Question 1

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all.

Accepted Answer

A) True 
 B)False

Question 2

The point of intersection between the supply and demand curves is called the stress point.

Accepted Answer

A) True 
 B)False

Question 3

The U.S. strongly relies on GDP data. However, it is only the total value of finished goods produced by the country. Officials are looking to measure total sales volume at all stages of production. What statistic would be most useful to them?

Accepted Answer

A)   Consumer price index
B)   Producer price index
C)   Gross output
D)   ProductivityE) B) and C)
F) A) and C)

Question 4

Olivia recently left her job at a large corporation because she saw little chance for advancement. Although she is still searching for a new position, she believes the economy is healthy and she hears that several firms are hiring people with her qualifications. Which of the following statements about Olivia's current situation is most accurate?

Accepted Answer

A)   Olivia is not considered unemployed because she voluntarily quit her job.
B)   Olivia is an example of cyclical unemployment.
C)   Olivia is an example of frictional unemployment.
D)   Olivia is likely to find employment quickly if she seeks training in a different field.E) All of the above
F) A) and C)

Question 5

Most communist countries today are suffering from severe economic problems.

Accepted Answer

A) True 
 B)False

Question 6

The higher the measurement of productivity, the higher the likely costs of production.

Accepted Answer

A) True 
 B)False

Question 7

When prices are free to adjust over time, in the long run, the market price of a good tends to

Accepted Answer

A)   rise above the equilibrium price in the long run.
B)   equal the equilibrium price.
C)   fall below the equilibrium price in the long run.
D)   have no specific relationship to the equilibrium price.E) B) and D)
F) All of the above

Question 8

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 demographics.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements about the Federal Reserve Bank (the Fed)  is most accurate?

Accepted Answer

A)   The Fed is an agency of the U.S. Treasury Department that has the responsibility of collecting tax receipts for the IRS.
B)   The Fed manages the U.S. money supply and interest rates.
C)   The Fed is the primary government agency involved in carrying out our nation's fiscal policies.
D)   The Fed is the agency of the government that ensures the U.S. maintains enough gold reserves to pay any foreign debts that result from international trade.E) None of the above
F) A) and B)

Question 10

During the a recession, the government of Cashland flooded several banking, financial services, and insurance firms with government funds in exchange (at least temporarily)  for government ownership rights. This move signaled the government's concern that the global banking system might collapse if these firms ended up in bankruptcy. This decision for government involvement in these firms demonstrates

Accepted Answer

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

Question 11

One drawback of socialism is that it may result in a reduction in the individual's incentive to work hard.

Accepted Answer

A) True 
 B)False

Question 12

Structural unemployment refers to unemployment caused by the restructuring of firms or by a mismatch between the skills or location of job seekers and the requirements or location of available jobs.

Accepted Answer

A) True 
 B)False

Question 13

Reality, Inc. is a major producer of reality television shows. The company faces fierce competition from three other major producers of similar shows. Together, Reality, Inc. and its three rivals control almost all of reality television. Their market environment is called

Accepted Answer

A)   an oligopoly.
B)   a duopoly.
C)   monopolistic competition.
D)   a quasi-monopoly.E) C) and D)
F) B) and D)

Question 14

________ policy refers to the efforts of the federal government to keep the economy stable by increasing or decreasing taxes and/or government spending.

Accepted Answer

A)   Monetary
B)   Incomes
C)   Fiscal
D)   CyclicalE) All of the above
F) B) and C)

Question 15

The ________ is a statistic used to measure the pace of inflation or deflation.

Accepted Answer

A)   consumer price index
B)   gross domestic product
C)   index of leading indicators
D)   index of inflationary trendsE) A) and B)
F) A) and C)

Question 16

Economics was called the "Dismal Science" by Thomas Carlyle because

Accepted Answer

A)   too many people would result in food shortages and shortages of other resources.
B)   it was a very complex area of study based on mathematics.
C)   the world population was growing slower than expected in the 1700s, leading economists to call it a dismal period of time.
D)   there were too many old people and not enough young people to care for them.E) A) and D)
F) None of the above

Question 17

A major trend around the world today is that

Accepted Answer

A)   free-market economies are moving more toward socialism and socialist economies are moving more toward capitalism.
B)   productivity in the service sector is increasing much more rapidly than productivity in agriculture and manufacturing.
C)   governments in socialist economies are increasing their use of social programs and relying on higher tax rates to finance these programs.
D)   governments in countries with capitalist economies are paying less attention to environmental concerns and issues involving social equality.E) C) and D)
F) A) and B)

Question 18

In perfect competition, each firm produces a product that is clearly differentiated from the products of other firms in the same market.

Accepted Answer

A) True 
 B)False

Question 19

As "global" trends become "local," and as we see more opportunities to compete in the global market,

Accepted Answer

A)   the long-term trend is for most nations to operate as mixed economies.
B)   disagreements about the best economic system to embrace will cause many nations to close their doors to outside commerce.
C)   the only industries that governments will want to own are the ones that are profitable.
D)   the forecast is for socialist nations to trend toward communism and for capitalist nations to trend toward socialism.E) A) and B)
F) B) and C)

Question 20

Economics is the study of how a society ________.

Accepted Answer

A)   invests wisely in the stock market.
B)   employs resources to produce goods and services and distribute them among competing groups and individuals.
C)   employs statistical techniques to make predictions about the evolution of society over the long run.
D)   governs itself for the good of its citizens.E) C) and D)
F) A) and B)

Exam 2: Understanding Economics and How It Affects Business

Which of the following statements about the Federal Reserve Bank (the Fed) is most accurate?

Correct Answer
verified

________ policy refers to the efforts of the federal government to keep the economy stable by increasing or decreasing taxes and/or government spending.

Correct Answer
verified

Correct Answer
verified

One drawback of socialism is that it may result in a reduction in the individual's incentive to work hard.

Correct Answer
verified

The higher the measurement of productivity, the higher the likely costs of production.

Correct Answer
verified

Economics was called the "Dismal Science" by Thomas Carlyle because

Correct Answer
verified

In perfect competition, each firm produces a product that is clearly differentiated from the products of other firms in the same market.

Correct Answer
verified

When prices are free to adjust over time, in the long run, the market price of a good tends to

Correct Answer
verified

The ________ is a statistic used to measure the pace of inflation or deflation.

Correct Answer
verified

The point of intersection between the supply and demand curves is called the stress point.

Correct Answer
verified

The U.S. strongly relies on GDP data. However, it is only the total value of finished goods produced by the country. Officials are looking to measure total sales volume at all stages of production. What statistic would be most useful to them?

Correct Answer
verified

Reality, Inc. is a major producer of reality television shows. The company faces fierce competition from three other major producers of similar shows. Together, Reality, Inc. and its three rivals control almost all of reality television. Their market environment is called

Correct Answer
verified

Economics is the study of how a society ________.

Correct Answer
verified

Correct Answer
verified

As "global" trends become "local," and as we see more opportunities to compete in the global market,

Correct Answer
verified

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all.

Correct Answer
verified

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 demographics.

Correct Answer
verified

A major trend around the world today is that

Correct Answer
verified

Structural unemployment refers to unemployment caused by the restructuring of firms or by a mismatch between the skills or location of job seekers and the requirements or location of available jobs.

Correct Answer
verified

Most communist countries today are suffering from severe economic problems.

Correct Answer
verified

Exam 2: Understanding Economics and How It Affects Business

Which of the following statements about the Federal Reserve Bank (the Fed) is most accurate?

Correct AnswerverifiedShow Answer

________ policy refers to the efforts of the federal government to keep the economy stable by increasing or decreasing taxes and/or government spending.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One drawback of socialism is that it may result in a reduction in the individual's incentive to work hard.

Correct AnswerverifiedShow Answer

The higher the measurement of productivity, the higher the likely costs of production.

Correct AnswerverifiedShow Answer

Economics was called the "Dismal Science" by Thomas Carlyle because

Correct AnswerverifiedShow Answer

In perfect competition, each firm produces a product that is clearly differentiated from the products of other firms in the same market.

Correct AnswerverifiedShow Answer

When prices are free to adjust over time, in the long run, the market price of a good tends to

Correct AnswerverifiedShow Answer

The ________ is a statistic used to measure the pace of inflation or deflation.

Correct AnswerverifiedShow Answer

The point of intersection between the supply and demand curves is called the stress point.

Correct AnswerverifiedShow Answer

The U.S. strongly relies on GDP data. However, it is only the total value of finished goods produced by the country. Officials are looking to measure total sales volume at all stages of production. What statistic would be most useful to them?

Correct AnswerverifiedShow Answer

Reality, Inc. is a major producer of reality television shows. The company faces fierce competition from three other major producers of similar shows. Together, Reality, Inc. and its three rivals control almost all of reality television. Their market environment is called

Correct AnswerverifiedShow Answer

Economics is the study of how a society ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As "global" trends become "local," and as we see more opportunities to compete in the global market,

Correct AnswerverifiedShow Answer

The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all.

Correct AnswerverifiedShow Answer

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 demographics.

Correct AnswerverifiedShow Answer

A major trend around the world today is that

Correct AnswerverifiedShow Answer

Structural unemployment refers to unemployment caused by the restructuring of firms or by a mismatch between the skills or location of job seekers and the requirements or location of available jobs.

Correct AnswerverifiedShow Answer

Most communist countries today are suffering from severe economic problems.

Correct AnswerverifiedShow Answer

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