and some more for chapter 2

56. The government of Laslow, an Asian nation, earned more revenue than its total expenditure in the last fiscal year. Given this information, the government of Laslow incurred a _____. a. revenue backlog b. revenue deficit c. debt brake d. budget surplus

d. budget surplus

77. The _____ was an $825 billion economic stimulus package, passed by Congress, designed to turn the economy by cutting taxes, building infrastructure, and investing in green energy. a. American Recovery and Reinvestment Act b. Troubled Assets Relief Program c. Clayton Antitrust Act d. NCUA Corporate Stabilization Program

a. American Recovery and Reinvestment Act

54. Which of the following statements best defines the producer price index (PPI)? a. It measures the change over time in the prices that businesses pay each other for goods and services. b. It refers to the quantity of products that consumers are willing to buy at different market prices. c. It measures the change in weighted-average price over time in a consumer market basket of goods. d. It refers to a standard equation that is used to determine the resources needed to produce a certain quantity of goods.

a. It measures the change over time in the prices that businesses pay each other for goods and services.

62. In the context of the fundamental principles of a free market system, which of the following statements is true of the equilibrium price? a. Market prices adjust toward the point where the supply curve and the demand curve intersect. b. The break-even point denotes the profit margin that a seller makes over the cost price of a product. c. It is the point at which the final cost of production equals the price of the raw materials used for a product. d. It refers to a situation where the cost price of a product is equal to its selling price.

a. Market prices adjust toward the point where the supply curve and the demand curve intersect.

74. The district of Dansas in Nerito, a European country, is a major producer of walnuts. All producers in the district sell packaged walnuts. The market structure is flexible enough for producers to enter and leave the market as and when they wish, but no single producer has control over the prices of the product. Which of the following market structures is existent in Dansas? a. Pure competition b. Monopoly c. Monopolistic competition d. Oligopoly

a. Pure competition

61. The economic system of the United States is called _____. a. capitalism b. communism c. socialism d. mercantilism

a. capitalism

79. The West Asian country of Quinland is experiencing an economic downturn because of a decrease in its gross domestic product for two consecutive quarters. In this scenario, Quinland is most likely facing an _____. a. economic recession b. economic expansion c. economic depression d. economic integration

a. economic recession

66. In a business cycle, the__________is a period of robust economic growth and high employment. a. expansion b. recovery c. disinflation d. contraction

a. expansion

70. A giant telecommunications company that was previously owned by the government of Sunzabia, a European country, is sold to an independent industrialist to ensure that the company is handled in a more efficient way. This scenario exemplifies _____. a. privatization b. globalization c. a joint venture d. a coalition

a. privatization

86. The economy of Sutanvia is under severe financial distress. However, over the last few months, the economy has gradually picked up, and employment levels are slowly rising back to normal levels. Consumers are also beginning to engage in regular buying activities. In this scenario, the economy of Sutanvia is currently in the _____ phase of its business cycle. a. recovery b. relapse c. expansion d. contraction

a. recovery

63. Olivia is a part-time worker at a jam-producing company in her village. Her job entails plucking and cleaning grapefruits. Because grapefruits grow only in winter, Olivia is unemployed for most part of the year. The given scenario exemplifies _____. a. seasonal unemployment b. frictional unemployment c. classical unemployment d. cyclical unemployment

a. seasonal unemployment

53. Identify a true statement about the Federal Reserve. a. It is headed by a 15-member Board of Governors. b. It manages the monetary policy of the United States. c. It is restricted from performing banking services for commercial banks. d. It operates under immense political pressure.

b. It manages the monetary policy of the United States.

94. __________refers to Federal Reserve decisions that shape the economy by influencing interest rates and the supply of cash. a. Fiscal policy b. Monetary policy c. Revenue policy d. Deficit policy

b. Monetary policy

58. __________is a market structure with just a single producer completely dominating the industry. a. Oligopoly b. Monopoly c. Monopolistic competition d. Pure competition

b. Monopoly

93. In the context of the various degrees of competition, which of the following statements is true of oligopoly? a. It is a market structure that has many competitors selling virtually identical products. b. Oligopolies typically avoid intense price competition. c. The agriculture industry is an example of oligopoly. d. It has a single producer completely dominating the industry, leaving no room for competitors.

b. Oligopolies typically avoid intense price competition.

82. In the context of price levels, which of the following measures is used by the government to evaluate inflation? a. The seller pricing rank b. The consumer price index c. The price-weighted activity index d. The knowledge pricing rank

b. The consumer price index

80. Which of the following is a similarity between socialism and communism? a. They both allow freedom in work choices for the people. b. They are both strongly involved with the government. c. They both allow free market systems. d. They both have low taxation policies.

b. They are both strongly involved with the government.

60. The controversial $700 billion economic bailout plan passed by Congress in early October 2008 was called the _____. a. American Recovery and Reinvestment Act b. Troubled Assets Relief Program c. Clayton Antitrust Act d. NCUA Corporate Stabilization Program

b. Troubled Assets Relief Program

84. In the context of monetary policy, which of the following statements is true of the discount rate? a. The Fed increases it during recessions. b. When the cost of acquiring funds from the Fed is low, interest rates on bank loans tend to fall. c. When the Fed increases it, banks can obtain funds at a lower cost. d. It is the interest rate that the Fed charges on its loans to individuals.

b. When the cost of acquiring funds from the Fed is low, interest rates on bank loans tend to fall.

88. The gross domestic product (GDP) of Trelinberg, a South American nation, has been decreasing for the past eight years. The long period of consecutive decreases in the GDP has led to high unemployment rates in Trelinberg. In the given scenario, the economy of Trelinberg is most likely in _____. a. a recession b. a depression c. deflation d. hyperinflation

b. a depression

68. In 1982, the total expenditure of the government of Kargenia, a European country, exceeded its revenue by a substantial amount. This forced the government of Kargenia to borrow funds to meet its legal obligations. In this scenario, the government of Kargenia incurred a _____ in 1982. a. revenue deficit b. budget deficit c. debt brake d. revenue backlog

b. budget deficit

72. Loger's, a high-end apparel company in Bruslon, an Asian country, cuts back on production as consumers start turning to basic products such as food because of the economic downturn in the country. The company also lays off many of its employees to further cut down expenses. In this scenario, Loger's has implemented these cost-cutting measures to accommodate the phase of _____ in Bruslon. a. economic recovery b. economic contraction c. economic integration d. economic expansion

b. economic contraction

64. Troboli is a North American country. The total value of all final goods and services produced in Troboli in the last fiscal year was 3.3% more than the year before that. This growth placed Troboli in a better position compared with most of its allies. In this scenario, the total value of all final goods and services through which the economic condition of Troboli was assessed is known as _____. a. net present value b. gross domestic product c. profit margin d. windfall profit

b. gross domestic product

96. Irkholm, a South American nation, experiences an economic downturn that leads to an increase in average prices across the country. The situation becomes more serious when average prices increase more than 50% per month. In the given scenario, Irkholm is experiencing _____. a. disinflation b. hyperinflation c. asset price inflation d. deflation

b. hyperinflation

67. Microeconomics focuses on: a. the employment rate in a country. b. individual businesses. c. the gross domestic product of a country. d. taxation policies.

b. individual businesses.

81. Denver wants to start an industrial products manufacturing company, but he finds it difficult to enter the market as it is already dominated by a single producer who controls product quality and product prices. Given this information, Denver is unable to enter the market because of the existence of _____. a. pure competition b. monopoly c. monopolistic competition d. oligopoly

b. monopoly

55. In a business cycle, the__________is the transition period between contraction and expansion. a. recession b. recovery c. disinflation d. deflation

b. recovery

95. Gregory is a typist at a corporate firm. When the company adopted a special voice recognition software for the purpose of documentation, Gregory's job became inessential. Therefore, he was laid off. The increased use of technology in most companies makes Gregory's skills inessential, and he remains unemployed for a long time. In the given scenario, Gregory is facing _____. a. seasonal unemployment b. structural unemployment c. frictional unemployment d. cyclical unemployment

b. structural unemployment

98. Timothy, a staff member at a university, wants to purchase a house. As he does not have sufficient funds, he is forced to take a loan. Given his low credit score, it is highly unlikely that he will be able to repay the borrowed money. In this scenario, Timothy should apply for a(n) _____. a. subsidized loan b. subprime mortgage loan c. endowment mortgage loan d. concessional loan

b. subprime mortgage loan

51. In the context of fundamental principles of a free market system, which of the following statements is true of a demand curve? a. It shows the relationship between price and quantity from a producer standpoint. b. It refers to the point where the supply of products starts exceeding demand due to excessive production. c. It shows the relationship between price and quantity from a customer standpoint. d. It refers to the point where the supply of products is no longer possible due to exhaustion of resources.

c. It shows the relationship between price and quantity from a customer standpoint.

69. The cosmetics industry in the district of Dunkenburg has many competing companies that sell personal care products. However, each company manufactures products that correspond to different income groups. The products are also different in terms of their uses. Which of the following market structures is existent in the cosmetics industry in Dunkenburg? a. Pure competition b. Monopoly c. Monopolistic competition d. Oligopoly

c. Monopolistic competition

75. Rochester, an Asian country, follows an economic system that facilitates private ownership. The country's economy is based on economic freedom and fair competition. Given this information, the economic system followed by Rochester is _____. a. socialism b. totalitarianism c. capitalism d. communism

c. capitalism

89. Danny is a citizen of Finiz, a North American country. He is able to run his handicraft business without any intervention from the government because Finiz has an economic system that encourages private ownership. He is able to make independent decisions for his business and has the freedom to decide the prices of his products. In this scenario, Finiz most likely has a _____. a. socialist economy b. totalitarian economy c. capitalist economy d. communist economy

c. capitalist economy

59. Glasvania, a European country, experiences a period of economic downturn that results in high unemployment. With most of its citizens out of work and having limited money to spend, the country's economy is dictated by low sales. Given the situation, all buyers are compelled to reduce their prices by a large margin. This scenario exemplifies _____. a. stagflation b. inflation c. deflation d. disinflation

c. deflation

85. The Kingsabode Daily is a community news agency that distributes newspapers to the residents of Kingsabode County. To meet the demand and to ensure that there is zero wastage of resources, the news agency prints 250 newspapers that are distributed in the 250 homes in the county. The price associated with such a demand and supply pattern is called the _____. a. parity price b. producer price c. equilibrium price d. basic price

c. equilibrium price

87. Anoush used to work for an investment firm. Although she liked her job, she had to resign because it took her a lot of time to commute to work. After resigning, she searched for a job, and within a month, she found a better job that was closer to her home. This scenario exemplifies _____. a. seasonal unemployment b. structural unemployment c. frictional unemployment d. cyclical unemployment

c. frictional unemployment

92. Denise is a hard worker, but she has always had differences with her boss, Angela. Angela has recently become more demanding and is often unwilling to provide clarification on project requirements. After many long working days with little job satisfaction, Denise submits her resignation. She knows that her résumé is strong and feels confident that she will find another job. In this scenario, Denise is facing _____. a. seasonal unemployment b. structural unemployment c. frictional unemployment d. cyclical unemployment

c. frictional unemployment

91. Aidan is a college student. As part of his economics project, he has to collect data on the consumption patterns of the households in his locality. In this scenario, Aidan is most likely involved in the study of _____. a. heterodox economics b. complexity economics c. microeconomics d. macroeconomics

c. microeconomics

76. The term _____ refers to the quantity of products that producers are willing to offer for sale at different market prices. a. repository b. stockpile c. supply d. cache

c. supply

97. The central banking system in the country of Darmos issues a notice to all its commercial banks stating that they must possess funds that are equal to 48% of the deposits held by their customers. In the given scenario, the central banking system's notice exemplifies _____. a. full-reserve banking b. the statutory framework c. the reserve requirement d. statutory liquidity ratio

c. the reserve requirement

78. Which of the following is a difference between the supply curve and the demand curve? a. The supply curve maps price on the y-axis, whereas the demand curve maps quantity on the y-axis. b. Unlike the demand curve, the supply curve for most goods and services slopes downward as it moves to the right. c. The supply curve maps quantity on the x-axis, whereas the demand curve maps price on the x-axis. d. Unlike the supply curve, the demand curve for most goods and services slopes downward as it moves to the right.

d. Unlike the supply curve, the demand curve for most goods and services slopes downward as it moves to the right.

52. The economic system of the East Asian nation of Xinzen calls for public ownership of all businesses. The government has complete control over the market, and individuals do not have individual rights and the freedom to make choices. In this scenario, the economic system followed by Xinzen is _____. a. socialism b. distributism c. capitalism d. communism

d. communism

71. In the context of planned economies, countries that adopted communism most likely developed: a. individualism and narcissistic values among people. b. a plethora of choices regarding jobs and buying options. c. a free market system for services. d. crippling shortages and surpluses.

d. crippling shortages and surpluses.

57. The U.S. government uses the consumer price index (CPI) and the producer price index (PPI) to evaluate: a. budget surplus. b. discount rates. c. productivity. d. inflation.

d. inflation.

65. Prior to formulating its annual budget, the government of the Asian country of Florenesia employs a number of individuals to look into the overall productivity of the country. These individuals are responsible for studying the economy in terms of goods and services, revising some of the taxation policies, and gauging the employment rate. Given this information, these individuals are studying _____. a. heterodox economics b. managerial economics c. microeconomics d. macroeconomics

d. macroeconomics

83. The government of Lenzerbia, a country in South Asia, monitors its inflation rate using an index that measures change over time in the prices that businesses pay to each other for goods and services. In this scenario, the Lenzerbian government most likely uses the _____ to evaluate inflation. a. prices received index b. consumer price index c. cost-of-living index d. producer price index

d. producer price index

90. Over the past 30 years, most economies of the world have begun moving toward the market end of a spectrum that ranges from pure planned economy at one extreme to pure market economy at the other. This has led to: a. more investments on human services such as free healthcare and education subsidies. b. a reduction in incentives for both domestic and foreign investment. c. stronger centralized government control over businesses. d. reduced red tape in socialist governments.

d. reduced red tape in socialist governments.

73. Keltica, a country in Asia, enjoyed a period of great economic boom in the 1980s. The country had robust economic growth, high employment, and abundant business investments during this period. In the context of the business cycle, the economy of Keltica was in _____ during the 1980s. a. a depression b. the contraction phase c. a recession d. the expansion phase

d. the expansion phase