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Exam 2: How Economic Issues Affect Business

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Question 31

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Price is the key factor that determines both quantity supplied and quantity demanded.

A) True
B) False

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Question 32

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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.

A) True
B) False

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Question 33

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Resource development is the system that has lead to wealth creation in much of the world.

Adam Smith believed the self-interest of businesspeople would lead them to create needed goods,services,and jobs.

Under the basic principle of supply,as the price goes down,manufacturers and suppliers of a product tend to supply less of the product to the market.

Countries that rely on a free market system often are plagued by persistent shortages or surpluses of goods and services.

One drawback of socialism is that it may result in a reduction in the individual's incentive to work hard.

A depression is a severe recession that is often accompanied by deflation.

At the equilibrium point the quantity consumers desire to buy equals the quantity sellers desire to sell.

Microeconomics focuses on the decisions and behaviour of people and organizations in particular markets.

The primary difference between macroeconomics and microeconomics is that macroeconomics looks at long run economic problems while microeconomics examines short run economic problems.

The higher productivity is,the higher the costs of production are likely to be.

Although changes in the CPI provide interesting insights into the overall performance of the economy,these changes have little practical impact on the lives of ordinary people.

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

If a shortage exists in a market for a good,the price of that good will tend to fall.

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:

The nation of Nadiria is in the midst of a terrible economic downturn.The nation's GDP has been declining steadily for over five years and is now at its lowest level in over fifty years.Nadiria's unemployment rate is at an all time high and the nation's CPI is falling.Nadiria is experiencing a:

Economist Sue Pligh is examining how consumers in the automobile market have responded to recent price increases by car manufacturers.Sue's efforts reflect the microeconomic perspective of economics.

A basic right under capitalism is the right of business to receive funding provided by the government.

Although it has been considered a capitalist economy in the past,for the past several years the economy of the nation of Suburbania has become more socialist in its characteristics.Which of the following trends is most likely to be associated with Suburbania's movement toward socialism?