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Exam 2: How Economic Issues Affect Business

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Question 51

True/False

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Socialists believe that the primary economic function of the government is to promote rapid economic growth.

A) True
B) False

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Question 52

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The _________ is a statistic that is used to compute the pace of inflation or deflation.

A) consumer price index
B) gross domestic product
C) index of leading indicators
D) index of inflationary trends

E) B) and D)
F) C) and D)

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Question 53

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Today,the economic systems of most nations could most accurately be classified as:

One of the benefits of communism is that it allows individuals a great deal of freedom to make their own economic decisions.

Under socialism:

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.

Fatma is a citizen of a country that has an economic system that is primarily based on free market capitalism.Fatma is likely to have the freedom to buy and sell property.

An increase in productivity means that a worker is now able to produce more goods and services in the same amount of time.

John complained to his buddy,Frank,that the prices of all the goods he and his family buy have increased a lot over the past year.Frank disagreed,saying that the prices of some goods have gone up a bit,but other prices have declined.Frank feels that the average price of consumer goods hasn't changed very much.In order to resolve their disagreement,John and Frank should look at recent figures for the:

The study of how society chooses to employ resources to produce goods and services and to distribute them for consumption among various competing groups and individuals is known as sociology.

In capitalism,most decisions about what goods and services to produce are made by:

The reason why many socialist countries have experienced brain drain is that:

Fourteen years ago,Murray noticed that a lot of people who bought personal computers really did not know much about how to use them and frequently suffered system crashes and other aggravations.He decided he could earn a nice profit by starting a consulting business to help other people overcome their computer woes.Although the business struggled at first,it has been quite successful for the last five years.Murray has many satisfied customers,and the business has grown to the point where he now employs several workers.Murray's experience is an example of:

Legislation has ended the monopoly status of utilities in some areas.

Socialism and communism are both variations of a free-market economy.

Deflation is a situation where the average level of prices is actually declining.

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

Capitalism has had little success in encouraging the creation of wealth.

A command system is characterized by:

The nation of Woland has seen its GDP decline severely for four years in a row,with no relief in sight.Unemployment has risen to record levels,prices are falling,and businesses are failing faster than at any time in the past century.The economy of Woland is experiencing a depression.