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Exam 2: Understanding How Economics Affects Business

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Question 131

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Under the __________ system the number of choices in the market is directly related to government involvement in markets.

A) capitalist
B) socialist
C) communist
D) mixed economy

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

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Question 132

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One way to lessen the U.S.government budget deficit is to:

A) cut spending.
B) increase spending.
C) call-in government savings bonds.
D) increase government social programs such as welfare,food-stamps,and Medicare.

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

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Question 133

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A collapse in Buldovia's banking system eventually led to companies unable to borrow money to run their businesses.Firms terminated employees.These circumstances cut into consumer's purchasing power,causing a severe decline in the prices of goods and services,better known as _______.

When the market price of a good is above its equilibrium value,and all other determinants are unchanged:

The greed of businesspeople represents one of the greatest dangers to the operation of a free market system.

Recently the U.S.national debt was over:

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

Government spending on defense decreases the national deficit.

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

In the past,socialist nations have realized that some of the government run businesses do not grow as quickly as businesses that operate for a profit.

In the service sector of the economy,the influx of machinery such as computers increases output per worker,but does little to improve the quality of services.

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

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.

Which of the following statements about business cycles in the U.S.is most accurate?

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

Mini-Case Gig Abite is a bright,hard-working engineer who once owned a successful engineering consulting firm in his native country of Frinezia.Gig became discouraged by the high tax rates in Frinezia,so he immigrated to the United States eleven years ago.Soon after moving to the U.S. ,Gig again started his own business,which he named Giganeers Consulting.The company struggled at first,and almost went under midway through its second year.However,Gig never lost faith,the company survived,and it soon developed a growing reputation for quality work and dependable service.Giganeers began experiencing sustained growth early in its fourth year.In fact,Gig hired additional employees over the next few years to keep up with the increasing workload.His company,which started with only Gig and 2 other full time workers,now provides jobs for 43 full-time employees as well as many part time workers. Despite these past successes,some clouds are on the horizon.The company recently suffered its first drop in business since its very early years.Gig is convinced that the problem is not with his company,but rather due to a downturn in the U.S.economy.He heard a national broadcast last week reporting that the value of the total output of final goods and services in the U.S.declined over the last quarter.The news anchor went on to state that many economists believe that this downward trend is likely to continue for several more months.Gig is concerned that he will have to lay off some of his employees if the economy doesn't improve.He hopes that the government does something soon to put the economy back on track. -The broadcast cited forecasts that national output might continue to fall in the future.If total output shows decline for two consecutive quarters,economists would classify this as a _____________.

The Federal Reserve Board is responsible for controlling the money supply.

While scanning the movies section in your local online newspaper,you click on the business section by mistake.While you're there,you quickly scan a report that says government spending will again exceed tax revenues in the current year.This means that the:

The freedom of people to decide where they want to work and live,and what they want to buy or sell are basic capitalist rights under:

At the onset of the recent economic slowdown,prices at the grocery stores continued to rise.In some cases,products such as milk and bread almost doubled in price.A Boston newspaper reported,"The price of eggs was up 40% and milk was up 26%." Consumers were already being hit with high energy costs,and now their confidence in the economy was further shaken with job cuts and a loss of discretionary income due to increases in food prices.The economy was slowing,but prices were rising,signifying the potential for ___________.