Question 1

A basic right under capitalism is the right of businesses to receive government funding.

Accepted Answer

A) True 
 B)False

Question 2

An oligopoly is a market that is characterized by:

Accepted Answer

A)  One firm that totally dominates the supply of the product. 
B)  A large number of small firms all producing very similar products. 
C)  A few large sellers who dominate the market. 
D)  Several small firms that compete primarily by differentiating their products. 
A)  One firm that totally dominates the supply of the product. 
B)  A large number of small firms all producing very similar products. 
C)  A few large sellers who dominate the market. 
D)  Several small firms that compete primarily by differentiating their products.

Question 3

The measure used to report price changes at the wholesale level is the:

Accepted Answer

A)  gross domestic product (GDP). 
B)  consumer price index (CPI). 
C)  wholesale price index (WPI). 
D)  producer price index (PPI). 
A)  gross domestic product (GDP). 
B)  consumer price index (CPI). 
C)  wholesale price index (WPI). 
D)  producer price index (PPI).

Question 4

The four basic types of unemployment are frictional,structural,seasonal,and:

Accepted Answer

A)  cyclical. 
B)  procedural. 
C)  industrial. 
D)  traditional. 
A)  cyclical. 
B)  procedural. 
C)  industrial. 
D)  traditional.

Question 5

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 6

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

Accepted Answer

A)  United States Treasury 
B)  Federal Reserve Bank 
C)  State Department 
D)  Federal Deposit Insurance Corporation 
A)  United States Treasury 
B)  Federal Reserve Bank 
C)  State Department 
D)  Federal Deposit Insurance Corporation

Question 7

A simple supply curve shows a relationship between the:

Accepted Answer

A)  Amount of labor a firm hires and the amount of output it can produce. 
B)  Amount of time required to produce a good and the relevant production costs. 
C)  Price of a good and the quantity of that good sellers are willing to offer for sale at a specific point in time. 
D)  Amount of a good a firm produces and the amount demanded by consumers. 
A)  Amount of labor a firm hires and the amount of output it can produce. 
B)  Amount of time required to produce a good and the relevant production costs. 
C)  Price of a good and the quantity of that good sellers are willing to offer for sale at a specific point in time. 
D)  Amount of a good a firm produces and the amount demanded by consumers.

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

Brain drain is the loss of the best and brightest people to other countries.

Accepted Answer

A) True 
 B)False

Question 10

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.

Accepted Answer

A) True 
 B)False

Question 11

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 12

___________ exists when a large number of firms produce goods that are similar but are perceived by buyers as being different.

Accepted Answer

A)  Perfect competition 
B)  Monopolistic competition 
C)  Oligopoly 
D)  A monopoly 
A)  Perfect competition 
B)  Monopolistic competition 
C)  Oligopoly 
D)  A monopoly

Question 13

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all.

Accepted Answer

A) True 
 B)False

Question 14

The higher the measurement of productivity,the higher the likely costs of production.

Accepted Answer

A) True 
 B)False

Question 15

Monetary policy is implemented to ease the up and down swings of business cycles,while fiscal policy is implemented to create swings when the cycle is stalled in an economic boom.

Accepted Answer

A) True 
 B)False

Question 16

__________ is a condition in which the price increases are slowing.

Accepted Answer

A)  Deflation 
B)  Disinflation 
C)  Stagflation 
D)  Uniflation 
A)  Deflation 
B)  Disinflation 
C)  Stagflation 
D)  Uniflation

Question 17

One of the drawbacks of free markets is the fact that competition in such markets undermines the ability of price to adjust to its equilibrium value in the long run.

Accepted Answer

A) True 
 B)False

Question 18

The freedom of people to buy,sell,and use land,buildings,machinery,and inventions are basic capitalist rights under:

Accepted Answer

A)  The right to own private property. 
B)  Freedom of expression. 
C)  Freedom of choice. 
D)  Freedom of competition. 
A)  The right to own private property. 
B)  Freedom of expression. 
C)  Freedom of choice. 
D)  Freedom of competition.

Question 19

__________ unemployment refers to unemployment caused by the restructuring of firms or by a mismatch between the skills of job seekers and the requirements of available jobs.

Accepted Answer

A)  Frictional 
B)  Structural 
C)  Cyclical 
D)  Seasonal 
A)  Frictional 
B)  Structural 
C)  Cyclical 
D)  Seasonal

Question 20

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:

Accepted Answer

A)  A capitalistic state 
B)  A socialistic state 
C)  A communistic state 
D)  A nationalistic state 
A)  A capitalistic state 
B)  A socialistic state 
C)  A communistic state 
D)  A nationalistic state

Exam 2: Understanding How Economics Affects Business

A basic right under capitalism is the right of businesses to receive government funding.

An oligopoly is a market that is characterized by:

The measure used to report price changes at the wholesale level is the:

The four basic types of unemployment are frictional,structural,seasonal,and:

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

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:

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

Brain drain is the loss of the best and brightest people to other countries.

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.

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

___________ exists when a large number of firms produce goods that are similar but are perceived by buyers as being different.

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all.

The higher the measurement of productivity,the higher the likely costs of production.

Monetary policy is implemented to ease the up and down swings of business cycles,while fiscal policy is implemented to create swings when the cycle is stalled in an economic boom.

__________ is a condition in which the price increases are slowing.

One of the drawbacks of free markets is the fact that competition in such markets undermines the ability of price to adjust to its equilibrium value in the long run.

The freedom of people to buy,sell,and use land,buildings,machinery,and inventions are basic capitalist rights under:

__________ unemployment refers to unemployment caused by the restructuring of firms or by a mismatch between the skills of job seekers and the requirements of available jobs.

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

Appendix A: Using Technology to Manage Information

Appendix B: Managing Risk

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