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Exam 2: Understanding Economics and How It Affects Business

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Question 151

True/False

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The U.S. national debt equals the sum of all recorded years of deficits.

A) True
B) False

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Question 152

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If the quantity supplied in a market exceeds the quantity demanded, a shortage will exist.

A) True
B) False

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Question 153

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One way to lessen the U.S. government budget deficit is to:

As indicated by the Making Ethical Decisions box, activities that lead to corruption can destroy free economic opportunities because they interfere with the right to freely compete.

Subtle differences such as the right to one's religious preference make the command economic system known as communism more like a mixed economy than a socialistic system.

Global economics and politics have no significant influence on businesses in the United States.

Over the past decade, socialist economies have proven to be more successful at creating wealth and jobs than capitalist economies.

The IMF has recently proposed a one-time global wealth tax to help bring the debt of nations closer to pre-recession levels.

Thomas Malthus believed that overpopulation was a major cause of poverty.

During the recent economic crisis, Presidents George W. Bush and Barack Obama increased government spending by trillions, in order to revive the ailing economy. Their strategy followed the economic theory known as:

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

Workers in nations who are strong proponents of communism work much harder and longer hours.

The Federal Reserve Board is responsible for controlling the money supply.

Socialists believe that the primary economic function of the government is to promote rapid economic growth.

According to the Reaching Beyond Our Borders box, over the last decade six of the world's 10 fastest-growing countries were:

The point of intersection between the supply and demand curves is called the stress point.

___________ studies the operation of a nation's economy as a whole.

____________ in the service sector has not shown the significant improvement that it has in the manufacturing sector. There are significant advances in the quality of service, but workers in this sector are unable to increase the number of persons served in a given time period.

Lance owns Lance Lawns Irrigation Systems, LLC, a company that installs and maintains underground lawn irrigation systems. Business is down due to new housing starts being negatively impacted by a deep recession. To make things worse, his bank called yesterday to inform him that his credit limit (interest fee of 12.5%) will be cut from $30,000 per year to $15,000 per year, unless he is willing to pay a higher interest rate of 20%. As Lance drives to the first job this morning, he knows that his last task of the day will be to reduce the hours for his two employees. He can't afford to work employees eight hours per day, with only a $15,000 line of credit. Which of the following strategies will help Lance's situation?

Countries that wish to avoid shortages and surpluses of goods should adopt a communist system.