Deck 3: Economic Challenges Facing Contemporary Business

Question 1

Forces of nature, such as a hurricane, can affect the supply curve.

Answer 1

True

Question 2

Assume electric water heaters and gas water heaters are interchangeable, and assume the price of natural gas rises sharply relative to the price of electricity. The demand curve for gas water heaters should shift to the left.

Answer 2

True

Question 3

The price of producing an item declines due to improved technology. The supply curve should shift to the left.

Answer 3

False

Question 4

Microeconomics and macroeconomics are interrelated.

Question 5

Economics deals only with the allocation of abundant resources by businesses.

Question 6

Assume the number of new home buyers suddenly increases. The demand curve for homes will likely shift upward and to the right.

Question 7

A typical demand curve slopes downward, which reflects that lower and lower prices attract larger and larger amounts purchased.

Question 8

Changes in overall government spending have a macroeconomic effect.

Question 9

Typically, the lower the price, the larger the quantity offered for sale.

Question 10

The graph showing the relationship between different prices and quantity sellers offer for sale at each price is called a demand curve.

Question 11

Supply refers to buyers' willingness and ability to purchase goods and services.

Question 12

When a manager tries to predict prices and quantities that will be sold, he or she is dealing with microeconomics.

Question 13

Assume that incomes rise. In this instance, the demand curve for homes is likely to shift upward and to the left.

Question 14

If the number of suppliers of a particular product increases, so should the quantity supplied, and the price should fall.

Question 15

Macroeconomics deals with taxing and spending decisions made by governments.

Question 16

Not-for-profit organizations must make economic decisions.

Question 17

If buyers' incomes increase, the demand curve for most products will shift to the left.

Question 18

The price of gasoline rises sharply. One likely outcome is that the demand curve for hybrid vehicles should shift downward and to the left.

Question 19

If demand for a product rises sharply, its price should decline and the quantity supplied should increase.

Question 20

Decisions made by individuals and businesses have little impact on overall economic conditions.

Question 21

An oligopoly is a market situation where there are only a few sellers of a good or service.

Question 22

Under a capitalistic system, the government tends to favour a "hands-off" attitude toward controlling business.

Question 23

When the supply curve shifts to the left and the demand curve remains unchanged, the price for the product or service will fall.

Question 24

Regulated monopolies are illegal in Canada.

Question 25

Giant oil companies such as BP (British Petroleum) and ExxonMobil are engaged in oligopoly competition.

Question 26

The equilibrium price is the same as the market price at which consumers are willing to buy the same quantity supplied by suppliers.

Question 27

The cost of the raw materials used to produce a product falls. The supply curve will likely shift down and to the left.

Question 28

Capitalism also is referred to as a public enterprise system.

Question 29

Equilibrium price refers to the intersection of the supply and demand curves.

Question 30

Monopolistic competition differs from pure competition because sellers have some control over prices.

Question 31

A shortage will occur if the market price is below the equilibrium price.

Question 32

An increase in customer preferences will shift the demand curve to the right.

Question 33

If the equilibrium price is below the market price, a shortage of a good or service will likely result.

Question 34

One example of an industry with high entry barriers is the airline industry.

Question 35

A long-term tax on a product is eliminated. The supply curve should shift upward and to the right, and the price of that product will typically rise.

Question 36

In order to control the rising price of housing, the city council enacts rent controls. This mandated price is below the equilibrium price. Consequently, a shortage of housing may result.

Question 37

No two countries have exactly the same economic system.

Question 38

Under a pure monopoly, no single producer has a significant amount of control over price.

Question 39

Because there are only a few manufacturers of computer chips, the product is sold in the pure competition market.

Question 40

The equilibrium price occurs at the point of intersection between the supply and demand curves.

Question 41

The government owns the railroads, utilities, energy companies, and financial institutions. Ownership of small businesses is in private hands. This is an example of socialism.

Question 42

In the recovery stage of the business cycle, the economy emerges from recession.

Question 43

The private enterprise system and the mixed market economy are the same.

Question 44

In a mixed economy, private firms do NOT compete with public enterprises.

Question 45

If productivity rises, profits and wages can rise without inflation.

Question 46

A country with a "mixed economy" is a combination of the private enterprise system and a planned economy.

Question 47

Gross domestic product (GDP) is the sum of all goods and services produced within a nation's borders each year.

Question 48

To determine its productivity level, a country can divide the output (goods and service produced in an economic system within a specific period) by the input (the resources used to produce that output).

Question 49

Economic growth leads to expanded job opportunities, improved wages, and an increased standard of living.

Question 50

During a recession, business spending falls but consumer spending remains relatively unchanged.

Question 51

In a mixed economy, public enterprises are expected to lose money.

Question 52

Under socialism, there is no private property.

Question 53

Rising unemployment and slowing inflation may indicate that the economy is headed into a recession.

Question 54

Socialism is one of the four market structures found in a private enterprise system.

Question 55

Increased purchases of discretionary items, such as cars and vacations, are common during periods of recession.

Question 56

Most communist systems allow private ownership of less critical industries.

Question 57

Canada has experienced several economic depressions since the 1930s.

Question 58

In most of Canada, electric utilities operate as regulated monopolies.

Question 59

In recent years, China has been moving from communism toward a more market-oriented economy.

Question 60

Natural monopolies often are industries with high entry barriers.

Question 61

Individuals who lose their jobs due to structural reasons are generally unemployed for long periods.

Question 62

Restrictive monetary policy reduces the money supply and helps to reduce inflation.

Question 63

Lowering taxes is an example of fiscal policy.

Question 64

Cyclical unemployment occurs when the economy slows down and mid managers, for example, are laid off.

Question 65

Assume that the federal government raises taxes in order to balance its budget. This action will tend to slow the rate of economic growth.

Question 66

Andrew has a construction job in the Boston area. During the winter, he is cyclically unemployed and looks for other work until the spring.

Question 67

Fiscal policy is used primarily to increase or decrease interest rates.

Question 68

The Bank of Canada can implement both expansionary and restrictive monetary policies.

Question 69

Inflation benefits borrowers with fixed-rate mortgages.

Question 70

In Canada, monetary policy is largely controlled by The House of Commons.

Question 71

Because energy and food prices fluctuate excessively from month to month, the Consumer Price Index (CPI) excludes these two variables.

Question 72

During recessions, both cyclical and seasonal unemployment rise.

Question 73

One of the twenty-first-century's major economic challenges is the shift to a global information economy.

Question 74

The business cycle provides an indication of economic health of an economy.

Question 75

When the Bank of Canada increases interest rates, the rate of inflation should increase because it will cost more to borrow money.

Question 76

Fiscal policy is used to increase or decrease the money supply, as well as change banking requirements and interest rates.

Question 77

Deflation is ideal for consumers and strengthens a nation's economy.

Question 78

The core inflation rate includes the prices of all goods and services.

Question 79

Real GDP accounts for the changes in prices and currency values.

Question 80

Assume that the Bank of Canada uses its available tools to push down interest rates. Economic activity should increase as a result.