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Exam 2: How Economic Issues Affect Business

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Question 31

Multiple Choice

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

A) PPI
B) GDP
C) MEW
D) CPI

E) All of the above
F) None of the above

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Question 32

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Inflation refers to a general rise in the prices of goods and services over time.

A) True
B) False

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Question 33

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

Peter Principal is the prime minister of the nation of Urbania.Peter has called for Urbania's legislature to enact new legislation designed to shift his economy away from socialism toward a more capitalistic system.Peter has acknowledged that such a radical change will entail some hardships,and that some citizens will be unhappy with the changes in the economy.The most likely source of unhappiness associated with a move toward capitalism is:

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

Jill owns a bakery that specializes in cheesecakes.Until recently,Jill charged a price of $12 for each cheesecake.At this price,Jill's customers bought an average of 84 cheesecakes each week.For the last few weeks,she has reduced her price to $10.50 per cheesecake,and her customers have purchased an average of 96 cheesecakes each week.These results are consistent with the economic concept of demand.

A key assumption of socialism is that:

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

In recent years,productivity in the goods-producing sector of the Canadian economy has been:

Under monopolistic competition,product differentiation is a key to success.

Which of the following would be a topic emphasized in a microeconomics class?

One of the drawbacks of free markets is the fact that competition in such markets undermines the ability of price to adjust to its equilibrium value in the long run.

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

In recent years,government leaders in Canada have reached broad agreement on the need for the government to continue expanding its role in health care and the regulation of banks and airlines.

Samir,a friend of yours,has called for more government regulation of business."After all",he says,"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 Samir:

The four basic types of employment are frictional,structural,seasonal,and:

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.

Current measures of productivity in the service sector provide an accurate measure of changes in the quality of output.

The concept of the invisible hand is based on the assumption that the primary motivation of entrepreneurs is to enjoy the financial rewards of their hard work.

Product differentiation is a key to success in monopolistic competition.