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Exam 2: Understanding Economics and How It Affects Business

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Question 101

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Like most nations, the United States has a mixed economy.

A) True
B) False

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Question 102

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Thomas Malthus believed that people in most countries would never be able to achieve high standards of living unless the problems of overpopulation were addressed.

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B) False

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Question 103

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High tax rates that put money into the government's coffers tend to slow spending, and ultimately slow the economy.

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

Both socialism and communism are variations of:

In socialist economies, the government owns some, if not most basic businesses such as telecommunications systems and utilities.

When the government attempts to stabilize the economy by changing taxes or government expenditures, it is using fiscal policy.

Neo-Malthusians believe that the solution to poverty is:

When the federal government's collection of tax revenues is less than what it spends in a given year, it results in a:

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

Deflation means prices are declining.

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

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

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

The quantity of a good or service that producers are willing to sell at different prices during a specific time period is known as the:

John complained to his buddy, Frank, that prices have increased a lot over the past year. Frank disagreed, saying that the prices of some goods have gone up a bit, but other prices have declined, noting that you can get some good buys on houses right now. Frank feels that the average price of consumer goods hasn't changed. Frank and John can refer to the __________ to learn how government economists currently view the price situation.

__________ is the market situation in which there are many sellers in a market and no seller is large enough to dictate the price of a product.

In an effort to promote rapid growth, the government of Goldinia has kept taxes low, done little to regulate business activities, and implemented only modest social programs. The government is now facing political pressure to do more to clean up the environment and to reduce the inequalities of income and wealth. Which of the following statements is most accurate? Goldinia's government is currently taking:

Robin just graduated from college and is seeking her first job. She received a degree in engineering at a prestigious university. Robin has several leads and has heard that the market for engineers is very strong, so she is convinced that she should locate a good job in the near future. Robin's current situation is an example of structural unemployment.

In order to restrict spending by businesses and households, the Fed would take measures designed to lower interest rates.