Ch.2 | Test Questions & Answers – Economic Challenges Facing - Contemporary Business 19e | Practice Test Bank by Louis E. Boone. DOCX document preview.
Package Title: Chapter 2, Testbank
Course Title: Boone, Contemporary Business, 19th Edition
Chapter Number: 2
Question type: Multiple Choice
1) Attempting to bring about changes in economic activity through changes in the size of the nation’s money supply is called _____.
a) fiscal policy
b) monetary policy
c) supply
d) microeconomics
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
2) _____ is an economic situation characterized by price increases that reduce the amount of goods and services people can purchase with a given amount of money.
a) The consumer price index (CPI)
b) Inflation
c) Equilibrium price
d) Recession
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
3) _____ measures the monthly average change in prices of goods and services.
a) The consumer price index (CPI)
b) Inflation
c) Equilibrium price
d) Demand
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
4) The amount of goods and services for sale at different prices is known as _____.
a) the consumer price index (CPI)
b) equilibrium price
c) supply
d) demand
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
5) _____ is the relationship between the goods and services produced in a nation each year and the inputs needed to produce them.
a) Gross domestic product (GDP)
b) Supply
c) Demand
d) Productivity
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
6) If the government spends more than the amount of money it raises through taxes, then a(n) _____ occurs.
a) inflation
b) budget deficit
c) Productivity
d) recession
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
7) During a(n) _____, consumers frequently postpone major purchases and shift buying patterns toward basic, functional products carrying low prices.
a) Inflation
b) budget deficit
c) recession
d) monopoly
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
8) _____ is the sum of all goods and services produced within a country’s borders.
a) Gross domestic product (GDP)
b) Equilibrium price
c) Supply
d) Productivity
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
9) _____ is a market structure characterized by relatively few sellers and barriers to entry resulting from high start-up costs.
a) Fiscal policy
b) Pure competition
c) Oligopoly
d) Monopoly
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
10) The study of small economic units, such as individual consumers, families, and businesses, is called _____.
a) the consumer Price Index (CPI)
b) monetary policy
c) demand
d) microeconomics
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
11) The use of government tax and spending policies to bring about desired changes in the economy is called _____.
a) gross domestic product (GDP)
b) fiscal policy
c) monetary policy
d) productivity
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
12) _____ is a market structure in which large number of buyers and sellers exchange homogenous products and no single participant has a significant influence on price.
a) Equilibrium price
b) Pure competition
c) Oligopoly
d) Monopoly
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
13) _____ refers to the willingness and ability of buyers to purchase goods and services at different prices.
a) Equilibrium price
b) Supply
c) Demand
d) Productivity
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
14) In a(n) _____, a single seller dominates trade in a product for which buyers can find no close substitutes.
a) pure competition
b) recession
c) oligopoly
d) monopoly
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
15) The point where the supply and demand curves intersect is the _____.
a) the consumer Price Index (CPI)
b) equilibrium price
c) supply
d) demand
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
16) ______ refers to the willingness and ability of buyers to purchase goods and services at different prices.
a) Socialism
b) Supply
c) Capitalism
d) Demand
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
17) Which of the following best describes the study of macroeconomics? It is:
a) concerned with studying a country’s overall economic issues
b) primarily concerned with the economic choices and decisions of individual consumers
c) not related to microeconomics
d) not related to government decisions concerning spending and taxes
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
18) An economist studies the consumer behavior in a particular area. This is an example of _____.
a) microeconomics
b) macroeconomics
c) sociology
d) psychology
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
19) As price of a good or service increases, in general, the quantity demanded _____.
a) declines
b) remains the same irrespective of the product type
c) increases
d) first increases and then decreases irrespective of the product type
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
20) If the number of buyers decreases, the demand curve will shift to the _____ and the price will ____.
a) left; fall
b) right; fall
c) right; rise
d) left; rise
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
21) The demand curve will shift to the _____ and the prices will _____, if buyers’ incomes increase.
a) right; rise
b) left; fall
c) right; fall
d) left; rise
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
22) If the prices of substitute goods decrease, the demand curve will shift to the _____ and the price will _____.
a) right; fall
b) left; fall
c) right; rise
d) left; rise
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
23) A demand curve will shift to the left if the _____.
a) number of buyers increases
b) future expectations become more optimistic
c) buyers’ incomes decrease
d) prices of substitute goods increase
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
24) Which of these best describes a graph showing the amount of a product that buyers will purchase at different prices?
a) Production possibility curve
b) Supply curve
c) Utility curve
d) Demand curve
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
25) Which of the following is an implication of demand curves sloping downward?
a) Buyers will purchase greater quantities of a good or service as its price falls.
b) Sellers will supply greater quantities of a good or service as its price increases.
c) Buyers will purchase greater quantities of a good or service as their incomes fall.
d) Sellers will supply greater quantities of a good or service as taxes increase.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
26) A demand curve is the schedule that shows the relationship between the price of a product and the _____.
a) overhead costs
b) social costs
c) quantity of that product buyers will purchase
d) quantity of that product manufacturers will supply
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
27) The supply curve will shift left when _____.
a) suppliers in the market increase
b) taxes increase
c) the costs of technologies decrease
d) the costs of inputs decrease
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
28) During an epidemic, the price of surgical masks increased. Which of the following is most likely to have been a consequence of this increase in price?
a) Decrease in the demand for surgical masks
b) Increase in the tax on surgical masks
c) Increase in the supply of surgical masks
d) Decrease in the profits from selling surgical masks
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
29) Which of these is caused by an increase in consumers’ incomes?
a) Break-even point to shift to the right
b) Demand curve to shift to the right
c) Break-even point to shift to the left
d) Demand curve to shift to the left
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
30) Which of these happens, according to a supply curve?
a) As prices rise, quantity of a product supplied falls
b) As prices fall, consumers will buy in smaller quantities
c) As prices rise, the quantity of a product that is supplied also rises
d) As prices rise, consumers will buy in larger quantities
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
31) If the cost of producing a good or service increases, the supply curve will shift to the _____ and the price will _____.
a) right; fall
b) right; rise
c) left; fall
d) left; rise
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
32) As the number of suppliers of a product increases, the supply curve shifts to the _____ and the price will _____.
a) right; fall
b) right; rise
c) left; fall
d) left; rise
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
33) Assume that the price of gasoline triples. What will likely happen to the demand for fuel-efficient small cars? The demand curve will shift to the _____ and demand will _____.
a) right; decrease
b) left; increase
c) right; increase
d) left; decrease
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
34) Under which of the following conditions, is the equilibrium price is established?
a) Prevailing market price of an item is same as the price at which a consumer can buy the item
b) Demand curve and the supply curve are parallel to each other
c) Opportunity cost of a product is greater than its production cost
d) Production cost of an item is greater than its selling price
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
35) What are the three major types of economic systems?
a) Collectivism, developed economies, and oligopoly
b) Individualism, developing economies, and duopoly
c) Ethnocentrism, cultural relativism, and polycentrism
d) Capitalism, planned economies, and mixed economies
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
36) Most industrialized nations operate economies based on _____.
a) planned economies
b) private enterprise systems
c) communist systems
d) socialist systems
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
37) In which of the following types of economic systems do entrepreneurs and investors have the most amount of freedom with regard to controlling business ownership, profits, and resource allocations?
a) Socialism
b) Capitalism
c) Communism
d) Mixed economy
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
38) In which of these systems are incentives to motivate employees to perform at their highest level?
a) Capitalist
b) Communist
c) Socialist
d) Collectivist
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
39) Which of the following is considered to be the BEST example of pure competition in today’s business environment?
a) The steel industry
b) The market for pet food
c) The fishing industry
d) The paper industry
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
40) Quinn cultivates and sells sugarcane to a sugar manufacturing company. Brett is a retailer for pet food. Which of the following is a difference between Quinn’s and Brett’s businesses?
a) Unlike Brett, Quinn has very few competitors.
b) Unlike Brett, Quinn is eligible for tax exemptions.
c) Unlike Brett, Quinn has no control over the pricing of his product.
d) Unlike Brett, Quinn can patent his product.
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Analysis
41) A particular industry has many competitors, each of whom has no significant control over price. In addition, it is fairly easy to enter the industry. This industry is an example of _____.
a) pure competition
b) monopolistic competition
c) an oligopoly
d) a pure monopoly
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
42) Global Flowers Inc. (GFI), an exporter of flowers across the globe, operates in an industry where there are many sellers and buyers. This makes it difficult for any one single seller or buyer to influence the market price of the flowers. Also, it is difficult for sellers or exporters to differentiate their products from each other. What type of market structure does this illustrate?
a) Oligopoly
b) Pure competition
c) Monopoly
d) Monopolistic competition
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
43) Ogechi ventures into a new business with few competitors and requires a huge investment. Soon after entering the business, one of Ogechi’s competitors introduces a price cut that forces Ogechi to reduce the prices of her products as well. In this scenario, Ogechi has ventured into _____.
a) oligopoly
b) pure competition
c) monopoly
d) monopolistic competition
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
44) Monopolistic competition has _____.
a) many buyers and sellers, who have some control over price
b) few sellers, but only one major buyer
c) many sellers, who sell a homogeneous product
d) no barriers to keep out new competitors
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
45) Consumers can choose from hundreds of different kinds and producers of cheese, each with a slightly different flavor and texture. This type of market structure is known as _____.
a) pure competition
b) monopolistic competition
c) a monopoly
d) an oligopoly
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
46) Pure competition is different form monopolistic competition in that _____.
a) buyers in pure competition see little difference between the goods offered by competitors
b) new competitors cannot easily enter a purely competitive market
c) buyers in monopolistic competition have no control over prices
d) sellers in monopolistic competition can never exit the industry
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
47) A particular industry has only a few competitors, who have some control over price. However, high start-up costs make entry into the industry difficult. This industry is an example of _____.
a) pure competition
b) monopolistic competition
c) an oligopoly
d) a pure monopoly
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
48) Which of the following best describes an industry where there is no direct competition, yet a firm operating in such an industry will have almost no control over pricing?
a) Monopolistic competition
b) A regulated monopoly
c) An oligopoly
d) Pure competition
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
49) Among the types of competition in a private enterprise system, control over price by individual firms is high in a(n) _____.
a) mixed economy
b) regulated monopoly
c) oligopoly
d) pure monopoly
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
50) Sharp Looks Inc. (SLI) is the sole supplier of cosmetic nose implants. Which of the following market structures does SLI exhibit?
a) Pure competition
b) Monopolistic competition
c) Oligopoly
d) Monopoly
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
51) In which of these, a local, state, or federal government grants exclusive rights in a certain market to a single firm.
a) Pure competition
b) Oligopolies
c) Regulated monopolies
d) Monopolistic competition
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
52) The state of Brookcliff has granted exclusive rights to the BC Electricity Board for the supply of electricity. This is an example of a(n) _____.
a) fiscal policy
b) regulated monopoly
c) mixed market economy
d) oligopoly
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
53) Before the patent on its allergy medicine expired, Ingles Pharma Inc. (IPI) was able to set its own market price for the drug. From which type of market structure did the company benefit?
a) Oligopoly
b) Pure competition
c) Monopolistic competition
d) Monopoly
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
54) _____ is an economic system in which private property is eliminated.
a) Socialism
b) Capitalism
c) Individualism
d) Communism
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
55) Under the economic system of communism, _____.
a) individual rights to profits are not allowed
b) government interference is limited
c) employees have the complete freedom to choose their own occupation
d) businesses are owned by individuals
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
56) Which of the following is an economic system in which the government owns all of a nation’s major industries but still allows private ownership in less crucial areas?
a) Communism
b) Socialism
c) Capitalism
d) Ethnocentrism
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
57) In the country of ABC, the government owns the public transportation, basic services like energy supply and communication, and the core manufacturing firms. Small businesses are privately owned. What type of economic system does ABC have?
a) Capitalism
b) Communism
c) Socialism
d) Individualism
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
58) United States of Mahan (USM) is a nation in which industries like steel, communications, electricity, railways, education, and health care are owned by the government. The leaders of the nation believe that it is detrimental to the public’s interest to allow such core industries to be owned by private firms. However, private ownership is encouraged in industries like restaurants, entertainment, and retail shops, which have a lower impact on social welfare. Which of the following economic systems has USM adopted?
a) Capitalism
b) Socialism
c) Individualism
d) Communism
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
59) _____ has a blend of both planned economy and private enterprise system.
a) Capitalism
b) Communism
c) A mixed market economy
d) A free market economy
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
60) A country has a strong private sector, along with publicly-owned enterprises. Entrepreneurs and private-sector investors are entitled to profits after paying taxes, and even state-owned enterprises are expected to generate returns. What type of economic system does this country have?
a) Mixed market economy
b) Communism
c) Socialism
d) Self-managed economy
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
61) If United States were to consider converting the U.S. Postal Service into a privately held business, it would be an example of _____.
a) nationalization
b) government appropriation
c) commercialization
d) privatization
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
62) During an economic recession, consumer spending _____ and unemployment _____.
a) increases; increases
b) increases; decreases
c) decreases; increases
d) decreases; decreases
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
63) During an economic recession _____.
a) unemployment begins to decline as business activity accelerates
b) businesses expand by hiring more employees
c) people turn to lower-priced retailers for the goods they need
d) consumer confidence about the future is optimistic
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
64) During a recession, which of the following businesses is most likely to do well?
a) North Sun Ships, a luxury cruise service
b) Red Couture Inc., a designer store for clothes and accessories
c) Save Market, a chain of discount stores
d) Ink Theory, a store that sells premium pens
Difficulty: Medium
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
65) _____ is the relationship between the goods and services produced in a nation each year and the inputs necessary to produce them.
a) Gross domestic product
b) Per capita income
c) Prosperity
d) Productivity
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
66) Many of the gains in U.S. productivity can be attributed to _____.
a) technology
b) deflation
c) inexpensive labor
d) budget surplus
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
67) Which of these is a commonly used measure of nation’s total productivity?
a) Gross domestic product
b) Product mix ratio
c) Contribution margin
d) Break-even point
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
68) Gross domestic product (GDP) is based on the _____ of a country.
a) allocative efficiency
b) output
c) factor income
d) net asset value
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
69) Which of these is caused by increases in the prices of raw materials and other factors of production?
a) Negative amortization
b) Supply-side deflation
c) Cost-push inflation
d) Price penetration
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
70) Assume that the number of people wanting to buy houses in your locality increases sharply. This will cause the price of houses to increase, which is an example of _____.
a) demand-pull inflation
b) cost-push inflation
c) supply-side deflation
d) credit deflation
Difficulty: Medium
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
71) Which of these is an economic situation characterized by soaring prices?
a) Hyperinflation
b) Deflation
c) Budget surplus
d) Balanced budget
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
72) _____ is experienced by members of the workforce who are temporarily not working but are looking for jobs.
a) Structural unemployment
b) Cyclical unemployment
c) Seasonal unemployment
d) Frictional unemployment
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
73) In the Midwest part of the United States, farm laborers are out of work for some months after they have harvested and sold the produce. This is an example of _____.
a) structural unemployment
b) cyclical unemployment
c) seasonal unemployment
d) frictional unemployment
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
74) Markell graduated from college in December and is currently looking for a job. This is an example of _____.
a) structural unemployment
b) cyclical unemployment
c) seasonal unemployment
d) frictional unemployment
Difficulty: Medium
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
75) The recent recession has left Brionna, previously a manager in a restaurant, unemployed. This is an example of_____.
a) cyclical unemployment
b) frictional unemployment
c) structural unemployment
d) seasonal unemployment
Difficulty: Medium
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
76) _____ occurs when workers lack the necessary skills for available jobs or because the skills they have are no longer in demand.
a) Structural unemployment
b) Cyclical unemployment
c) Seasonal unemployment
d) Frictional unemployment
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
77) Magnus has been unemployed for a long time because he has not been able to find a job in which he can apply his specialized knowledge about the Robostic Data System (RDS), a computer system that is now obsolete. What type of unemployment is Magnus facing?
a) Structural unemployment
b) Frictional unemployment
c) Seasonal unemployment
d) Cyclical unemployment
Difficulty: Medium
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
78) Which of the following is true of monetary policy?
a) It uses taxation and spending to control economic activities.
b) It is dictated by international organizations like the United Nations
c) It is a mechanism to control the flow of foreign currency into a nation by reducing its exports.
d) It uses variations in interest rate and money supply to influence a nation’s economy.
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
79) In the United States, the _____ is responsible for formulating and implementing the nation’s monetary policy.
a) Federal Reserve System
b) Department of the Treasury
c) Department of Commerce
d) Federal Executive Institute
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
80) Business borrowing becomes more difficult when the _____.
a) federal government reduces taxes
b) federal government increases spending
c) Federal Reserve decreases the money supply
d) Federal Reserve reduces interest rates
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
81) What is the purpose of a restrictive monetary policy?
a) Stimulate spending
b) Reduce the cost of borrowing
c) Stimulate employment
d) Curb rising prices and overexpansion
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
82) The purpose of an expansionary monetary policy is to _____.
a) limit entrepreneurial activities
b) increase the money supply
c) increase the cost of borrowing
d) curb rising prices
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
83) In the context of fiscal policy, lower taxes and increased government spending _____.
a) cut unemployment rates
b) limit economic expansion
c) reduce inflation
d) reduce the profits of a business
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
84) Fiscal policy involves which of these?
a) Curbing political activities by limiting the spending on political campaigns
b) Controlling the flow of foreign currency by reducing exports and increasing imports
c) Adjusting money supply by varying the exchange rate of the national currency
d) Influencing economic activities by making decisions about taxes and government spending
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
85) In the context of fiscal policy, increased taxes and reduced government spending _____.
a) restrict economic activities
b) create more profits for firms
c) increase a nation’s gross domestic product
d) cut unemployment rates
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
86) A nation will achieve a balanced budget when _____
a) the amount of savings equal the amount of borrowings from banks
b) the consumer price index is equal to the producer price index
c) imports are equal to its exports
d) total revenues raised by taxes equal the total proposed spending for the year
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
87) The government of Badland, a less-developed country, has been spending the revenue generated from taxes and fees on infrastructural development, health care, and public utilities. Its expenditure has exceeded its revenue. This condition referred to as a _____.
a) trade surplus
b) positive balance of payment
c) break-even point
d) budget deficit
Difficulty: Medium
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
88) The federal government raises corporate taxes in order to reduce the budget deficit. This is an example of the government using _____ policy as a tool to _____ economic activities.
a) political; restrict
b) social; fuel
c) monetary; increase
d) fiscal; decrease
Difficulty: Medium
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
89) If the government of a country takes in more money than it spends, it is said to have a _____.
a) trade deficit
b) budget surplus
c) balanced budget
d) negative balance of payment
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
90) Which of the following is NOT a source of government funds to cover the annual budget?
a) Taxes
b) Fees
c) Subsidiaries
d) Borrowing
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
91) All of the following are part of the national debt EXCEPT:
a) Corporate taxes
b) Treasury bills
c) Treasury notes
d) Treasury bonds
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
92) According to the annual World Economic Forum, all of the following are key challenges facing business today’s economy EXCEPT ________.
a) increasing younger workforce
b) asset bubbles in a major economy
c) illicit trade
d) failure/shortfall of critical infrastructure
Difficulty: Easy
Learning Objective 1: 02-05: Describe the global economic challenges encountered by businesses today.
Section Reference 1: Global Economic Challenges
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
93) The annual World Economic Forum meeting identifies global risks in all of the following categories except _____.
a) economic
b) environmental
c) political
d) societal
Difficulty: Easy
Learning Objective 1: 02-05: Describe the global economic challenges encountered by businesses today.
Section Reference 1: Global Economic Challenges
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
94) ________ amounts to a balance between what we want and what we can afford.
a) Economics
b) Marketing
c) Sociology
d) Psychology
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
95) Two goods are ________ goods if an increase in the price of one causes a fall in demand for the other.
a) substitute
b) complementary
c) supply-driven
d) opposite
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
96) Under which types of competition do individual firms have some control over price?
a) pure competition and a monopoly
b) monopolistic competition and an oligopoly
c) an oligopoly and pure competition
d) a pure monopoly and a regulated monopoly
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
97) Under which types of competition is ease of entry into industry by new firms is regulated by government?
a) Pure competition
b) Monopolistic competition
c) An oligopoly
d) Monopoly
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
98) A local fitness center is an example for which type of competition?
a) Pure competition
b) Monopolistic competition
c) An oligopoly
d) Monopoly
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
Question type: True/False
99) Changes in overall government spending have a macroeconomic effect.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
100) Research finds that decisions made by individual consumers and businesses have an insignificant impact on overall economic conditions.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
101) For most of us, economics amounts to a balance between what we want and what we can afford.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
102) Two goods are substitute goods if an increase in the price of one causes a fall in demand for the other.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
103) Microeconomics examines not just the economic policies of individual nations, but the ways in which those individual policies affect the overall world economy.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
104) Taxing and spending decisions made by governments are part of macroeconomics.
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
105) Not-for-profit organizations must also make economic decisions just like other business organizations.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
106) When Vincent, a manager at Beauty Products International, tries to evaluate the price and the quantity of a product that will be sold, he is dealing with microeconomics.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
107) Microeconomics and macroeconomics have no correlation.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Learning Objective 2: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Section Reference 2: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
108) As prices of goods and services rise, the quantity demanded will generally decline.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
109) A demand curve is the graph showing the relationship between different prices and the quantities of a good or service that sellers will offer for sale.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
110) The demand curve will shift to the right if consumers have more money to spend.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
111) The price of gasoline rises sharply. One likely outcome is that the demand curve for hybrid vehicles should shift to the left.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
112) The prevailing market price at which consumers can buy an item is called the equilibrium price.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
113) If number of buyers increase, the demand curve for most products will shift to the left.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
114) Assume electric water heaters and gas water heaters are interchangeable, and assume the price of natural gas rises sharply relative to the price of electricity. The demand curve for electric water heaters should shift to the right.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Analysis
115) The supply curve should shift to the left if the cost of producing an item declines due to improved technology.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
116) Demand and supply never affect employment.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
117) Assume that the number of first-time home buyers suddenly increases. The demand curve for houses is likely shift to the right.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
118) Factors of production play a central role in determining the overall supply of goods and services.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
119) Hurricane and other such forces of nature can affect the supply curve.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
120) The equilibrium price occurs at the point of intersection between the supply and demand curves.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
121) In order to control the rising price of housing, the county council enacts rent controls. This mandated price is below the equilibrium price. Consequently, a shortage in the supply of housing may result.
Difficulty: Hard
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Synthesis
122) If the actual market price differs from the equilibrium price, buyers and sellers tend to make economic choices that restore the equilibrium level.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
123) The sole underlying cause of movement along demand and supply curves is price.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
124) The supply curve is likely to shift down and to the left if the cost of the raw materials used to manufacture a product falls.
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
125) A private enterprise system rewards businesses for meeting the needs and demands of consumers.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
126) Capitalism also is referred to as a private enterprise system.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
127) The government tends to have most of the control under a capitalist system.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
128) Because a monopoly market lacks the benefits of competition, many governments regulate monopolies.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
129) Under the market situation of pure competition, sellers have a significant control over price.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
130) Monopolistic competition and pure competition are the same concept.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
131) A market situation where there are only a few sellers of a good or service is an oligopoly.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
132) An example of a pure monopoly is the market for pet food.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
133) The U.S. Postal Service’s delivery of first-class mail is an example of a regulated monopoly.
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
134) When a firm possesses unique characteristics so important to competition in its industry that they form barriers to prevent entry by would-be competitors, a pure monopoly occurs.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
135) The U.S. government is trending away from deregulation and toward regulated monopolies.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
136) People mostly work for private-owned enterprises under communism.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
137) North Korea is currently shifting toward a more market-oriented economy.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
138) Socialism is one of the four market structures found in a private enterprise system.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
139) In a socialist economy, incentives usually are limited in state enterprises but do motivate workers in the private sector.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
140) The government of ABC country owns the railways, utilities, energy companies, and financial institutions. Ownership of small, less critical businesses is in private hands. This is an example of socialism.
Difficulty: Medium
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
141) In a mixed market economy, state enterprises are not expected to produce returns.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
142) The United States, since the 1930s, has not faced another “true” economic depression.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
143) Economic growth leads to expanded job opportunities, improved wages, and an increased standard of living.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
144) An economic recession lasts for three months or shorter.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
145) In the recovery stage of the business cycle, the economy emerges from recession.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
146) Business spending, during a recession, increases but consumer spending remains relatively unchanged.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
147) During an economic recession, low-priced retailers like Dollar Tree and Dollar General will likely see increased sales.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
148) When a constant amount of inputs generates increased outputs, an increase in productivity occurs
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
149) The core inflation rate consists of an economy’s inflation rate after removing energy and food prices.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
150) Inflation benefits consumers with fixed incomes.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
151) The Consumer Price Index (CPI) excludes energy and food because their prices fluctuate excessively from month to month.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
152) Deflation can hurt industries like housing and auto manufacturing.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
153) Workers in high-tech industries, air travel, and manufacturing have all faced unemployment during periods of economic contraction.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
154) Ali has a construction job in Boston. During winter, he looks for other work as no construction can take place. Ali is cyclically unemployed.
Difficulty: Medium
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
155) Individuals who lose their jobs due to structural reasons are generally unemployed only for a short period of time.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
Difficulty: Medium
156) Restrictive monetary policy reduces the money supply and helps to reduce inflation.
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
157) No country is an economic island in today’s global economy
Difficulty: Easy
Learning Objective 1: 02-05: Describe the global economic challenges encountered by businesses today.
Section Reference 1: Global Economic Challenges
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
Question type: Essay
158) Define economics. Why is understanding economics important in one’s life?
Difficulty: Medium
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Application
159) Differentiate between macroeconomics and microeconomics. What types of economic activities might be included in each category?
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Learning Objective 2: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Section Reference 2: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
160) Differentiate between demand and supply.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
161) List the factors that should cause a supply curve to shift to the left.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
162) Do changes in household income affect demand? Explain.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
Section Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
163) List the four factors of production and provide an example of each factor.
Difficulty: Easy
Learning Objective 1: 02-01: Discuss microeconomics and explain the forces of demand and supply.
ection Reference 1: Microeconomics: The Forces of Demand and Supply
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
164) Describe how worker incentives vary in each of the four economic systems.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
165) Describe oligopoly.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
166) Explain monopolistic competition.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
167) Describe the major differences between socialism and a mixed market economic system.
Difficulty: Easy
Learning Objective 1: 02-02: Describe macroeconomics and the issues for the entire economy.
Section Reference 1: Macroeconomics: Issues for the Entire Economy
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
168) Briefly describe each of the four stages of the business cycle.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
169) Explain how the Consumer Price Index helps measure the changes in consumer prices.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
170) Identify and describe the four categories of unemployment.
Difficulty: Easy
Learning Objective 1: 02-03: Identify how to evaluate economic performance.
Section Reference 1: Evaluating Economic Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
171) Explain the difference between expansionary monetary policy and restrictive monetary policy.
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Comprehension
172) What is a federal budget? Explain how a federal budget is framed.
Difficulty: Easy
Learning Objective 1: 02-04: Discuss managing the economy’s performance.
Section Reference 1: Managing the Economy’s Performance
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge
173) What are the economic challenges in today’s world?
Difficulty: Easy
Learning Objective 1: 02-05: Describe the global economic challenges encountered by businesses today.
Section Reference 1: Global Economic Challenges
Standard 1: AACSB || Analytic
Standard 2: Bloom’s || Knowledge