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Exam 2: Understanding Economics and How It Affects Business

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Question 51

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The "Reaching Beyond Our Borders" box in Chapter 2, explains the changing business climate in other nations. What kinds of experiences are U.S. based companies facing abroad?

A) Companies are only benefitting when they set-up business in a nation with a similar economic and/or political system as the home-based business.
B) Companies such as U.S. based General Motors is competing well in Japan, but having a difficult time in Mexico.
C) For some food franchisors such as Yum Brands, the economic and political systems are not preventing them from growing the business abroad.
D) Differentiating oneself abroad is detrimental because socialist nations seek equality, even in food products and advertising.

E) None of the above
F) B) and D)

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Question 52

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Kathleen's company produces computer monitors and other peripheral devices for computers. About six months ago, Kathleen began to keep track of number of hours worked, and the resulting output at her particular work site. Comparing 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 increased significantly. This indicates that:

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.

E) All of the above
F) A) and D)

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Question 53

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Patrick just landed a job working for a major online gaming company in Silicon Valley. In a lot of ways, this is his dream job come true - the chance to work for a company that makes gaming software and live in California at the same time. As his plane lands at San Jose International, he pictures a snazzy apartment with a palm tree right outside the front door. A few hours later, as he meets a property manager of a large apartment complex, his heart sinks. The price of apartments is out of sight! Back at the hotel, he logs on to the Bureau of Labor Statistics to try to get a better picture of why the cost of housing is so high in this region of the U.S. Which factors may be causing the rise in the price of housing?

The "Spotlight on Small Business" box in Chapter 2 is titled, "The Key to Capitalism is Capital." Which of the following statements best describes the message of this story?

A(n) curve shows the relationship between the price of a good and the quantity of that good people are willing and able to buy in a given time period.

A typical demand curve shows that:

GDP figures do not include the value of illegal activities.

The CPI is based on the prices of a carefully selected market basket of goods, all of which consumers can purchase at a supermarket.

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

As indicated in "Prospering in Foreign Lands", Reaching Beyond Our Borders box: Companies founded in the U.S. under a capitalistic system are seldom successful in breaking through the communistic and socialistic systems when they go global.

Studies about the effects of population growth on the economy are part of macroeconomics.

Due to the rights and freedoms afforded under capitalism:

As you scan the national news online, you read about the BXY Utility Company's latest problems. The story describes an expansive retaining wall that collapsed during a flood last week, spewing toxic coal ash, burying homes, and causing a few fatalities. An editorial claims that the company will not be held accountable to the same standards as the asbestos companies of a few years back that paid severe fines and even went out of business due to their lack of attention to environmental clean-up. You agree with the writer because you recently studied about the various competitive markets and utility companies clearly fall under monopolistic competition.

When the supply curve and demand curve for a particular good are shown together on a single graph, the point at which the two curves intersect identifies the:

Adam Smith's research focused on determining the best way to distribute a fixed amount of resources, rather than on how to create more wealth.

Sweetland is a nation that publicly supports a free market economy with private ownership of businesses. Over time, the government of Sweetland has developed policies designed to help the needy and reduce the level of income inequality. It pays for these programs by levying relatively high taxes on businesses and workers. These arrangements suggest that the economy of Sweetland is trending toward pure capitalism.

Monica notices that just a few big companies produce the vast majority of soft drinks. She would be correct in describing the soft drink industry as an oligopoly.

In the U.S., the has the role of managing the money supply and interest rates.

Fiscal policy involves increases or decreases in:

is considered by some to be the father of modern economics.