Question 1

Abby left her native land in Eastern Europe in order to become a nanny for a family in a western suburb of Chicago,Illinois.One of the benefits of her arrangement was that she could attend the community college near her family's residence.When she arrived at her new job,she experienced the differences from a predominately socialist nation and a capitalist nation.Abby noted that public transportation in northern Illinois was limited and expensive,making it difficult to get to school.For a negligible fee,the government in her native country provided public transportation for everyone.Abby's native country's economic system was more characteristic of socialism.

Accepted Answer

A) True 
 B)False

Question 2

Three important economic indicators of the United States are the unemployment rate,the price indices,and the:

Accepted Answer

A)   debt to equity ratio (DER) .
B)   gross resource utilization index (GRUI) .
C)   gross domestic product (GDP) .
D)   index of capital formation.E) None of the above
F) C) and D)

Question 3

If the quantity supplied in a market exceeds the quantity demanded,a shortage will exist.

Accepted Answer

A) True 
 B)False

Question 4

When describing the state of the U.S.economy,reporters often refer to the nation's GDP,its unemployment rate,and the CPI.Explain what each of these terms means and why each measure is significant.

Accepted Answer

GDP is the acronym for gross domestic product,which is the total value of a nation's output of final goods and services for a specific year.It is a broad indicator of the overall performance of the economy.Increases and decreases in GDP indicate whether the nation's economy is growing,staying the same,or decreasing.For example,when GDP falls for two or more consecutive quarters the economy is said to be in a recession.
The unemployment rate measures the number of civilians 16 or older that do not have a job,but are also actively seeking to find work.A high unemployment rate indicates that a lot of people who are able to work and want a job are without jobs.This is obviously undesirable,leading to less output and lower incomes in the economy.The unemployment rate is significant because when people are unemployed they generally stop spending.If too many people and businesses stop spending,firms stop producing.
The CPI is the consumer price index.The CPI consists of monthly statistics that measure the pace of inflation or deflation.The prices of goods and services-including food,energy,housing,apparel,and medical care-are measured to determine if there are significant changes.The CPI is an important figure because some wages and salaries,rents and leases,tax brackets,government benefits,and interest rates are based on it.If the CPI index rises too quickly,it will affect the standard of living of most persons.

Question 5

Reality Entertainment,Inc is a major producer of reality TV programming.The company faces fierce competition from three other major producers of similar shows.Together,Reality Entertainment and its three rivals control almost the entire reality TV programming.Their market environment is called:

Accepted Answer

A)   An oligopoly.
B)   A duopoly.
C)   Monopolistic competition.
D)   A quasi-monopoly.E) None of the above
F) A) and B)

Question 6

Free-market capitalism has made it more difficult for individuals to gain wealth.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)   capitalism
B)   socialism
C)   communism
D)   a mixed economyE) B) and D)
F) A) and B)

Question 8

A major premise of a socialist system is:

Accepted Answer

A)   To make sure that those that create wealth are allowed to keep that wealth.
B)   To reduce the inequality in the distribution of wealth.
C)   To create incentives to encourage entrepreneurs to create jobs and economic growth.
D)   To keep tax rates extremely low so that businesses do not need to support government projects.E) None of the above
F) A) and B)

Question 9

In recent years,countries with communist economic and political systems have:

Accepted Answer

A)   Enjoyed periods of great prosperity.
B)   Experienced severe economic depression.
C)   Placed even more importance on individual ownership of businesses.
D)   Grown very slowly,but have avoided the severe problems that have plagued some capitalist economies in Asia and Europe.E) A) and B)
F) B) and C)

Question 10

A depression is a severe recession that is often accompanied by deflation.

Accepted Answer

A) True 
 B)False

Question 11

Most countries throughout the world can be classified as either purely capitalist or purely socialist.

Accepted Answer

A) True 
 B)False  False

Question 12

__________ is the market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product.

Accepted Answer

A)   Oligopoly
B)   Monopolistic competition
C)   Perfect competition
D)   Microeconomic competitionE) A) and C)
F) A) and B)

Question 13

Inflation refers to the persistent rise in the purchasing power of money.

Accepted Answer

A) True 
 B)False

Question 14

During the recent recession,the administrations of Presidents George W.Bush and Barack Obama flooded several banking,financial services,and insurance firms with government funds in exchange (at least temporarily) for government ownership rights.The unprecedented move signaled the government's concern that the global banking system might collapse if these firms ended up in bankruptcy.The decision for active government involvement in the operations of these firms demonstrates:

Accepted Answer

A)   The unforgiving nature of capitalism.
B)   The desire for more individuals in the U.S.to live under a socialist system.
C)   The trend toward mostly capitalist nations to move toward socialism.
D)   The freedoms the U.S.government has under capitalism.E) None of the above
F) A) and B)

Question 15

A problem with the CPI is that it measures the price changes of only food and clothing,while ignoring what happens to the prices of such important items as medical care and energy.

Accepted Answer

A) True 
 B)False

Question 16

The prime minister of the nation of Urbania has called for Urbania's legislature to enact new legislation designed to shift his country away from socialism toward a more capitalistic system.The Prime Minister acknowledges that such a radical change will entail some hardships,and that some citizens will be unhappy with the changes.The most likely source of dissatisfaction with a move toward capitalism is:

Accepted Answer

A)   Decrease in wealth.
B)   People will have less economic freedom.
C)   Tax rates will have to increase.
D)   A trend toward unequal distribution of wealth.E) B) and C)
F) A) and D)

Question 17

Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain.

Accepted Answer

A) True 
 B)False

Question 18

Under capitalism:

Accepted Answer

A)   Most of the means of production and distribution are privately owned and operated for profit.
B)   The primary function of the government is to distribute wealth more evenly.
C)   Utilities,health care,education,and other important services are operated by the government.
D)   Markets operate to carry out the decisions made by central planners.E) B) and C)
F) A) and D) A

Question 19

Over the years,the government of Montivia has focused on implementing programs that promote equality.On the short-term,though,Montivia legislators are concerned about the very slow rate of growth that has plagued its national economy.In order to address this problem,the government is likely to:

Accepted Answer

A)   Take control of more major industries.
B)   Reduce taxes and cut back on some social programs.
C)   Make sure to balance its budget.
D)   Avoid the use of fiscal policies and reduce the supply of money in circulation.E) A) and B)
F) A) and C)

Question 20

Your professor showed you an Internet video of the chair of the Federal Reserve Bank speaking to the American public.The message he is conveying indicates that Fed economists are worried about inflation and believe the best course of action would be to slow the economy.Which of the following policies is the Fed most likely to pursue?

Accepted Answer

A)   Increase taxes.
B)   Decrease interest rates.
C)   Restrict the money supply and increase interest rates.
D)   Devalue the dollar on international currency exchanges.E) A) and D)
F) A) and C)

Exam 2: Understanding How Economics Affects Business

Correct Answer
verified

Three important economic indicators of the United States are the unemployment rate,the price indices,and the:

Correct Answer
verified

If the quantity supplied in a market exceeds the quantity demanded,a shortage will exist.

Correct Answer
verified

When describing the state of the U.S.economy,reporters often refer to the nation's GDP,its unemployment rate,and the CPI.Explain what each of these terms means and why each measure is significant.

Reality Entertainment,Inc is a major producer of reality TV programming.The company faces fierce competition from three other major producers of similar shows.Together,Reality Entertainment and its three rivals control almost the entire reality TV programming.Their market environment is called:

Correct Answer
verified

Free-market capitalism has made it more difficult for individuals to gain wealth.

Correct Answer
verified

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

Correct Answer
verified

A major premise of a socialist system is:

Correct Answer
verified

In recent years,countries with communist economic and political systems have:

Correct Answer
verified

A depression is a severe recession that is often accompanied by deflation.

Correct Answer
verified

Most countries throughout the world can be classified as either purely capitalist or purely socialist.

Correct Answer
verified
False

__________ is the market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product.

Correct Answer
verified

Inflation refers to the persistent rise in the purchasing power of money.

Correct Answer
verified

Correct Answer
verified

A problem with the CPI is that it measures the price changes of only food and clothing,while ignoring what happens to the prices of such important items as medical care and energy.

Correct Answer
verified

Correct Answer
verified

Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain.

Correct Answer
verified

Under capitalism:

Correct Answer
verified
A

Over the years,the government of Montivia has focused on implementing programs that promote equality.On the short-term,though,Montivia legislators are concerned about the very slow rate of growth that has plagued its national economy.In order to address this problem,the government is likely to:

Correct Answer
verified

Correct Answer
verified

Exam 2: Understanding How Economics Affects Business

Correct AnswerverifiedShow Answer

Three important economic indicators of the United States are the unemployment rate,the price indices,and the:

Correct AnswerverifiedShow Answer

If the quantity supplied in a market exceeds the quantity demanded,a shortage will exist.

Correct AnswerverifiedShow Answer

When describing the state of the U.S.economy,reporters often refer to the nation's GDP,its unemployment rate,and the CPI.Explain what each of these terms means and why each measure is significant.

Reality Entertainment,Inc is a major producer of reality TV programming.The company faces fierce competition from three other major producers of similar shows.Together,Reality Entertainment and its three rivals control almost the entire reality TV programming.Their market environment is called:

Correct AnswerverifiedShow Answer

Free-market capitalism has made it more difficult for individuals to gain wealth.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A major premise of a socialist system is:

Correct AnswerverifiedShow Answer

In recent years,countries with communist economic and political systems have:

Correct AnswerverifiedShow Answer

A depression is a severe recession that is often accompanied by deflation.

Correct AnswerverifiedShow Answer

Most countries throughout the world can be classified as either purely capitalist or purely socialist.

Correct AnswerverifiedFalse

__________ is the market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product.

Correct AnswerverifiedShow Answer

Inflation refers to the persistent rise in the purchasing power of money.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A problem with the CPI is that it measures the price changes of only food and clothing,while ignoring what happens to the prices of such important items as medical care and energy.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain.

Correct AnswerverifiedShow Answer

Under capitalism:

Correct AnswerverifiedA

Over the years,the government of Montivia has focused on implementing programs that promote equality.On the short-term,though,Montivia legislators are concerned about the very slow rate of growth that has plagued its national economy.In order to address this problem,the government is likely to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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False

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A

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Correct Answer
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