Question 1

The Federal Reserve Bank operates

Accepted Answer

A)  as a semi-private organization not under the direct control of the government. 
B)  under the direct control of the executive branch of the government. 
C)  under the direction of the Banking Oversight Committee of Congress. 
D)  as a special agency of the U.S. Treasury. 
A)  as a semi-private organization not under the direct control of the government. 
B)  under the direct control of the executive branch of the government. 
C)  under the direction of the Banking Oversight Committee of Congress. 
D)  as a special agency of the U.S. Treasury.

Question 2

Communism is an economic and political system in which the state makes almost all economic decisions and owns almost all the major factors of production.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Serena is a vocal critic of socialism. She often points out that governments in many socialistic countries have cut back on government services and have thusly reduced taxes. Serena believes that this trend will ultimately result in every country adopting pure capitalistic ideals. Recent evidence shows that her views are essentially correct.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Although mixed economies tend to improve economic conditions, moral values prevent communist nations such as North Korea and Vietnam from progressing in this direction. Overall, economic progress continues to be very slow in these nations.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following people would tend to favor a socialist economy?

Accepted Answer

A)  Fred prefers to live in a country with low marginal tax rates. 
B)  Lizzie prefers to live in a country that encourages rapid economic growth. 
C)  Kara prefers to live in a country with limited government regulation. 
D)  Bryan prefers to live in a country that promotes social equality. 
A)  Fred prefers to live in a country with low marginal tax rates. 
B)  Lizzie prefers to live in a country that encourages rapid economic growth. 
C)  Kara prefers to live in a country with limited government regulation. 
D)  Bryan prefers to live in a country that promotes social equality.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

In recent years, U.S. manufacturing sector has experienced ________ productivity.

Accepted Answer

A)  rising 
B)  relatively stable 
C)  falling slowly 
D)  falling very rapidly 
A)  rising 
B)  relatively stable 
C)  falling slowly 
D)  falling very rapidly

Question 10

Frictional unemployment occurs because the economy is experiencing a recession.

Accepted Answer

A) True 
 B)False

Question 11

Quinn owns a local salon. She wants to update her shop with new customer massage chairs and work stations for her nail technicians. If the Fed were to lower interest rates by 1.5 percentage points, at the same time that the government increased the tax rate by 1.5%, she could immediately conclude that updating her shop would not increase or decrease her financial position.

Accepted Answer

A) True 
 B)False

Question 12

Identify and describe the 4 basic rights that form the foundation of capitalism.

Accepted Answer

The four basic rights are the right to p

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. 
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

When the market price of a good is below the equilibrium price, and all other determinants are unchanged

Accepted Answer

A)  the quantity demanded will be greater than the quantity supplied. 
B)  the supply curve will be to the right of the demand curve. 
C)  a surplus will exist in the market. 
D)  the government will regulate the price of the good to ensure equilibrium is attained. 
A)  the quantity demanded will be greater than the quantity supplied. 
B)  the supply curve will be to the right of the demand curve. 
C)  a surplus will exist in the market. 
D)  the government will regulate the price of the good to ensure equilibrium is attained.

Question 15

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 16

According to the box, "Bad Medicine for Consumers?" the hypothetical pharmaceutical firm you work for recently increased the price of a chemotherapy drug from $300 to $3,000! What concern associated with capitalism best illustrates this ethical dilemma?

Accepted Answer

A)  Some businesspeople may let greed guide guide their behavior. 
B)  Through the lack of quality healthcare, the number of cancer patients has increased and the demand for chemotherapy drugs is greater than the supply. 
C)  Thanks to many different kinds of chemotherapy drugs, there is now a surplus and prices need to increase to make a profit. 
D)  The government regulates pharmaceutical costs and can raise or lower the price as it sees fit. 
A)  Some businesspeople may let greed guide guide their behavior. 
B)  Through the lack of quality healthcare, the number of cancer patients has increased and the demand for chemotherapy drugs is greater than the supply. 
C)  Thanks to many different kinds of chemotherapy drugs, there is now a surplus and prices need to increase to make a profit. 
D)  The government regulates pharmaceutical costs and can raise or lower the price as it sees fit.

Question 17

Core inflation figures omit healthcare prices, but not energy prices.

Accepted Answer

A) True 
 B)False

Question 18

In socialist economies, the government owns some, if not most, basic businesses such as telecommunications systems and utilities.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is an important premise of Adam Smith's conclusions about economic prosperity?

Accepted Answer

A)  Individual freedom is necessary if a society is to prosper. 
B)  Understanding the concept of survival of the fittest will lead to prosperity. 
C)  Determining what motivates people will lead to prosperity. 
D)  Command economies and structured markets must be in place before we can work toward prosperity. 
A)  Individual freedom is necessary if a society is to prosper. 
B)  Understanding the concept of survival of the fittest will lead to prosperity. 
C)  Determining what motivates people will lead to prosperity. 
D)  Command economies and structured markets must be in place before we can work toward prosperity.

Question 20

Shelly's company produces computers, phones, and tablets. About six months ago, Shelly began to keep track of number of hours worked at the company, and the resulting output. When she compared the results, she found that the number of workers (and the hours they worked) remained relatively steady over the past six months; however, the work site's output improved considerably. This indicates that

Accepted Answer

A)  productivity at the work site has increased. 
B)  the work site sold off some of its excess inventory. 
C)  the company's prices have increased faster than the wages paid to workers. 
D)  the company should hire more workers. 
A)  productivity at the work site has increased. 
B)  the work site sold off some of its excess inventory. 
C)  the company's prices have increased faster than the wages paid to workers. 
D)  the company should hire more workers.

Exam 2: Understanding Economics and How It Affects Business

The Federal Reserve Bank operates

Communism is an economic and political system in which the state makes almost all economic decisions and owns almost all the major factors of production.

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

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

Although mixed economies tend to improve economic conditions, moral values prevent communist nations such as North Korea and Vietnam from progressing in this direction. Overall, economic progress continues to be very slow in these nations.

Which of the following people would tend to favor a socialist economy?

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

In recent years, U.S. manufacturing sector has experienced ________ productivity.

Frictional unemployment occurs because the economy is experiencing a recession.

Identify and describe the 4 basic rights that form the foundation of capitalism.

The main goal of resource development is to find ways to

When the market price of a good is below the equilibrium price, and all other determinants are unchanged

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

According to the box, "Bad Medicine for Consumers?" the hypothetical pharmaceutical firm you work for recently increased the price of a chemotherapy drug from $300 to $3,000! What concern associated with capitalism best illustrates this ethical dilemma?

Core inflation figures omit healthcare prices, but not energy prices.

In socialist economies, the government owns some, if not most, basic businesses such as telecommunications systems and utilities.

Which of the following is an important premise of Adam Smith's conclusions about economic prosperity?

Taking Risks and Making Profits Within the Dynamic Business Environment

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Working Within the Legal Environment

Using Technology to Manage Information

Managing Risk

Managing Personal Finances

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