p

Question 3

A free market is one in which decisions about what to produce and in what quantities are made by:

Accepted Answer

A) the Fed 
B) the community 
C) the market 
D) the Congress 
A) the Fed 
B) the community 
C) the market 
D) the Congress

Question 4

The CPI is based on the prices of a carefully selected market basket of goods,all of which consumers can purchase at a supermarket.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would be a topic emphasized in a macroeconomics course?

Accepted Answer

A) Factors that determine how fast a nation's economy is growing. 
B) How a firm decides the amount it will charge for one of its products. 
C) How a consumer chooses which goods to buy. 
D) The determinants of the wage rate for labor in the auto industry. 
A) Factors that determine how fast a nation's economy is growing. 
B) How a firm decides the amount it will charge for one of its products. 
C) How a consumer chooses which goods to buy. 
D) The determinants of the wage rate for labor in the auto industry.

Question 6

A major distinction between capitalism and socialism concerns the distribution of income.
Level of Learning 2: Understanding of concepts and principles

Accepted Answer

A) True 
 B)False

Question 7

The presence of competition in free markets:

Accepted Answer

A) Is undesirable because it results in unnecessary duplication of efforts. 
B) Usually results in better quality and lower prices. 
C) Is rare,since most markets eventually evolve into monopolies. 
D) Is undesirable,because one big firm can usually produce goods more efficiently than a large number of small firms. 
A) Is undesirable because it results in unnecessary duplication of efforts. 
B) Usually results in better quality and lower prices. 
C) Is rare,since most markets eventually evolve into monopolies. 
D) Is undesirable,because one big firm can usually produce goods more efficiently than a large number of small firms.

Question 8

The total value of a country's output of final goods and services in a given year is known as the gross domestic product (GDP).
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 9

The social and economic goals of __________ include private ownership of land and business.

Accepted Answer

A) capitalism 
B) socialism 
C) communism 
D) a mixed economy 
A) capitalism 
B) socialism 
C) communism 
D) a mixed economy

Question 10

A basic right under capitalism is the right of businesses to receive government funding.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 11

Inflation refers to a general rise in the prices of goods and services over time.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 12

In the newspaper this morning,you read about the downfall of a multi-national entertainment business,and a report that the company's CEO enjoyed a 9% increase in his salary during the same year that the company's profits were down 35%.As you read further,you learn that the company's board of directors approved undeserved salary increases.Clearly,this is an example of how inequality and greed can infiltrate the free-market economic system.
Level of Learning 3: Application of principles

Accepted Answer

A) True 
 B)False

Question 13

In perfect competition,each firm produces a product that is clearly differentiated from the products of other firms in the same market.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 14

Deanne is a vocal critic of socialism.She likes to point out that in recent years the governments in many socialistic nations have cut back on government services and have reduced taxes.Deanne believes that this trend will ultimately result in all nations adopting pure capitalistic ideals.Recent evidence suggests that Deanne's views are essentially correct.
Level of Learning 3: Application of principles

Accepted Answer

A) True 
 B)False

Question 15

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 16

The "Reaching Beyond Our Borders" box in Chapter 2,explains the changing business climate in other nations.What kinds of experiences are U.S.based companies facing abroad?

Accepted Answer

A) Companies are only benefitting when they set-up business in a nation with a similar economic and/or political system as the home-based business. 
B) Companies such as U.S.based General Motors is competing well in Japan,but having a difficult time in Mexico. 
C) For some food franchisors such as Yum! Brands,the economic and political systems are not preventing them from growing the business abroad. 
D) Differentiating oneself abroad is detrimental because socialist nations seek equality,even in food products and advertising. 
A) Companies are only benefitting when they set-up business in a nation with a similar economic and/or political system as the home-based business. 
B) Companies such as U.S.based General Motors is competing well in Japan,but having a difficult time in Mexico. 
C) For some food franchisors such as Yum! Brands,the economic and political systems are not preventing them from growing the business abroad. 
D) Differentiating oneself abroad is detrimental because socialist nations seek equality,even in food products and advertising.

Question 17

Economist Adam Smith's important contribution was an inquiry as to why some nations are wealthy,while others remain poor.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 18

The Fed is concerned that the economy is growing too rapidly.Given these concerns,it is likely to pursue policies to restrict the supply of money and raise interest rates.
Level of Learning 3: Application of principles

Accepted Answer

A) True 
 B)False

Question 19

The top tax rate on personal income in most socialist economies is usually lower than the top tax rate on personal income in capitalist economies.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Question 20

The U.S.national debt equals the sum of all recorded years of deficits.
Level of Learning 1: Knowledge of key terms

Accepted Answer

A) True 
 B)False

Exam 2: Understanding How Economics Affects Business

Due to the rights and freedoms afforded under capitalism:

Identify and describe the 4 basic rights that form the foundation of capitalism.

A free market is one in which decisions about what to produce and in what quantities are made by:

The CPI is based on the prices of a carefully selected market basket of goods,all of which consumers can purchase at a supermarket. Level of Learning 1: Knowledge of key terms

Which of the following would be a topic emphasized in a macroeconomics course?

A major distinction between capitalism and socialism concerns the distribution of income. Level of Learning 2: Understanding of concepts and principles

The presence of competition in free markets:

The total value of a country's output of final goods and services in a given year is known as the gross domestic product (GDP). Level of Learning 1: Knowledge of key terms

The social and economic goals of __________ include private ownership of land and business.

A basic right under capitalism is the right of businesses to receive government funding. Level of Learning 1: Knowledge of key terms

Inflation refers to a general rise in the prices of goods and services over time. Level of Learning 1: Knowledge of key terms

In perfect competition,each firm produces a product that is clearly differentiated from the products of other firms in the same market. Level of Learning 1: Knowledge of key terms

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all. Level of Learning 1: Knowledge of key terms

The "Reaching Beyond Our Borders" box in Chapter 2,explains the changing business climate in other nations.What kinds of experiences are U.S.based companies facing abroad?

Economist Adam Smith's important contribution was an inquiry as to why some nations are wealthy,while others remain poor. Level of Learning 1: Knowledge of key terms

The Fed is concerned that the economy is growing too rapidly.Given these concerns,it is likely to pursue policies to restrict the supply of money and raise interest rates. Level of Learning 3: Application of principles

The top tax rate on personal income in most socialist economies is usually lower than the top tax rate on personal income in capitalist economies. Level of Learning 1: Knowledge of key terms

The U.S.national debt equals the sum of all recorded years of deficits. Level of Learning 1: Knowledge of key terms

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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