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Exam 2: Understanding Economics and How It Affects Business

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Question 71

True/False

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The greed of businesspeople represents one of the greatest dangers to the operation of a free market system.

A) True
B) False

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Question 72

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A simple supply curve shows a relationship between the:

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.

E) A) and C)
F) C) and D)

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Question 73

Multiple Choice

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__________ unemployment refers to loss of jobs due to a recession or a similar downturn in the economy.

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:

Brain drain has occurred in many socialistic nations because:

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:

History shows that free-market capitalism leads to a fair and equitable distribution of wealth.

Nick wants to buy a new car, and is planning to borrow the money for his purchase from a bank. He read in the newspapers that the Federal Reserve is likely to implement policies in the next few weeks that are designed to stimulate the economy. Nick would probably get a lower interest rate on his car loan if he waits until after the Fed implements its new policies.

A major trend in the world today is that:

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

A major distinction between capitalism and socialism concerns the distribution of income.

Although changes in the CPI provide interesting insights into the overall performance of the economy, these changes have little practical impact on the lives of ordinary people.

The size of the national debt increases when the federal government runs a deficit.

The nation of Desperia is reporting a significant decline in GDP for four consecutive years, with no relief in sight. With unemployment at record levels and businesses failing faster than at any time in the past century, Desperia is likely experiencing a depression.

Some wages, tax brackets, interest rates, and government benefits are based on the CPI.

A free market is one in which decisions about what to produce and in what quantities are made by:

The study of how society chooses to employ resources to produce goods and services and to distribute them for consumption among various competing groups and individuals is known as sociology.

Capitalism is the foundation of the U.S. economic system.

In the United States, laws prohibit the creation of most types of monopolies.

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