Question 1

_________ is considered by some to be the father of modern economics.

Accepted Answer

A)   John Maynard Keynes
B)   Adam Smith
C)   Thomas Carlyle
D)   Thomas MalthusE) C) and D)
F) A) and B)

Question 2

The freedom of people to decide where they want to work and live, and what they want to buy or sell are basic capitalist rights under:

Accepted Answer

A)   eminent domain.
B)   freedom of expression.
C)   freedom of choice.
D)   freedom of competition.E) C) and D)
F) A) and B) C

Question 3

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

Question 4

Communism is an economic system in which:

Accepted Answer

A)   the government and private citizens own equal shares of the economic resources.
B)   almost all of the productive resources are owned by private businesses.
C)   the government makes almost all of the major economic decisions.
D)   individual consumers make all economic decisions.E) A) and B)
F) None of the above C

Question 5

Which of the following is a basic right under capitalism?

Accepted Answer

A)   Freedom of collusion.
B)   Freedom from taxation.
C)   The right to vote.
D)   The right to compete.E) B) and C)
F) A) and B)

Question 6

Brain drain is the loss of the best and brightest people to other countries.

Accepted Answer

A) True 
 B)False

Question 7

One of the benefits of communism is that it allows individuals a great deal of freedom to make their own economic decisions.

Accepted Answer

A) True 
 B)False

Question 8

Ben recently lost his job at a major U.S. auto plant in one of the rust belt states. After looking unsuccessfully for work in a similar industry for several months, he plans to start interviewing with road and bridge repair companies. He speculates that if the government begins to contract with companies that repair highways and bridges, he may find steady work, at least in the short term. Which of the following statements best describes the strategy behind his thoughts?

Accepted Answer

A)   The best way for the government to reign in on too much money floating around the system is to hire people and pay them wages.
B)   Ben doesn't understand the causes of unemployment. We obviously don't need any more autos on the roads if the plant has closed. Repairs will slow down rather than increase.
C)   If the current administration asks the Fed to raise interest rates, it will do more than if the current administration begins contracting with road repair companies.
D)   By increasing government spending through road and bridge repair and construction, the government will intervene in the free-market economic system to help jump-start a weak economy.E) None of the above
F) All of the above

Question 9

One strength of a free-market economic system is that it emphasizes the fair and humane treatment of the less fortunate in society.

Accepted Answer

A) True 
 B)False  False

Question 10

An economy is said to be in a recession if GDP declines for two or more consecutive quarters.

Accepted Answer

A) True 
 B)False

Question 11

The total value of final goods and services produced within a nation's borders in a given year is known as that nation's:

Accepted Answer

A)   aggregate production quota.
B)   aggregate domestic output.
C)   index of aggregate economic output.
D)   gross domestic product.E) A) and D)
F) A) and C)

Question 12

One of the major ways the Fed influences economic conditions is through its control of interest rates.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

The Fed is concerned that the economy is growing too rapidly. Given these concerns, it is likely to pursue policies to restrict the supply of money and raise interest rates.

Accepted Answer

A) True 
 B)False

Question 16

Product differentiation is a key to success in monopolistic competition.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)   total profit earned by producers.
B)   total amount of labor that will be employed in that market.
C)   amount of time it takes to bring together the buyers and sellers of the good.
D)   equilibrium price of the good.E) None of the above
F) A) and B)

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

The PowerHouse Utility Company recently built a nuclear power plant in a southern state and started competing against BXY Utility Company that has served customers in that region for 65 years. Due to deregulation, consumers now have a choice among utility companies in this area. Although PowerHouse has made a sizeable capital investment, if it successfully grows market share, eventually prices for electricity may stabilize or fall.

Accepted Answer

A) True 
 B)False

Question 20

The four basic types of unemployment are frictional, structural, seasonal, and:

Accepted Answer

A)   cyclical.
B)   procedural.
C)   industrial.
D)   traditional.E) B) and C)
F) None of the above

Exam 2: Understanding Economics and How It Affects Business

_________ is considered by some to be the father of modern economics.

Correct Answer
verified

The freedom of people to decide where they want to work and live, and what they want to buy or sell are basic capitalist rights under:

Correct Answer
verified
C

A key to economic growth and development is to:

Correct Answer
verified

Communism is an economic system in which:

Correct Answer
verified
C

Which of the following is a basic right under capitalism?

Correct Answer
verified

Brain drain is the loss of the best and brightest people to other countries.

Correct Answer
verified

One of the benefits of communism is that it allows individuals a great deal of freedom to make their own economic decisions.

Correct Answer
verified

Correct Answer
verified

One strength of a free-market economic system is that it emphasizes the fair and humane treatment of the less fortunate in society.

Correct Answer
verified
False

An economy is said to be in a recession if GDP declines for two or more consecutive quarters.

Correct Answer
verified

The total value of final goods and services produced within a nation's borders in a given year is known as that nation's:

Correct Answer
verified

One of the major ways the Fed influences economic conditions is through its control of interest rates.

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

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

Correct Answer
verified

The Fed is concerned that the economy is growing too rapidly. Given these concerns, it is likely to pursue policies to restrict the supply of money and raise interest rates.

Correct Answer
verified

Product differentiation is a key to success in monopolistic competition.

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified

The four basic types of unemployment are frictional, structural, seasonal, and:

Correct Answer
verified

Exam 2: Understanding Economics and How It Affects Business

_________ is considered by some to be the father of modern economics.

Correct AnswerverifiedShow Answer

The freedom of people to decide where they want to work and live, and what they want to buy or sell are basic capitalist rights under:

Correct AnswerverifiedC

A key to economic growth and development is to:

Correct AnswerverifiedShow Answer

Communism is an economic system in which:

Correct AnswerverifiedC

Which of the following is a basic right under capitalism?

Correct AnswerverifiedShow Answer

Brain drain is the loss of the best and brightest people to other countries.

Correct AnswerverifiedShow Answer

One of the benefits of communism is that it allows individuals a great deal of freedom to make their own economic decisions.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One strength of a free-market economic system is that it emphasizes the fair and humane treatment of the less fortunate in society.

Correct AnswerverifiedFalse

An economy is said to be in a recession if GDP declines for two or more consecutive quarters.

Correct AnswerverifiedShow Answer

The total value of final goods and services produced within a nation's borders in a given year is known as that nation's:

Correct AnswerverifiedShow Answer

One of the major ways the Fed influences economic conditions is through its control of interest rates.

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

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

Correct AnswerverifiedShow Answer

The Fed is concerned that the economy is growing too rapidly. Given these concerns, it is likely to pursue policies to restrict the supply of money and raise interest rates.

Correct AnswerverifiedShow Answer

Product differentiation is a key to success in monopolistic competition.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The four basic types of unemployment are frictional, structural, seasonal, and:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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C

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C

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False

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