Exam 2: Understanding How Economics Affects Business

Senator Gong Lee is alarmed at the state of the economy.Unemployment is high and GDP is low.Senator Lee has called for Congress to take action to increase government spending and cut taxes in order to stimulate the economy.The actions called for by Senator Lee are examples of:

Although changes in the CPI provide interesting insights into the overall performance of the economy,these changes have little practical impact on the lives of ordinary people.

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:

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.

Peace and prosperity will flourish if we can find the one best way to divide existing resources among nations.

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.

Ben recently lost his job at a major U.S.auto plant in one of the rust belt states.After looking unsuccessfully for work in a similar industry for several months,he plans to start interviewing with road and bridge repair companies.He speculates that if the government begins to contract with companies that repair highways and bridges,he may find steady work,at least in the short term.Which of the following statements best describes the strategy behind his thoughts?

Resource development is concerned with finding the best way to utilize the fixed amount of resources a society has available.

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.

GLAMOR GAL,a popular women's cosmetics company is gaining popularity among younger women.Differentiating itself from the sea of companies that compete for the same business,it focuses on products for sensitive,youthful skin.GLAMOR GAL clearly operates in an oligopolistic environment.

__________ unemployment results when the demand for labor varies during the year.

Recently,Hugo Chavez,the Prime Minister of Venezuela announced that he is standing behind the concept of state owned utilities and public schools in 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 socialism.

When the government attempts to stabilize the economy by changing taxes or government expenditures,it is using fiscal policy.

In socialist economies,the government owns some,if not most basic businesses such as telecommunications systems and utilities.

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. -Gig started Giganeers to earn a profit,but by working hard and increasing his market share,he was able to create jobs for others.This is an example of the ______________ concept.

An economist is examining how consumers in the automobile market have responded to recent price increases by car manufacturers.He is examining a microeconomic situation.

Patrick just landed a job working for a major online gaming company in Silicon Valley.In a lot of ways,this is his dream job come true - the chance to work for a company that makes gaming software and live in California at the same time.As his plane lands at San Jose International,he pictures a snazzy apartment with a palm tree right outside the front door.A few hours later,as he meets a property manager of a large apartment complex,his heart sinks.The price of apartments is out of sight! Back at the hotel,he logs on to the Bureau of Labor Statistics to try to get a better picture of why the cost of housing is so high in this region of the U.S.Which factors may be causing the rise in the price of housing?

Socialism and communism are both variations of a free-market economy.

Macroeconomics is the economic perspective that looks at the operation of a nation's economy as a whole.

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 ___________.