Download Learning Objectives

0
Learning Objectives:
12.1 Describe the predominant economic systems and how they impact business.
12.2 Define scarcity and identify the problems posed by limited resources.
12.3 Explain how the economic concepts of supply and demand influence prices.
12.4 Identify the types of competition that exist within the free markets.
12.5 Understand the key economic indicators that determine how the economy is doing.
12.6 Describe how fiscal and monetary policy control the economy.
Quick answer key:
Question #
Multiple Choice
True/False
1
B
False
2
A
True
3
D
True
4
A
False
5
C
True
6
A
True
7
D
False
8
D
True
9
B
False
10
A
True
11
B
False
1
12
C
False
13
A
True
14
B
False
15
A
True
16
D
False
17
D
True
18
C
True
19
A
False
20
C
True
21
D
False
22
B
False
23
B
True
24
C
True
25
D
False
26
A
True
27
C
28
B
29
C
30
A
2
Multiple Choice Questions:
1. Under which economic system does the government own most basic businesses and
distribute profits to the people?
A)
B)
C)
D)
capitalism
socialism
communism
mixed economies
Learning Objective 12.1
Answer – B
2. Which economic system grants people the freedom to buy and sell whichever goods and
services they please?
A)
B)
C)
D)
capitalism
socialism
communism
mixed economies
Learning Objective 12.1
Answer – A
3. Which of the following addresses the scarcity of resources?
A)
B)
C)
D)
microeconomics
macroeconomics
opportunity costs
resource development
Learning Objective 12.2
Answer – D
3
4. Which of the following statements is true about the economic concept of supply?
A)
B)
C)
D)
supply increases as price increases
supply decreases as price increases
supply increases as demand increases
supply decreases as demand decreases
Learning Objective 12.3
Answer – A
5. Which of the following statements is true about the economic concept of demand?
A)
B)
C)
D)
supply decreases as demand decreases
demand increases as price increases
demand decreases as price increases
supply increases as demand increases
Learning Objective 12.3
Answer – C
6. In which type of competition are there few sellers and product differentiation is a major
factor in market success?
A)
B)
C)
D)
oligopoly
monopoly
perfect competition
monopolistic competition
Learning Objective 12.4
Answer – A
7. Which of the following represents a business cycle?
A)
B)
C)
D)
expansion following by prosperity
depression followed by recession
contraction followed by recession
expansion followed by contraction
Learning Objective 12.5
Answer – D
4
8. Which economic indicator represents the total value of goods and services produced in a
country in a given year?
A)
B)
C)
D)
price indexes
unemployment rate
national debt
gross domestic product
Learning Objective 12.5
Answer – D
9. Which conditions exist during a period of stagflation?
A)
B)
C)
D)
too few dollars are chasing too many goods
inflation and unemployment are high
prices of goods and services have risen over 5%
the government has spent more money that it has collected
Learning Objective 12.6
Answer – B
10. Which of the following best describes fiscal policy?
A)
B)
C)
D)
the use of taxes and government spending to influence the economy
raising and lowering interest rates to influence the economy
increasing the prices of goods and services to influence the economy
using the unemployment rate to determine the state of the economy
Learning Objective 12.6
Answer – A
11. Which of the following best defines a system in which decisions about what to produce
and in what quantities are by the market?
A)
B)
C)
D)
trade market
free market
social equality
mixed economies
Learning Objective 12.1
Answer – B
5
12. Which of the following economic systems creates a free market in which open
competition exists between companies?
A)
B)
C)
D)
communism
socialism
capitalism
mixed economies
Learning Objective 12.1
Answer – C
13. In which of the following economic systems does the government make all economic
decisions and own most businesses?
A)
B)
C)
D)
communism
socialism
capitalism
mixed economies
Learning Objective 12.1
Answer – A
14. Which of the following best defines what you give up in order to do or get something
else?
A)
B)
C)
D)
economics
opportunity cost
microeconomics
macroeconomics
Learning Objective 12.2
Answer – B
6
15. Which of the following best defines the quantity of products that consumers are willing to
buy at different prices at a specific time?
A)
B)
C)
D)
demand
supply
market price
supply price
Learning Objective 12.3
Answer – A
16. What is the term used for when the supply curve and demand curve cross on a graph?
A)
B)
C)
D)
market price
demand price
supply price
equilibrium price
Learning Objective 12.3
Answer – D
17. Who decides what to produce and in what amounts in countries without free markets?
A)
B)
C)
D)
consumers
competitive prices from other countries
economists
government
Learning Objective 12.3
Answer – D
18. What are the four types of competition?
A)
B)
C)
D)
perfect competition, market competition, oligopoly, and monopoly
market competition, monopolistic competition, oligopoly, and monopoly
perfect competition, monopolistic competition, oligopoly, and monopoly
perfect competition, market competition, monopolistic competition, and monopoly
Learning Objective 12.4
Answer – C
7
19. Which of the following best defines the degree of competition in which there are many
sellers in a market an one is large enough to dictate the price of a product?
A)
B)
C)
D)
perfect competition
monopolistic competition
market competition
monopoly
Learning Objective 12.4
Answer – A
20.Which of the following best defines a degree of competition in which just a few sellers
dominate the market?
A)
B)
C)
D)
perfect competition
market competition
oligopoly
monopoly
Learning Objective 12.4
Answer – C
21. In the United States there are laws prohibiting which type of competition?
A)
B)
C)
D)
market competition
perfect competition
oligopoly
monopoly
Learning Objective 12.4
Answer – D
22. What are the major indicators of the economic condition?
A)
B)
C)
D)
gross domestic product, global economy, price indexes and inflation
gross domestic product, unemployment rate, price indexes and inflation
global economy, unemployment rate, price indexes and inflation
gross domestic product, unemployment rate, global economy
Learning Objective 12.5
Answer – B
8
23. What is the difference between gross domestic product (GDP), and gross national
product (GNP)?
A) Gross domestic product (GDP) is the value of goods and services produced by a
country’s factors of production, regardless of where these factors are based.
Gross national product (GNP) is the total value of final goods and services
produced in a country in a given year.
B) Gross domestic product (GDP) is the total value of final goods and services
produced in a country in a given year. Gross national product (GNP) is the
value of goods and services produced by a country’s factors of production,
regardless of where these factors are based.
C) Gross domestic product (GDP) is the total value of final goods and services
produced by individual towns, cities or regions within a specific country. Gross
national product (GNP) is the total value of final goods and services for an entire
country.
D) Gross domestic product (GDP) is the total value of final goods and services for
an entire country. Gross national product (GNP) is the total value of final goods
and services produced by individual towns, cities or regions within a specific
country.
Learning Objective 12.5
Answer – B
24. What are the four types of unemployment?
A)
B)
C)
D)
cyclical, international, frictional, structural
international, seasonal, frictional, structural
cyclical, seasonal, frictional, structural
cyclical, seasonal, frictional, international
Learning Objective 12.5
Answer – C
25. What type of unemployment best defines job seekers who are between jobs?
A)
B)
C)
D)
cyclical
international
structural
frictional
Learning Objective 12.5
Answer – D
9
26. Which of the following best defines a set of monthly statistics that measures the pace of
inflation and deflation?
A)
B)
C)
D)
consumer price index (CPI)
inflation price index (IPI)
producer price index (PPI)
economic price index (EPI)
Learning Objective 12.5
Answer – A
27. Which of the following best defines a set of monthly statistics that measures prices at the
wholesale level?
A)
B)
C)
D)
consumer price index (CPI)
inflation price index (IPI)
producer price index (PPI)
economic price index (EPI)
Learning Objective 12.5
Answer – C
28. When the Fed raises the interest rate, making it more expensive for businesses to
borrow money, they are hoping that it does which of the following to the economy?
A)
B)
C)
D)
Slows the economy as businesses start to borrow more money
Slows the economy as businesses start to spend less
Boosts the economy as businesses start to spend more
Boosts the economy as businesses start to borrow less
Learning Objective 12.6
Answer – B
10
29. When the Fed lowers the interest rate, making it easier for business to borrow money,
they are hoping that it does which of the following to economy?
A)
B)
C)
D)
Slows the economy as businesses start to borrow more money
Slows the economy as businesses start to spend less
Boosts the economy as businesses start to spend more
Boosts the economy as businesses start to borrow less
Learning Objective 12.6
Answer – C
30.Which of the following best defines the management of the money supply and interest
rates?
A)
B)
C)
D)
monetary policy
economic policy
fed policy
fiscal policy
Learning Objective 12.6
Answer – A
11
True/false Questions:
1. Socialism is an economic system in which all or most of the factors of production and
distribution are privately owned and operated for profit.
Learning Objective 12.1
Answer – False
2. Capitalism creates a free market in which open competition exists between companies.
Learning Objective 12.1
Answer – True
3. The intent of socialism is to create social equality, by taxing the wealthy and
redistributing the wealth through government programs.
Learning Objective 12.1
Answer – True
4. Workers in communist countries tend to get longer vacations and work fewer hours,
which accounts for slower business growth.
Learning Objective 12.1
Answer – False
5. Mixed economies are economic systems in which some allocation of resources is made
by the market and some is made by the government.
Learning Objective 12.1
Answer – True
12
6. Macroeconomics is the economics study that looks at the operation of a nation’s
economy as a whole.
Learning Objective 12.2
Answer – True
7.
Scarcity is an economic problem that suggests that both resources and consumer wants
are scarce or limited.
Learning Objective 12.2
Answer – False
8. Market price is the price determined by supply and demand.
Learning Objective 12.3
Answer – True
9. Demand is the quantity of products that manufacturers or owners are willing to sell at
different prices at a specific time.
Learning Objective 12.3
Answer – False
10. The point on a graph where supply and demand cross is known as the equilibrium point
or equilibrium price.
Learning Objective 12.3
Answer – True
11. Oligopoly is the degree of competition in which a large number of sellers produce very
similar products that buyers nevertheless perceive as different.
Learning Objective 12.4
Answer – False
13
12. Perfect competition is a degree of competition in which just a few sellers dominate the
market.
Learning Objective 12.4
Answer – False
13. Deregulation is the removal of government control and strict oversight in a market that
thereby opens the market for others to enter.
Learning Objective 12.4
Answer – True
14. The three major indicators of economic conditions are global economy, unemployment
rate, and price indexes and inflation.
Learning Objective 12.5
Answer – False
15. Gross domestic product (GDP) is the total value of final goods and services produced in
a country in a given year.
Learning Objective 12.5
Answer – True
16. Production values for a Texas factory owned by a Japanese computer company would
be included in the US gross domestic product (GNP), since the production takes place
within the country’s borders.
Learning Objective 12.5
Answer – False
17. Recession is a period during which the gross domestic product of a nation declines for
two or more quarters.
Learning Objective 12.5
Answer – True
14
18. Unemployment rate is the number of civilians 16 years of age and older who are
unemployed and have tried to find a job within the prior four weeks.
Learning Objective 12.5
Answer – True
19. Cyclical is a type of unemployment where people are between ending one job and
beginning another.
Learning Objective 12.5
Answer – False
20.Stagflation is the situation where the economy is slowing but prices are rising.
Learning Objective 12.5
Answer – True
21. Consumer price index (CPI) is a set of monthly statistics that measures prices at the
wholesale level.
Learning Objective 12.5
Answer – False
22. Supply and demand are in balance where there are too few dollars for too many goods.
Learning Objective 12.5
Answer – False
23. A business cycle is a pattern that consists of a period of rapid economic expansion
alternating with a period of economic decline.
Learning Objective 12.5
Answer – True
15
24. Fiscal policy is the government’s efforts to keep the economy stable by increasing or
decreasing taxes or government spending.
Learning Objective 12.6
Answer – True
25. The national deficit is the sum of government deficits over time.
Learning Objective 12.6
Answer – False
26. Monetary policy is the management of the money supply and interest rates.
Learning Objective 12.6
Answer – True
16
Short Answer questions:
1. List and explain the three types of economic systems.
Answer – The three types of economic systems are capitalism, socialism, and
communism. Capitalism is an economic system in which all or most of the factors of
production and distribution are privately owned and operated for profit. Socialism is an
economic system in which most businesses are owned by the government so profits can
be evenly distributed among all people. Communism is an economic system in which the
government owns most businesses and limits the freedom of choice of its people.
2. What is the difference between macroeconomics and microeconomics?
Answer – Macroeconomics is the part of economics study that looks at the operation of
a nation’s economy as a whole. Microeconomics is the part of economics study that
looks at the behavior of people and organizations in particular markets.
3. Explain the concepts of supply and demand, and how they affect market price.
Answer – Supply is the quantity of products that manufacturers or owners are willing to
sell at different prices at a specific time. Demand is the quantity of products that
consumers are willing to buy at different prices at a specific time. The market price for a
product or service is determined by supply and demand.
4. List and explain the four type of competition within free markets.
Answer – The four types of competition within free markets is perfect competition,
monopolistic competition, oligopoly, and monopoly. In perfect competition there are
many sellers in a market and none is large enough to dictate the price of a product. In
monopolistic competition there are a large number of sellers that produce similar
products that buyers nevertheless perceive as different. Oligopoly is the degree of
competition in which just a few sellers dominate the market. Monopoly is the degree of
competition in which only one seller controls the total supply of a product or service and
sets the price.
17
5. List the three economic indicators of economic conditions.
Answer – The three economic indicators of economic conditions are gross domestic
product, unemployment rate, and price indexes and inflation.
6. Explain the anticipated effects on the economy when the Fed lowers or raises interest
rates.
Answer – When the economy is booming the Fed tends to raise the interest rate,
making it more expensive to borrow money, which helps to slow the economy. The Fed
lowers the interest rate when the economy is doing poorly to entice businesses to
borrow money to hopefully grow the economy.
18