Economics for Business
Exam Answer Key
Course Introduction
Economics for Business provides students with a foundational understanding of key economic principles and their application in the business environment. The course covers essential topics such as supply and demand, market structures, pricing strategies, and the influence of government policies on business operations. Students will explore macroeconomic and microeconomic concepts to analyze business decision-making, assess competitive strategies, and understand the broader economic factors that impact firms. Through real-world case studies and practical examples, students will develop the analytical skills necessary to interpret economic data and make informed managerial decisions in diverse business contexts.
Recommended Textbook
Principles of Macroeconomics A Streamlined Approach 3rd Edition by Robert H. Frank
Available Study Resources on Quizplus
13 Chapters
2266 Verified Questions
2266 Flashcards
Source URL: https://quizplus.com/study-set/2479 Page 2
Chapter 1: Thinking Like an Economist
Available Study Resources on Quizplus for this Chatper
135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/49257
Sample Questions
Q1) Economics is best defined as the study of:
A) inflation, interest rates and the stock market.
B) supply and demand.
C) how people make choices in the face of scarcity and the implications of those choices for society as a whole.
D) the financial concerns of businesses and individuals.
Answer: C
Q2) Economists believe the Cost-Benefit Principle is:
A) a simple but useful model of how people should make choices.
B) a comprehensive description all the factors that influence people's choices.
C) an interesting intellectual exercise with little applicability to the real world.
D) of little use to those who wish to learn how to make better decisions.
Answer: A
Q3) The marginal benefit of an activity is the:
A) same as the total benefit of an activity.
B) total benefit of an activity divided by the level of the activity.
C) extra benefit associated with an extra unit of the activity.
D) total benefit associated with an extra unit of the activity.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Supply and Demand
Available Study Resources on Quizplus for this Chatper
173 Verified Questions
173 Flashcards
Source URL: https://quizplus.com/quiz/49258
Sample Questions
Q1) Gertie saw a pair of jeans that she was willing to buy for $35. The price tag said they were $29.99. Therefore:
A) Gertie should not buy the jeans because they will be of lower quality than she expected.
B) Gertie should not buy the jeans because the price is not equal to her reservation price.
C) Gertie should buy the jeans because the price is less than her reservation price.
D) Gertie should buy the jeans because the price is more than her reservation price.
Answer: C
Q2) A market equilibrium might not maximize total economic surplus because:
A) efficiency is not an important social goal.
B) in a market equilibrium individuals do not act rationally.
C) in a market equilibrium individuals do not exploit all opportunities for individual gain.
D) sometimes goods entail costs and benefits that do not fall on buyers and sellers.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: International Trade and Trade Policy
Available Study Resources on Quizplus for this Chatper
184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/49259
Sample Questions
Q1) The United States was unable to maintain its dominance in the production of televisions because:
A) the highly technical skills necessary to produce televisions are greater in other countries.
B) the raw materials necessary to build televisions became scarce in the United States.
C) the product designs evolved too rapidly for engineers in the United States to keep up.
D) automated techniques allowed production to be outsourced to countries with less-skilled workers.
Answer: D
Q2) If country A can produce more of practically everything than can country B, then which of the following statements is true?
A) Country A has no incentive to trade with country B.
B) Country B cannot have a comparative advantage in the production of any good that country A wants to buy.
C) Trade can benefit both countries.
D) Country B has no incentive to trade with country A.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Macroeconomics: the Birds-Eye View of the Economy
Available Study Resources on Quizplus for this Chatper
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/49260
Sample Questions
Q1) People who enjoy high standards of living usually have all of the following EXCEPT:
A) higher literacy rates.
B) longer life expectancies.
C) freedom from scarcity.
D) better general health.
Q2) Deregulation of the airline, trucking, telephone, and electric utility industries are examples of _______ policy.
A) aggregation
B) fiscal
C) monetary
D) structural
Q3) Normative analysis:
A) addresses the question of whether a policy should be used.
B) aims at determining only the economic consequences of a particular policy.
C) does not depend on the analyst's values.
D) focuses on the actual effects of a policy.
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Measuring Economic Activity: GDP, Unemployment,
and Inflation
Available Study Resources on Quizplus for this Chatper
272 Verified Questions
272 Flashcards
Source URL: https://quizplus.com/quiz/49261
Sample Questions
Q1) The labor force divided by the working age population equals the:
A) unemployment rate.
B) employment rate.
C) participation rate.
D) population rate.
Q2) The inflation rate can be calculated as the percentage change in:
A) real GDP.
B) nominal GDP.
C) the CPI.
D) the exchange rate.
Q3) A measure of the average price of a given class of goods or services relative to the price of the same goods and services in a base year is called a:
A) real price.
B) real quantity.
C) rate of inflation.
D) price index.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Economic Growth, Productivity, and Living Standards
Available Study Resources on Quizplus for this Chatper
162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/49262
Sample Questions
Q1) To increase future living standards by pursuing higher current rates of investment spending, an economy must:
A) allow higher rates of current consumption.
B) reduce current rates of consumption spending.
C) reduce the current capital stock.
D) decrease the amount of future research and development spending.
Q2) Workers should invest in additional human capital as long as the:
A) marginal benefit exceeds the marginal cost.
B) marginal cost exceeds the marginal benefit.
C) opportunity cost exceeds the marginal benefit.
D) opportunity cost is zero.
Q3) The application of new technologies to the production process will increase:
A) average labor productivity.
B) the share of the population employed.
C) the unemployment rate.
D) the quantity of human capital.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: The Labor Market: Workers, Wages, and Unemployment
Available Study Resources on Quizplus for this Chatper
143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/49263
Sample Questions
Q1) A sharp increase in the price of beef that causes consumers to switch to chicken is predicted to ____ the real wage and ____ employment of unskilled workers in a poultry processing plant.
A) increase; increase
B) increase; decrease
C) increase; not change
D) decrease; decrease
Q2) Regulation in the labor market is not necessarily undesirable, but should be subject to the:
A) principle of comparative advantage.
B) principle of increasing opportunity cost.
C) scarcity principle.
D) cost-benefit principle.
Q3) The increased efficiency and specialization that results from globalization illustrates the:
A) scarcity principle.
B) principle of comparative advantage.
C) cost-benefit principle.
D) principle of increasing opportunity costs.
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Saving and Capital Formation
Available Study Resources on Quizplus for this Chatper
174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/49264
Sample Questions
Q1) Crowding out is the tendency for increased government deficits to:
A) reduce investment spending.
B) increase investment spending.
C) reduce consumption spending.
D) increase consumption spending.
Q2) Holding other factors constant, if growing concerns about job security raise precautionary saving, then the real interest rate will ______ and the equilibrium quantity of national saving and investment will ____.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) decrease; increase
Q3) Life-cycle saving is saving:
A) to meet long-term objectives, such as retirement, college attendance, or the purchase of a home.
B) for protection against unexpected setbacks, such as the loss of a job or a medical emergency.
C) for the purpose of leaving an inheritance.
D) to pay life-insurance premiums.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Money, The Federal Reserve, and Global Financial Markets
Available Study Resources on Quizplus for this Chatper
184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/49265
Sample Questions
Q1) Which of the following equations is equivalent to the equation S - NX = I?
A) S + KI = I
B) S - I = KI
C) S - KI = NX
D) S + I = NX - KI
Q2) In an open economy with a given level of real interest rates and risk, an increase in real interest rates abroad will ______ capital inflows and ______ the equilibrium domestic real interest rate.
A) increase; increase
B) increase; decrease
C) decrease; decrease D) decrease; increase
Q3) In an open economy, an increase in the government's budget deficit will ______ the domestic real interest rate and ______ the level of capital investment in the country, holding other factors constant.
A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Short-Term Economic Fluctuations and Fiscal Policy
Available Study Resources on Quizplus for this Chatper
190 Verified Questions
190 Flashcards
Source URL: https://quizplus.com/quiz/49266
Sample Questions
Q1) Aggregate expenditure is total:
A) value added in the economy.
B) spending on final goods and services.
C) income of households, businesses, governments, and foreigners.
D) revenue from the sale of goods and services.
Q2) Two drawbacks in using fiscal policy as a stabilization tool are that fiscal policy can affect ______ as well as aggregate demand and that fiscal policy is _______.
A) consumption; too flexible
B) potential output; not flexible enough
C) consumption; offset by automatic stabilizers
D) potential output; offset by automatic stabilizers
Q3) Indicators of economic activity that move at the same time as the overall economy are called ______ indicators.
A) short-term
B) long-term
C) real
D) coincident
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Stabilizing the Economy: The Role of the Fed
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/49267
Sample Questions
Q1) If the Fed wishes to increase nominal interest rates, it must engage in an open market ______ of bonds that ______ the money supply.
A) sale; increases
B) sale; decreases
C) sale; does not change
D) purchase; increases
Q2) One problem with using monetary policy to address "bubbles" in asset markets is that:
A) doing so presupposes that the Federal Reserve is better than financial-market professionals at identifying bubbles.
B) monetary policy is well-suited for addressing the problem of inappropriately high asset prices.
C) reducing the real interest rate to deal with the bubble could lead to inflation.
D) the Federal Reserve is not interested in stabilizing output.
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Inflation and Aggregate Supply
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/49268
Sample Questions
Q1) Higher rates of inflation reduce spending because:
A) the Fed reacts to the higher inflation by lowering interest rates.
B) the reduction in wealth, resulting from the reduced real value of money, restricts spending.
C) resources are redistributed from low-spending households to high-spending households.
D) the real value of money increases.
Q2) All else equal, an increase in the rate of inflation ____ aggregate spending and ____ short-run equilibrium output.
A) increases; increases
B) decreases; increases
C) increases; decreases
D) decreases; decreases
Q3) Starting from long-run equilibrium, an increase in autonomous consumption results in ____ output in the short run and _____ output in the long run.
A) higher; higher
B) higher; potential
C) lower; potential
D) lower; higher
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Exchange Rates and the Open Economy
Available Study Resources on Quizplus for this Chatper
168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/49269
Sample Questions
Q1) Easy monetary policy reduces the real interest rate, which ______ the demand for dollars, ______ the supply of dollars, and ______ the equilibrium value of the dollar.
A) increases; increases; increases
B) decreases; decreases; decreases
C) increases; decreases; increases
D) decreases; increases; decreases
Q2) Suppose the price of gold is $300 per ounce in the United States and 2,400 pesos per ounce in Mexico. If purchasing power parity holds then, if the price of oil is 200 pesos per barrel in Mexico, the price of oil is ______ per barrel in the United States.
A) $1,600
B) $80
C) $36
D) $25
Q3) Speculative attacks against a currency are caused by fears of:
A) exchange rate revaluations.
B) exchange rate devaluations.
C) monetary policy tightening.
D) balance-of-payments surpluses.
To view all questions and flashcards with answers, click on the resource link above. Page 15