Question 1

State capitalism is the combination of freer markets and some government control.

Accepted Answer

A) True 
 B)False

Question 2

Adam Smith believed that countries would prosper if businesspeople were free to start and run their own businesses. Businesspeople would make a profit by providing the goods, services, and ideas that others in the economy wanted, and they would hire others to help increase those profits, leading to social and economics benefits for many. This idea was called the

Accepted Answer

A)   kinked demand theory.
B)   invisible hand.
C)   spending multiplier.
D)   demand accelerator.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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.

Accepted Answer

A)   demand
B)   supply
C)   utility
D)   equilibrium

Question 5

Due to the fundamental rights afforded to us by a free-market capitalistic system, people are more willing to take calculated risks.

Accepted Answer

A) True 
 B)False

Question 6

Economics was called the "Dismal Science" by Thomas Carlyle because

Accepted Answer

A)   too many people would result in food shortages and shortages of other resources.
B)   it was a very complex area of study based on mathematics.
C)   the world population was growing slower than expected in the 1700s, leading economists to call it a dismal period of time.
D)   there were too many old people and not enough young people to care for them.

Question 7

Keynesian economic theory suggests

Accepted Answer

A)   reducing government involvement in the free-market economy.
B)   proposing long-term solutions in order to create wider swings in the business cycle.
C)   a more permanent government involvement in the banking system, even creating a national banking system that owns and operates most of the global and regional banks.
D)   short-term increases in government spending to stimulate the economy.

Question 8

Discuss the views of economist Adam Smith. How does the "invisible hand" philosophy suggested by Smith benefit society as a whole?

Accepted Answer

Adam Smith believed in a free-market sys...

Question 9

A simple supply curve shows a relationship between the

Accepted Answer

A)   amount of labor a firm hires and the amount of output it can produce.
B)   amount of time required to produce a good and the relevant production costs.
C)   price of a good and the quantity of that good sellers are willing to offer for sale at a specific point in time.
D)   amount of a good a firm produces and the amount demanded by consumers.

Question 10

As you're checking out the online edition of your local newspaper, you quickly scan a report in the business section that says government spending will again exceed tax revenues in the current year. What does this mean for the economy?

Accepted Answer

A)   The total national debt is likely to increase.
B)   The national deficit is likely to decrease.
C)   The rate of inflation is likely to fall.
D)   The monetary policies pursued by the Fed need tightening.

Question 11

In a free market economic system, the lack of government control and regulation means that businesses find it easy to take advantage of customers by offering poor-quality products at high prices.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements would a follower of Adam Smith most likely make?

Accepted Answer

A)   The federal government should use its ability to spend and tax to guide the decisions of businesses and consumers.
B)   The federal government puts too much emphasis on economic growth instead of aiding in social issues.
C)   The federal government should help in alleviating overpopulation.
D)   The federal government should give people the freedom to follow their own interests; theoretically their efforts will lead to economic growth that benefits society as a whole.

Question 13

The main goal of resource development is to find ways to

Accepted Answer

A)   increase the amount of resources and create conditions that will make better use of those resources.
B)   allocate existing resources more efficiently among competing uses.
C)   find the right balance between policies that promote economic growth and policies designed to promote other goals such as a fair distribution of income.
D)   promote the central planning of resource utilization so that resources can be allocated to the uses that will benefit society the most.

Question 14

A prediction that GDP will increase significantly over the next six months is bad news for most businesspeople.

Accepted Answer

A) True 
 B)False

Question 15

A young couple living in rural west-central Missouri heard about the closing of a local grocery store. Although a small operation, it served a small community that would now have to travel another 20 miles to the nearest grocery store. With help from a local realtor and banker, the couple purchased the store, remodeled it, and reopened it. As new storeowners, they had to carefully watch cash flow. As their customer base began to grow, they began offering hot food, and hired others to help with the operation. The economic benefit created in this story is called:

Accepted Answer

A)   an economic intervention.
B)   an economic crisis control.
C)   the invisible hand.
D)   the deliberate process.

Question 16

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.

Question 17

Sasha is a well-educated entrepreneur who operated a small business in her home country of Evensplitia. At the encouragement of American relatives, Sasha recently immigrated to the United States and applied for citizenship. "In Evensplitia, tax rates were very high," Sasha complained. "The government used my taxes to finance all sorts of social programs to help the less fortunate. While I want to help, it has really undermined the profit incentive of individuals such as me. I feel those high taxes have stunted economic growth." Sasha's comments illustrate the reason many socialist countries are experiencing a(n)

Accepted Answer

A)   antitrust problem.
B)   depression.
C)   brain drain.
D)   budget surplus.

Question 18

Some wages, tax brackets, interest rates, and government benefits are based on the CPI.

Accepted Answer

A) True 
 B)False

Question 19

Under capitalism,

Accepted Answer

A)   most of the means of production and distribution are privately owned and operated for profit.
B)   the primary function of the government is to distribute wealth more evenly.
C)   utilities, health care, education, and other important services are operated by the government.
D)   markets operate to carry out the decisions made by central planners.

Question 20

The presence of competition in free markets

Accepted Answer

A)   is undesirable because it results in unnecessary duplication of efforts.
B)   usually results in better quality and lower prices.
C)   is rare, since most markets eventually evolve into monopolies.
D)   is undesirable, because one big firm can usually produce goods more efficiently than a large number of small firms.

Exam 2: Understanding Economics and How It Affects Business

Due to the fundamental rights afforded to us by a free-market capitalistic system, people are more willing to take calculated risks.

Correct Answer
verified

A prediction that GDP will increase significantly over the next six months is bad news for most businesspeople.

Correct Answer
verified

Correct Answer
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The presence of competition in free markets

Correct Answer
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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.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements would a follower of Adam Smith most likely make?

Correct Answer
verified

Some wages, tax brackets, interest rates, and government benefits are based on the CPI.

Correct Answer
verified

Under capitalism,

Correct Answer
verified

State capitalism is the combination of freer markets and some government control.

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

As you're checking out the online edition of your local newspaper, you quickly scan a report in the business section that says government spending will again exceed tax revenues in the current year. What does this mean for the economy?

Correct Answer
verified

A simple supply curve shows a relationship between the

Correct Answer
verified

Keynesian economic theory suggests

Correct Answer
verified

In a free market economic system, the lack of government control and regulation means that businesses find it easy to take advantage of customers by offering poor-quality products at high prices.

Correct Answer
verified

Discuss the views of economist Adam Smith. How does the "invisible hand" philosophy suggested by Smith benefit society as a whole?

Correct Answer
verified
Adam Smith believed in a free-market sys...
View Answer

The main goal of resource development is to find ways to

Correct Answer
verified

Economics was called the "Dismal Science" by Thomas Carlyle because

Correct Answer
verified

Exam 2: Understanding Economics and How It Affects Business

Due to the fundamental rights afforded to us by a free-market capitalistic system, people are more willing to take calculated risks.

Correct AnswerverifiedShow Answer

A prediction that GDP will increase significantly over the next six months is bad news for most businesspeople.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The presence of competition in free markets

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements would a follower of Adam Smith most likely make?

Correct AnswerverifiedShow Answer

Some wages, tax brackets, interest rates, and government benefits are based on the CPI.

Correct AnswerverifiedShow Answer

Under capitalism,

Correct AnswerverifiedShow Answer

State capitalism is the combination of freer markets and some government control.

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 AnswerverifiedShow Answer

As you're checking out the online edition of your local newspaper, you quickly scan a report in the business section that says government spending will again exceed tax revenues in the current year. What does this mean for the economy?

Correct AnswerverifiedShow Answer

A simple supply curve shows a relationship between the

Correct AnswerverifiedShow Answer

Keynesian economic theory suggests

Correct AnswerverifiedShow Answer

In a free market economic system, the lack of government control and regulation means that businesses find it easy to take advantage of customers by offering poor-quality products at high prices.

Correct AnswerverifiedShow Answer

Discuss the views of economist Adam Smith. How does the "invisible hand" philosophy suggested by Smith benefit society as a whole?

Correct AnswerverifiedAdam Smith believed in a free-market sys...View AnswerShow Answer

The main goal of resource development is to find ways to

Correct AnswerverifiedShow Answer

Economics was called the "Dismal Science" by Thomas Carlyle because

Correct AnswerverifiedShow Answer

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Adam Smith believed in a free-market sys...
View Answer

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Correct Answer
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