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Exam 2: Understanding Economics and How It Affects Business

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Question 51

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Brianne graduated from college and is looking for her first job. She received a degree in nursing from a well-regarded local university. Brianne has several leads and has heard the nursing market is still strong, so she is convinced that she will locate a good job in the near future. Brianne's current situation is an example of structural unemployment.

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Question 52

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Communism is an economic system in which

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.

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Question 53

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Willow was laid off from her job 7 months ago. At first, she looked for a new job nearly every day. However, in the last 6 weeks, Willow has become depressed about not finding a job and quit looking. Based on the criteria used by the government, Willow is a civilian whose job status is included in computing the national unemployment rate.

Mini-Case Cooper Collins is a bright, hard-working engineer who once owned a successful engineering consulting firm in his native country of Evensplitia. Cooper was discouraged by the high tax rates in Evensplitia, so he immigrated to the United States seven years ago. Soon after moving to the U.S., Cooper again tried his hand at entrepreneurship and opened Coop's Consulting. The company struggled at first, and almost went bankrupt midway through its second year. However, Cooper never lost faith, the company survived, and eventually developed a great reputation in the community. Coop's Consulting began experiencing sustained growth early in its fourth year. In fact, Cooper hired additional employees to keep up with the increasing workload. His company, which started with only Cooper and two other full-time workers, now provides jobs for 43 full-time employees as well as many part-time workers and interns. Despite these past successes, business ownership is not without complications. The company suffered its first drop in business since its very early years. Cooper is convinced that the problem is not with his company, but rather due to a downturn in the U.S. economy. He heard a national broadcast last week reporting that the value of the total output of final goods and services in the U.S. declined over the last quarter. The anchor went on to state that many economists believe that this downward trend is likely to continue for several more months. Cooper is concerned that he will have to lay off some of his employees if the economy doesn't improve. He hopes that the government does something soon to put the economy back on track. -The broadcast that reported a decline in total output for the United States probably got some of its information from the government's measurement of ________.

Government spending on defense decreases the national deficit.

The consumer price index (CPI) measures what is happening to prices at the wholesale level.

Kyle O'Donnell needs a new car and he is planning to borrow the money from a nearby bank. The other day, he read online that the Federal Reserve is likely to implement policies in the next few weeks that are designed to stimulate the economy. If he waits until after the Fed implements its new policies, Kyle would probably get a lower interest rate on his car loan.

The best way to avoid national budget deficits is to increase our exports and decrease our imports.

Brendan considers himself to be a follower of Thomas Malthus. Which of the following statements would he be most likely to make?

The foundation of the U.S. economic system is based on

Under the basic principle of supply, as the price goes down, manufacturers and suppliers of a product tend to supply less of the product to the market.

Fiscal policy involves increases or decreases in

If a shortage exists in a market for a good, the price of that good will tend to fall.

In developing nations of the world, population has leveled off and is not expected to increase dramatically in the future.

Which of the following statements about business cycles in the U.S. is most accurate?

Most nations recognize that private enterprise is detrimental to business growth and what is best for consumers. Recently, Evensplitia had the opportunity to sell its government-owned telecommunications system to a private firm. Instead it realized that it would be better off if it raised taxes so that it could maintain the status quo.

________ unemployment refers to unemployment caused by the restructuring of firms or by a mismatch between the skills of job seekers and the requirements of available jobs.

Microeconomics focuses on the decisions and behavior of people and organizations in particular markets.

In recent years, countries with communist economic and political systems have

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