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Exam 2: Understanding How Economics Affects Business

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Question 41

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Both socialism and communism are variations of:

A) Command economies.
B) Competitive economies.
C) Free-market economies.
D) Plutocratic systems.

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Question 42

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For many years,Congressman Ricardo Perez has called for more government regulation of business."After all," the Congressman said recently,"businesspeople are out to make a profit,not to create jobs or serve their customers.The government must pass more laws to require businesses to take the interests of consumers and workers into account." From these comments,it is clear that Congressman Perez:

A) Agrees with the ideas of Thomas Malthus.
B) Does not accept the "invisible hand" idea brought forth by Adam Smith.
C) Is unaware of the fact that most businesses in the United States are owned by the government.
D) Does not realize that government regulation is already the main determinant of business decisions in capitalist economies.

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Question 43

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

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

Economist Thomas Malthus believed that ______________ would limit economic progress.

Subtle differences such as the right to one's religious preference make the command economic system known as communism more like a mixed economy than a socialistic system.

The study of how to increase the amount of available resources and create conditions that will make better use of these resources is known as:

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

__________ is the study of how a society employs its limited resources to produce goods and services and how it distributes them among competing groups and individuals.

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

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

Deanne is a vocal critic of socialism.She likes to point out that in recent years the governments in many socialistic nations have cut back on government services and have reduced taxes.Deanne believes that this trend will ultimately result in all nations adopting pure capitalistic ideals.Recent evidence suggests that Deanne's views are essentially correct.

_________ is the name of a free-market economic system in which most of the factors of production and distribution - such as land,factories,railroads,and stores - are owned by individuals.

In a free market economic system,the mechanism of __________ is the key determinant used to signal to producers what to produce and how much to produce.

Brain drain has occurred in many socialistic nations because:

The nation of Desperia is reporting a significant decline in GDP for four consecutive years,with no relief in sight.With unemployment at record levels and businesses failing faster than at any time in the past century,Desperia is likely experiencing a depression.

Most nations recognize that private enterprise is detrimental to business growth and what is best for consumers.Recently,a nation had the opportunity to sell its government-owned telecommunication 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.

One of the major ways the Fed influences economic conditions is through its control of interest rates.

A monopoly occurs when there is a single seller for a product or service.

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