Introduction To Business - Section 65z - Spring 2009 - Part 1

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 Introduction To Business - Section 65z - Spring 2009 - Part 1
Introduction to Business - Section 65Z - Spring 2009 - part 1

  
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  • 1. 
    ____________ is the amount a business earns over and above what it spends for salaries and other expenses.
    • A. 

      Profit

    • B. 

      Revenue

    • C. 

      Interest

    • D. 

      Dividends


  • 2. 
    __________ is the chance a business owner will lose the time and money invested in a business that proves to be unprofitable.
    • A. 

      Depreciation

    • B. 

      Risk

    • C. 

      Fallibility

    • D. 

      Redundancy


  • 3. 
    A(n) ____________ is a person who assumes the risk of starting a business.
    • A. 

      Manager

    • B. 

      Entrepreneur

    • C. 

      Private investor

    • D. 

      Stakeholder


  • 4. 
    Starting a business always involves a ________.
    • A. 

      Profit

    • B. 

      Loss

    • C. 

      Revenue

    • D. 

      Risk


  • 5. 
    Often in business the greater the risk, the:
    • A. 

      Greater the potential reward.

    • B. 

      Lower the expected revenues.

    • C. 

      Lower the value provided to society.

    • D. 

      Greater the number of stakeholders.


  • 6. 
    Last year, MacTeck Enterprises had total revenues of $34 million while its total expenses were $22 million. Based on this information, MacTeck:
    • A. 

      Earned a profit of $12 million.

    • B. 

      Earned a profit of $56 million.

    • C. 

      Suffered a loss of $12 million.

    • D. 

      Suffered a loss of $22 million.


  • 7. 
    Shelley recently opened a new restaurant specializing in fast foods prepared with less fat and calories for health-conscious diners who are in a hurry. Shelley knows that there are some risks associated with opening and managing a restaurant, but she is confident that she can earn a profit. Shelley is an example of a(n):
    • A. 

      Arbitrageur

    • B. 

      Entrepreneur

    • C. 

      Speculator

    • D. 

      Account manager


  • 8. 
    A key characteristic of entrepreneurs is that they:
    • A. 

      Are willing to accept the risks involved in starting and managing a business

    • B. 

      Have a high level of scientific and technical expertise

    • C. 

      Possess a great deal of personal wealth

    • D. 

      Have experience in running large, complex organizations


  • 9. 
    The standard of living for a nation's people depends mainly on:
    • A. 

      The quality of the natural environment

    • B. 

      How much political freedom they have

    • C. 

      Their incomes and the prices of the goods and services they buy

    • D. 

      The amount of labor and capital available employed in the manufacturing sector


  • 10. 
    In the past twenty years,the number of U.S. women business owners:
    • A. 

      Remained relatively constant.

    • B. 

      Slowly increased.

    • C. 

      Increased dramatically.

    • D. 

      Decreased slightly.


  • 11. 
    Which of the following statements about factors of production is the most accurate?
    • A. 

      The five factors of production are energy,capital,labor,leadership and money.

    • B. 

      Wealth creation in poor nations is slowed by chronic shortages of labor.

    • C. 

      Each of the factors of production is equally important in creating wealth.

    • D. 

      Entrepreneurship and knowledge are the most important in creating wealth.


  • 12. 
    Nadine has started up a new printing business. The printers,computers,and copying machines she has leased are examples of:
    • A. 

      Natural resources.

    • B. 

      Intangible resources

    • C. 

      Current assets.

    • D. 

      Capital.


  • 13. 
    A country's ___________ refers their general well-being and satisfaction derived from a variety of factors including personal freedom, safety, education, and a clean environment.
    • A. 

      Standard of living

    • B. 

      Quality of life

    • C. 

      Gross national income

    • D. 

      Social satisfaction index


  • 14. 
    The knowledge and skills students acquire in business courses will be useful to them:
    • A. 

      Only if they work for a major corporation.

    • B. 

      Only if they work for a nonprofit organization.

    • C. 

      Only if they start their own businesses.

    • D. 

      If they work for any organization that produces goods and services, including nonprofit and volunteer organizations as well as businesses.


  • 15. 
    Which of the following is a factor of production?
    • A. 

      Bonds

    • B. 

      Money

    • C. 

      Knowledge

    • D. 

      Service


  • 16. 
    According to the Spotlight on Small Business box for Chapter 1, which of the following statements about starting small businesses in the United States is most accurate?
    • A. 

      Compared to other industrialized nations, a much smaller percentage of U.S. citizens attempt to start their own business than citizens in other countries.

    • B. 

      Rapid technological change has actually discouraged the formation of new businesses in the United States.

    • C. 

      Compared to other countries, the United States has more public and private groups that teach entrepreneurs how to build businesses.

    • D. 

      Starting a business is more risky and almost always offers a lower financial reward than opening an outlet of a successful franchise.


  • 17. 
    The most important difference between businesses and nonprofit organizations is that:
    • A. 

      Businesses do not benefit society

    • B. 

      Nonprofit organizations do not strive for financial gains

    • C. 

      Nonprofit organizations focus on social and educational goals

    • D. 

      Nonprofit organizations do not benefit society


  • 18. 
    The number of businesses owned by Hispanics and Asians has:
    • A. 

      Has decreased after the 9-11 terrorist attack

    • B. 

      Slowly increased

    • C. 

      Increased dramatically

    • D. 

      Remained relatively constant


  • 19. 
    In countries where businesses are government owned:
    • A. 

      There is less incentive to work hard.

    • B. 

      The right amount of each good is produced.

    • C. 

      Profits tend to be higher.

    • D. 

      The quality of goods is high but profits are low.


  • 20. 
    A review of the decision making process as to where to locate a new business venture suggests that:
    • A. 

      Entrepreneurs seem to like professional sports.

    • B. 

      Entrepreneurs respond to differences in tax rates and government regulations.

    • C. 

      Risk has no bearing on where businesses locate their operations.

    • D. 

      Entrepreneurs almost always start their businesses within 25 miles of their hometown.


  • 21. 
    According to Bloomberg Personal Finance magazine, one of the greatest threats to the U.S. economy is:
    • A. 

      The risk of additional terrorist attacks by anti-American forcesincreased strength of the Euro currency and the European market

    • B. 

      Increased strength of the Euro currency and the European market

    • C. 

      The continued weakness of our Asian trading partners.

    • D. 

      The impact of corporate scandals on investor confidence.


  • 22. 
    ___________ means producing items with the least amount of resources.
    • A. 

      Efficiency

    • B. 

      Technology

    • C. 

      Production

    • D. 

      Productivity


  • 23. 
    All of the following policies would tend to foster entrepreneurship except:
    • A. 

      Establishing a currency that is tradable on world markets.

    • B. 

      Establishing more regulations to protect the environment.

    • C. 

      Developing policies to reduce corruption in business and government

    • D. 

      Allowing private ownership of businesses.


  • 24. 
    The Internet and the emergence of an information based economy are important parts of the ___________ environment in which businesses operate
    • A. 

      Economic and legal

    • B. 

      Technological

    • C. 

      Competitive

    • D. 

      Global


  • 25. 
    Employers provide tools and technology for their employees in order to:
    • A. 

      Increase the cost of production and profitability

    • B. 

      Improve their efficiency and productivity

    • C. 

      To reduce corruption in business and eliminate scandals

    • D. 

      Encourage the private ownership of businesses


  • 26. 
    All around the world, countries are trying to create more wealth by:
    • A. 

      Raising taxes

    • B. 

      Selling government-owned businesses to private individuals

    • C. 

      Restricting trade with other countries in order to protect local businesses

    • D. 

      Attempting to attain more gold through foreign trade


  • 27. 
    High tax rates tend to:
    • A. 

      Promote economic development

    • B. 

      Make a nation's currency tradable

    • C. 

      Discourage entrepreneurship

    • D. 

      Reduce the amount of money created by the government


  • 28. 
    All of the following can increase labor's productivity except:
    • A. 

      Increased education and training

    • B. 

      Higher wages

    • C. 

      Better technology

    • D. 

      Increased amount of machinery and equipment


  • 29. 
    Taxes and government regulations are part of the ________________ environment of business.
    • A. 

      Economic and legal

    • B. 

      Competitive

    • C. 

      Social

    • D. 

      Technological


  • 30. 
    Jill is looking into the possibility of opening up a day care center in her community, because she is aware of many two-income families that need a place for their children to stay while the parents work. However, she is concerned about the long-term prospects for such a business. Jill believes the future of her center will depend on whether birth rates and the number of two-income families remain high. These concerns illustrate how businesses can be affected by:
    • A. 

      Econometric trends

    • B. 

      Demographic trends

    • C. 

      Holographic trends

    • D. 

      Psychometric trends


  • 31. 
    The statistical study of human population to learn its size, density, and characteristics is called:
    • A. 

      Psychographics

    • B. 

      Econometrics

    • C. 

      Demography

    • D. 

      Geometry


  • 32. 
    Which of the following statements about e-commerce is most accurate?
    • A. 

      Most firms engaged in e-commerce become profitable after one or two years of operations.

    • B. 

      One of the advantages of e-commerce that has lured businesses into e-commerce is the prospect of lower transactions costs

    • C. 

      E-commerce firms that emphasize B2C transactions have grown at a much faster rate than firms that emphasize B2B transactions

    • D. 

      A major advantage e-commerce firms have over traditional retailers is in the area of customer service


  • 33. 
    One result of the use of self-managed cross-functional teams has been:
    • A. 

      A reduction in the amount of empowerment.

    • B. 

      Less emphasis on meeting the needs of stakeholders.

    • C. 

      The elimination of some management positions.

    • D. 

      Reduced responsibility and pay for lower-level employees.


  • 34. 
    An electronic storage file where firms keep customer information is known as a(n):
    • A. 

      MP3 file

    • B. 

      Management information system

    • C. 

      Database

    • D. 

      E-mail server


  • 35. 
    Population studies indicate that by the year 2050 ________ will be a slim majority of the U.S. population.
    • A. 

      African-Americans

    • B. 

      Asians

    • C. 

      Non-Hispanic Blacks

    • D. 

      Non-Hispanic whites


  • 36. 
    Companies that sell goods to consumers over the Internet are engaging in:
    • A. 

      B2C transactions

    • B. 

      IOU transactions

    • C. 

      B2B transactions

    • D. 

      Y2K transactions


  • 37. 
    To be effective, empowerment will require lower-level workers to :
    • A. 

      Have more education

    • B. 

      Accept less responsibility and lower wages

    • C. 

      Receive less training

    • D. 

      Have written policies regulating each aspect of their work


  • 38. 
    Successful businesses are keenly focused on their:
    • A. 

      Customers

    • B. 

      Managers

    • C. 

      Creditors

    • D. 

      Bureaucrats


  • 39. 
    Empowerment requires that managers focus more on __________________ lower-level employees.
    • A. 

      Directly supervising

    • B. 

      Training, supporting, coaching, and motivating

    • C. 

      Simplifying the jobs of

    • D. 

      Controlling and correcting


  • 40. 
    The series of lines on a product packaging that the cashier scans when you check out at a grocery store or discount store is called a:
    • A. 

      Bar code

    • B. 

      Zip code

    • C. 

      Scan code

    • D. 

      Laser code


  • 41. 
    Mark recently graduated with honors from his college. He has bragged to his friends that his fine academic performance has prepared him so well for a successful career that he can forget school or training in his future. In evaluating the workplace of the future, Mark is:
    • A. 

      Exactly right. His past performance should carry him to success

    • B. 

      Completely wrong. Studies show that a college education has little to do with success

    • C. 

      Over confident. Global competition means that continuous learning will be needed in the future to adapt to rapid changes

    • D. 

      Probably right. Specialized training today is a key to continued success in the future


  • 42. 
    The book Generations at Work suggests that ________ are perceived by others as slackers, whiners, and rude
    • A. 

      Boomers

    • B. 

      Generation Xers

    • C. 

      Ethnic

    • D. 

      Migrant workers


  • 43. 
    Those individuals born in the U.S. between 1946 and 1964 are referred to as:
    • A. 

      Boomers

    • B. 

      Generation Xers

    • C. 

      Echoes

    • D. 

      Diversity workers


  • 44. 
    Cooperation among firms from different nations is:
    • A. 

      Likely to become a thing of the past as competition among nations increases

    • B. 

      Illegal and will eventually hurt consumers

    • C. 

      A way to expand world markets and achieve greater world prosperity

    • D. 

      Likely to result in a loss of jobs in poor nations as production shifts to wealthier countries


  • 45. 
    Which of the following best describes recent job growth in the service sector?
    • A. 

      The service sector has generated almost all new jobs in the American economy since the mid 1980's,but the rate of job growth in services has slowed in recent years

    • B. 

      Jobs in the service sector have increased slowly over the past decade,but most new jobs are created in the manufacturing industries

    • C. 

      Employment in the service sector has declined in recent years,and this decline is expected to continue

    • D. 

      There has been little change in the number of jobs in the service sector in recent years,however employment is expected to increase rapidly


  • 46. 
    Currently,the richest group in the United States consists of people between the ages of:
    • A. 

      25 and 34

    • B. 

      35 and 44

    • C. 

      45 and 54

    • D. 

      55 and 64


  • 47. 
    In the current global environment,high quality products are produced:
    • A. 

      In United States only

    • B. 

      Only in high wage nations such as the U.S.,Germany,and Japan

    • C. 

      Only in low labor cost countries since they can afford required technology

    • D. 

      In a variety of nations throughout the world,regardless of the labor costs


  • 48. 
    People born in the U.S. between 1965 and 1980 are referred to as:
    • A. 

      Boomers

    • B. 

      Generation Xers

    • C. 

      Echoes

    • D. 

      Diversity workers


  • 49. 
    Tangible products such as computers,food,and cars are examples of:
    • A. 

      Declining industries

    • B. 

      B2B agreements

    • C. 

      Services

    • D. 

      Goods


  • 50. 
    The book Generations at Work suggests that ________ are perceived by others as self-righteous workaholics
    • A. 

      Boomers

    • B. 

      Generation Xers

    • C. 

      Ethnic

    • D. 

      Immigrant workers


  • 51. 
    The events of 9-11's terrorist attack initially caused:
    • A. 

      Consumers to lose confidence and the government to spend more

    • B. 

      Consumers to spend more because they felt more patriotic

    • C. 

      A decrease in sales revenue for many businesses and an increase in the stock market prices

    • D. 

      The government to cut back spending in order to balance the federal budget


  • 52. 
    The high cost of housing and the desire to “have it all” have contributed to a dramatic growth in:
    • A. 

      Unemployment

    • B. 

      Two-income families

    • C. 

      Divorce rates

    • D. 

      Government subsidy programs


  • 53. 
    Mostly Mirrors, Inc. is considering a program that would allow some of its workers to telecommute. One group of workers who would probably benefit from telecommuting is:
    • A. 

      Workers who do not have access to computers at home

    • B. 

      Workers who have little self-motivation

    • C. 

      Front-line workers who must frequently meet with customers who visit the office

    • D. 

      Workers with young children who want to earn income while staying at home


  • 54. 
    By 1990, Todd McFarlane was the highest paid _____________ in America.
    • A. 

      Toy manufacturer

    • B. 

      Sculptor

    • C. 

      Professional baseball player

    • D. 

      comic book artist

    • E. 

      BMX stunt bicycle rider


  • 55. 
    What set of laws is the success of the McFarlane Companies especially dependent on?  
    • A. 

      Employment law

    • B. 

      intellectual property law (the law of patents and copyrights)

    • C. 

      Antitrust law

    • D. 

      Product liability law

    • E. 

      The law of corporations


  • 56. 
    How much did The McFarlane Companies pay for Mark McGuire's record 70th homerun ball?  
    • A. 

      $1 million

    • B. 

      $2 million

    • C. 

      $3 million

    • D. 

      $4 million

    • E. 

      $5 million


  • 57. 
    What career did Todd McFarlane of the McFarlane Companies have his heart set on when he was a teenager?
    • A. 

      Businessman

    • B. 

      Entrepreneur

    • C. 

      professional baseball player

    • D. 

      Accountant

    • E. 

      Comic book artist


  • 58. 
    In the video "Toying with Success: The McFarlane Companies," Todd McFarlane held up a toy basketball his company makes. The toy was a realistic brown color and had painted black seams. Mr. McFarlane estimated that this basketball costs him _____ cents per unit to make. He also estimated that if he were to make it instead in a less realistic orange color without painted seams,it would cost him _____ cents per unit to make.
    • A. 

      3;1

    • B. 

      6;2

    • C. 

      9;3

    • D. 

      12;4

    • E. 

      15;5


  • 59. 
    Mr. Lilly 's theory of the causes of differential wealth among nations includes elimination of corruption as a subfactor within institutional capital.
    • A. 

      True

    • B. 

      False


  • 60. 
    Mr. Lilly' s theory of the causes of differential wealth among nations includes social capital as a factor
    • A. 

      True

    • B. 

      False


  • 61. 
    According to Mr. Lilly,eBay creates wealth or value out of thin air.
    • A. 

      True

    • B. 

      False


  • 62. 
    Mr. Lilly 's theory of the causes of differential wealth among nations includes effective enforcement of private contracts as a subfactor within institutional capital.
    • A. 

      True

    • B. 

      False


  • 63. 
    According to Mr. Lilly, Businesses bring wealth into existence in our universe that wasn' t there before. They create wealth "out of thin air."
    • A. 

      True

    • B. 

      False


  • 64. 
    Mr. Lilly 's theory of the causes of differential wealth among nations includes keeping taxes and business regulations to a minimum as a subfactor within institutional capital.  
    • A. 

      True

    • B. 

      False


  • 65. 
    Mr. Lilly' s theory of the causes of differential wealth among nations includes labor as a factor
    • A. 

      True

    • B. 

      False


  • 66. 
    Mr. Lilly 's theory of the causes of differential wealth among nations includes knowledge as a factor.  
    • A. 

      True

    • B. 

      False


  • 67. 
    Mr. Lilly' s theory of the causes of differential wealth among nations includes entrpreneurship as a factor.
    • A. 

      True

    • B. 

      False


  • 68. 
    Businesses keep 100% of the value they create
    • A. 

      True

    • B. 

      False


  • 69. 
    Mr. Lilly says the stakeholder view of the corporation presented in the textbook,as summarized in its statement that "The challenge of the 21st century will be for organizations to balance, as much as possible, the needs of all stakeholders" (emphasis added) is a bit controversial
    • A. 

      True

    • B. 

      False


  • 70. 
    Mr. Lilly's theory of the causes of differential wealth among nations includes the right to own private property as a subfactor within institutional capital.
    • A. 

      True

    • B. 

      False


  • 71. 
    Mr. Lilly's theory of the causes of differential wealth among nations includes physical capital as a factor
    • A. 

      True

    • B. 

      False


  • 72. 
    Mr. Lilly's theory of the causes of differential wealth among nations includes land as a factor.
    • A. 

      True

    • B. 

      False


  • 73. 
    Mr. Lilly's theory of the causes of differential wealth among nations includes institutional capital as a factor
    • A. 

      True

    • B. 

      False


  • 74. 
    Mr. Lilly defines government corruption as government officials taking money in exchange for  
    • A. 

      Goods

    • B. 

      Services

    • C. 

      Stocks and bonds

    • D. 

      doing their job differently than they would otherwise have done

    • E. 

      All of the above are correct


  • 75. 
    In Mr. Lilly's opinion, businesses have  
    • A. 

      A large effect on both our standard of living and our quality of life.

    • B. 

      A large effect on our quality of life, but a more limited effect on our standard of living

    • C. 

      A large effect on our standard of living, but a more limited effect on our quality of life

    • D. 

      Little or no effect on our standard of living or our quality of life.


  • 76. 
    Mr. Lilly would prefer to see the expression ___________________________ substituted for #4 Tradable currency in the 5-item list in the upper left quadrant of Figure 1.3 of your book labeled "The Economic and Legal Environment."
    • A. 

      Basic law and order

    • B. 

      Widespread availability of credit

    • C. 

      Free and fair elections

    • D. 

      Peace


  • 77. 
    According to Mr. Lilly, under reasonable assumptions, about half the value created by businesess shows up as ______________, and the other half shows up as taxes or consumer surplus
    • A. 

      Inventory

    • B. 

      Advertising

    • C. 

      Distribution costs

    • D. 

      Profits


  • 78. 
    Saudi Arabia has the 45th highest standard of living in the world out of 194 nations. Mr. Lilly thinks this is primarily because they have a lot of the factor of production called  
    • A. 

      Land

    • B. 

      Labor

    • C. 

      Capital

    • D. 

      Entrepreneurship

    • E. 

      Knowledge


  • 79. 
    In the lecture, Mr. Lilly presented a definition of "business" that was identical to the one contained in your textbook, except that he substituted the expression ____________________ for the word activity
    • A. 

      Business process

    • B. 

      Professional undertaking

    • C. 

      individual or organization

    • D. 

      Risky activity


  • 80. 
    Mr. Lilly says "Show me a business that _____________________, and I will show you a business that creates wealth or value out of thin air
    • A. 

      Is run ethically

    • B. 

      Obeys the law

    • C. 

      Is profitable

    • D. 

      All of the above


  • 81. 
    According to Mr. Lilly, the value created by businesses is divided between
    • A. 

      Two groups: shareholders and employees

    • B. 

      Three groups: shareholders, consumers, and the government

    • C. 

      Four groups: shareholders, employees, consumers, and the government

    • D. 

      Five groups: shareholders, employees, consumers, the government, and other stakeholders.


  • 82. 
    Consumer surplus is the difference between the amount a consumer would have been willing to pay for a product or service and  
    • A. 

      The cost of making that product or service

    • B. 

      The profit earned on that product or service

    • C. 

      Its resale value

    • D. 

      The amount they actually had to pay


  • 83. 
    What do high tax rates tend to do?
    • A. 

      Promote economic development

    • B. 

      Make a nation's currency tradable

    • C. 

      Discourage entrepreneurship

    • D. 

      Reduce the amount of money printed by the government


  • 84. 
    Which of the following is the best example of a business?
    • A. 

      A community college

    • B. 

      The Salvation Army

    • C. 

      The Girl Scouts of America

    • D. 

      Wal-Mart


  • 85. 
    Contracts are  
    • A. 

      Merely promises that people have made to each other

    • B. 

      Laws that are passed by state legislatures

    • C. 

      Orders that are issued by a president or governor of a state

    • D. 

      All of the above


  • 86. 
    According to Mr. Lilly, businesses are constantly trying to invent new products that society will value more highly and/or find ways to produce their current products more cheaply, in order to make:
    • A. 

      Inroads into new markets

    • B. 

      It impossible for the government to regulate them

    • C. 

      Government get off their back

    • D. 

      The step-up in value from inputs to outputs as high as possible.


  • 87. 
    A key to economic growth and development is to:
    • A. 

      Locate more deposits of gold and other precious metals

    • B. 

      Emphasize a fair and equitable distribution of income

    • C. 

      Provide people with better education

    • D. 

      Allow government planning to guide the allocation of resources


  • 88. 
    According to the invisible hand concept, the best way for the government to encourage the creation of jobs and the production of the products most wanted by consumers would be to:
    • A. 

      Take over the operation of all firms in major industries, such as telecommunications, transportation, and energy, and operate these firms as nonprofit organizations

    • B. 

      Allow private ownership of businesses, but make use of extensive regulation to force businesses to behave in a socially desirable way

    • C. 

      Allow entrepreneurs a great deal of personal freedom to follow their own self-interest

    • D. 

      Impose high taxes on individuals, and use the revenue to subsidize businesses to encourage them to produce the maximum rate of output


  • 89. 
    ___________ studies the operation of a nation's economy as a whole
    • A. 

      Microeconomics

    • B. 

      Socioeconomics

    • C. 

      Econometrics

    • D. 

      Macroeconomics


  • 90. 
    _________ is considered by some to be the father of modern economics
    • A. 

      John Maynard Keynes

    • B. 

      Adam Smith

    • C. 

      Thomas Carlyle

    • D. 

      Samuel Kapital


  • 91. 
    Which of the following would be a topic emphasized in a macroeconomics course?
    • A. 

      Factors that determine how fast a nation's economy is growing

    • B. 

      How a firm decides the price it will charge for one of its products

    • C. 

      How a consumer chooses which goods to buy

    • D. 

      The determinants of the wage rate for a certain type of labor


  • 92. 
    Adam Smith believed that countries would prosper if businesspeople were free to start and run their own businesses, because businesspeople would make a profit by providing the goods, services and ideas that others in the economy wanted. This was called the:
    • A. 

      Kinked demand theory

    • B. 

      Invisible hand

    • C. 

      Spending multiplier

    • D. 

      Demand accelerator


  • 93. 
    For many years, Congressman Reggie Lader 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 Lader:
    • A. 

      Agrees with the ideas of Thomas Malthus

    • B. 

      Does not accept the philosophy behind Adam Smith's invisible hand

    • C. 

      Is unaware of the fact that most businesses in the United States are actually owned by the government

    • D. 

      Does not realize that government regulation is already the main determinant of business decisions in capitalist economies


  • 94. 
    In the boxed material "Reaching Beyond Our Borders," Pablo Tesak increased the productivity of his workers. How did he accomplish this?
    • A. 

      He gave each worker a state-of-the-art computer and developed a new training program that made extensive use of the multimedia capabilities of these computers

    • B. 

      He was the first employer in El Salvador to recognize and negotiate with a union formed by the workers

    • C. 

      He improved the morale of his workers by opening a “price club” to help them buy goods and obtain needed services at low cost

    • D. 

      He gave his employees a share of ownership in his company


  • 95. 
    Sue Flay is a gifted cook. She is about to open her own business, a restaurant in which she will be the head chef. Sue is willing to work long hours because she believes that her culinary talents and hard work will allow her business to succeed and earn her a great deal of money. Sue's efforts appear most consistent with the economic theory developed by:
    • A. 

      Thomas Malthus.

    • B. 

      Karl Marx

    • C. 

      Adam Smith

    • D. 

      David Riccardo


  • 96. 
    Which of the following would be a topic emphasized in a microeconomics class?
    • A. 

      How a nation's GDP is computed

    • B. 

      The reason's why the unemployment rate for the economy is rising or falling

    • C. 

      How market conditions determine the price of a specific product

    • D. 

      How the government can use fiscal and monetary policies to stabilize the economy


  • 97. 
    Thomas Malthus believed that a major problem that would limit economic progress was:
    • A. 

      Depletion of gold reserves

    • B. 

      Overpopulation

    • C. 

      The tendency of governments to levy high tax rates

    • D. 

      The inability of workers in developed nations to compete against cheap foreign labor


  • 98. 
    Economics is the study of how
    • A. 

      To invest wisely in the stock market

    • B. 

      To employ resources to produce goods and services and distribute them among competing groups and individuals

    • C. 

      Sophisticated statistical techniques can be used to make predictions about the evolution of society over the long run

    • D. 

      People govern themselves in a democratic society


  • 99. 
    ____________ looks at the behavior of individual people and organizations in specific markets.
    • A. 

      Macroeconomics

    • B. 

      Finite economics

    • C. 

      Microeconomics

    • D. 

      Nanoeconomics


  • 100. 
    The market price of apples is currently rising. In a free-market economy, the most likely explanation of this price change is that:
    • A. 

      The government has decided to set a higher price so that the firms in the market make an adequate profit.

    • B. 

      There is a shortage in the market for apples

    • C. 

      The supply of money has decreased

    • D. 

      The equilibrium price is lower than the market price


  • 101. 
    The presence of competition in free markets:
    • A. 

      Is undesirable because it results in unnecessary duplication of efforts

    • B. 

      Typically results in better quality and lower prices

    • C. 

      Is rare, since most markets eventually evolve into monopolies

    • D. 

      Is undesirable, because one big firm can usually produce goods more efficiently than a large number of small firms


  • 102. 
    A typical demand curve shows that:
    • A. 

      As people earn more income, they buy more of a good

    • B. 

      As supply increases, the amount purchased decreases

    • C. 

      People tend to buy more of a good than they really want

    • D. 

      People tend to buy more of a good when its price decreases


  • 103. 
    The quantity of a good or service that manufacturers or owners are willing to sell at different prices during a specific time period is known as the
    • A. 

      Supply of that product

    • B. 

      Demand for that product

    • C. 

      Elasticity of that product

    • D. 

      Utility of that product


  • 104. 
    When the supply curve and demand curve for a particular good are on a single graph, the point at which the two curves intersect identifies the:
    • A. 

      Total profit earned by producers

    • B. 

      Total amount of labor that will be employed in that market

    • C. 

      Amount of time it takes to bring together the buyers and sellers of the good

    • D. 

      Equilibrium price of the good


  • 105. 
    Patrick lives in a capitalist country. He owns his own home and car, as well as his own business and building. Patrick is able to maintain ownership of these items under the right to:
    • A. 

      Eminent domain

    • B. 

      Freedom of choice

    • C. 

      Private property

    • D. 

      Freedom of competition


  • 106. 
    Under capitalism:
    • A. 

      Most of the means of production and distribution are privately owned and operated for profit

    • B. 

      The primary function of the government is to distribute wealth more evenly

    • C. 

      Utilities, health care, education, and other services are controlled by the government

    • D. 

      Markets operate to carry out the decisions made by central planners


  • 107. 
    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. 

      Demand

    • B. 

      Supply

    • C. 

      Utility

    • D. 

      Laffer


  • 108. 
    When the market price of a good is below the equilibrium price:
    • A. 

      The quantity demanded will exceed 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


  • 109. 
    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:
    • A. 

      Eminent domain

    • B. 

      Freedom of expression

    • C. 

      Freedom of choice

    • D. 

      Freedom of competition


  • 110. 
    The markets for laundry detergents, soft drinks, and automobiles all are dominated by just a few sellers. Economists would classify these markets as examples of:
    • A. 

      Monopolistic competition

    • B. 

      Perfect competition

    • C. 

      An oligopoly

    • D. 

      A monopoly


  • 111. 
    Which of the following statements most accurately identifies a serious limitation of the free-market economic system?
    • A. 

      Free-market economies offer little opportunity for the poor to work their way out of poverty

    • B. 

      Free-market economies have been unable to create wealth as rapidly as other types of economic systems

    • C. 

      Free-market economies often are plagued by shortages of needed consumer goods

    • D. 

      Free-market economies result in a very unequal distribution of wealth


  • 112. 
    __________ is characterized by a large number of firms selling products that appear to be identical.
    • A. 

      Oligopoly

    • B. 

      Monopolistic competition

    • C. 

      Perfect competition

    • D. 

      Microeconomic competition


  • 113. 
    ___________ exists when a large number of firms produce goods that are similar but are perceived by buyers as being different
    • A. 

      Perfect competition

    • B. 

      Monopolistic competition

    • C. 

      Oligopoly

    • D. 

      A monopoly


  • 114. 
    One of the greatest concerns associated with capitalism is that:
    • A. 

      It is not very successful at creating wealth

    • B. 

      Some businesspeople may let greed guide their behavior

    • C. 

      The amount of economic freedom enjoyed by consumers is very limited

    • D. 

      Producers are unlikely to supply the goods and services that consumers value the most


  • 115. 
    Under socialism:
    • A. 

      The basic goal is to make sure that those that create wealth are allowed to keep that wealth

    • B. 

      A major goal of the government is to reduce the inequality in the distribution of wealth

    • C. 

      A major goal of the government is to create incentives to encourage entrepreneurs to create jobs and economic growth

    • D. 

      The most important goal of the government is to keep tax rates extremely low


  • 116. 
    A major benefit of socialism is assumed to be its:
    • A. 

      Ability to stimulate rapid economic growth

    • B. 

      Emphasis on low tax rates

    • C. 

      Emphasis on social equality

    • D. 

      Ability to create strong incentives to work hard


  • 117. 
    A key assumption of socialism is that:
    • A. 

      Government ownership of some basic businesses is desirable because it helps achieve a more equal distribution of profits among the people

    • B. 

      The most important economic function of government is to promote rapid economic growth

    • C. 

      Economic growth requires strict government control over population growth

    • D. 

      Tax rates should be kept as low as possible in order to give consumers the maximum possible purchasing power


  • 118. 
    Jorge Martinez is a hard working entrepreneur who operated a successful business in his home country of Margintina for many years. Recently, however, he immigrated to the United States and applied for U.S. citizenship. "In Margintina, tax rates were very high,” Jorge complained. "The government used the taxes I paid to finance all sorts of social programs to help the less fortunate. While this is a noble goal, it has really undermined the profit incentive of individuals such as myself. I really feel that these high taxes have stifled economic growth." Jorge's comments illustrate the reason many socialist countries are experiencing a(n):
    • A. 

      Antitrust problem

    • B. 

      Depression

    • C. 

      Brain drain

    • D. 

      Budget surplus


  • 119. 
    In most large cities there are a large number of bakeries. These bakeries produce similar, but not identical, products. Some bakeries claim to have the best cheesecakes in town, while others brag about their cookies or specialty breads. The bakery market in a large city is an example of:
    • A. 

      Monopolistic competition

    • B. 

      Perfect competition

    • C. 

      An oligopoly

    • D. 

      A monopoly


  • 120. 
    According to the material in the "Dealing With Change" box concerning the Internet in Chapter 2, the advantage of the Internet for small businesses is that it gives them the ability to:
    • A. 

      Reach global markets quickly and cheaply

    • B. 

      Avoid high tax rates

    • C. 

      Sell Internet software to computer users

    • D. 

      Achieve a monopoly position in what would otherwise be a perfectly competitive market


  • 121. 
    In the early 2000s, the value of the U.S. GDP was about:
    • A. 

      $700 billion

    • B. 

      $10 trillion

    • C. 

      $2.5 trillion

    • D. 

      $360 billion


  • 122. 
    Communism is an economic system in which:
    • A. 

      The government and private citizens own equal shares of the economic resources.

    • B. 

      All or most of the productive resources are owned by private businesses.

    • C. 

      The government makes most of the major economic decisions.

    • D. 

      Individual consumers make all economic decisions.


  • 123. 
    Karl Marx believed that:
    • A. 

      Capitalism was incapable of creating wealth

    • B. 

      Only societies that were entirely self-sufficient could hope to prosper

    • C. 

      Capitalism would eventually replace socialism as the dominant economic system

    • D. 

      Workers should take over ownership of businesses and share in the wealth they created


  • 124. 
    The total value of final goods and services produced within a nation's borders in a given year is known as that nation's:
    • A. 

      Aggregate production quota

    • B. 

      Aggregate domestic output

    • C. 

      Index of aggregate economic output

    • D. 

      Gross domestic product


  • 125. 
    Three of the major indicators of the economic condition of the United States are the gross domestic product (GDP), the price indices, and the:
    • A. 

      Debt to equity ratio (DER).

    • B. 

      Gross resource utilization index (GRUI).

    • C. 

      Unemployment rate

    • D. 

      Index of capital formation


  • 126. 
    A major trend in the world today is that:
    • A. 

      Free-market economies are moving more toward socialism and socialist economies are moving more toward capitalism.

    • B. 

      Productivity in the service sector is increasing much more rapidly than productivity in agriculture and manufacturing

    • C. 

      Governments in socialist economies are increasing their use of social programs and relying on higher tax rates to finance these programs

    • D. 

      Governments in countries with capitalist economies are paying less attention to environmental concerns and issues involving social equality


  • 127. 
    Which of the following statements provides the most accurate comparison of socialism and communism?
    • A. 

      Under socialism the government owns most businesses, while under communism the church owns most businesses

    • B. 

      Both socialism and communism want to achieve a more equal distribution of income and wealth, but under communism the government takes more control over people's lives

    • C. 

      Socialism strives for an equal distribution of income but communism wants income to go primarily to those who own and operate private businesses

    • D. 

      Communism believes that the government should always strive to balance its budget, while socialism accepts deficit spending as the price of achieving true equality


  • 128. 
    __________ is a condition in which the rate of inflation is declining.
    • A. 

      Deflation

    • B. 

      Disinflation

    • C. 

      Stagflation

    • D. 

      Unflation


  • 129. 
    _____________ refers to a general rise in the price level of goods and services over time.
    • A. 

      Acceleration

    • B. 

      Recession

    • C. 

      Inflation

    • D. 

      Escalation


  • 130. 
    Kathleen manages a manufacturing plant for ScanRite, Inc., a producer of scanners and other input devices connected to computers. About six months ago, Kathleen asked an assistant to keep track of both work hours and output at her plant. She has compared these figures, and has found that even though the number of workers (and the hours they worked) remained relatively steady over the past six months, the plant's output increased significantly. This indicates that:
    • A. 

      The productivity of workers at the ScanRite plant has increased

    • B. 

      The ScanRite plant must have sold off some of its excess inventory

    • C. 

      ScanRite prices have increased faster than the wages it pays to its workers

    • D. 

      Kathleen should hire more workers.


  • 131. 
    The measure used to report price changes at the wholesale level is the:
    • A. 

      Gross domestic product (GDP).

    • B. 

      Consumer price index (CPI).

    • C. 

      Wholesale price index (WPI).

    • D. 

      Producer price index (PPI).


  • 132. 
    Francine is a bright and talented woman. She recently quit her job at a major corporation because she and her boss didn't get along and she saw little chance for advancement. Francine has not yet found another job, but the economy appears healthy and lots of firms are hiring people with her qualifications. Thus, Francine is confident that she will find a job in the near future. Which of the following statements about Francine's current situation is most accurate? Francine is:
    • A. 

      Not considered unemployed because she voluntarily quit her job

    • B. 

      An example of cyclical unemployment

    • C. 

      An example of frictional unemployment

    • D. 

      Most likely to find employment quickly if she seeks training in a different field


  • 133. 
    Which of the following statements about productivity in the service sector of the U.S. economy is most accurate?
    • A. 

      Productivity in the service sector has increased much more rapidly than productivity in the manufacturing sector.

    • B. 

      Improving productivity in the service sector is much less important than improving productivity in the manufacturing sector, because the service sector does not really produce anything

    • C. 

      Productivity in the service sector is easier to measure than productivity in agriculture.

    • D. 

      Measures of productivity in the service sector do a poor job of taking quality improvements into account.


  • 134. 
    Which of the following results would be the clearest indication that an economy was experiencing deflation?
    • A. 

      A decrease in the unemployment rate

    • B. 

      A decrease in GDP

    • C. 

      An increase in the PPI.

    • D. 

      A decrease in the CPI


  • 135. 
    The ___________ index measures changes in the prices of about 400 goods and services such as food, housing, apparel and medical care
    • A. 

      Market price

    • B. 

      Producer price

    • C. 

      Wholesale price

    • D. 

      Consumer price


  • 136. 
    According to the "Making Ethical Decisions" box in Chapter 2, some people suggest that the tax deductions allowed for interest charges on home mortgages and for charitable contributions should be eliminated. What is the basis for this proposal?
    • A. 

      This deduction reduces tax revenues, thus increasing the national debt.

    • B. 

      This deduction leads to very high levels of income tax fraud.

    • C. 

      Elimination of this and other deductions would allow the IRS to greatly simplify our tax forms.

    • D. 

      These deductions are unfair because it is only available to people who are wealthy enough to afford them, while poorer households get no comparable deduction.


  • 137. 
    Your local newspaper has a story in its business section that reports that government spending will again exceed tax revenues. This means that the:
    • A. 

      National debt will increase

    • B. 

      Balance of payments will experience yet another deficit

    • C. 

      Rate of inflation is likely to fall

    • D. 

      Monetary policies pursued by the Fed have been too loose


  • 138. 
    Senator Bud Jette is alarmed at the state of the economy. Unemployment is high and GDP is low. Senator Jette has called for Congress to take decisive action to increase its expenditures and cut taxes in order to stimulate the economy. The actions called for by Senator Jette are examples of the government's use of:
    • A. 

      Monetary policy

    • B. 

      Fiscal policy

    • C. 

      Incomes policy

    • D. 

      Social investment policy


  • 139. 
    A __________ is a very severe recession that is usually accompanied by a decline in the average level of prices.
    • A. 

      Stagflation

    • B. 

      Retraction

    • C. 

      Depression

    • D. 

      Dissolution


  • 140. 
    Recently the U.S. national debt was a little more than:
    • A. 

      $6 trillion

    • B. 

      $2 trillion

    • C. 

      $560 billion

    • D. 

      $380 billion


  • 141. 
    In the United States, the control of the money supply is the responsibility of the:
    • A. 

      United States Treasury

    • B. 

      Federal Reserve System

    • C. 

      Department of State

    • D. 

      Federal Deposit Insurance Corporation


  • 142. 
    Economics is a social science
    • A. 

      True

    • B. 

      False


  • 143. 
    The Internet is greatly increasing the benefits that can be derived from a market-based economy
    • A. 

      True

    • B. 

      False


  • 144. 
    Mr. Lilly recommends to all of his students that they take both Economics 1 and Economics 2 while they are here at De Anza College, or their equivalents at another college.
    • A. 

      True

    • B. 

      False


  • 145. 
    "From each according to his ability, and to each according to his need" summarizes one of the central tenets of
    • A. 

      communism

    • B. 

      Socialism

    • C. 

      Capitalism

    • D. 

      Mixed economies


  • 146. 
    When prices are free to adjust over time, the market price of a good tends to:
    • A. 

      Rise above the equilibrium price in the long run.

    • B. 

      Equal the equilibrium price in the long run.

    • C. 

      Fall below the equilibrium price in the long run.

    • D. 

      Have no specific relationship to the equilibrium price.


  • 147. 
    Karl Marx predicted that the second phase of communism would involve _______________ ownership of the means of production.  
    • A. 

      National

    • B. 

      Private

    • C. 

      Community

    • D. 

      Individual


  • 148. 
    In free-market economies, the distribution of wealth is left to _________________ to determine.  
    • A. 

      Committees

    • B. 

      Markets

    • C. 

      Government agencies

    • D. 

      Business owners and managers


  • 149. 
    Almost all national economies in the world today are converging on a form of economic organization known as  
    • A. 

      Pure capitalism

    • B. 

      Socialism

    • C. 

      Communism

    • D. 

      A mixed economy


  • 150. 
    Under monopoly, the price will be ________ and the quantity sold per time period will _____________ than they would have been under perfect competition.
    • A. 

      Higher; also be higher

    • B. 

      higher; be lower

    • C. 

      Lower; also be lower

    • D. 

      Lower; be higher


  • 151. 
    After the Bolshevik Revolution, the Soviet Union got stuck in the _________ phase of communism predicted by Marx.  
    • A. 

      first

    • B. 

      Second

    • C. 

      Third

    • D. 

      Fourth


  • 152. 
    A typical supply curve shows that an increase in the price of a good will cause the quantity supplied to:
    • A. 

      Decrease

    • B. 

      Increase

    • C. 

      Remain constant

    • D. 

      Fluctuate randomly around its equilibrium value


  • 153. 
    In a purely capitalist economy, ________ percent of the productive resources of the economy would be privately owned and managed
    • A. 

      100

    • B. 

      Over 80

    • C. 

      Over 70

    • D. 

      At least 50


  • 154. 

    Refer to the graph above. The quantity demanded when price is $4.00 per week is:
    • A. 

      2 cassettes per week

    • B. 

      4 cassettes per week

    • C. 

      6 cassettes per week

    • D. 

      8 cassettes per week


  • 155. 
    In command economies, _______________ decide(s) how wealth should be distributed.  
    • A. 

      The king or queen

    • B. 

      Markets

    • C. 

      No one

    • D. 

      committees


  • 156. 

    Refer to the graph above. At which point will you expect the stronger downward pressure on prices?
    • A. 

      (a)

    • B. 

      (b)

    • C. 

      (c)

    • D. 

      (d)


  • 157. 
    Some people say that North and South Korea's fortunes since 1945 are strong evidence of the superiority of  
    • A. 

      Communism

    • B. 

      Capitalism

    • C. 

      Socialism

    • D. 

      Mixed economies


  • 158. 
    The market for gasoline at the retail level (i.e. the market gas stations sell in) is a good example of
    • A. 

      A monopoly.

    • B. 

      An oligopoly

    • C. 

      Monopolistic competition

    • D. 

      A perfectly competitive market


  • 159. 

    Refer to the graph above. The figure shows the demand and supply curves for eggs and shows two equilibrium points, E1 and E2. Suppose the prevailing price of a dozen eggs is $1.25 and the demand curve is given by D1. Which of the following would result?
    • A. 

      A surplus of 2000 dozen eggs per week

    • B. 

      A shortage of 2000 dozen eggs per week

    • C. 

      A surplus of 3000 dozen eggs per week

    • D. 

      A tendency for the price of eggs to increase


  • 160. 
    The U.S. automobile industry is a good example of  
    • A. 

      A monopoly

    • B. 

      An oligopoly

    • C. 

      Monopolistic competition

    • D. 

      A perfectly competitive market


  • 161. 
    Karl Marx predicted that the first phase of communism would involve ______________ ownership of the means of production.
    • A. 

      National

    • B. 

      Private

    • C. 

      Community

    • D. 

      Individual


  • 162. 
    One of the reasons communism came into being is that capitalist countries of the 1800s tended to produce
    • A. 

      Too few goods and services

    • B. 

      Too few public goods

    • C. 

      Too much environmental damage

    • D. 

      A highly unequal distribution of wealth and income


  • 163. 
    Socialism is intermediate between communism and capitalism in
    • A. 

      One way

    • B. 

      Two ways

    • C. 

      Three ways

    • D. 

      Four ways


  • 164. 
    Adam Smith was a Scottish ______________ professor when he decided to take some time off of work to do the research which led to the publication of The Wealth of Nations
    • A. 

      Economics

    • B. 

      Sociology

    • C. 

      Philosophy

    • D. 

      Accounting


  • 165. 
    The percentage change in the CPI from one year to the next tells you the rate of inflation for that year
    • A. 

      True

    • B. 

      False


  • 166. 
    The level of the CPI in a given year tells you the rate of inflation for that year
    • A. 

      True

    • B. 

      False


  • 167. 
    The so-called natural rate of unemployment in any given year is probably the sum of the ___________________ components of unemployment
    • A. 

      Frictional and seasonal

    • B. 

      Structural and cyclical

    • C. 

      Frictional and structural

    • D. 

      Structural and seasonal


  • 168. 
    A period of deflation is a period in which
    • A. 

      Average price levels are rising

    • B. 

      Average price levels are falling

    • C. 

      The rate of inflation is increasing

    • D. 

      The rate of inflation is decreasing


  • 169. 
    Classical economists of the early 1900s believed that ____________ unemployment should never occur
    • A. 

      Frictional

    • B. 

      Structural

    • C. 

      Seasonal

    • D. 

      Cyclical


  • 170. 
    A period of inflation is a period in which
    • A. 

      Average price levels are rising.

    • B. 

      Average price levels are falling

    • C. 

      The rate of inflation is increasing

    • D. 

      The rate of inflation is decreasing

    • E. 

      Both a and c


  • 171. 
    If the federal government wants to use both of its fiscal policy tools to help cool off the economy, they should  
    • A. 

      Increase taxes and reduce government spending

    • B. 

      Increase government spending and reduce taxes

    • C. 

      Reduce both taxes and government spending

    • D. 

      Increase both taxes and government spending


  • 172. 
    If inflation is public enemy number one, the Fed will most likely  
    • A. 

      Raise interest rates

    • B. 

      Lower interest rates

    • C. 

      Increase the money supply

    • D. 

      Put their foot on the gas pedal


  • 173. 
    The part of unemployment composed of workers who chose to leave their last job, plus people entering the job market for the first time, is called   (
    • A. 

      Frictional unemployment

    • B. 

      Structural unemployment

    • C. 

      Seasonal unemployment

    • D. 

      Cyclical unemployment


  • 174. 
    If unemployment is substantially above 4% and inflation is low, the Fed will most likely  
    • A. 

      Raise interest rates

    • B. 

      Lower interest rates

    • C. 

      Decrease taxes

    • D. 

      Increase government spending

    • E. 

      Put their foot on the brake pedal


  • 175. 
    In fiscal policy, the government can put its foot on the gas pedal either by  
    • A. 

      Decreasing government spending or decreasing taxes

    • B. 

      Increasing government spending or decreasing taxes

    • C. 

      Increasing government spending or increasing taxes

    • D. 

      Decreasing government spending or increasing taxes


  • 176. 
    In theory, electronic job boards such as Monster.com and HotJobs.com should decrease ____________ unemployment
    • A. 

      Frictional

    • B. 

      Structural

    • C. 

      Seasonal

    • D. 

      Cyclical

    • E. 

      All of the above


  • 177. 
    The part of unemployment caused by a mismatch in either skills or geography between people actively looking for work and open positions is called  
    • A. 

      Frictional unemployment

    • B. 

      Structural unemployment

    • C. 

      Seasonal unemployment

    • D. 

      Cyclical unemployment


  • 178. 
    Which of the following would be the most efficient and effective way to reduce structural unemployment?  
    • A. 

      Pass laws making it more difficult for employers to lay off workers

    • B. 

      Pass laws outlawing the global outsourcing of American jobs

    • C. 

      Pass laws to slow the pace of technological change in capitalist economies

    • D. 

      Subsidize the retraining of structurally unemployed workers


  • 179. 
    Periods of recession cause  
    • A. 

      Excess unemployment

    • B. 

      The level of unemployment to decrease

    • C. 

      Rapid rates of inflation

    • D. 

      No appreciable change in the level of unemployment


  • 180. 
    In fiscal policy, the government can put its foot on the brake pedal either by  
    • A. 

      Decreasing government spending or decreasing taxes

    • B. 

      Increasing government spending or decreasing taxes

    • C. 

      Increasing government spending or increasing taxes

    • D. 

      Decreasing government spending or increasing taxes


  • 181. 
    The part of unemployment caused by the tendency of economies to oscillate between growth and contraction is called  
    • A. 

      Frictional unemployment

    • B. 

      Structural unemployment

    • C. 

      Seasonal unemployment

    • D. 

      Cyclical unemployment


  • 182. 
    A period of disinflation is a period in which
    • A. 

      Average price levels are rising

    • B. 

      Average price levels are falling

    • C. 

      The rate of inflation is increasing

    • D. 

      The rate of inflation is decreasing


  • 183. 
    The part of unemployment caused by certain industries predictably and consistently needing more employees at certain times of the year is called  
    • A. 

      Frictional unemployment

    • B. 

      Structural unemployment

    • C. 

      Seasonal unemployment

    • D. 

      Cyclical unemployment


  • 184. 
    Which theory states that a nation should produce and sell goods to other countries that it produces most efficiently, and buy goods produced more efficiently by other countries?
    • A. 

      Comparative advantage

    • B. 

      Absolute advantage

    • C. 

      Mercantilism

    • D. 

      Bilateral advantage


  • 185. 
    The largest importer in the global market today is:
    • A. 

      Japan

    • B. 

      Russia

    • C. 

      Germany

    • D. 

      The United States


  • 186. 
    __________________ occurs when a country has a monopoly on      producing a product or is able to produce it at a cost below that of all other countries
    • A. 

      Comparative advantage

    • B. 

      Absolute advantage

    • C. 

      Complete advantage

    • D. 

      Dumping advantage


  • 187. 
    The largest exporter in the world is:
    • A. 

      The United States

    • B. 

      Japan

    • C. 

      Great Britain

    • D. 

      Canada


  • 188. 
    Maureen, a United States resident, was surprised to see that her home computer was actually made in Japan. Maureen did not know she had purchased a(n):
    • A. 

      Imported item

    • B. 

      Exported item

    • C. 

      Protected good

    • D. 

      Generic good


  • 189. 
    A nation has a ___________ in the production of a good if it can produce that good more effectively or efficiently than it can produce other goods.
    • A. 

      Supreme advantage

    • B. 

      Primary efficiency

    • C. 

      Qualified advantage

    • D. 

      Comparative advantage


  • 190. 
    Patrick's Products has a manufacturing plant near Chicago. The plant specializes in compact washers and dryers for countries in which consumers have less living space. Patrick's Products participates in the global market through:
    • A. 

      Importing

    • B. 

      Dumping

    • C. 

      Exporting

    • D. 

      Balancing trade


  • 191. 
    Countries with a low standard of living and quality of life are called:
    • A. 

      Industrialized nations

    • B. 

      Well endowed societies

    • C. 

      Developing countries

    • D. 

      Opportunities of free trade


  • 192. 
    Which of the following is home to the largest percentage of the world's population?
    • A. 

      Africa

    • B. 

      Europe

    • C. 

      North America

    • D. 

      Asia


  • 193. 
    Last year, the nation of Kwansai reported that it had a favorable balance of trade even though it imported $11 billion worth of goods. This indicates that Kwansai:
    • A. 

      Exported $11 billion worth of goods

    • B. 

      Exported more than $11 billion worth of goods

    • C. 

      Overpriced the value of its exports

    • D. 

      Exported less than $11 billion worth of goods


  • 194. 
    The value of goods imported into France exceeds the value of French exports. This indicates that France
    • A. 

      Will experience an exchange rate decrease

    • B. 

      Utilizes high tariffs

    • C. 

      Will incur a budget deficit

    • D. 

      Has a balance of trade deficit


  • 195. 
    When foreign firms build production facilities in the United States, they are engaging in:
    • A. 

      Exporting

    • B. 

      Importing

    • C. 

      Foreign direct investment

    • D. 

      Countertrading


  • 196. 
    A favorable balance of trade occurs when the value of:
    • A. 

      Imports equals the value of exports

    • B. 

      The cash inflows equal the value of the cash outflows

    • C. 

      Imports is less than the value of exports

    • D. 

      The dollar is greater than the value of the euro


  • 197. 
    The president of the Auto Parts of America Corporation recently testified before Congress, urging them to limit the flow of imported automobile parts into the United States. She contended that these imports were priced lower than the foreign producers were charging in their own countries. She believes these foreign producers are:
    • A. 

      Dumping

    • B. 

      Exercising trade deficits

    • C. 

      Promoting free trade

    • D. 

      Exhibiting ethnocentricity


  • 198. 
    To provide better service for their customers, America Online purchased office space in India for their online customer service representatives. This is an example of:
    • A. 

      Dumping

    • B. 

      Foreign direct investment

    • C. 

      A non-tariff trade restriction

    • D. 

      Ethnocentricity


  • 199. 
    __________ is the practice of selling a product in foreign countries for a lower price than the good is sold domestically
    • A. 

      Deflating

    • B. 

      Deflating

    • C. 

      Inflating

    • D. 

      Dumping


  • 200. 
    All of the following are considered when calculating a country's balance of payments except:
    • A. 

      Foreign aid

    • B. 

      Military expenditures

    • C. 

      Domestic inflation rates

    • D. 

      Tourism


  • 201. 
    While the United State exports the largest________ of goods globally, it exports a much lower______ of its products than many other countries do.
    • A. 

      Percentage; volume

    • B. 

      Volume; percentage

    • C. 

      Volume; dollar value

    • D. 

      Percentage; dollar value


  • 202. 
    According to the material in the Reaching Beyond Our Borders box in Chapter 3, which of the following statements best describes McDonald's current involvement in global markets?
    • A. 

      McDonald's focus is on the U.S. market, and it currently has no plans to participate in global markets.

    • B. 

      McDonald's success in the global market has been achieved by offering the U.S. menu worldwide.

    • C. 

      McDonald's global market success reflects their willingness to adapt their menu to local tastes and culture.

    • D. 

      McDonald's has been successful in Europe, but has failed to achieve consumer acceptance in other regions of the world.


  • 203. 
    The. Department of Commerce estimates that every $1 billion of U.S. exports:
    • A. 

      Replaces 250 service sector jobs with 25 manufacturing jobs in the U.S.

    • B. 

      Causes lost revenues for U.S. federal government

    • C. 

      Results in reduced profits for U.S. businesses

    • D. 

      Generates 25,000 jobs in the U.S.


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