Business Economics
Exam Review
Course Introduction
Business Economics explores the application of economic theories and quantitative methods to real-world business decisions and challenges. The course examines both microeconomic and macroeconomic principles, such as demand and supply analysis, production and cost structures, market competition, pricing strategies, and the influence of government policies on business operations. Students gain practical insights into how businesses optimize resources, respond to market signals, and make strategic decisions in dynamic and competitive environments. The focus is on developing analytical skills and economic reasoning to solve problems and identify opportunities within various organizational contexts.
Recommended Textbook
Macroeconomics 4th Australian Edition by Glenn Hubbard
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15 Chapters
2116 Verified Questions
2116 Flashcards
Source URL: https://quizplus.com/study-set/1419
Page 2
Chapter 1: Economics: Foundations and Models
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160 Verified Questions
160 Flashcards
Source URL: https://quizplus.com/quiz/28152
Sample Questions
Q1) What is 'equity', and how does it differ from 'efficiency'?
Answer: Equity refers to the fair distribution of economic benefits. In economics, efficiency refers to least cost production (productive efficiency)and producing according to human preferences (allocative efficiency).
Q2) Explain the economic assumption that 'people are rational'. ____________________________________________________________
Answer: 'People are rational' means that economists assume consumers and firms will use all available information as they act to achieve their goals. Rational individuals weigh the benefits and costs of each action, and they choose an action only if the benefits exceed the costs.
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Chapter 2: Choices and Trade Offs in the Market
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192 Verified Questions
192 Flashcards
Source URL: https://quizplus.com/quiz/28153
Sample Questions
Q1) What is meant by the term 'free market'?
Answer: A free market is a market with few government restrictions on how a good or service can be produced or sold or on how factors of production can be employed.
Q2) Refer to Figure 2.6. What is the opportunity cost of 100 dozen roses?
A)0.8 dozen orchids
B)5 dozen orchids
C)40 dozen orchids
D)80 dozen orchids
Answer: C
Q3) Refer to Table 2.8. Scotland has a comparative advantage in the production of: A)both products.
B)guitars.
C)motorcycles.
D)neither product.
Answer: C
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Page 4
Chapter 3: Where Prices Come From: the Interaction of
Demand and Supply
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201 Verified Questions
201 Flashcards
Source URL: https://quizplus.com/quiz/28154
Sample Questions
Q1) If the price of a product is above equilibrium, what forces the price toward the equilibrium price?
Answer: When the price is above equilibrium, a surplus occurs. Some producers who are unable to sell the product will have excess inventories and hence an incentive to offer to sell the product at a lower price. A lower price will simultaneously decrease the quantity supplied and increase the quantity demanded. This downward pressure on price continues until the surplus is eliminated and equilibrium is achieved.
Q2) An increase in the price of pineapples will result in:
A)a smaller quantity of pineapples supplied.
B)a larger quantity of pineapples supplied.
C)a decrease in the demand for pineapples.
D)an increase in the supply of pineapples.
Answer: B
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Chapter 4: Gdp: Measuring Total Production, Income and Economic Growth
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123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/28155
Sample Questions
Q1) What is meant by 'intermediate goods' and are they included in the measure of GDP?
Q2) Which of the following is included in investment spending?
A)changes in business inventories
B)non-durable goods
C)taxes
D)transfer payments
Q3) The measure of production that values output using a base year is called:
A)value-added GDP.
B)nominal GDP.
C)real GDP.
D)underground GDP.
Q4) The circular-flow model demonstrates that the value of total production is equal to the value of total income in an economy.
A)True
B)False
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Chapter 5: Economic Growth, the Financial System and Business Cycles
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132 Verified Questions
132 Flashcards
Source URL: https://quizplus.com/quiz/28156
Sample Questions
Q1) Assume that the government reduces taxation on earnings from dividends on shares. Use the model of the loanable funds market to describe what will happen to the savings, investment, economic growth, the real interest rate and the quantity of loanable funds exchanged.
Q2) The 'long boom' in Australia referred to the general period of strong economic growth that occurred between:
A)1928 and 1931.
B)the late 1950s to the late 1980s.
C)the late 1940s to the early 1970s.
D)1991 and 2007.
Q3) Outline the trend in real GDP per capita in Australia from 1901 to 2016.
Page 7
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Chapter 6: Long-Run Economic Growth: Sources and Policies
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) What reasons explain the increase in productivity growth rates that occurred in Australia from the early 1990s to the early 2000s?
Q2) Because Australian labour markets are more controlled and regulated than those in many European countries, labour productivity has grown relatively faster in Australia.
A)True
B)False
Q3) Since the world began, most records show that little or no increases in real GDP per capita occurred until around the 1800s.
A)True
B)False
Q4) The Soviet Union's economic growth rate slowed despite rapid increases in capital per hour worked.
A)True
B)False
Page 8
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Chapter 7: Unemployment
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) In Australia between 2006 and 2016:
A)the fastest job growth was experienced in the full-time job category.
B)the fastest job growth was experienced in the part-time job category.
C)total net jobs growth fell.
D)the unemployment rate rose.
Q2) Explain how the rate of unemployment is measured and discuss the weaknesses of this method of measurement.
Q3) The labour force participation rates of men in Australia have gradually increased since 1978.
A)True
B)False
Q4) How is a 'retired person' classified?
A)as unemployed
B)as under-employed
C)as not in the labour force
D)as part-time employed
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Chapter 8: Inflation
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110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/28159
Sample Questions
Q1) What is 'hyperinflation'?
Q2) You lend $5 000 to a friend for one year at a nominal interest rate of 10%. The CPI over that year rises from 180 to 190. What is the real rate of interest you will earn?
A)0%
B)4.4%
C)5.5%
D)5.8%
Q3) If the nominal interest rate is 8% and the inflation rate is 3%, then the real interest rate is:
A)4%.
B)8%.
C)3%.
D)5%.
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Chapter 9: Aggregate Expenditure and Output in the Short Run
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138 Verified Questions
138 Flashcards
Source URL: https://quizplus.com/quiz/28160
Sample Questions
Q1) You review a salesman's income over a five-year period. You note it fluctuates significantly from year-to-year. Yet his consumption of goods and services remains consistently at the same level, year after year. Does this mean that income is not a determinant of consumption, or could something else explain his behaviour?
Q2) Explain, in detail, how the adjustment to macroeconomic equilibrium occurs when spending is less than production.
Q3) If aggregate expenditure is less than GDP, then inventories rise and real GDP falls. A)True B)False
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Page 11
Chapter 10: Aggregate Demand and Aggregate Supply Analysis
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) The model which focuses on how productivity shocks explain fluctuations in real GDP is the:
A)monetarist model.
B)real business cycle model.
C)new classical model.
D)new Keynesian model.
Q2) An adverse supply shock causes the short-run aggregate supply curve to shift left, increasing the price level.
A)True
B)False
Q3) Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?
A)output will increase
B)prices will decline
C)unemployment will decline
D)aggregate supply will shift to the left
Q4) 'Stagflation' occurs when short-run aggregate supply decreases.
A)True B)False
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Chapter 11: Money, Banks and the Reserve Bank of Australia
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123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/28162
Sample Questions
Q1) In February 2016, the level of credit in Australia was approximately:
A)$2 667.6 billion.
B)$49.8 billion.
C)$141.8 billion.
D)$445.1 billion.
Q2) If banks become more pessimistic about the future of the economy and increase their holdings of excess reserves, the size of the deposit multiplier will be:
A)larger.
B)smaller.
C)zero.
D)the same.
Q3) Among potential stores of value, money:
A)offers the highest rate of return.
B)increases in value during periods of inflation.
C)has the advantage of being the most liquid asset.
D)provides more services than other assets.
Q4) A person's 'wealth' is the same as her or his income.
A)True
B)False
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Chapter 12: Monetary Policy
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116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/28163
Sample Questions
Q1) Which of the following does the Reserve Bank of Australia use as its main measure of monetary movements in Australia?
A)credit
B)the cash rate
C)the money supply
D)the demand for money
Q2) What effect will a rise in interest rates have on the exchange rate and net exports?
Q3) How do economists generally rate the Reserve Bank of Australia's performance in the 1980s, 1990s and 2000s?
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Chapter 13: Fiscal Policy
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) If policy makers are concerned that the economy is in danger of rising inflation because aggregate demand is increasing faster than aggregate supply, the appropriate fiscal policy response is to:
A)increase taxes.
B)increase government spending.
C)use expansionary fiscal policy.
D)increase interest rates.
Q2) The government 'purchases multiplier' always has a positive sign and the 'tax multiplier' always has a negative sign.
A)True
B)False
Q3) The Australian federal budget was in surplus during the:
A)early 1990s.
B)early- to mid-2000s.
C)mid-1970s.
D)early-1980s.
Q4) The structural budget deficit indicates what the budget deficit is during a recession.
A)True
B)False
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Chapter 14: Macroeconomics in an Open Economy
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) If the current account balance is negative:
A)net foreign investment is also negative.
B)capital inflows must be less than capital outflows.
C)net foreign investment is positive.
D)Both A and B are correct.
Q2) If the Australian government sells a bond to the Bank of China, how is this recorded in Australia's balance of payments?
A)a positive entry on the trade account
B)capital inflow into Australia's financial account
C)a negative entry on the financial account
D)an increase in foreign direct investment into Australia
Q3) What effect does an open economy have on the effectiveness of monetary policy and fiscal policy?
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16
Chapter 15: The International Financial System
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Assume that the Thai government wants to maintain an exchange rate of 0.04 baht per United States (US)dollar, as shown in Figure 15.3. If currency speculators think that the Thai government will soon allow the currency to float, how will that affect the number of baht the central bank must buy or sell to maintain the peg at 0.04 baht per US dollar?
A)They must purchase more than 100 million baht per day with US dollars.
B)They must purchase less than 100 million baht per day with US dollars.
C)They must purchase exactly 100 million baht per day with US dollars.
D)They do not have to do anything.
Q2) Limits on the flow of foreign exchange and financial investment across countries are called:
A)capital controls.
B)fixed exchange rates.
C)credit constraints.
D)currency restrictions.
Q3) The countries that abandoned the gold standard the earliest during the Great Depression suffered the least loss of production.
A)True
B)False
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