Deck 1: The US Business Environment

Question 1

Physical resources, labor, capital, and entrepreneurs are four traditional factors of production.

Answer 1

True

Question 2

Nearly every economic system has two broad goals: economic growth and economic stability.

Answer 2

True

Question 3

With a price index change of 2.5 and an initial price index of 160.5, the inflation rate would be 1.6 percent.

Answer 3

True

Question 4

With a 1998 CPI of 148.2 and a 1999 CPI of 152.4, the inflation rate would be 1.5%.

Question 5

Total revenues for the month of March at XYZ Enterprises are $500,000. Total expenses are $250,000. Which statement is true?

A) The difference represents XYZ's profit.
B) Profit is $200,000.
C) Profit cannot be determined.
D) None of the above statements is true.

Question 6

A healthy business climate contributes to _____.

A) the quality of life
B) the standard of living
C) business profits
D) all of the above

Question 7

Which of the following best describes the term gross national product?

A) total quantity of goods and services produced by an economic system
B) total quantity of goods and services produced within a given period by a national economy, not including foreign production
C) total value of all goods and services produced within a given period by a national economy through domestic factors of production
D) total value of all goods and services produced within a given period regardless of where the factors of production are located

Question 8

Which of the following best describes nominal GDP?

A) total quantity of goods and services produced by an economic system
B) total value of all goods and services produced within a given period by a national economy through domestic factors of production measured in current dollars, or with all components valued at current prices
C) total value of all goods and services produced within a given period by a national economy regardless of where the factors of production are located
D) total value of all goods and services produced within a given period by a national economy through domestic factors of production adjusted to account for changes in currency values and price changes

Question 9

The _____ rate is the percentage change in a price index.

A) price
B) index
C) inflation
D) economic

Question 10

With a consumer price index of 130.7 in 1990 and 136.2 in 1991, what was the inflation rate for 1990?

A) 5.5%
B) 4.2%
C) 4.0%
D) It cannot be determined from the data.

Question 11

What was the inflation rate for 1991, given a consumer price index of 130.7 in 1990 and 136.2 in 1991?

A) 5.5%
B) 4.2%
C) 4.0%
D) 2.8%

Question 12

With a consumer price index of 140.3 in 1992 and 144.5 in 1993, what was the inflation rate for 1993?

A) 5.5%
B) 3.8%
C) 3.0%
D) 2.5%

Question 13

With a consumer price index of 144.5 in 1993 and 148.2 in 1994, what was the inflation rate for 1994?

A) 5.8%
B) 3.1%
C) 2.2%
D) 2.6%

Question 14

What are the two broad goals of nearly every economic system?

Question 15

Describe oligopoly.

Question 16

Describe monopoly.

Question 17

How is risk a welcomed ingredient in a free-enterprise system?

Question 18

Assess the degrees of risk in perfect competition versus monopolistic competition. Are the risks similar? Different?

Question 19

If the amount of money in an economic system exceeds the system's output during times of inflation, people will have more money to spend. How can inflation present increased risk to consumers?

Question 20

What risks does the U.S. government face when determining the nation's monetary policy?

Question 21

What type of competition prevails for McDonald's?

Question 22

In Year 3, a hamburger cost twice as much as in Year 1 but you had twice as much income to pay for it. In effect, the price was actually the same. In Year 4, however, your income increased 250 percent while the price of the hamburger increased by 275 percent. How can this be explained?

Question 23

Will the value of goods produced by McDonald's in Stockholm, Sweden, be included in Sweden's GDP? Explain.

Question 24

Will the factors of production required for the operation of a McDonald's store in France, a mixed market economy, be similar to the factors of production required for the operations of a McDonald's in the United States?