Question 1

Economists study how people use resources to produce and distribute goods and services for consumption among competing groups and individuals.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements about productivity in the service sector of the U.S. economy is most accurate?

Accepted Answer

A)  Productivity in the service sector has increased much more rapidly than productivity in the manufacturing sector.
B)  Improving productivity in the service sector is much less important than improving productivity in the manufacturing sector, because the service sector does not really produce anything.
C)  Productivity in the service sector is easier to measure than productivity in agriculture.
D)  Measures of productivity in the service sector do a poor job of taking quality improvements into account.E) A) and D)
F) B) and D)

Question 3

According to the invisible hand concept, the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to:

Accepted Answer

A)  Permit government owned industries, such as telecommunications, transportation, and energy, and operate these firms as nonprofit organizations.
B)  Allow private ownership of businesses, but make use of extensive regulation to force businesses to behave in a socially desirable way.
C)  Allow entrepreneurs personal freedom to follow their own self-interest.
D)  Impose high taxes on individuals, and use the revenue to subsidize businesses to encourage them to produce the maximum rate of output.E) A) and D)
F) A) and C)

Question 4

Government spending on defense decreases the national deficit.

Accepted Answer

A) True 
 B)False

Question 5

A basic right under capitalism is the right of businesses to receive government funding.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Although mixed economies tend to improve economic conditions, moral values prevent communist nations such as China and Vietnam from progressing in this direction. Overall, economic progress continues to be very slow in these nations.

Accepted Answer

A) True 
 B)False

Question 8

Product differentiation is a key to success in monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 9

Most communist countries today are suffering from severe economic problems.

Accepted Answer

A) True 
 B)False

Question 10

Resource development is the study of how to increase resources and to create the conditions that will make better use of those resources.

Accepted Answer

A) True 
 B)False

Question 11

A collapse in Buldovia's banking system eventually led to companies unable to borrow money to run their businesses. Firms terminated employees. These circumstances cut into consumer's purchasing power, causing a severe decline in the prices of goods and services, better known as .

Accepted Answer

A)  Disinflation.
B)  Deflation.
C)  Contra inflation.
D)  Overproduction.E) A) and C)
F) None of the above

Question 12

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

Question 13

Adam Smith believed the self-interest of businesspeople would lead them to create needed goods, services, and jobs.

Accepted Answer

A) True 
 B)False

Question 14

Economist Adam Smith's important contribution was an inquiry as to why some nations are wealthy, while others remain poor.

Accepted Answer

A) True 
 B)False

Question 15

One of the greatest concerns associated with capitalism is that:

Accepted Answer

A)  It is not very successful at creating wealth.
B)  Some businesspeople may let greed guide their behavior.
C)  The amount of economic freedom enjoyed by consumers is very limited.
D)  Producers are unlikely to supply the goods and services that consumers value the most.E) A) and D)
F) B) and C)

Question 16

A key to economic growth and development is to:

Accepted Answer

A)  Locate more deposits of gold and other precious metals.
B)  Emphasize a fair and equitable distribution of income.
C)  Provide people with better education.
D)  Allow government planning to guide the allocation of resources.E) B) and D)
F) None of the above

Question 17

On average, what percentage of the GDP does the U.S. government collect through taxes?

Accepted Answer

A)  50%
B)  10.5%
C)  28.2%
D)  33.33%E) A) and D)
F) None of the above

Question 18

is a condition in which inflation is increasing, at a decreasing rate.

Accepted Answer

A)  Deflation
B)  Disinflation
C)  Stagflation
D)  UniflationE) A) and C)
F) B) and D)

Question 19

Deflation means prices are declining.

Accepted Answer

A) True 
 B)False

Question 20

Chase is a recent college graduate with a new job as an engineering trainee for a large defense company. Now that he is making good wages, he hopes to start saving for his first house and also contribute toward the company retirement plan. As he looks over his monthly bills, Chase is concerned about ever getting ahead of the game. His food bill, car payment, and mounting gasoline payments keep him in the "just making ends meet" category. As his mind wonders back to the good ol' college days, he reflects on a time when gas and food seemed a lot more reasonable. Chase is experiencing the effects of:

Accepted Answer

A)  Inflation
B)  Conditions of low demand
C)  Involuntary CPI
D)  Cyclical unemploymentE) None of the above
F) A) and B)

Exam 2: Understanding Economics and How It Affects Business

Resource development is the study of how to increase resources and to create the conditions that will make better use of those resources.

Correct Answer
verified

Government spending on defense decreases the national deficit.

Correct Answer
verified

Deflation means prices are declining.

Correct Answer
verified

is a condition in which inflation is increasing, at a decreasing rate.

Correct Answer
verified

Product differentiation is a key to success in monopolistic competition.

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

Most communist countries today are suffering from severe economic problems.

Correct Answer
verified

Economist Adam Smith's important contribution was an inquiry as to why some nations are wealthy, while others remain poor.

Correct Answer
verified

Although mixed economies tend to improve economic conditions, moral values prevent communist nations such as China and Vietnam from progressing in this direction. Overall, economic progress continues to be very slow in these nations.

Correct Answer
verified

A basic right under capitalism is the right of businesses to receive government funding.

Correct Answer
verified

Economists study how people use resources to produce and distribute goods and services for consumption among competing groups and individuals.

Correct Answer
verified

A key to economic growth and development is to:

Correct Answer
verified

A collapse in Buldovia's banking system eventually led to companies unable to borrow money to run their businesses. Firms terminated employees. These circumstances cut into consumer's purchasing power, causing a severe decline in the prices of goods and services, better known as .

Correct Answer
verified

According to the invisible hand concept, the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to:

Correct Answer
verified

Adam Smith believed the self-interest of businesspeople would lead them to create needed goods, services, and jobs.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

One of the greatest concerns associated with capitalism is that:

Correct Answer
verified

On average, what percentage of the GDP does the U.S. government collect through taxes?

Correct Answer
verified

Which of the following statements about productivity in the service sector of the U.S. economy is most accurate?

Correct Answer
verified

Exam 2: Understanding Economics and How It Affects Business

Resource development is the study of how to increase resources and to create the conditions that will make better use of those resources.

Correct AnswerverifiedShow Answer

Government spending on defense decreases the national deficit.

Correct AnswerverifiedShow Answer

Deflation means prices are declining.

Correct AnswerverifiedShow Answer

is a condition in which inflation is increasing, at a decreasing rate.

Correct AnswerverifiedShow Answer

Product differentiation is a key to success in monopolistic competition.

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

Most communist countries today are suffering from severe economic problems.

Correct AnswerverifiedShow Answer

Economist Adam Smith's important contribution was an inquiry as to why some nations are wealthy, while others remain poor.

Correct AnswerverifiedShow Answer

Although mixed economies tend to improve economic conditions, moral values prevent communist nations such as China and Vietnam from progressing in this direction. Overall, economic progress continues to be very slow in these nations.

Correct AnswerverifiedShow Answer

A basic right under capitalism is the right of businesses to receive government funding.

Correct AnswerverifiedShow Answer

Economists study how people use resources to produce and distribute goods and services for consumption among competing groups and individuals.

Correct AnswerverifiedShow Answer

A key to economic growth and development is to:

Correct AnswerverifiedShow Answer

A collapse in Buldovia's banking system eventually led to companies unable to borrow money to run their businesses. Firms terminated employees. These circumstances cut into consumer's purchasing power, causing a severe decline in the prices of goods and services, better known as .

Correct AnswerverifiedShow Answer

According to the invisible hand concept, the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to:

Correct AnswerverifiedShow Answer

Adam Smith believed the self-interest of businesspeople would lead them to create needed goods, services, and jobs.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One of the greatest concerns associated with capitalism is that:

Correct AnswerverifiedShow Answer

On average, what percentage of the GDP does the U.S. government collect through taxes?

Correct AnswerverifiedShow Answer

Which of the following statements about productivity in the service sector of the U.S. economy is most accurate?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified