Download test bank for BUSN 7 7th edition by kelly williams

False LEARNING OBJECTIVES: BUSN.KELL.15.02.01 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: A-Head: Economics: Navigating a Crisis KEYWORDS: Bloom's: LEARNING OBJECTIV

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Test Bank for BUSN 7 7th edition by Kelly Williams

1 An economy is both a social and a financial system

a True

b False

LEARNING OBJECTIVES: BUSN.KELL.15.02.01

NATIONAL STANDARDS: United States - BUSPROG: Analytic

TOPICS: A-Head: Economics: Navigating a Crisis KEYWORDS: Bloom's:

Knowledge

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4 A key economic goal is to provide a deep understanding of past choices that can be

used to guide future business decisions

a True

b False

What’s Working?

B-Head: Productivity

5 An economic system is a structure for measuring gross domestic product

a True

b False

Knowledge

6 Microeconomics is the study of a country’s overall economic dynamics, such as the

employment rate, the gross domestic product, and taxation policies

a True

b False

KEYWORDS: Bloom's: Knowledge

7 Macroeconomics issues directly affect one's day-to-day life, influencing key variables such as what jobs will be available, how much cash one will actually take home after

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a True

b False

Navigating a Crisis

9 Luke is taking an economics class that focuses on decisions made by individual

business firms and consumers Luke’s class is concerned with microeconomic issues

a True

b False

KEYWORDS: Bloom's: Application

10 Microeconomics focuses on individual consumers, families, and individual businesses

a True

b False

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DIFFICULTY: Difficulty: Easy

TOPICS: A-Head: Economics: Navigating a Crisis B-Head:

Global Economic Crisis: How Did This Happen?

12 Starting in the mid-2000s, amidst many regulation and government policies, financial institutions maintained high reserves in case the mortgage-backed funds lost value

a True

b False

TOPICS: A-Head: Economics: Navigating a Crisis

B-Head: Global Economic Crisis: How Did This Happen?

KEYWORDS: Bloom's: Comprehension

13 With a new administration, President Obama proposed, and Congress passed, an $825 billion economic stimulus package called the American Recovery and

Reinvestment Act

a True

b False

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B-Head: Moving in a Better Direction

KEYWORDS: Bloom's: Knowledge

14 The unemployment rate hit 9.6% in 2010, leading to total Great Recession job losses of nearly 8 million Many of these jobs will never come back as the economy continues to change, and old skills become obsolete a True b False

TOPICS: A-Head: Economics: Navigating a Crisis B-Head:

Global Economic Crisis: How Did This Happen?

15 The $700 billion economic bailout package passed by Congress in 2008 was an

example of monetary policy

a True

b False

B-Head: Moving in a Better Direction

16 Fiscal policy is the government’s effort to influence the economy through taxation and spending decisions to encourage growth and boost employment while curbing inflation

a True

b False

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Monetary Policy B-Head: Fiscal Policy

17 In fiscal strategies, most economists agree that higher taxes can boost the economy by leaving more money with the government to spend or invest during economic crisis

Monetary Policy B-Head: Fiscal Policy

18 The government experiences a budget surplus when its tax revenue exceeds its

expenditures

a True

b False

B-Head: Debt Ceiling/Fiscal Cliff

19 The government incurs a budget deficit, if revenue is higher than spending and must

borrow money to cover the shortfall

a True

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ANSWER: False

TOPICS: A-Head: Managing the Economy Through Fiscal and Monetary Policy

20 The debt ceiling is the maximum amount Congress lets the government borrow

a True

b False

Monetary Policy B-Head: Debt Ceiling/Fiscal Cliff

21 The sum of all the money borrowed over the years and not yet repaid is the total fiscal debt

a True

b False

22 The debt ceiling is the maximum amount Congress lets the government lend to the

public

a True

b False

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ANSWER: False

TOPICS: A-Head: Managing the Economy Through Fiscal and Monetary Policy

23 The 12 Federal Reserve Banks are regional banks, privately owned by the member

commercial banks in their individual districts

a True

b False

Monetary Policy B-Head: Monetary Policy

24 The federal government does not own the Federal Reserve Banks

a True

b False

25 The Federal Reserve does not regulate banks; only state regulatory agencies perform

this function

a True

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ANSWER: False

26 State governments are actually the owners of the Federal Reserve Banks

a True

b False

27 The Federal Reserve provides banking services to member banks and is the central

bank of the United States

a True

b False

28 The Fed is headed by a 50-member Board of Governors

a True

b False

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29 The Federal Reserve Bank is in charge of both fiscal and monetary policy

a True

b False

30 Money supply refers specifically to the amount of paper bills and metal coins in our

overall economy

a True

b False

31 When the economy contracts, the Fed typically decreases the money supply

a True

b False

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KEYWORDS: Bloom's: Knowlegde

32 M1 and M2 are commonly used definitions for money supplies If you use the debit

card connected to your checking account to make purchases, it would be referred to as

an M1

a True

b False

33 Ashley has decided to purchase a dress for the banquet using her credit card Ashley

will be using a form of the money supply most often referred to as M2

a True

b False

34 The Fed’s decision to buy and sell government securities is decided by the Federal

Open Market Committee

a True

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b False

35 When inflation is a concern, the Fed buys securities

a True

b False

36 Monetary policy is made by the Federal Open Market Committee

KEYWORDS: Bloom's: Synthesis

37 When the economy is weak, the Fed sells government securities on the open market

a True

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b False

38 The discount rate is the interest rate the Fed charges on its loans to commercial banks

39 Capitalism is based on private ownership, economic freedom, and fair competition

a True

b False

TOPICS: A-Head: Capitalism: The Free Market System KEYWORDS: Bloom's:

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ANSWER: False

TOPICS: A-Head: Capitalism: The Free Market System KEYWORDS: Bloom's:

Comprehension

41 The fundamental rights of capitalism guarantee that businesses will be profitable and

taxes will be low, thus providing a strong motivation to start a business a True b False

Market System B-Head: The Fundamental Rights of Capitalism

42 Everlene’s Bakery competes against many other bakeries in the same city However,

each bakery uses different recipes and each claims to offer better products than their

rivals For example, Everlene’s advertises that it produces the “World’s Best” chocolate chip cookies This suggests that Everlene’s Bakery is an example of pure competition

System B-Head: Four Degrees of Competition

KEYWORDS: Bloom's: Evaluation

43 Government policies promoting free trade are consistent with the right to free choice, which is fundamental to capitalism

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b False

TOPICS: A-Head: Capitalism: The Free Market System

B-Head: The Fundamental Rights of Capitalism

44 An entrepreneur with limited funds who wants to start a new business would probably

be most successful in an monopolistic market, because the amount of competition in

such markets is very limited

a True

b False

Market System B-Head: Four Degrees of Competition

45 A typical supply curve shows that an increase in the price of a good will cause

producers to decrease the quantity they supply

a True

b False

B-Head: Supply and Demand: Fundamental Principles of a Free Market System

46 Federal law has made all types of monopolies illegal in the United States

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a True

b False

System B-Head: Four Degrees of Competition

KEYWORDS: Bloom's: Analysis

47 Consumers will see prices fall when the quantity demanded exceeds quantity supplied

a True

b False

48 The price paid for goods and services will rise when the quantity demanded exceeds

quantity supplied

a True

b False

49 Brooklyn’s Beachfront Bed and Breakfast loses money due to a sharp drop in the

number of guests during the winter months If Brooklyn’s demand curve is like most

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demand curves, one way to attract more guests would be to offer lower rates during the off-season

KEYWORDS: Bloom's: Evaluation

50 Morgan’s Moped and Bicycle Store is located on the property of a fivestar resort in

southern Florida Rental cost of the mopeds and bikes is based on one-hour increments Morgan lowers his standard prices to attract patrons during daily rainstorms in June and August This is an example of decreasing supply

51 Demand refers to the quantity of products that consumers are willing to buy at different market prices

a True

b False

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52 Market equilibrium identifies the price at which quantity supplied is equal to quantity demanded

a True

b False

53 In a planned economy, the government plays only a minor role in the operation of the economy

a True

b False

TOPICS: A-Head: Planned Economies: Socialism and Communism KEYWORDS:

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TOPICS: A-Head: Planned Economies: Socialism and Communism

55 Socialism is an economic system based on the principle that the government should

own and operate key enterprises that directly affect public welfare

a True

b False

B-Head: Socialism

56 The North Korean and Cuban governments still own most of their nations’ enterprises and actively control the performance of their nations’ economies

a True

b False

B-Head: Communism

57 Communism is an economic and political system in which a strong central government owns and controls almost all productive enterprises

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B-Head: Communism

58 By the end of the 1980s, communism began to collapse across the Soviet Union and its satellite nations

a True

b False

B-Head: Communism

59 The few nations that still rely on a communist economic system have actually seen

major improvements in their economic performance over the past decade

a True

b False

B-Head: Communism

60 Karl Marx envisioned communism as a system that would improve the lot of the

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B-Head: Communism

61 One problem that plagued many communist economies was that the absence of free

markets resulted in crippling shortages and surpluses of goods and services

a True

b False

TOPICS: A-Head: Planned Economies: Socialism and Communism KEYWORDS:

Bloom's: Knowledge

62 In the U.S economy, various branches of government own major enterprises such as

the postal service, schools, parks, libraries, universities, and the military

a True

b False

TOPICS: A-Head: Mixed Economies: The Story of the Future KEYWORDS: Bloom's:

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TOPICS: A-Head: Mixed Economies: The Story of the Future

KEYWORDS: Bloom's: Knowledge

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64 The federal government creates regulations that prohibit competition and

stimulate consumers to work

a True

b False

NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS:

A-Head: Mixed Economies: The Story of

the Future

65 Privatization is the conversion of government-owned enterprises to private

ownership

a True

b False

TOPICS: A-Head: Mixed Economies: The Story of the Future KEYWORDS:

Bloom's: Comprehension

66 While the U.S relies heavily on free markets, it is actually a mixed economy in

which the government owns several major enterprises and regulates many aspects

of business operations

a True

b False

KEYWORDS: Bloom's: Analysis

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67 Competition encourages companies to operate efficiently and responsively The

government does its part to stimulate fair competition by creating regulations to

protect consumers and workers

a True

b False

Bloom's: Analysis

68 Privatization is an important element of the movement toward a greater market

orientation in many nations

a True

b False

NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS:

A-Head: Mixed Economies: The Story of

the Future

69 The economic restructuring necessary to move toward greater reliance on markets

has proven to be relatively easy for most previously planned economies to

achieve

a True

b False

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KEYWORDS: Bloom's: Comprehension

70 Many countries that have restructured to become more market-oriented have seen

dramatic increase in the standard of living for most of their people

a True

b False

71 Gross Domestic Product (GDP) measures the total value of all final goods and

services produced within a nation’s physical boundaries over a given period of

time

a True

b False

What’s Working?

B-Head: Gross Domestic Product

72 GDP tends to overstate the amount of output produced by a nation’s economy

a True

b False

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TOPICS: AHead: Evaluating Economic Performance: What’s Working?

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73 GDP, as the measurement of the total value of goods and services, includes the

output produced within households and output produced by illegal activities

a True

b False

74 In 2011, the GDP of the United States was about $15.08 trillion, reflecting

What’s Working?

75 The unemployment rate includes only individuals over the age of 21 who were

involuntarily laid off or fired from their previous jobs

a True

b False

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B-Head: Employment Level

76 The unemployment rate measures individuals 16 years of age and older without

jobs who are actively seeking employment

a True

b False

77 Gross Domestic Product (GDP) includes the value of output produced within a

nation even if that output is produced by a foreign-owned company a True b

False

What’s Working?

78 The value of a Hyundai Sonata built in Montgomery, Alabama would be included

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KEYWORDS: Bloom's: Synthesis

79 Individuals who quit their jobs experience structural unemployment a True

b False

80 Cyclical unemployment results from layoffs during recessionary periods a True

b False

What’s Working?

81 Frictional unemployment may occur even when the economy is healthy, and may

ultimately result in a better match between workers and jobs a True b False

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82 The predictable nature of the business cycle makes it easy to forecast when the

next upturn or downturn in business activity will occur a True b False

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TOPICS: A-Head: Evaluating Economic Performance: What’s Working?

B-Head: The Business Cycle

83 An economy is said to be in a recession when GDP decreases for two consecutive

quarters a True

b False

What’s Working?

84 The two key phases of the business cycle are contraction and expansion a True b False

TOPICS: A-Head: Evaluating Economic Performance: What’s Working?

85 Contraction is a period of economic downturn marked by rising unemployment, business cutbacks, and decreases in consumer spending a True b False

Easy

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86 The four basic types of unemployment are natural, cyclical, voluntary, and induced a True

b False

What’s Working?

87 Unfortunately, depressions are a common problem in most free-market economies a True

b False

88 Less expensive labor pools overseas might create layoffs at a U.S.-based engine plant This is an example of structural unemployment a True b False

ANSWER: True

DIFFICULTY: Difficulty: Challenging

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89 Recovery is a period of increased employment, business expansion, and increased

consumer spending a True

b False

What’s Working?

90 Inflation occurs as the average prices of goods and services rise a True b False

B-Head: Price Levels

91 Productivity growth due to the infusion of technology enables employees to increase

output and measure quality a True

b False

92 Disinflation is a slowing in the rate of inflation

a True

b False

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DIFFICULTY: Difficulty: Moderate

What’s Working?

93 It is important that any government examine multiple measures of its own economic

health, rather than relying on simply one or two dimensions a True b False

94 To measure productivity, multiply the number of inputs by the cost of each input a

True

b False

95 Changes in the producer price index (PPI) can sometimes predict changes in the

consumer price index (CPI) a True

b False

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TOPICS: A-Head: Evaluating Economic Performance:

What’s Working?

96 The economy, as a system, represents the:

a non-efficient use of material resources

b flow of resources from production through consumption

c means of production only

d means of capitalistic systems

ANSWER: b

Knowledge

97 In the broadest sense, economics studies the choices that:

a people make in disposing of unnecessary resources

b governments make in creating natural resources

c companies make in producing goods and services for corporate use

d people, governments, and companies make in allocating resources

ANSWER: d

key reason to study economics is to:

a gain a better understanding of past business choices in order to make better future

decisions

b avoid the temptation to focus on past events

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d learn how to achieve a monopoly position in markets with the potential to generate high profits

ANSWER: a

Navigating a Crisis

99 A _ is targeted to borrowers with low credit scores, high debt-to-income ratios, or signs of a reduced ability to repay the money they borrow a home equity line of credit

b revolving line of credit

c fixed rate mortgage loan

d subprime mortgage loan

ANSWER: d

100 Economics is divided into two core areas of study known as:

a production and consumption

b data collection and forecasting

c macroeconomics and microeconomics

d supply economics and demand economics

ANSWER: c

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Knowledge

101 An economic system is a structure for:

a measuring gross domestic products

b allocating limited resources

c forecasting trends

d delivering unsurpassed value to customers

ANSWER: b

Market System KEYWORDS:

102 Macroeconomics focuses on:

a the major issues facing the national economy, but has little or no relevance to

individuals

b smaller economic units such as individual consumers, families, and individual

businesses operating within the economy

c the major issues facing the national economy that may seem abstract, but directly affect

an individual’s dayto-day life

d the role of government, while microeconomics focuses on the private sector

ANSWER: c

DIFFICULTY: Difficulty: Moderate LEARNING

OBJECTIVES: BUSN.KELL.15.02.01

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model year

b How consumers would respond if a restaurant raised its prices

c How a firm in an oligopolistic market would respond to a change in the pricing strategy

of other firms in its market

d Factors that influence the nation’s unemployment rate

ANSWER: d

Analysis

104 Microeconomics focuses on:

a the employment rate

b individual businesses

c the gross domestic product

d taxation policies

Navigating a Crisis

105 Some argue that the Federal Reserve lowering interest rates from mid-2000 to the end of

2002 greatly increased the money supply; however, opportunities to invest yielded paltry returns leading bankers to offer _ in order to earn a higher return a revolving lines

of credit

b home equity lines of credit

c fixed rate mortgage loans

d subprime mortgage loans

ANSWER: d

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106 Subprime loans were attractive to lenders because:

a financial institutions maintained high reserves

b they were secured by many rules and regulations

c they were absolutely risk-free

d they provided a higher return than many other investments

ANSWER: d

107.After the collapse of the dot com bubble and the 9/11 terrorist attacks, the stock

market depreciated and unemployment increased leading many to fear that the

country was on the brink of a full-blown recession In order to stimulate the

economy the Federal Reserve Bank: a lowered taxes in an effort to increase

spending

b lowered interest rates from 6.5% to 1.25% in an effort to increase spending

c increased taxes in an effort to increase spending

d increased interest rates from 1.25% to 6.5% in an effort to increase spending

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108 GeeGee’s is a neighborhood bakery known for its scrumptious tea cakes GeeGee’s

recipes call for expensive spices imported from Asia Recently the cost of these spices has risen dramatically, leading GeeGee’s to consider increasing its prices In order to

analyze how this change would affect consumer choices, GeeGee’s management could perform a:

DIFFICULTY: Difficulty: Challenging

Evaluation

109 The $700 billion economic bailout plan is called the:

a American Recovery and Reinvestment Act

b Troubled Assets Relief Program

c Troubled Assistance Relief Program

d Big Business Assistance Program

ANSWER: b

Navigating a Crisis B-Head: Moving in a Better

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