Economics for Business Exam Solutions
Course Introduction
Economics for Business provides students with a foundational understanding of the economic principles that influence business decision-making and strategy. The course covers key topics such as supply and demand, market structures, pricing strategies, and the effects of government policies on business operations. Students will learn how to interpret economic indicators, analyze market trends, and apply economic reasoning to real-world business scenarios. Through case studies and practical applications, the course equips future managers with the tools necessary to make informed decisions in a dynamic global economy.
Recommended Textbook
Macroeconomics 10th Edition by Stephen Slavin
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19 Chapters
5438 Verified Questions
5438 Flashcards
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Page 2
Chapter 1: A Brief Economic History of the United States
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258 Verified Questions
258 Flashcards
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Sample Questions
Q1) Which of the following is true?
A)Twenty-five percent of Americans were officially unemployed in 1933.
B)Our economy expanded steadily from 1933 to 1937.
C)Once the Great Depression began in 1929,our economy moved steadily downhill until 1933.
D)All of the choices are true.
Answer: D
Q2) The economic recovery program begun by the Roosevelt Administration to end the Great Depression was known as the ____________________.
Answer: New Deal
Q3) Which of the following is false?
A)The completion of the national railroad network by 1890 led to the development of a national American market rather than just a series of smaller regional markets.
B)Northern manufacturers benefited from high protective tariffs,which kept out cheaper British goods.
C)The U.S.was the first mass-consumption society.
D)Aside from slavery,southern and northern agriculture were very similar.
Answer: D
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Chapter 2: Resource Utilization
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265 Verified Questions
265 Flashcards
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Sample Questions
Q1) For most of 2009 the U.S.was in a very severe recession,with an unemployment rate approximately _____ percent while the capacity utilization rate was below ______ percent.
A)5;85
B)9;70
C)2;90
D)0;100
Answer: B
Q2) Which statement about entrepreneurship in America is true?
A)Alexander Graham Bell and Thomas Edison were two of the most famous American inventors who became entrepreneurs.
B)The American entrepreneur led the way to the country's economic success.
C)Often the entrepreneur is an innovator.
D)The vast majority of entrepreneurs in America either work for themselves or have just one or two employees.
E)All of the statements are truE.
Answer: E
Q3) The economy usually operates at point _______.
Answer: T
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Page 4
Chapter 3: The Mixed Economy
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262 Flashcards
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Sample Questions
Q1) Statement I.Under fascism,the government owns the means of production.
Statement II.Nearly one-third of the world's countries may be described as fascist.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Answer: D
Q2) Which one of the following is not a mixed economy?
A)United States
B)China
C)Japan
D)Sweden
E)All of the countries listed are mixed economies.
Answer: E
Q3) A ban on leaded gasoline has reduced ____________ pollution.
Answer: air
Q4) Ours is a mixed economy because there is a ______________________ sector and a _______________ sector.
Answer: private;public (or government
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Chapter 4: Supply and Demand
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255 Flashcards
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Sample Questions
Q1) In the graph shown above at a price of $25
A)there is a surplus.
B)there is a shortage.
C)quantity demanded is greater than quantity supplied.
D)there is a shortage and quantity demanded is greater than quantity supplied,but there is not a surplus.
E)there is a surplus and quantity demanded is greater than quantity supplied,but there is not a shortagE.
Q2) When market price is below equilibrium price
A)a shortage is generated.
B)a surplus is generated.
C)quantity demanded is greater than quantity supplied.
D)then both a shortage is generated and quantity demanded is greater than quantity supplied,but a surplus is not generateD.
E)then both a surplus is generated and quantity demanded is greater than quantity supplied,but a shortage is not generated.
Q3) If price were $14,there would be a (shortage or surplus)_____ of _____.
Q4) If you are willing to buy a particular good,you still won't buy it unless you happen to
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Chapter 5: The Household Consumption Sector
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312 Verified Questions
312 Flashcards
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Sample Questions
Q1) Which statement is true?
A)Middle-aged Americans have been saving at a higher rate than in the past.
B)Home equity loans have been a source of funds to finance consumer spending.
C)The Japanese savings rate is nearly twice the American saving rate.
D)None is true.
Q2) Statement I.When disposable income is zero,autonomous consumption equals total consumption.
Statement II.When consumption equals disposable income,saving is zero.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q3) Which of the following statements is false?
A)When income levels are very low,C is higher than income.
B)When income is equal to consumption,saving is zero.
C)Induced consumption expenditures represent consumption that is independent of income.
D)The average propensity to save is positive at very high levels of income.
Q4) At what level of disposable income is saving equal to zero?
Q5) In 2005 the United States had a ___________ savings rate.
Page 7
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Chapter 6: The Business Investment Sector
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295 Verified Questions
295 Flashcards
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Sample Questions
Q1) When disposable income is 1,500,Savings is
A)0
B)100
C)150
D)200
Q2) If gross investment is less than depreciation,then net investment is ____________ and the economy is ____________.
A)positive,expanding
B)positive,shrinking
C)negative,expanding D)negative,shrinking
Q3) Gross Investment ___________ (rose/fell)from 1929 to 1932 while GDP ________ (rose/fell)during those same years.
Q4) Which of the following might be used to acquire capital?
A)working less
B)consuming more
C)borrowing
D)all the choices
Q5) Would you borrow the money and invest it?
Q6) When disposable income is $1 trillion,how much is savings?
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Chapter 7: The Government Sector
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301 Verified Questions
301 Flashcards
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Sample Questions
Q1) Which is the most accurate statement?
A)Americans pay higher taxes on gasoline than do the people in most other industrial countries.
B)In general,excise taxes tend to be regressive.
C)The projected 2011 total federal tax revenue is more than federal government spending.
D)The new tax rates in the tax cut of 2003 are permanent.
Q2) If your taxable income was $50,000 and you had an average tax rate of 20 percent,how much tax did you pay?
Q3) Which statement is true?
A)The government sector of GDP is larger than the consumption sector.
B)The federal government spends about five percent of our GDP on foreign aid.
C)The federal government spends less on Social Security than it does on defense.
D)None is true.
Q4) The money that pays Social Security benefits is raised by A)taxes that workers pay.
B)taxes that employers pay.
C)taxes that both workers and employers pay.
D)the personal income tax.
Q5) Sue Hawkins earns $100,000.How much Social Security tax does she pay?
Page 9
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Chapter 8: The Export-Import Sector
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) Workers in the poor countries of the world where labor intensive products are produced earn between ________________ per day compared to United States workers earning eight to twelve dollars per hour.
Q2) Statement I: The WTO regulates world trade.
Statement II: The basis for international trade is that all nations stand to gain through specialization and exchange with other nations.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q3) Statement I: Canada is our most important trading partner.
Statement II: In 1999,11 EU countries formed the European Monetary Union.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q4) The world trade agreement that was drafted in 1947 was known as _____________.
Q5) In 1970 our imports and exports added together were __________ percent of GDP.
Page 10
Q6) The C + I + G curve lies __________ the C + I + G + Xn curve.
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Chapter 9: Gross Domestic Product
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336 Verified Questions
336 Flashcards
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Sample Questions
Q1) Today our per capita real GDP is _______ what it was since World War II.
A)half
B)equal to C)twice
D)over three times
Q2) Suppose that,since the base year,all prices have risen by 100%.This year's current-dollar GDP is $2,000 billion.Then constant-dollar GDP is
A)$4,000 billion.
B)$3,000 billion.
C)$2,000 billion.
D)$1,000 billion.
E)$500 billion.
Q3) Which statement is true?
A)Real GDP can never increase faster than GDP.
B)Real GDP can increase faster than GDP if there is inflation.
C)Real GDP can increase faster than GDP if there is deflation.
D)None of the statements are true.
Q4) Find gross domestic product.
Q5) GDP measures _____ _______ we produce but not _________ we produce.
Page 11
Q6) If prices fall 9 percent since the base year,how much is the GDP deflator?
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Chapter 10: Economic Fluctuations, unemployment, and Inflation
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394 Verified Questions
394 Flashcards
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Sample Questions
Q1) If the number of unemployed is greater than the number of employed,the unemployment rate is
A)over 100%.
B)more than 50%.
C)less than 50%.
D)None of the choices are correct.
Q2) Statement I: The depression phase of the conventional three-phase business cycle is usually accompanied by an unemployment rate of at least 20 percent.
Statement II: The so-called index of leading economic indicators has generally begun to decline two or three months after business cycle peaks.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q3) The longest expansion since records have been kept began in
A)March 1991.
B)November 1982.
C)July 1980.
D)March 1975.
Page 12
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Chapter 11: Classical and Keynesian Economics
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241 Verified Questions
241 Flashcards
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Sample
Questions
Q1) John Maynard Keynes would argue that massive government spending ___________ will pull us out of a depression.
Q2) The line segment ST describes the region where
A)increases in output do not cause higher prices because of a large portion of unemployed resources.
B)prices and output increase together.
C)increases in prices do not generate any increase in output.
D)increases in prices cause decreases in output.
Q3) Keynes believed
A)lowering wages could cure a depression.
B)the interest rate was more important than the expected rate of profit in determining the level of investment in an economy.
C)our economy always tends toward full employment.
D)aggregate demand was more important than aggregate supply in the short run.
Q4) When the price level falls,the purchasing power of people's liquid assets rises,they feel richer,and they tend to spend more.This sequence describes the ________ _______.
Q5) Macroeconomic equilibrium occurs when the quantity of output _____ equals the quantity of output ____.
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Chapter 12: Fiscal Policy and the National Debt
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377 Verified Questions
377 Flashcards
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Sample Questions
Q1) The "crowding-out effect" suggests that
A)government spending is increasing at the expense of private investment.
B)imports are replacing domestic production.
C)private investment is increasing at the expense of government spending.
D)consumption is increasing at the expense of investment.
Q2) Between 1980 and 1990,the national debt ___________ as a percentage of GDP.
A)fell substantially
B)fell slightly
C)stayed about the same
D)rose slightly
E)rose substantially
Q3) If GDP is $5,800 billion,the multiplier is 8,and G falls by $20 billion,find the new level of GDP.
Q4) Statement I: Our national debt is larger than our GDP.
Statement II: The national debt is much greater than the size of any of the annual federal budget deficits run during the 1990s.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Page 14
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Chapter 13: Money and Banking
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278 Verified Questions
278 Flashcards
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Sample Questions
Q1) Which is the most accurate statement?
A)Fringe and sub-prime lending should be outlawed.
B)Poor people cannot get loans in the United States.
C)Household International can be considered a model corporate citizen.
D)When poor people get home mortgages or personal loans,they usually pay much higher interest rates than the average American.
Q2) Which is NOT considered money?
A)Checking account balances
B)Debit cards
C)Currency and coin
D)Traveler's checks issued by non-banks
Q3) Statement I: As interest rates rise,in the long run people tend to hold less money. Statement II: As the rate of inflation rises in the long run,people tend to hold more money.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q4) M2 + ___________ = M3.
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Page 15
Chapter 14: The Federal Reserve and Monetary Policy
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365 Verified Questions
365 Flashcards
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Sample Questions
Q1) If there were a 10% reserve requirement,how much would the deposit multiplier be?
Q2) The members of the Board of Governors are appointed by A)the president.
B)Congress.
C)the Federal Reserve district banks.
D)the member banks.
Q3) Which statement is true?
A)Banks get a significant part of their total revenue from interest on their primary reserves.
B)Banks try to carry as much in excess reserves as they possibly can.
C)Only a small fraction of the nation's banks are subject to the reserve requirements of the Federal Reserve.
D)The banks have received interest on their reserves since October,2008.
Q4) Demand deposits $125,000,000
Time deposits:
Original maturity (less than 18 months): $1 billion
Original maturity (18 months or more): $500 million
Use the information above to find this bank's required reserves.
Q5) The main reason that banks borrow from the Fed is that they _________.
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Chapter 15: A Century of Economic Theory
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308 Verified Questions
308 Flashcards
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Sample Questions
Q1) The conventional monetary policy to fight inflation would be to
A)increase the rate of monetary growth.
B)decrease the rate of monetary growth.
C)run budget deficits.
D)run budget surpluses.
Q2) Statement I: Rational expectationists believe that people make well-reasoned and self-interested decisions based upon available information.
Statement II: The Laffer curve describes the relationship between cost-push inflation and demand-pull inflation.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q3) According to the equation of exchange,an increase in either velocity or the money supply will
A)cause GDP to rise.
B)not affect the price level.
C)cause the price level to fall.
D)cause GDP to fall.
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Chapter 16: Economic Growth and Productivity
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Sample Questions
Q1) Which statement is true?
A)The average workweek is about 50 percent lower than it was in 1900.
B)The average workweek is about the same as it was in 1900.
C)Most Americans work more hours per year than do most Western Europeans.
D)Most American workers work less hours than workers in other industrialized countries.
Q2) Statement I.Our rate of productivity growth was very low from the mid-1970s to the mid-1990s.
Statement II.One reason for our relatively high rate of productivity growth in recent years is the rising quality of our labor force.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q3) The introduction of ____ had a long delayed effect on raising productivity growth in the late 1990s.
Q4) The second phase of the industrial revolution first took place in ______ (a country)in the _______ (decade).
Q5) The country that spends the most per capita on healthcare is ____.
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Chapter 30: Income Distribution and Poverty
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285 Flashcards
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Sample Questions
Q1) Over _______% of Americans live below the poverty line.
A)3
B)7
C)13
D)15
E)19
Q2) Which is the most accurate statement?
A)Poverty can easily be wiped out by giving every adult on welfare a minimum wage job.
B)The basic cause of poverty is that nearly all of the poor are lazy.
C)Within a decade,poverty will no longer be a national problem.
D)There is a hard core of millions of poor people who will need public assistance for many years to come.
Q3) The International Water Management Institute estimates that clean water could be provided to everyone on earth for an outlay of $________ a year beyond current spending on water projects.
Q4) If income were distributed equally our economic _________ would suffer.
Q5) The country with the highest child poverty rate in the industrial world is ________.
Q6) About one out of every _________ Hispanics is poor.
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Chapter 31: International Trade
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Sample Questions
Q1) In 2009,the majority of the goods and services deficit was due to _______ imports.
Q2) A tariff on a good _________ its price.
Q3) The existence of absolute advantage
A)implies that there will be no benefits from trade taking place between two nations.
B)refers to a situation where one country can produce one particular good with fewer units of resources than the other country.
C)fosters the self-sufficiency of the two nations.
D)refers to a situation in which one country can produce all goods with fewer units of resources than can another country.
Q4) A tariff on French perfume will ____ the price of perfume in the U.S.and ____ the quantity purchased.
Q5) Our fastest growing trade imbalance is with A)ChinA.
B)Japan.
C)Canada.
D)Mexico.
E)Germany.
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Chapter 32: International Finance
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230 Verified Questions
230 Flashcards
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Sample Questions
Q1) During the second half of the 19<sup>th</sup> century,the United States
A)was a net creditor nation.
B)had a surplus in its current account.
C)borrowed heavily from European nations to acquire capital in order to industrialize.
D)borrowed heavily from European nations to purchase consumer goods.
Q2) The demise of the gold standard led to
A)more international trade.
B)greater and greater devaluation.
C)freely floating exchange rates.
Q3) If the personal savings rate rose to 10%
A)our current account deficit would probably fall.
B)our current account deficit would probably rise.
C)our current account deficit would be unaffected.
Q4) If 1 U.S.dollar exchanges for 0.9 Canadian dollars,how much would it cost in U.S.dollars and cents to purchase a Canadian hockey jersey priced at 45 Canadian dollars?
Q5) If a country's gold supply were dwindling under the gold standard,an alternative to lower prices and wages would be to _____________.
Q6) Technically,our balance of payments always has a balance of _________.
Page 21
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