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Exam 2: Understanding How Economics Affects Business

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Question 51

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According to the invisible hand concept,the best way for a society to encourage the creation of jobs and the production of the products most wanted by consumers would be to:

A) Permit government owned 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 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.

E) All of the above
F) A) and D)

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Question 52

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Reality Entertainment,Inc is a major producer of reality TV programming.The company faces fierce competition from three other major producers of similar shows.Together,Reality Entertainment and its three rivals control almost the entire reality TV programming.Their market environment is called:

A) An oligopoly.
B) A duopoly.
C) Monopolistic competition.
D) A quasi-monopoly.

E) A) and B)
F) All of the above

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Question 53

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A typical demand curve shows that:

Any output produced by U.S.firms is included in the value of U.S.GDP,even if the output was produced in a foreign country. Level of Learning 1: Knowledge of key terms

If businesses are producing at capacity,and the nation is experiencing almost full employment (a very low rate of unemployment - less than 2%) ,the Fed may decide to:

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

It is understandable that productivity is rising faster in the service sector because service businesses have newer technologies than the manufacturing sector and fewer laborers. Level of Learning 2: Understanding of concepts and principles

When the government attempts to stabilize the economy by changing taxes or government expenditures,it is using fiscal policy. Level of Learning 1: Knowledge of key terms

Under the __________ system there is very little incentive to work hard or to produce quality goods or services.

Today,the economic systems of most nations could most accurately be classified as:

If a shortage exists for a good in a free-market economy,the:

John complained to his buddy,Frank,that prices 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,noting that you can get some good buys on houses right now.Frank feels that the average price of consumer goods hasn't changed.Frank and John can refer to the __________ to learn how government economists currently view the price situation.

Under capitalism:

Peace and prosperity will flourish if we can find the one best way to divide existing resources among nations. Level of Learning 1: Knowledge of key terms

Thomas Malthus believed that overpopulation was a major cause of poverty. Level of Learning 1: Knowledge of key terms

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

A graphical representation of a demand curve for a product will show the price for any particular quantity on the X-axis. Level of Learning 1: Knowledge of key terms

In recent years,U.S.manufacturing sector has experienced ___________ productivity.

The nation of Desperia is reporting a significant decline in GDP for four consecutive years,with no relief in sight.With unemployment at record levels and businesses failing faster than at any time in the past century,Desperia is likely experiencing a depression. Level of Learning 3: Application of principles

Which of the following indicators provides the clearest indication that an economy is experiencing deflation?