Deck 4: Economics: the Framework for Business

Question 1

A typical supply curve shows that an increase in the price of a good will cause producers to decrease the quantity they supply.

Answer 1

False

Question 2

Capitalism places paramount importance on the need for the government to intervene in the economy to ensure a fair and equitable distribution of income.

Answer 2

False

Question 3

Federal law has made all types of monopolies illegal in Canada.

Answer 3

False

Question 4

An economy is both a social and a financial system.

Question 5

Market equilibrium identifies the price at which quantity supplied is equal to quantity demanded.

Question 6

The study of economics focuses on how people,businesses,and governments choose to allocate resources.

Question 7

The study of economics falls into two broad categories called meta-economics and econometrics.

Question 8

Financial or social systems are not essential to the development of a strong economy.

Question 9

Macroeconomic conditions impact day-to-day life by influencing variables such as the availability of jobs,the amount of take-home pay households have available after paying taxes,and the buying power of those incomes.

Question 10

A key economic goal is to provide a deep understanding of past choices that can be used to guide future business decisions.

Question 11

A surprisingly small number of key variables have a significant impact on the performance of the economy.

Question 12

The price paid for goods and services will rise when the quantity demanded exceeds quantity supplied.

Question 13

Economists forecast business needs based on a deep understanding of past choices.

Question 14

Market equilibrium is the point at which the supply curve intersects the demand curve.

Question 15

Luke is taking an economics class that focuses on decisions made by individual business firms and consumers.Luke's class is concerned with microeconomic issues.

Question 16

Capitalism is based on private ownership,economic freedom,and fair competition.

Question 17

Broad economic trends in employment,inflation,and economic growth provide a context that has an important impact on businesses throughout the economy.

Question 18

Microeconomics is the study of broad,economy-wide issues such as the unemployment rate,gross domestic product,and inflation.

Question 19

The complexity of the economy makes economic forecasting an inexact process.

Question 20

Consumers will see prices fall when the quantity demanded exceeds quantity supplied.

Question 21

Brooklyn's Beachfront Bed and Breakfast loses money due to a sharp drop in the number of guests during the winter months.If Brooklyn's demand curve is like most demand curves,one way to attract more guests would be to offer lower rates during the off-season.

Question 22

The North Korean and Cuban governments still own most of their nation's enterprises and actively control the performance of their nation's economies.

Question 23

In capitalism,what gets produced is largely determined by central government planning.

Question 24

Morgan's Moped and Bicycle Store is located on the property of a five-star resort in Alberta.The mopeds and bikes are rented based on one-hour increments.Morgan lowers her standard prices to attract patrons during daily rainstorms in June and August.This is an example of decreasing supply.

Question 25

One problem that plagued many communist economies was that the absence of free markets resulted in crippling shortages and surpluses of goods and services.

Question 26

Everlene's Bakery competes against many other bakeries in the same city.However,each bakery uses different recipes and each claims to offer better products than their rivals.For example,Everlene's advertises that it produces the "World's Best" chocolate-chip cookies.This suggests that Everlene's market is an example of pure competition.

Question 27

The federal government creates regulations that prohibit competition and stimulate consumers to work.

Question 28

Government policies promoting free trade are consistent with the right to free choice,which is fundamental to capitalism.

Question 29

In Canada,the government places no restrictions on the right to own property and the freedom to will that property to family members.

Question 30

Privatization is the conversion of government-owned enterprises to private ownership.

Question 31

A strength of a pure planned economy is that it is likely to grow rapidly and produce enough products and services to support its people in the long term.

Question 32

An entrepreneur with limited funds who wants to start a new business would probably be most successful in an oligopolistic market,because the amount of competition in such markets is very limited.

Question 33

Karl Marx envisioned communism as a system that would improve the lot of the common worker.

Question 34

In a planned economy,the government plays only a minor role in the operation of the economy.

Question 35

The fundamental rights of capitalism guarantee that businesses will be profitable and taxes will be low,thus providing a strong motivation to start a business.

Question 36

The few nations that still rely on a communist economic system have actually seen major improvements in their economic performance over the past decade.

Question 37

The Canadian government is the nation's largest employer.

Question 38

By the end of the 1980s,communism began collapsing in the Soviet Union and its satellite nations.

Question 39

Communism is an economic and political system in which a strong central government owns and controls almost all productive enterprises.

Question 40

In the Canadian economy,various branches of government own major enterprises such as the postal service,schools,parks,libraries,universities,and the military.

Question 41

Many countries that have restructured to become more market-oriented have seen dramatic increases in the standard of living for most of their people.

Question 42

While Canada relies heavily on free markets,it is actually a mixed economy in which the government owns several major enterprises and regulates many aspects of business operations.

Question 43

Gross domestic product (GDP),as the measurement of the total value of goods and services,includes the output produced within households and output produced by illegal activities.

Question 44

Gross domestic product (GDP)tends to overstate the amount of output produced by a nation's economy.

Question 45

Cyclical unemployment results from layoffs during recessionary periods.

Question 46

Gross domestic product (GDP)measures the total value of all goods and services produced within a nation's physical boundaries over a given period of time.

Question 47

The economic restructuring necessary to move toward greater reliance on markets has proven to be relatively easy for most previously planned economies to achieve.

Question 48

The predictable nature of the business cycle makes it easy to forecast when the next upturn or downturn in business activity will occur.

Question 49

Individuals quitting their jobs experience structural unemployment.

Question 50

The two most common types of real-world economies are pure capitalism and pure socialism.

Question 51

Gross domestic product (GDP)includes the value of output produced within a nation even if that output is produced by a foreign-owned company.

Question 52

Competition encourages companies to operate efficiently and responsively.The government does its part to stimulate fair competition by creating regulations to protect consumers and workers.

Question 53

The value of a Hyundai Sonata built in Ontario would be included in Canadian GDP even though Hyundai is actually a Korean corporation.

Question 54

Contraction is a period of economic downturn marked by rising unemployment,business cutbacks,and decreases in consumer spending.

Question 55

The two key terms relating to the business cycle are contraction and expansion.

Question 56

Privatization is an important element of the movement toward a greater market orientation in many nations.

Question 57

The unemployment rate measures individuals 16 years of age and older without jobs who are actively seeking employment.

Question 58

Frictional unemployment may occur even when the economy is healthy,and may ultimately result in a better match between workers and jobs.

Question 59

An economy is said to be in a recession when GDP decreases for two consecutive quarters.

Question 60

The unemployment rate includes only individuals over the age of 21 who were involuntarily laid off or fired from their previous jobs.

Question 61

Fiscal policy is the government's effort to influence the economy through taxation and spending decisions to encourage growth and boost employment while curbing inflation.

Question 62

In the broadest sense,what does economics study?

A)what companies make in producing goods and services for corporate use
B)what governments make in creating natural resources
C)what people, governments, and companies make in allocating resources
D)what people make in disposing of unnecessary resources

Question 63

The M1 money supply consists solely of currency (coins and paper money)issued by the government.

Question 64

From the business perspective,what is a key reason to study economics?

A)to gain a better understanding of past business choices in order to make better future decisions
B)to avoid the temptation to focus on past events
C)to ensure that demand exceeds supply
D)to learn how to achieve a monopoly position in markets with the potential to generate high profits

Question 65

What is an economic system a structure for?

A)allocating limited resources
B)forecasting trends
C)government
D)measuring gross domestic products

Question 66

Less expensive labour pools overseas might create layoffs at a Canadian-based engine plant.This is an example of structural unemployment.

Question 67

Constant change has been the most predictable economic force over the last few decades.

Question 68

The bank rate is the interest rate the Bank of Canada charges on its loans to commercial banks.

Question 69

Unfortunately,depressions are a common problem in most free-market economies.

Question 70

The government experiences a budget surplus when its tax revenue exceeds its expenditures.

Question 71

What does the economy represent as a system?

A)the means of production only
B)the non-efficient use of material resources
C)the flow of resources from production through consumption
D)the means of capitalistic systems

Question 72

Recovery is a period of increasing employment,business expansion,and increased consumer spending.

Question 73

During the peak season,retail workers are hired in great numbers to meet the demands of holiday shoppers.At the end of the holiday season many of those workers are released from their jobs,thus creating seasonal unemployment.

Question 74

The federal government experiences a budget deficit when its revenue from taxes is higher than its expenditures.

Question 75

Which structure is used for allocating scarce resources?

A)a factor distributor
B)an econometric plan
C)the gross domestic product
D)an economic system

Question 76

It is important that any government examine multiple measures of its own economic health,rather than simply relying on one or two dimensions.

Question 77

Inflation occurs as the average prices of goods and services rise.

Question 78

To measure productivity,multiply the number of inputs by the cost of each input.

Question 79

What does macroeconomics focus on?

A)the minor issues facing the national economy
B)the role of government, while microeconomics focuses on the private sector
C)the small individual units operating within the economy
D)the major issues facing the national economy

Question 80

Into which two core categories is the study of economics divided?

A)data collection and forecasting
B)macroeconomics and microeconomics
C)production and consumption
D)supply economics and demand economics