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Exam 2: Understanding Economics and How It Affects Business

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Question 91

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One strength of a free-market economic system is that it emphasizes the fair and humane treatment of the less fortunate in society.

A) True
B) False

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Question 92

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The national deficit is the difference between our nation's exports and its imports.

A) True
B) False

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Question 93

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In perfect competition, each firm produces a product that is clearly differentiated from the products of other firms in the same market.

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:

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

The U.S. national debt equals the sum of all recorded years of deficits.

A simple supply curve shows that an increase in the price of a good will cause the quantity supplied to:

High tax rates in socialist countries is a major reason these nations have experienced a brain drain.

Which of the following statements provides the most accurate comparison of socialism and communism?

Capitalism is the foundation of the U.S. economic system.

When the federal government's collection of tax revenues is less than what it spends in a given year, it results in a:

Peace and prosperity will flourish if we can find the one best way to divide existing resources among nations.

In 2009, the U.S. unemployment rate was at its lowest point in 10 years.

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

Nick wants to buy a new car, and is planning to borrow the money for his purchase from a bank. He read in the newspapers that the Federal Reserve is likely to implement policies in the next few weeks that are designed to stimulate the economy. Nick would probably get a lower interest rate on his car loan if he waits until after the FED implements its new policies.

The U.S. economic system relies on

Any output produced by U.S. firms is included in the value of U.S. GDP, even if the output was produced in a foreign country.

Workers in nations who are strong proponents of communism work much harder and longer hours.

A prediction that GDP will increase significantly over the next six months is bad news for most businesspeople.

in the service sector has not shown the significant improvement that it has in the manufacturing sector. There are significant advances in the quality of service, but workers in this sector are unable to increase the number of persons served in a given time period.