Question 1

Deflation refers to
A)a period of falling prices.
B)the occurrence of price increases throughout the economic system.
C)the condition in an economic system in which the amount of money available is greater than the amount of goods produced.
D)the measure of prices in urban areas.
E)the amount of government spending greater than the taxes collected in one year.

Accepted Answer

Deflation refers to a period of falling prices, which can occur due to a decrease in consumer demand, excess supply, or other economic factors. It is the opposite of inflation, which is a period of rising prices.

Question 2

If Canada fell into a depression,the Bank of Canada would most likely
A)raise interest rates.
B)leave interest rates alone.
C)lower interest rates.
D)it is not possible to tell with the information given.
E)increase gasoline taxes.

Accepted Answer

When an economy is in a depression, it means that there is a lack of demand for goods and services, which leads to a decrease in overall economic activity. Lowering interest rates is one of the monetary policy tools that the Bank of Canada can use to stimulate spending and encourage borrowing. By lowering interest rates, it's cheaper for businesses and individuals to borrow money, which can lead to increased investment, consumption, and overall economic growth. Therefore, the most likely course of action for the Bank of Canada in a depression would be to lower interest rates.

Question 3

What effect do higher interest rates have on consumer spending?
A)Consumer spending increases as people try to quickly buy goods before rates go even higher.
B)Consumer spending decreases immediately,but then rises sharply after consumers get used to the new higher interest rates.
C)Consumer spending is not impacted by changes in interest rates.
D)Consumer spending decreases.
E)It is not possible to tell from the information given.

Accepted Answer

Higher interest rates make borrowing more expensive, leading to decreased consumer spending as people are less likely to take out loans or use credit to purchase goods.

Question 4

________ includes human knowledge,work methods,physical equipment,electronics and telecommunications,and various processing systems that are used in performing business activities.
A)The technological environment
B)The social environment
C)The political-legal environment
D)The competitive environment
E)The economic environment

Accepted Answer

The technological environment refers to the tools and procedures used in business activities. This includes equipment, electronics, and telecommunications systems. It also includes knowledge and work methods used by employees.

Question 5

If you were the Minister of Finance taking care of fiscal policy,which one of the following could you implement?
A)A tax increase
B)A cut in social security programs
C)An increase in federal transfer payments
D)An increase in spending to military bases
E)All of these ideas could be implemented.

Accepted Answer

As the Minister of Finance responsible for fiscal policy, all the options listed (A: tax increase, B: cut in social security programs, C: increase in federal transfer payments, D: increase in spending to military bases) are within the scope of fiscal policy measures. These actions involve government spending and taxation decisions, which are key tools of fiscal policy used to influence a country's economic conditions.

Question 6

A computer programmer who has just quit her job but who will find a new one soon is an example of ________ unemployment.
A)seasonal
B)frictional
C)cyclical
D)structural
E)none of these

Accepted Answer

The computer programmer is currently unemployed because she chose to quit her job, but she is actively searching for a new job. This type of unemployment is frictional, which is temporary unemployment caused by the time it takes for workers to find new jobs.

Question 7

Unemployment is the level of joblessness among
A)people over the age of 18 within a given economic system.
B)people who have been previously employed in an economic system.
C)people who have the skills for employment within an economic system.
D)people over the age of 18 and under the age of 65 in a given economic system.
E)people actively seeking work in an economic system.

Accepted Answer

Unemployment refers to the number of people who are actively seeking work but do not have a job. Therefore, the best choice is E, which states that unemployment is among people actively seeking work in an economic system.

Question 8

Which of the following is correct regarding unemployment rates in Canada?
A)Unemployment rates have been fairly stable at about 6 percent for the last 30 years.
B)Unemployment rates have been fairly stable at about 2 percent for the last 30 years.
C)Unemployment rates for women have generally been slightly lower than unemployment rates for men.
D)The government did not keep track of unemployment rates for women until the 1980s.
E)The unemployment rate for women is about half the unemployment rate for men.

Accepted Answer

According to Statistics Canada, the unemployment rate for women has been slightly lower than that for men. Option A and B are incorrect as they both provide extreme values which are not supported by factual data. Option D is incorrect as the government did keep track of the unemployment rate for women even before the 1980s. Option E is incorrect as the statement is not true for Canada.

Question 9

An increase in tax rates is an example of ________ policy,while the government influencing banks to lend more to consumers is an example of ________ policy.
A)GDP;GNP
B)fiscal;monetary
C)GNP;GDP
D)monetary;fiscal
E)none of these

Accepted Answer

An increase in tax rates is an example of fiscal policy, as it relates to government actions regarding taxation and spending. On the other hand, the government influencing banks to lend more to consumers is an example of monetary policy, which refers to actions taken by central banks to control the supply of money and credit in the economy.

Question 10

Which of the following statements about inflation is true?
A)Inflation increases the purchasing power of consumer dollars.
B)Inflation occurs when people have more money to spend as the quantity of goods available increases.
C)Inflation occurs when the amount of money taken out of the economy exceeds the amount of money put into the economy.
D)Inflation and deflation are almost synonymous in practice.
E)None of these.

Accepted Answer

None of the statements accurately describe inflation. Inflation decreases the purchasing power of money, occurs when demand outpaces supply, and is not synonymous with deflation.

Question 11

John is experiencing ________ unemployment because he is out of work temporarily while looking for a new job,while Sally is experiencing ________ unemployment because she is out work because of a downturn in the business cycle.
A)seasonal;structural
B)structural;seasonal
C)frictional;cyclical
D)cyclical;frictional
E)seasonal;cyclical

Accepted Answer

Frictional unemployment occurs when individuals are temporarily out of work while transitioning from one job to another, fitting John's situation. Cyclical unemployment happens due to economic downturns affecting the business cycle, which describes Sally's scenario.

Question 12

________ policy involves the collection and spending of government revenues,while ________ policy focuses on controlling the size of the nation's money supply.
A)Productivity;inflation
B)Taxation;monetary
C)Monetary;fiscal
D)Fiscal;monetary
E)National debt;annual deficit

Accepted Answer

Fiscal policy involves the collection and spending of government revenues, such as through taxation and government spending programs, while monetary policy focuses on controlling the size of the nation's money supply, such as through interest rates and the buying and selling of government securities.

Question 13

________ unemployment results because workers lack the right skills,while ________ unemployment results when people are temporarily out of work while they are looking for a new job.
A)Cyclical;seasonal
B)Frictional;seasonal
C)Seasonal;structural
D)Cyclical;structural
E)Structural;frictional

Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills that workers possess and the skills demanded by employers. Frictional unemployment occurs when individuals are temporarily out of work while they look for a new job. Cyclical unemployment occurs when there is a downturn in the business cycle and overall demand for labor decreases. Seasonal unemployment occurs when the demand for labor varies by season, such as in agricultural or tourism industries. Based on this, the best choice is E, because structural unemployment is caused by a lack of skills, while frictional unemployment is temporary and caused by individuals looking for new jobs.

Question 14

Ben is unemployed,but he is currently in a training program designed to increase the skills he needs to perform the kinds of jobs that are available.Ben is experiencing ________ unemployment.
A)frictional
B)seasonal
C)cyclical
D)structural
E)none of these

Accepted Answer

Ben's unemployment is caused by a lack of necessary skills for available jobs, which is a characteristic of structural unemployment. The fact that he is currently in a training program to acquire those skills confirms this.

Question 15

Sam,an audiologist,lost his job two years ago and still hasn't found work.There is just no market for audiologists currently.Sam is experiencing
A)structural unemployment.
B)full unemployment.
C)cyclical unemployment.
D)bad luck.
E)frictional unemployment.

Accepted Answer

Sam is experiencing structural unemployment because his skills as an audiologist are not in demand in the current job market, indicating a mismatch between his skills and the available jobs.

Question 16

The chance that a society can achieve full employment is ________ percent.
A)10
B)75
C)45
D)1
E)0

Accepted Answer

Full employment is an economic condition where all available labor resources are being used in the most efficient way possible, but it does not mean zero unemployment due to frictional and structural factors. Hence, achieving absolute full employment (0% unemployment) is practically impossible.

Question 17

The government controls the size of the money supply through ________ policies.
A)revenue
B)monetary
C)inflation
D)economic
E)fiscal

Accepted Answer

The government controls the size of the money supply through monetary policies, such as adjusting interest rates, buying or selling government securities, and setting reserve requirements for banks. Fiscal policies, such as government spending and taxation, may indirectly affect the money supply, but they are not direct mechanisms of control. Revenue policies involve collecting taxes and other sources of government income, but they do not directly impact the money supply. Inflation is a result of various economic factors, but it is not a policy tool for controlling the money supply. Therefore, the best choice is B, monetary policies.

Question 18

Don is unemployed because of a downturn in economic activity;this is an example of ________ unemployment.
A)frictional
B)seasonal
C)structural
D)cyclical
E)none of these

Accepted Answer

Don's unemployment is a result of a downturn in economic activity, which is a characteristic of cyclical unemployment.

Question 19

The ________ is a measure of the prices of a typical "basket of products" purchased by consumers.
A)consumer price index
B)national debt
C)balance of trade
D)gross national product
E)real GDP

Accepted Answer

The consumer price index (CPI) is specifically designed to measure changes in the prices of goods and services bought by households in an economy, reflecting changes in the cost of living. It is calculated by comparing the price of a basket of goods and services in one period with the price of the same basket in a base period.

Question 20

Which of the following best describes what the consumer price index is used to indicate?
A)The average wage rate for a given region
B)The economic performance of key consumer product companies
C)The changes in the cost of consumer products over time
D)The percentage of consumers in the total population looking for work
E)The number of price increases within a given period of time

Accepted Answer

The consumer price index (CPI) is an economic indicator that measures the changes in the cost of a basket of goods and services purchased by households over time. It is used to indicate changes in the cost of consumer products over time.

Quiz 2: The Environment of Business

Deflation refers to

If Canada fell into a depression,the Bank of Canada would most likely

What effect do higher interest rates have on consumer spending?

________ includes human knowledge,work methods,physical equipment,electronics and telecommunications,and various processing systems that are used in performing business activities.

If you were the Minister of Finance taking care of fiscal policy,which one of the following could you implement?

A computer programmer who has just quit her job but who will find a new one soon is an example of ________ unemployment.

Unemployment is the level of joblessness among

Which of the following is correct regarding unemployment rates in Canada?

An increase in tax rates is an example of policy,while the government influencing banks to lend more to consumers is an example of policy.

Which of the following statements about inflation is true?

John is experiencing unemployment because he is out of work temporarily while looking for a new job,while Sally is experiencing unemployment because she is out work because of a downturn in the business cycle.

policy involves the collection and spending of government revenues,while policy focuses on controlling the size of the nation's money supply.

unemployment results because workers lack the right skills,while unemployment results when people are temporarily out of work while they are looking for a new job.

Ben is unemployed,but he is currently in a training program designed to increase the skills he needs to perform the kinds of jobs that are available.Ben is experiencing ________ unemployment.

Sam,an audiologist,lost his job two years ago and still hasn't found work.There is just no market for audiologists currently.Sam is experiencing

The chance that a society can achieve full employment is ________ percent.

The government controls the size of the money supply through ________ policies.

Don is unemployed because of a downturn in economic activity;this is an example of ________ unemployment.

The ________ is a measure of the prices of a typical "basket of products" purchased by consumers.

Which of the following best describes what the consumer price index is used to indicate?