Economics - The Business Cycle

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| By Mrbayne1
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Mrbayne1
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Economics - The Business Cycle - Quiz

Questions and Answers
  • 1. 

    People or groups who combine resources to make goods or services are called:

    • A.

      Producers

    • B.

      Consumers

    • C.

      Capital

    Correct Answer
    A. Producers
    Explanation
    Producers refers to individuals or groups who combine resources such as labor, capital, and raw materials to create goods or services. They play a crucial role in the economy by supplying goods and services to meet the demands of consumers. Producers are responsible for the production process, including manufacturing, processing, and distribution. They aim to generate profit by selling their products or services in the market.

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  • 2. 

    This is what is given up when an economic decision is made.

    • A.

      Opportunity Cost

    • B.

      Scarcity

    • C.

      Good

    • D.

      Supply

    Correct Answer
    A. Opportunity Cost
    Explanation
    When an economic decision is made, the opportunity cost is what is given up. Opportunity cost refers to the value of the next best alternative that is forgone when making a choice. In other words, it is the cost of choosing one option over another. So, when making an economic decision, individuals or businesses have to consider the opportunity cost of their choices, as they are giving up the benefits or opportunities associated with the alternative options they did not choose.

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  • 3. 

    The condition that results from unlimited economic wants and limited resources is called:

    • A.

      Scarcity

    • B.

      Opportunity Cost

    • C.

      Demand

    • D.

      Supply

    Correct Answer
    A. Scarcity
    Explanation
    Scarcity is the condition that arises when there are unlimited economic wants but limited resources to fulfill those wants. This means that there is not enough of a resource available to satisfy everyone's desires. Scarcity forces individuals and societies to make choices about how to allocate their limited resources, leading to trade-offs and opportunity costs. The concept of scarcity is fundamental to understanding economics and the need for efficient resource allocation.

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  • 4. 

    People who use resources, goods, or services to satisfy their economic wants are:

    • A.

      Consumers

    • B.

      Producers

    • C.

      Entrepreneurs

    Correct Answer
    A. Consumers
    Explanation
    Consumers are individuals or entities who utilize resources, goods, or services to fulfill their economic desires. They play a vital role in the economy by creating demand for products and services, which in turn drives production and business growth. Consumers have the power to make purchasing decisions and influence the market through their buying behavior. They are an essential component of the economic system, as their consumption patterns shape the supply and demand dynamics of various industries.

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  • 5. 

    The quantities of resources, goods, or services that will be PURCHASED at a various prices is the:

    • A.

      Demand

    • B.

      Supply

    • C.

      Scarcity

    Correct Answer
    A. Demand
    Explanation
    Demand refers to the quantities of resources, goods, or services that consumers are willing and able to purchase at various prices. It represents the consumer's desire and ability to buy a particular product or service. Demand is influenced by factors such as price, income, preferences, and the availability of substitutes. As the price of a product decreases, the quantity demanded generally increases, and vice versa. Understanding demand is crucial for businesses in determining their pricing strategies and production levels.

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  • 6. 

    The quantities of resources, goods, or services that are OFFERED for sale is the: 

    • A.

      Supply

    • B.

      Demand

    • C.

      Scarcity

    Correct Answer
    A. Supply
    Explanation
    Supply refers to the quantities of resources, goods, or services that are available and offered for sale in the market. It represents the amount of a particular product or service that producers are willing and able to provide to the market at a given price and time. The concept of supply is important in understanding market dynamics and determining equilibrium prices.

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  • 7. 

    "Inflation not expected to be a problem this year." The headline above affects which economic indicator the most? 

    • A.

      Consumer Price Index

    • B.

      Gross Domestic Product

    • C.

      Unemployment Statistics

    Correct Answer
    A. Consumer Price Index
    Explanation
    The headline "Inflation not expected to be a problem this year" suggests that the Consumer Price Index (CPI) would be the economic indicator most affected. The CPI measures the average change in prices of goods and services consumed by households, and inflation is a key component of the index. If inflation is not expected to be a problem, it implies that the prices of goods and services are not expected to rise significantly, which would have a direct impact on the CPI.

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  • 8. 

    "Enron Corporation Fires 5,000 Employees"The headline above affects which economic indicator the most? 

    • A.

      Unemployment statistics

    • B.

      Consumer Price Index

    • C.

      Gross Domestic Product

    Correct Answer
    A. Unemployment statistics
    Explanation
    The headline "Enron Corporation Fires 5,000 Employees" directly relates to the unemployment statistics economic indicator. The firing of 5,000 employees indicates a significant increase in unemployment, which is a key measure of the health of the labor market. This event would have a direct impact on the unemployment rate, making it the most affected economic indicator.

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  • 9. 

    'Ford to produce fewer sports utility vehicles (SUVs) this year' The headline above affects which economic indicator the most? 

    • A.

      Gross Domestic Product

    • B.

      Unemployment Statistics

    • C.

      Consumer Price Index

    • D.

      Option 4

    Correct Answer
    A. Gross Domestic Product
    Explanation
    The headline stating that Ford will produce fewer sports utility vehicles (SUVs) this year directly impacts the Gross Domestic Product (GDP) the most. GDP measures the total value of goods and services produced within a country's borders, and a decrease in SUV production by Ford would result in a decline in the overall output of the automotive industry. This reduction in production would subsequently lower the GDP, as it represents a decrease in the country's economic activity and output.

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  • 10. 

    'Prices for consumer goods down 5% this year!' The headline above affects which economic indicator the most? 

    • A.

      Consumer price index

    • B.

      Gross Domestic Product

    • C.

      Unemployment statistics

    Correct Answer
    A. Consumer price index
    Explanation
    The headline stating that prices for consumer goods have decreased by 5% this year directly impacts the consumer price index (CPI) the most. The CPI measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. A decrease in prices for consumer goods would result in a lower CPI, indicating a decrease in inflation and potentially improved purchasing power for consumers.

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  • 11. 

    'Business investment in capital goods (machinery for production) rises.' The headline above affects which economic indicator the most? 

    • A.

      Gross Domestic Product

    • B.

      Consumer Price Index

    • C.

      Unemployment Statistics

    Correct Answer
    A. Gross Domestic Product
    Explanation
    An increase in business investment in capital goods indicates that businesses are expanding and investing in new machinery for production. This leads to an increase in the overall level of economic activity and output, which is measured by Gross Domestic Product (GDP). Therefore, the headline above affects the GDP indicator the most.

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  • 12. 

    'More opportunities for recent graduates to find jobs!' The headline above affects which economic indicator the most? 

    • A.

      Unemployment statistics

    • B.

      Gross Domestic Product

    • C.

      Consumer Price Index

    Correct Answer
    A. Unemployment statistics
    Explanation
    The headline "More opportunities for recent graduates to find jobs!" would have the most impact on the unemployment statistics. This is because the headline suggests that there are increased job opportunities for recent graduates, which would likely lead to a decrease in the unemployment rate. Unemployment statistics specifically measure the number of people who are actively seeking employment but are unable to find a job, making it the most relevant economic indicator affected by the headline.

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  • 13. 

    Fiscal policy is controlled by the President and Congress

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    It involves how the President and Congress tax/spend money.

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  • 14. 

    Open-Market Operations involves the Federal Reserve buying and selling bonds. 

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    The FED buys bonds to make the economy grow (to reduce unemployment) and sell bonds to make the economy smaller (to reduce inflation)

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  • 15. 

    This economic problem refers to the overall increase in price level. 

    • A.

      Inflation

    • B.

      Unemployment

    • C.

      Hyperflation

    • D.

      Deflation

    Correct Answer
    A. Inflation
    Explanation
    Inflation refers to the overall increase in the price level. It is a situation where there is a sustained rise in the general level of prices for goods and services in an economy over a period of time. Inflation erodes the purchasing power of money and reduces the value of each unit of currency. It can be caused by factors such as increased demand, supply shocks, or government policies. Inflation is a significant economic problem as it affects the cost of living, savings, investments, and overall economic stability.

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  • 16. 

    Who is included in the unemployment rate?

    • A.

      Those who are actively seeking work but cannot find a job

    • B.

      Part time workers who wish to work full time

    • C.

      Those who have given up in looking for a job

    • D.

      The retired

    Correct Answer
    A. Those who are actively seeking work but cannot find a job
    Explanation
    The unemployment rate includes those individuals who are actively searching for employment but are unable to secure a job. This includes individuals who are actively submitting job applications, attending job interviews, and engaging in other job-seeking activities. Part-time workers who desire full-time employment are also considered in the unemployment rate. However, individuals who have given up on searching for a job and the retired population are not included in the unemployment rate as they are not actively seeking employment.

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  • 17. 

    The picture above is mainly concerned with: 

    • A.

      How the economy has grown throughout the years

    • B.

      The tax revenues of the country

    • C.

      The price of consumer goods

    • D.

      The tariffs placed on imports

    Correct Answer
    A. How the economy has grown throughout the years
    Explanation
    The picture above is mainly concerned with how the economy has grown throughout the years. This can be inferred from the fact that the other options, such as tax revenues, price of consumer goods, and tariffs on imports, are not depicted or mentioned in the picture. The image likely shows a graph or chart illustrating the growth of the economy over time.

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  • 18. 

    "Unemployment at an all time high!"Which of these would be an example of proper fiscal policy in this situation? 

    • A.

      Lowering taxes and increasing government spending

    • B.

      Raising taxes and decreasing government spending

    • C.

      Raising the discount rate offered to banks

    Correct Answer
    A. Lowering taxes and increasing government spending
    Explanation
    Lowering taxes and increasing government spending would be an example of proper fiscal policy in a situation of high unemployment. By lowering taxes, individuals and businesses would have more disposable income, which can stimulate consumer spending and business investment. Increasing government spending can also create job opportunities and stimulate economic growth. Both measures can help boost aggregate demand and reduce unemployment levels.

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  • 19. 

    "United States sets a high tax on imported oil!"Which of these would be a reason why the U.S. create this policy?

    • A.

      To protect the U.S. oil industry

    • B.

      To decrease the cost of oil

    • C.

      To allow for free trade of oil

    Correct Answer
    A. To protect the U.S. oil industry
    Explanation
    The reason why the U.S. sets a high tax on imported oil is to protect the U.S. oil industry. By imposing a high tax on imported oil, the U.S. government aims to make domestically produced oil more competitive in the market. This policy helps to safeguard the interests of the U.S. oil industry by creating a barrier for foreign oil producers, thereby ensuring that the domestic industry remains profitable and sustainable.

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  • 20. 

    The role of government is limited/non-existent in a market economy

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    In a market economy, the role of government is limited or non-existent. This means that the government does not interfere with the functioning of the market and allows the forces of supply and demand to determine prices and allocate resources. The government does not regulate or control businesses and individuals have the freedom to make their own economic decisions. This promotes competition, innovation, and efficiency in the market. However, it is important to note that while the government's role is limited, it may still play a role in providing public goods, enforcing property rights, and ensuring fair competition.

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  • 21. 

    In a command economy, what to produce is decided by consumer choice.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    In a command economy, the government answers the economic questions.

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  • 22. 

    In the United States, a combination of command, traditional, and market forces guide economic decisions. 

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    The United States operates under a mixed economic system, which means that economic decisions are influenced by a combination of command, traditional, and market forces. Command refers to government regulations and policies that impact the economy, traditional refers to cultural and social norms that shape economic behavior, and market forces refer to the supply and demand dynamics of a free market. Therefore, it is true that a combination of these forces guide economic decisions in the United States.

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  • 23. 

    Private ownership of business is a key characteristic of a market economy.

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    Private ownership of business is a key characteristic of a market economy because in a market economy, individuals and private entities have the right to own and control businesses. This means that individuals can start their own businesses, make decisions about production and pricing, and compete with other businesses in the market. Private ownership encourages competition, innovation, and efficiency, as individuals have the incentive to maximize profits and meet the demands of consumers. It also allows for the accumulation of wealth and the possibility of economic growth. Therefore, private ownership is an essential component of a market economy.

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  • 24. 

    In a market economy, decisions about what to produce are made by consumers and producers. 

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    In a market economy, decisions about what to produce are made by consumers and producers. This is because in a market economy, the allocation of resources and production decisions are primarily determined by the interaction of supply and demand. Consumers express their preferences and needs through their purchasing decisions, which in turn influence producers to produce goods and services that are in demand. Producers, on the other hand, make decisions about what to produce based on market signals such as prices and consumer demand. Therefore, in a market economy, the decisions about what to produce are indeed made by consumers and producers.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jun 25, 2015
    Quiz Created by
    Mrbayne1
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