Question 1

The government experiences a budget surplus when its tax revenue exceeds its expenditures.

Accepted Answer

A) True 
 B)False

Question 2

Why does the government have laws against monopolies?

Accepted Answer

A)  because these laws are the main way the government ensures an equal distribution of income in the economy 
B)  because these laws are inconsistent with the role of government in a capitalist system 
C)  because these laws are the key way the government promotes competition in a capitalist system 
D)  because these laws are the main reason the Canadian economy is best classified as a socialist system

Question 3

The Rainland government enjoys a socialist economic system, but in recent years it has found that new business growth has stalled. In an effort to stimulate more economic growth, what will the government probably do?

Accepted Answer

A)  create regulations giving consumers and workers more protection 
B)  reduce taxes and cut back on some social programs 
C)  take over most new businesses and operate them as government enterprises 
D)  increase the number of citizens who qualify for free education and healthcare

Question 4

What is gross domestic product (GDP)? How well does it measure what it is intended to measure?

Accepted Answer

The answer of What is gross domestic product (GDP)? How...

Question 5

The price paid for goods and services will rise when the quantity demanded exceeds quantity supplied.

Accepted Answer

A) True 
 B)False

Question 6

Contraction is a period of economic downturn marked by rising unemployment, business cutbacks, and decreases in consumer spending.

Accepted Answer

A) True 
 B)False

Question 7

The Consumer Price Index (CPI) is a measure of inflation that evaluates the change in the weighted-average price of goods and services that the average consumer buys each month.

Accepted Answer

A) True 
 B)False

Question 8

GeeGee's is a community-based bakery known for its scrumptious tea cakes. The recipe calls for expensive spices imported from Asia. Recently, the cost of these spices has risen dramatically, leading GeeGee's to consider increasing its prices. What could GeeGee's management perform in order to analyze how this change would affect consumer choices?

Accepted Answer

A)  a transformational economic analysis 
B)  a microeconomic analysis 
C)  a structural analysis 
D)  a macroeconomic analysis

Question 9

Which of the following would be studied in the greatest detail in a macroeconomics course?

Accepted Answer

A)  how a firm in an oligopolistic market would respond to a change in the pricing strategy of other firms in its market 
B)  how various factors influence the nation's unemployment rate 
C)  how a large automobile manufacturer decides how many SUVs to produce in a given model year 
D)  how consumers would respond if a restaurant raised its prices

Question 10

Consumers will see prices fall when the quantity demanded exceeds quantity supplied.

Accepted Answer

A) True 
 B)False

Question 11

The nation of High Land has seen a steady increase in the output of goods and services produced within its borders in the last year. What would this indicate?

Accepted Answer

A)  a rise in High Land's unemployment rate 
B)  a decline in the national tax rate 
C)  a rise in High Land's CPI 
D)  a rise in High Land's GDP

Question 12

The Producer Price Index (PPI) is a measure of inflation that evaluates the hyperinflation as it relates to productivity.

Accepted Answer

A) True 
 B)False

Question 13

What decreases when it takes more resources (inputs) to produce a given amount of goods and services (outputs) than in the past?

Accepted Answer

A)  structural unemployment 
B)  the business cycle 
C)  productivity 
D)  inflation

Question 14

Countries from France to China have experienced sometimes violent demonstrations in response to economic restructuring toward a more mixed economy.

Accepted Answer

A) True 
 B)False

Question 15

Which economic measure provides the most information about what is happening to prices of consumer goods?

Accepted Answer

A)  GDP 
B)  CPI 
C)  Dow Jones Index 
D)  GNP

Question 16

Members of the Canadian Parliament have voted themselves an annual pay raise while the country is operating under a budget deficit. What will be the result of a pay raise for all Members of Parliament?

Accepted Answer

A)  a decrease in social programs 
B)  an increase in the federal debt 
C)  an increase in the reserve requirement 
D)  a decrease in the interest rate

Question 17

The two key terms relating to the business cycle are contraction and expansion.

Accepted Answer

A) True 
 B)False

Question 18

If there is a cold spell that ruins many crops of oranges growing in Florida, how will this affect consumers' purchasing behaviour of oranges?

Accepted Answer

A)  They will not buy oranges at all. 
B)  They will buy less due to the increase in price. 
C)  They will buy no more or less due to the increase in price. 
D)  They will buy more due to the increase in price.

Question 19

Luke is taking an economics class that focuses on decisions made by individual business firms and consumers. Luke's class is concerned with microeconomic issues.

Accepted Answer

A) True 
 B)False

Question 20

Capitalism is based on private ownership, economic freedom, and fair competition.

Accepted Answer

A) True 
 B)False

Exam 3: Economics: The Framework for Business

The government experiences a budget surplus when its tax revenue exceeds its expenditures.

Why does the government have laws against monopolies?

The Rainland government enjoys a socialist economic system, but in recent years it has found that new business growth has stalled. In an effort to stimulate more economic growth, what will the government probably do?

What is gross domestic product (GDP)? How well does it measure what it is intended to measure?

The price paid for goods and services will rise when the quantity demanded exceeds quantity supplied.

Contraction is a period of economic downturn marked by rising unemployment, business cutbacks, and decreases in consumer spending.

The Consumer Price Index (CPI) is a measure of inflation that evaluates the change in the weighted-average price of goods and services that the average consumer buys each month.

Which of the following would be studied in the greatest detail in a macroeconomics course?

Consumers will see prices fall when the quantity demanded exceeds quantity supplied.

The nation of High Land has seen a steady increase in the output of goods and services produced within its borders in the last year. What would this indicate?

The Producer Price Index (PPI) is a measure of inflation that evaluates the hyperinflation as it relates to productivity.

What decreases when it takes more resources (inputs) to produce a given amount of goods and services (outputs) than in the past?

Countries from France to China have experienced sometimes violent demonstrations in response to economic restructuring toward a more mixed economy.

Which economic measure provides the most information about what is happening to prices of consumer goods?

Members of the Canadian Parliament have voted themselves an annual pay raise while the country is operating under a budget deficit. What will be the result of a pay raise for all Members of Parliament?

The two key terms relating to the business cycle are contraction and expansion.

If there is a cold spell that ruins many crops of oranges growing in Florida, how will this affect consumers' purchasing behaviour of oranges?

Luke is taking an economics class that focuses on decisions made by individual business firms and consumers. Luke's class is concerned with microeconomic issues.

Capitalism is based on private ownership, economic freedom, and fair competition.