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Exam 2: How Economic Issues Affect Business

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Question 61

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The government of Ruritania has implemented many programs that promote equality,but has become concerned about the very slow rate of growth that has plagued the national economy for many years.In order to address this problem,the government is likely to:

A) reduce taxes and cut back on some social programs.
B) avoid the use of fiscal policies and reduce the supply of money in circulation.
C) take control of more major industries.
D) make sure to balance its budget.

E) A) and C)
F) All of the above

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Question 62

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Deflation is a situation where the average level of prices is actually declining.

A) True
B) False

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Question 63

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The study of how to increase resources is known as what?

As productivity increases,the cost of producing goods and services is likely to fall.

Frictional unemployment occurs because the economy is experiencing a recession.

A_______ is a very severe recession that is usually accompanied by a decline in the average level of prices.

If a shortage exists for a good in a free-market economy,the:

In the service sector of the economy,the influx of machinery such as computers increases output per worker,but does little to improve the quality of services.

Adam Smith believed that since businesspeople are motivated to improve their own prosperity,their actions are unlikely to benefit society as a whole.

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

Fourteen years ago,Murray noticed that a lot of people who bought personal computers really did not know much about how to use them and frequently suffered system crashes and other aggravations.He decided he could earn a nice profit by starting a consulting business to help other people overcome their computer woes.Although the business struggled at first,it has been quite successful for the last five years.Murray has many satisfied customers,and the business has grown to the point where he now employs several workers.According to Adam Smith,Murray's experience is an example of:

Today,the economic systems of most nations could most accurately be classified as:

_______studies the operation of a nation's economy as a whole.

A collapse in the national banking system of Lasia has resulted in a condition where prices are declining.This condition is known as:

Which of the following would be a topic emphasized in a macroeconomics course?

Monica notices that just a few big companies produce the vast majority of soft drinks.She would be correct in describing the soft drink industry as an oligopoly.

Macroeconomics is the economic perspective that looks at the operation of a nation's economy as a whole.

Under perfect competition,sellers' products appear to be identical.

Disinflation refers to a situation in which the overall level of prices in an economy is steadily falling.

When the supply curve and demand curve for a particular good are on a single graph,the point at which the two curves intersect identifies the: