Chapter 2&3 HW Questions – Flashcards

An economist is examining how consumers in the automobile market have responded to recent price increases by car manufacturers. He is examining a microeconomic situation.

History shows that free-market capitalism leads to a fair and equitable distribution of wealth.

A major distinction between capitalism and socialism concerns the distribution of income.

Although changes in the CPI provide interesting insights into the overall performance of the economy, these changes have little practical impact on the lives of ordinary people.

If the government wants to jump-start the economy resulting in more consumer spending, it will raise taxes.

The Fed is concerned that the economy is growing too rapidly. Given these concerns, it is likely to pursue policies to restrict the supply of money and raise interest rates.

Adam Smith believed that countries would prosper if businesspeople were free to start and run their own businesses. Businesspeople would make a profit by providing the goods, services and ideas that others in the economy wanted, and they would hire others to help increase those profits, leading to social and economics benefits for many. This idea was called the ________.

When the market price of a good is below the equilibrium price, and all other determinants are unchanged:

The market price of apples is currently rising. In a free-market economy, the most likely explanation of this price change is that:

Which of the following people would tend to favor a communist economy?

The next wave of marketable innovations may involve new ways to produce and conserve energy. If we can turn new technology into marketable products and services that produce energy to run our businesses and homes, the U.S. could see a surge in output of goods and services. The Department of Economic Development would document this surge by measuring the ____.

One reason the CPI is monitored very closely by government, businesses, and workers is that:

Emily recently quit her job at a major corporation because she saw little chance for advancement. Although she is still searching for a new position, Emily believes the economy is healthy and she hears that several firms are hiring people with her qualifications. Which of the following statements about Emily's current situation is most accurate? Emily is:

While scanning the movies section in your local online newspaper, you click on the business section by mistake. While you're there, you quickly scan a report that says government spending will again exceed tax revenues in the current year. This means that the:

In one of his weekly broadcasts, the Federal Reserve Chairman remarked that inflation had begun to tick upward. However, unemployment in the U.S. was still quite high and economic growth had slowed. With short-term interest rates close to 0 (zero), the Chair did not visualize that ____________ policy would be able to do anything for the high unemployment problem. He felt that _______ policy would be more useful for bolstering employment, but that would require local and state governments and the federal government to provide tax breaks for corporations.

Free trade results in a mutually beneficial exchange between and among nations.

In any given year, the United States' cash outflow to other nations exceeds its cash inflow from other nations.

One characteristic of an international joint venture is all parties sharing the risk of a major project.

The Nissan automobile assembly plant in Tennessee is an example of foreign direct investment in the United States.

An example of foreign direct investment would be Pepsi granting a Japanese firm the use of its formula and trademark, for a fee.

Since patent and copyright laws are the same in all nations, they are not of much impact to firms that compete globally.

The principle of mercantilism encouraged nations to keep economics separate from politics.

Only large firms have the resources needed to successfully compete in the global environment.

The tiny nation of Tinian is extremely efficient in the mining of tin. However, its climate and terrain makes it difficult to produce corn. According to the theory of comparative advantage, Tinian should:

Many of the toy products sold in the United States are imported from Taiwan because the Taiwanese can produce these products more efficiently than U.S. companies. This is an example of:

As a business strategy, the strategy behind "dumping" is to __________.

Last year, the nation of Tigerland imported goods totaling $500 million and exported products totaling $386 million. Tigerland experienced a(n):

For a firm to be considered a multinational corporation, which of the following conditions must be true?

Nike _________________ its products in foreign countries, where labor is cheap and production sites are owned by other companies. This strategy allows Nike to experiment in new markets without incurring large start-up costs involved with building their own production facilities.

When studying abroad last year, Blake found that his U.S. dollars did not stretch as far as he had hoped. Each time he exchanged U.S. dollars for euros, he gave up more U.S. dollars in exchange for less euros. The exchange rate indicates: