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Exam 2: Understanding Economics and How It Affects Business

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Question 41

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Economic progress can occur when business owners provide jobs and economic growth for their employees,their communities,and themselves.

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Question 42

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

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Question 43

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Frictional unemployment occurs because the economy is experiencing a recession.

In capitalist countries,the government decides what to produce and how the goods and services will be produced.

Which of the following is an important premise of Smith's conclusions about economic prosperity?

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

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.

The _________ is a statistic used to compute the pace of inflation or deflation.

During the recent economic crisis,Presidents George W.Bush and Barack Obama increased government spending by $2 trillion,in order to revive the ailing economy.Their strategy followed the economic theory known as:

The top tax rate on personal income in most socialist economies is usually lower than the top tax rate on personal income in capitalist economies.

As you scan the national news online,you read about the BXY Utility Company's latest problems.The story describes an expansive retaining wall that collapsed during a flood last week,spewing toxic coal ash,burying homes,and causing a few fatalities.An editorial claims that the company will not be held accountable to the same standards as the asbestos companies of a few years back that paid severe fines and even went out of business due to their lack of attention to environmental clean-up.You agree with the writer because you recently studied about the various competitive markets and utility companies clearly fall under monopolistic competition.

Sarah owns a hair styling salon.She needs to update her shop with new customer chairs and work stations.If the Fed were to lower interest rates by 1.5 percentage points,at the same time that the government increased the tax rate by 1.5%,she could immediately determine that updating her shop would not increase or decrease her financial position. FALSE

Abby left her native land in Eastern Europe to become a nanny for a family in a western suburb of Chicago,Illinois.One of the benefits of her arrangement was that she could attend the community college near her family's residence.When she arrived at her new job,she experienced some immediate differences.Abby noted that public transportation in northern Illinois was limited and expensive,making it difficult to get to school.For a negligible fee,the government in her native country provided public transportation to everyone.The economic system in Abby's native country was more characteristic of ___________.

In the U.S. ,the __________ has the role of managing the money supply and interest rates.

In the newspaper this morning,you read about the downfall of a multi-national entertainment business,and a report that the company's CEO enjoyed a 9% increase in his salary during the same year that the company's profits were down 35%.As you read further,you learn that the company's board of directors approved undeserved salary increases.Clearly,this is an example of how inequality and greed can infiltrate the free-market economic system.

The U.S.economic system relies on

Product differentiation is a key to success in monopolistic competition.

Patrick lives in a nation whose government embraces capitalism.He owns his own home and car,as well as his own business and building.Patrick maintains ownership due to:

One of the most significant problems faced by communist nations is:

The broadcast cited forecasts that national output might continue to fall in the future.If total output shows decline for two consecutive quarters,economists would classify this as a _____________.