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Exam 2: Understanding Economics and How It Affects Business

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Question 81

True/False

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The producer price index measures what is happening to prices at the wholesale level.

A) True
B) False

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Question 82

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In one of his weekly broadcasts, the Federal Reserve Chairman remarked that inflation had begun to tick upward. However, unemployment in the U.S was still quite high and economic growth had slowed. With short-term interest rates close to 0 (zero) , the Chair did not visualize that ____________ policy would be able to do anything for the high unemployment problem. He felt that _______ policy would be more useful for bolstering employment, but that would require local and state governments and the federal government to provide tax breaks for corporations?

A) federal; State
B) fiscal; Monetary
C) monetary; Fiscal
D) fiscal; Federal

E) A) and B)
F) A) and C)

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Question 83

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A prediction that GDP will increase significantly over the next six months is bad news for most businesspeople.

Most nations recognize that private enterprise is detrimental to business growth and what is best for consumers. Recently, a nation had the opportunity to sell its government-owned telecommunication system to a private firm. Instead it realized that it would be better off if it raised taxes so that it could maintain the status quo.

Monetary policy is directly under the control of the U.S. Department of the Treasury.

If the national debt is $14 trillion, the national deficit will be considerably higher.

The price of iPhones™ is falling. In a free-market economic system where everything else is equal, the most likely explanation is:

Gabby and Gus Malloy recently got pre-approved on a loan for their first house purchase. They are speculating on how much they should bid on their number one choice - a small, three-bedroom bungalow near a major college town. Which of the following indicators may be an important factor in whether they are able to successfully put in a low bid?

A major premise of a socialist system is:

We use indicators such as (1) the gross domestic product (GDP), (2) the interest rate, and (3) the price indexes to measure the health of our economy.

Your professor showed you an online video of the chair of the Federal Reserve Bank speaking to the American public. The message she 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?

America's business success is largely due to an economic and social climate that allows businesses to operate freely.

The most fundamental of all rights in capitalism is the right to private property.

Danny was laid off from his job five months ago. At first, he looked for a new job every day. During the past six weeks, however, Danny became depressed about his employment status and quit trying to find a job. According to the criteria used by the government, Danny is a civilian whose job status is included in computing the national unemployment rate.

Disinflation refers to a situation in which prices continue to rise, but not at the rate they were rising previously.

A rare and scarce earth metal known as Neodymium is used in many consumer and military products including smart-phones, smart-bombs, laptop computer monitors, and electric/hybrid cars. In one year's time, the price of Neodymium has gone from $19/lb. to $129/lb. Under these circumstances and the fact that at least 1 kilogram is used in each electric car that is assembled, a graph of the supply and demand for this product would show:

The National Coalition on Healthcare Reform reports that nearly 18% of the U.S. population under the age of 65 is without healthcare. If this advocacy group succeeds in convincing the current administration and Congress to vote for basic healthcare for everyone, which of the following is likely to occur?

An oligopoly is a market that is characterized by:

Which of the following people would tend to favor a socialist economy?

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: