Question 1

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

Accepted Answer

This situation is best described as deflation, which occurs when prices decline due to a surplus of goods and services that exceeds consumer demand.

Question 2

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

Accepted Answer

The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output, which includes goods purchased in large quantities for resale.

Question 3

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.

Accepted Answer

Fiscal policy involves government decisions on taxation and spending, which are key responsibilities of the Treasury Department.

Question 4

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

Accepted Answer

The answer of The U.S. government thinks that the country...

Question 5

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

Accepted Answer

Lowering interest rates makes borrowing cheaper for businesses, encouraging them to take out loans for expansion or operations, potentially stimulating economic growth.

Question 6

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.

Accepted Answer

The answer of Your friend is considering opening a new...

Question 7

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

Accepted Answer

The answer of Provide a real-life example that demonstrates some...

Question 8

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.

Accepted Answer

The answer of There are four kinds of free markets....

Question 9

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.

Accepted Answer

The answer of Think of a product or service that...

Question 10

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

Accepted Answer

The answer of Your friend is considering a move to...

Question 11

Microeconomics is the study of small economic units.

Accepted Answer

Microeconomics focuses on the actions of individuals and industries, like the dynamics between buyers and sellers, borrowers and lenders.

Question 12

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

Accepted Answer

While capitalism offers opportunities for economic mobility, it does not guarantee that everyone can work their way up from poverty due to systemic inequalities, market failures, and other barriers.

Question 13

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.

Accepted Answer

In perfect competition, there are many sellers in the market, none of whom dominate the market share, and the products are considered homogeneous with no differentiation.

Quiz 6: Accounting and Financial Statements