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Exam 2: Understanding Economics and How It Affects Business

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Question 131

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If a shortage exists in a market for a good, the price of that good will tend to fall.

A) True
B) False

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Question 132

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To be classified as unemployed, a person must be at least 16 years old and trying to find a job within the past four weeks.

A) True
B) False

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Question 133

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When the market price of a good is above its equilibrium value, and all other determinants are unchanged:

Which of the following statements about government deficit spending is most accurate?

Recently, Juanita Martinez, the Prime Minister of Vuvuzela announced that she is standing behind the concept of state owned utilities and public schools in her nation. Although not all industry is owned and managed by the government, her ideas would lead one to believe that he has a preference for socialism.

Efforts by the Federal Reserve Bank (the Fed) to control the money supply and interest rates are known as:

Marina 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. Marina 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. Marina's native country's economic system was more characteristic of socialism.

A free-market economic system is one in which the market of buyers and sellers decides what is produced, how much is produced, and how it is distributed.

The consumer price index (CPI) measures what is happening to prices at the wholesale level.

In command economies, the government plays a major role in deciding which goods are produced and who will get them.

In the small nation of Equalia, the government owns several of the key businesses and provides a wide range of social services. The government places a great deal of emphasis on eliminating large disparities in people's incomes. These features of Equalia's economy are consistent with a socialist economic system.

The government of Velovia made progress in its efforts to bring rapid inflation under control. Although prices are still rising, the rate of increase has slowed considerably. This suggests that Velovia is experiencing disinflation.

__________ is a condition in which the average level of prices is actually falling.

Studies about the effects of population growth on the economy are part of macroeconomics.

The main goal of resource development is to find ways to:

Maureen is the office manager of a service company. She recently approved the installation of new computers and office equipment for all workers in her office. If Maureen's company is like most service companies, she will probably see a big jump in the productivity figures reported for workers in her office.

Countries that rely on a free market system are plagued by persistent shortages or surpluses of goods and services.

Under capitalism:

In a mixed economy, the government's goal is to grow the economy and maintain some measure of social equality.

Large educated populations can contribute to an economy by offering knowledge and entrepreneurship.