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Exam 2: Understanding How Economics Affects Business

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Question 51

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In the United States,laws prohibit the creation of most types of monopolies.

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Question 52

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

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The concept of the invisible hand begins with the assumption that the primary motivation of entrepreneurs is that they will prosper from their own hard work.

The study of how society chooses to employ resources to produce goods and services and to distribute them for consumption among various competing groups and individuals is known as sociology.

Adam Smith believed that incentives to seek personal gain would create wealth,but that the government must then step in to make sure that this wealth is equitably distributed.

Deflation means prices are declining.

To be classified as unemployed,a person must be at least 16 years old and trying to find a job within the past four weeks.

The U.S.economic system relies on

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

Katie owns a nail salon.She needs to update her shop with new customer massage chairs and work stations for her technicians.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.

Monetary policy is directly under the control of the U.S.Department of the Treasury.

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

Roland is a nation with an economic system that closely approximates pure capitalism.While Roland's economy is likely to generate a great deal of wealth,it may do a poor job of providing an acceptable level of income for the elderly or disabled.

A(n) _____________ curve shows the relationship between the price of a good and the quantity of that good people are willing and able to buy in a given time period.

There is general agreement in the United States on the degree to which the government should be involved in the economy.

The next wave of marketable innovations may involve new ways to produce and conserve energy.If we can turn new technology into marketable products and services that produce energy to run our businesses and homes,the U.S.could see a surge in output of goods and services.The Department of Economic Development would document this surge by measuring the ______.

Adam Smith's research focused on determining the best way to distribute a fixed amount of resources,rather than on how to create more wealth.

__________ exists when the entire supply of a good is controlled by a single seller.

Communism is an economic system in which:

A rare and scarce earth metal known as Neodymium is used in many consumer and military products including smart-phones,smart-bombs,laptop computer monitors,and electric/hybrid cars.In one year's time,the price of Neodymium has gone from $19/lb to $129/lb.Under these circumstances and the fact that at least 1 kilogram is used in each electric car that is assembled,a graph of the supply and demand for this product would show: