Deck 6: Accounting and Financial Statements

Question 1

Which statement about scarcity is true?

A) Scarcity has little effect on price.
B) Few products are actually scarce.
C) Only natural resources can be considered scarce.
D) All things are essentially scarce.
E) Scarcity has little bearing on supply and demand.

Answer 1

All things are essentially scarce.

Question 2

A shoe company was having trouble getting the raw materials for its most popular shoe. Because there was a shortage of the shoe, the company raised its prices for consumers. This demonstrates the influence of ________ on prices.

A) macroeconomics
B) deflation
C) channels
D) marketing
E) supply and demand

Answer 2

supply and demand

Question 3

________ studies the economy as a whole.

A) Macroeconomics
B) Microeconomics
C) Finance
D) Marketing
E) Consumer behavior

Answer 3

Macroeconomics

Question 4

Which of these activities would most likely fall under the responsibilities of a macroeconomist?

A) whether the availability of e-books is affecting the sales of traditional printed books
B) how a winning season by a professional sports team affects ticket prices
C) studying economic indicators such as the consumer price index
D) the effect of coupons on consumers' buying behavior
E) how a local business allocates its funds to various departments

Question 5

Halil is a microeconomist. Which key area would most likely fall under his responsibilities?

A) U.S. gross domestic product
B) national job growth, employment, and unemployment
C) growth in industrial production
D) the manufacturing and service sectors of the national economy
E) projected consumer sales of a new iPhone

Question 6

The means for developing goods and services and for satisfying consumers' demand are

A) capitalism.
B) microeconomics.
C) macroeconomics.
D) supply and demand.
E) factors of production.

Question 7

A nuclear plant requires large quantities of water for its cooling system. This represents which factor of production?

A) capital
B) natural resources
C) human resources
D) entrepreneurship
E) knowledge

Question 8

Marlow and Nancy were having trouble finding healthy food for their dog, so they pooled their savings and started a company to produce and sell all-natural pet food. This represents which factor of production?

A) capital
B) natural resources
C) human resources
D) entrepreneurship
E) knowledge

Question 9

________ is the technological expertise and practical experience that allows entrepreneurs to quickly determine new wants and needs and deliver new products.

A) Capital
B) Natural resources
C) Human resources
D) Entrepreneurship
E) Knowledge

Question 10

Without her employees, Marissa knows she could not operate her editorial business at a profitable level. Which factor of production does Marissa require?

A) capital
B) natural resources
C) human resources
D) entrepreneurship
E) knowledge

Question 11

Which factor of production includes the buildings and tools that are used to produce goods and services?

A) capital
B) natural resources
C) human resources
D) entrepreneurship
E) knowledge

Question 12

Ten Thousand Villages in Chicago is a fair trade boutique that imports and sells handmade items from around the world. Which benefit of capitalism does this company offer to consumers in Chicago?

A) more jobs
B) more goods and services
C) help for the less fortunate
D) career choices
E) entrepreneurial activity

Question 13

Dr. Evans, a veterinarian, offers free vaccinations for pets once a year to pet owners who cannot afford to pay for them. Which benefit of capitalism does Dr. Evans provide?

A) more jobs
B) more goods and services
C) help for the less fortunate
D) career choices
E) entrepreneurial activity

Question 14

Macon and Cho were having trouble finding healthy food for their child, so they pooled their savings and started a company to produce and sell all-natural baby food. Which benefit of capitalism does this company offer to Macon and Cho?

A) more jobs
B) more goods and services
C) help for the less fortunate
D) higher income
E) career choices and entrepreneurial activity

Question 15

When Corey started his athletic wear line, he didn't account for the large number of competitors and he lost most of his savings in the first year. Which drawback of capitalism did Corey experience?

A) exploitation
B) lack of planning
C) possibility of heavy losses
D) income inequality
E) consumer rejection

Question 16

In 2017, it was reported that Walmart's CEO earned 1,188 times as much as the company's average worker. Which drawback of capitalism does thisbest demonstrate?

A) exploitation
B) lack of planning
C) possibility of heavy losses
D) income inequality
E) consumer rejection

Question 17

When the Affordable Care Act was passed, many companies that had not previously offered health insurance to their employees were required to do so. Some of them instead moved their full-time employees to part time to skirt the requirement. Which drawback of capitalism does this demonstrate?

A) lack of planning
B) possibility of heavy losses
C) income inequality
D) consumer rejection
E) exploitation

Question 18

To operate successfully, capitalist countries must grant four basic rights. These rights must be supported by laws, institutions, infrastructure, and

A) stakeholders.
B) culture.
C) businesses.
D) profitability.
E) consumers.

Question 19

When Bennett was job hunting, he focused on salaries when he researched potential companies because he had school loans to repay. This demonstrates which of the four basic rights under capitalism?

A) right to compete
B) right to free speech
C) right to free choice
D) right to make and keep profits
E) right to own property

Question 20

Once she subtracted payroll and other expenses, Dana found she had some money left in her business account. This demonstrates which of the four basic rights under capitalism?

A) right to compete
B) right to free speech
C) right to free choice
D) right to make and keep profits
E) right to own property

Question 21

The ________ price reflects what the consumer is willing to pay.

A) market
B) supply
C) demand
D) median
E) source

Question 22

China's response to U.S. tariffs against them was to put tariffs on U.S. soybean exports, hurting soybean farmers in the United States significantly since China typically buys more than half of U.S. soybean shipments. This is an example of how ________ can affect markets.

A) incomplete information
B) government influences
C) irrationality
D) consumer sovereignty
E) supply and demand

Question 23

Grant owned a small chain of hotels in a city with much larger chains. He found he had trouble booking all his rooms because their availability sometimes got lost in the glut of information available to consumers. This is an example of how ________ can affect markets.

A) incomplete information
B) government influences
C) irrationality
D) consumer sovereignty
E) supply and demand

Question 24

The former Soviet Union continually failed to anticipate and meet demands for food and housing, which led to long lines and waiting lists among citizens. This best illustrates which drawback of communism?

A) extreme government intrusion
B) consumer sovereignty
C) central planning flaws
D) high taxes
E) lack of incentives

Question 25

Alexei lived in Russia in the 1970s when the communist state was in control. He worked at a factory job and wasn't particularly motivated to pursue a better job, even though he hated the one he had. What is the most likely drawback to communism in this scenario?

A) extreme government intrusion
B) consumer sovereignty
C) central planning flaws
D) high taxes
E) lack of incentives

Question 26

Sven lives in Norway. Although the government owns some major industries, Sven does own and operate a small bakery. In addition, the government provides social programs for its citizens, like health insurance, social security, and pensions. Norway's economic system is

A) capitalism.
B) communism.
C) autocracy.
D) mixed.
E) socialism.

Question 27

When Billie moved from Iowa to Sweden, she was surprised how little entrepreneurism she saw. This is most likely because of which drawback of socialism?

A) problems with central planning
B) low taxes
C) possible brain drain
D) less job and wealth creation
E) possible government deficits

Question 28

During which phase of the business cycle does the pace of economic activity slow down and GDP falls?

A) expansion
B) peak
C) contraction
D) trough
E) acceptance

Question 29

________ is a general increase in the prices of most goods and services.

A) Recession
B) Deflation
C) Inflation
D) Depression
E) Expansion

Question 30

The ________ is the level of joblessness among people 16 years or older actively seeking work.

A) consumer price index
B) producer price index (PPI)
C) productivity report
D) national cost analysis
E) unemployment rate

Question 31

Nneka just graduated with a degree in economics. She has accepted her first job and will be responsible for researching how the price of different forms of dairy goods impacts how much people buy when grocery shopping. Nneka is most likely working in the field of

A) microeconomics.
B) perfect competition economics.
C) scarcity economics.
D) macroeconomics.
E) resource development economics.

Question 32

The hot new video game system is having production delays, which is limiting the number of units available for resale. How will sellers most likely react in this situation?

A) save their inventory
B) decrease prices
C) pause all advertising
D) leave prices the same
E) increase prices

Question 33

Tierra and Alexis opened a store last year. They sell video game consoles, games, and accessories. They have noticed that the prices for their inventory have been increasing over the course of the year. This is most likely a sign of

A) inflation.
B) expansion.
C) consumer sovereignty.
D) equilibrium pricing.
E) deflation.

Question 34

Bedazzled headbands have become a very popular item with children in the past year. The market is flooded with them. What is most likely to happen as a result?

A) The government will begin regulating the price for headbands.
B) Buyers will want to pay less for the headbands.
C) The headbands will quickly reach an equilibrium price.
D) Sellers will begin charging more for the headbands.
E) The headbands will quickly become scarce.

Question 35

Giant Enterprises is preparing to install a new automated production line in its factory. Which of the factors of production does the new line best represent?

A) entrepreneurship
B) human resources
C) capital
D) knowledge
E) technology resources

Question 36

Dreamcatcher Toys is preparing for the holiday rush. It uses staffing firms and its own recruiting team to nearly double the production team each year. Which of the factors of production does the staffing increase best represent?

A) knowledge resources
B) capital
C) demand labor
D) human resources
E) intrapreneurship

Question 37

A'ja opened her own consulting firm last year specializing in technology training. She knows that companies in the marketplace are always looking for ways to keep their employees current with new technology, so A'ja dedicates a portion of her week to studying technology trends. She uses this information to develop new programs that will add additional value for her customers. Which of the factors of production does this best represent?

A) natural resources
B) knowledge
C) capital
D) entrepreneurship
E) human resources

Question 38

Nationwide Sports specializes in sports merchandise from teams around the country. It makes the goods available in its stores located in cities throughout the United States. The cities with Nationwide stores are most likely realizing which benefit of capitalism?

A) increased entrepreneurial activity
B) additional aid for the less fortunate
C) improved access to goods and services
D) upgraded income potential
E) optimized benefits to employees

Question 39

Giga Company recently implemented a new benefit for its employees. Giga will match every dollar that employees donate to charitable organizations dollar for dollar. Which benefit of capitalism does this best represent?

A) help for the less fortunate
B) more jobs
C) higher income
D) career choices
E) more goods and services

Question 40

Tri-State Banking was recently found guilty of defrauding a large group of its customers. Tri-State had been adding paid services and fee-based accounts for its senior customers even if they hadn't requested them. Which drawback of capitalism does this best represent?

A) employer sovereignty
B) social inequity
C) exploitation
D) lack of oversight
E) income inequality

Question 41

Gayathri recently opened a store specializing in custom embroidery. She has sunk most of her life savings into the company, but unfortunately competition is keeping her from making money. If things don't change, Gayathri will likely need to close her store. Which drawback of capitalism does this best represent?

A) possibility of heavy losses
B) too many goods and services
C) lower income expectations
D) exploitation
E) lack of demand

Question 42

Clara is planning to open her own business next year. Last week she purchased a building where she plans to locate the store. Which of the basic rights under capitalism does this best represent?

A) the right to make profits
B) the right to compete
C) the right to free choice
D) the right to more jobs
E) the right to own property

Question 43

Haylie is currently working as a software developer for Agile Technology. Scrum Networking offers her a similar job, but with increased compensation. Which of the basic rights under capitalism does this best represent for Haylie?

A) the right to make profits
B) the right to sovereignty
C) the right to incentives
D) the right to compete
E) the right to free choice

Question 44

Padmavati has been a personal trainer at Super Gym for more than five years. She believes that her methodology for training is better than the one used at Super Gym. Padmavati decides to open her own gym and plans to directly compete with Super Gym and other similar companies in the market. Which of the basic rights under capitalism does thisbest represent?

A) the right to compete
B) the right to free choice
C) the right to offer services
D) the right to career choices
E) the right to make profits

Question 45

Nicodemo recently finished paying his taxes after his first year running his own business. He signs into his bank account and is pleased to notice that he was left with a significant cash balance. Which of the basic rights under capitalism does thisbest represent?

A) the right to own property
B) the right to avoid exploitation
C) the right to free choice
D) the right to make and keep profits
E) the right to entrepreneurial sovereignty

Question 46

There are several hotels in a tourist community located in Wisconsin. Each hotel utilizes a slightly different marketing campaign, related to comfort, designed to highlight the reasons why this hotel is better than the others. For example, one of the hotels compares itself to the finest hotels in large cities; one has an outdoor, woodsy experience with glamping; another highlights quality accommodations at an affordable price, while another caters to families and their special needs. Which type of free market does this best represent?

A) monopolistic competition
B) perfect competition
C) oligopoly
D) monarchy
E) monopoly

Question 47

Which business can be best described as operating in a perfect competition?

A) water utilities
B) pizza restaurants
C) automobile manufacturers
D) dairy farms
E) airline companies

Question 48

Gigiwidgets are an incredibly popular new toy. When they initially hit the market, they were very hard to find, especially as demand grew. Over the past few months, the supply has increased, and the demand has decreased to the point where they are equal. This example best demonstrates the concept of

A) market price.
B) price sovereignty.
C) price deflation.
D) contraction price.
E) price inflation.

Question 49

Claudius recently took over his father's dairy farm. He decides that he is going to add beef cattle to his farm and sell the meat to regional grocery stores and butcher shops. Before he can sell any meat, he knows that he will need to ensure he is compliant with the U.S. Department of Agriculture standards. Which of the forces affecting markets does this best represent?

A) government influences
B) rationality
C) incomplete information
D) factors of production
E) consumer sovereignty

Question 50

Slavko recently opened an electric bike store in town. Unfortunately, he was not aware that three other electric bike stores had plans to open in the same town within the year. Which of the forces affecting markets does this best represent?

A) supply and demand
B) free choice
C) local influences
D) competitor sovereignty
E) incomplete information

Question 51

Video stores like Blockbuster and Family Video used to be commonplace in cities across the United States. As different options like Redbox and Netflix entered the market, consumers shifted their interests in response as they adapted to the competitors. Which force affecting markets does this best represent?

A) market expansion
B) mixed economies
C) incomplete information
D) monetary influences
E) consumer sovereignty

Question 52

Peter lives in a country where the government owns businesses, homes, and all other forms of property. All of Peter's friends and family hold jobs but none of them work for private employers. Peter most likely lives in a(n) ________ country.

A) oligopolistic
B) aristocratic
C) communist
D) socialist
E) monopolistic

Question 53

Edit works on a production line for a factory in her home country. She comes to work each day, but only does the bare minimum. She often daydreams about running her own business but feels that it would be a waste of time to pursue her dream. Edit most likely lives in a(n) ________ country.

A) mixed economy
B) communist
C) oligopolistic
D) socialist
E) capitalist

Question 54

Anton grew up in the Soviet Union during the early 1980s and remembers waiting in long lines with his father to get meat and bread. He also remembers his parents talking about a waiting list for the larger apartment they had hoped to move into. Which of the drawbacks of communism does this best represent?

A) incomplete information
B) lack of incentives
C) government contraction
D) consumer sovereignty
E) central planning flaws

Question 55

Auda's parents passed away when she was young, so her grandmother raised her. Her grandmother has fallen ill, but thankfully the government in Auda's country provides free medical care for the elderly. Auda most likely lives in a(n)

A) libertarian state.
B) monetary state.
C) capitalist country.
D) oligopolistic country.
E) welfare state.

Question 56

Amalija lives in a country that provides a free college education to its citizens. What would most likely also be true in a country like this?

A) increased poverty
B) decreased brain drain
C) lower amount of incentives
D) reduced government deficits
E) higher taxes

Question 57

Chrystelle had been planning to open her own business but is frustrated by the very high taxes in her home country. She decides to move to a different country with a lower tax rate to pursue her dreams instead. Which drawback of socialism does this best represent?

A) consumer sovereignty
B) social inequality
C) brain drain
D) government deficits
E) poor central planning

Question 58

Ema lives in a country where private citizens have been very successful in creating new businesses. Income has been increasing as well. Ema's country also provides free assistance to the poor as well as financial assistance for individuals wishing to pursue a college degree. Ema most likely lives in a country operating as a(n)

A) mixed economy.
B) department.
C) command economy.
D) oligopoly.
E) welfare state.

Question 59

Gross domestic product has been steadily increasing for a few quarters. The economy is most likely in which stage of the business cycle?

A) contraction
B) inflation
C) trough
D) peak
E) expansion

Question 60

Prices in the United States have declined over the past six months. As a result, consumer spending has decreased while several businesses have filed for bankruptcy. The United States is most likely in a(n)

A) peak.
B) recovery.
C) recession.
D) expansion.
E) depression.

Question 61

The United States was in a period of strong economic growth. Production of goods and services was at an all-time high. Shortly thereafter, prices began to decline sharply when there were too many goods for consumers to buy. This situation can be best described as

A) expansion.
B) depression.
C) inflation.
D) exploitation.
E) deflation.

Question 62

The Bureau of Labor Statistics is in the process of reviewing the purchases of goods that were made in large quantities and that were targeted for resale. The Bureau is calculating

A) purchasing power.
B) gross domestic product.
C) producer price index.
D) expansion rate.
E) consumer price index.

Question 63

The U.S. Secretary of the Treasury is meeting this week to discuss recommendations for federal tax rates and government spending. The Secretary is most likely working on ________ policy.

A) competitive
B) welfare
C) reverse logistics
D) incentive
E) fiscal

Question 64

The U.S. government thinks that the country is at risk of inflation. What option would be its most appropriate course of action?

A) decrease the tax rate
B) raise interest rates
C) lower the consumer price index
D) reduce the money supply
E) increase the producer price index

Question 65

The Fed has begun lowering interest rates. What will be the most likely outcome of this action?

A) Consumers will be less likely to borrow from banks.
B) The economy will be more likely to enter a trough.
C) Businesses will be more likely to borrow from banks.
D) The economy will be less likely to see a rise in gross domestic product.
E) Government spending will be more likely to decrease.

Question 66

Your friend is considering opening a new business. He heard that he needs to consider the factors of production in order to be successful. List the five factors and provide an example of each one.

Question 67

Provide a real-life example that demonstrates some of capitalism's benefits to society.

Question 68

There are four kinds of free markets. Provide a short summary of each market and include an example of a business or industry within each one.

Question 69

Think of a product or service that you are familiar with. Describe how supply and demand affect the availability and price of the product or service. Explain how the product or service would reach its market price.

Question 70

Your friend is considering a move to a communist country. Describe the benefits and drawbacks your friend might encounter after the move.

Question 71

Microeconomics is the study of small economic units.

Question 72

The promise of capitalism is that people can always work their way up from poverty to a more comfortable life.

Question 73

In perfect competition, there are usually three or four sellers who dominate more than half the market and who try to differentiate their products through marketing.