BA

An upward shift in the consumption function can be caused by Select one: a. expectations of product shortages. b. expectations of less income in the future. c. a decrease in consumer confidence. d. a reduction in the wealth of households.

a. expectations of product shortages.

The marketing plan should constantly answer the question Select one: a. "What is the biggest challenge of the company?" b. "Why should I invest in this plan?" c. "How will the company aid shareholders?" d. "How will this help the CMO?" e. "Why should I buy your brand?"

b. "Why should I invest in this plan?"

Let real GDP =Y = Yd, and the consumption function is C = $1,000 + .06Y. What is the value of autonomous consumption (A) and what is the marginal propensity to consume (MPC)? Select one: a. A = $600; MPC = 0.4 b. A = $1,000; MPC = 0.6 c. A = $1,600; MPC = 2.5 d. A = $2,500; MPC = 0.6

b. A = $1,000; MPC = 0.6

The study of a single firm and how it determines prices would fall under: Select one: a. macroeconomics. b. microeconomics. c. the study of inflation. d. normative economics.

b. microeconomics.

The Case in Point on the Simpsons indicated that even fictional characters face: Select one: a. diminishing marginal product. b. opportunity costs. c. the fallacy of false cause. d. positive statements.

b. opportunity costs.

The costs of the market basket in the current period will be compared against the costs of the market basket in _____ when computing a price index. Select one: a. the expansion period b. the recession period c. the adjustment period d. the base period

d. the base period

The assertion that consumption depends on expected average annual income is called Select one: a. permanent income. b. the current income hypothesis. c. current income. d. the permanent income hypothesis.

d. the permanent income hypothesis.

If a company has multiple planning levels, Select one: a. the plans must be consistent and all must help achieve individual goals. b. the plans must be approved by all departments within an organization. c. he plans must be adhered to regardless of external factors. d. the plans must be consistent and all must help achieve the overall goals of the corporation. e. the plans must be the same for each strategic business unit.

d. the plans must be consistent and all must help achieve the overall goals of the corporation.

A value proposition Select one: a. states the firm's strategy for entering new markets with new product or service offerings. b. states the firm's marketing objectives. c. states the firm's pricing strategy. d. states the buyer's purchase incentives. e. states the specific benefits a product or service offering provides to a buyer.

e. states the specific benefits a product or service offering provides to a buyer.

The short run in macroeconomic analysis is a period Select one: a. in which wages and some other prices do not respond to changes in economic conditions. b. in which full wage and price flexibility and market adjustment have been achieved. c. of less than 12 months. d. in which all macroeconomic variables are fixed.

a. in which wages and some other prices do not respond to changes in economic conditions.

Stealing product strategy information from a competitor is known as Select one: a. industrial espionage. b. competitive intelligence. c. product investigation. d. consumer protection. e. strategic marketing.

a. industrial espionage.

Making choices that are expected to achieve the highest possible value for some objective is termed: Select one: a. maximizing. b. minimizing. c. sanitizing. d. satisfying.

a. maximizing.

A simplified representation of a particular problem is a: Select one: a. model. b. constant. c. hypothesis. d. law.

a. model.

The economy's potential output corresponds to the level of Select one: a. natural employment. b. frictional unemployment. c. structural unemployment. d. cyclical unemployment.

a. natural employment.

Which of the following is NOT part of the marketing mix, also known as the "four Ps"? Select one: a. profit b. product c. price d. place e. promotion

a. profit

Your grandfather tells you that his Social Security payments are indexed. What does this mean? Select one: a. It means that the dollar value of his Social Security payment is adjusted for changes in the price level so that his purchasing power is constant. b. It means that the dollar value of his Social Security payments is adjusted for changes in the price level so that his purchasing power increases at the same rate as inflation. c. It means that the value of his Social Security payments is not adjusted for changes in the price level so his purchasing power may fall. d. It means that the real value of his Social Security payment is adjusted for changes in the price level so that its nominal value is constant.

a. It means that the dollar value of his Social Security payment is adjusted for changes in the price level so that his purchasing power is constant.

The ____ is a document that is designed to communicate the marketing strategy for an offering. Select one: a. research paper b. market plan c. mission statement d. annual report e. execution strategy

b. market plan

Scarcity exists when: Select one: a. a choice must be made among two or more alternatives. b. we face the notion of "all other things unchanged." c. countries and people find themselves facing poverty. d. the notions of normative economics come into play.

a. a choice must be made among two or more alternatives.

In the Case in Point titled "Take Me Out to the Ball Game . . .", the fan price index used to track the costs of going to baseball games uses: Select one: a. a fixed market basket of goods and services, like the consumer price index. b. a varying market basket of goods and services, like the consumer price index. c. a varying market basket of goods and services, like the implicit price deflator. d. a fixed market basket of goods and services, like the implicit price deflator.

a. a fixed market basket of goods and services, like the consumer price index.

A proposition about the relationship between two variables that can be proven false is called: Select one: a. a hypothesis. b. a law. c. a theory. d. the scientific method.

a. a hypothesis.

A graph that depicts the relationship between the total quantity of goods and services demanded and the price level is the Select one: a. aggregate demand curve. b. average price level. c. circular flow model. d. GDP curve.

a. aggregate demand curve.

The bulk of aggregate demand in the United States consists of Select one: a. consumption. b. investment. c. government spending. d. net exports.

a. consumption.

Which is the correct association between the AMA's definition of marketing and the corresponding element of the marketing mix? Select one: a. creating offerings > Product b. communicating offerings > Product c. delivering offerings > Price d. exchanging offerings > Place e. providing offerings > Profit

a. creating offerings > Product

A negative relationship between the quantity demanded and price is called the law of ______. Select one: a. demand b. diminishing marginal returns c. market clearing d. supply

a. demand

Marketing plans aid CMOs in Select one: a. setting their organization's marketing expectations. b. funding employment salaries and benefits. c. understanding the roles of their customers. d. setting customer service tolerance zones. e. tracking advertisements.

a. setting their organization's marketing expectations.

Aggregate expenditures are the Select one: a. sum of planned levels of consumption, investment, government purchases, and net exports, at a given price level, as they relate to real GDP. b. sum of consumption, saving, investment, government purchases, and net exports, at a given price level, as they relate to real GDP. c. total of all spending, and equal to the value of real GDP at all price levels. d. value of GDP, in nominal values, for all price levels, all other things unchanged.

a. sum of planned levels of consumption, investment, government purchases, and net exports, at a given price level, as they relate to real GDP.

Which element is included in the bundle that is the company's offering to the customer? Select one: a. tangible elements b. place c. supply chain d. advertising e. end user

a. tangible elements

The intersection of the supply and demand curves indicates: Select one: a. the equilibrium solution in the market. b. a surplus that will cause the price to fall. c. a shortage that will cause the price to rise. d. the quantity demanded exceeds the quantity supplied.

a. the equilibrium solution in the market.

The slope and location of the demand curve depend on: Select one: a. the number of buyers. b. production costs. c. the number of producers. d. all of the above.

a. the number of buyers.

In the aggregate expenditures model, if aggregate expenditures are greater than real GDP, Select one: a. there will be unplanned decreases in inventories. b. employment decreases. c. aggregate output decreases. d. actual real output is greater than equilibrium real output.

a. there will be unplanned decreases in inventories.

The point at which a recession ends and the expansion begins is called the: Select one: a. trough. b. downturn. c. peak. d. lag.

a. trough.

The fundamental economic questions that every economic system must answer are: Select one: a. what, how, and for whom. b. what, why, and for whom. c. when, why, and for whom. d. how, when, and how much.

a. what, how, and for whom.

Who was the economist who laid the foundations for classical economics? Select one: a. John Locke b. David Ricardo c. Adam Smith d. John Maynard Keynes

b. David Ricardo

What is a business cycle? Select one: a. It is a firm's pattern of sales during a given year. b. It is the economy's pattern of fluctuations in economic activity: expansion followed by contraction and then by another expansion. c. It is the seasonal pattern of fluctuations in consumer spending: increased spending during the holiday season and decreased spending at other times of the year. d. It refers to the peaks and troughs in the demand for luxury goods in a country.

b. It is the economy's pattern of fluctuations in economic activity: expansion followed by contraction and then by another expansion.

The inability of the government to stabilize the economy in the 1970s when real GDP has fallen, but inflation has remained high, led Robert Lucas to challenge the Keynesian macroeconomic policy prescriptions. Which of the following is the main tenet of his argument? Select one: a. Active stabilization policies tend to be destabilizing because of the long policy lags and consequently, slow down the economy's self correction. b. There is no role for active stabilization policies because they do not take into account rational choices by individuals; failure to do so generally cancels the impact of fiscal and monetary policies. c. Individuals respond in predictable ways to their changing economic environment; active stabilization interferes with people's ability to respond to changing economic conditions. d. The economy is inherently stable and any role for stabilization policy should be limited to those that affect long-run aggregate supply to promote economic growth and not aggregate demand.

b. There is no role for active stabilization policies because they do not take into account rational choices by individuals; failure to do so generally cancels the impact of fiscal and monetary policies.

David Ricardo focused on the economy in the _______ and on the forces that determined an Economy's _______. Select one: a. short run; full employment level of output b. long run; potential output c. short run; market gluts d. short run; money supply

b. long run; potential output

According to Keynesian theory, Select one: a. sticky prices and wages do not have an effect on aggregate expenditures. b. because of sticky prices and wages, changes in total spending have the biggest impact on output and employment. c. wage and price stickiness cause output and employment to remain close to their full employment levels, even when total spending changes. d. wages and prices fall in the early stages of a recession even when total spending is declining.

b. because of sticky prices and wages, changes in total spending have the biggest impact on output and employment.

New classical theory asserts that, because people have rational expectations, if a policy of reducing the money supply is used Select one: a. it might affect both aggregate demand and potential real GDP. b. consumers and firms observe that the money supply has fallen, anticipate the eventual reduction in the price level, and adjust their expectations accordingly. c. market participants react in such a way that shifts in aggregate supply will reinforce shifts in aggregate demand and real GDP will shift inevitably into inflationary or recessionary gaps. d. All of the above are true.

b. consumers and firms observe that the money supply has fallen, anticipate the eventual reduction in the price level, and adjust their expectations accordingly.

Market trends can be uncovered internally utilizing Select one: a. industrial espionage. b. data mining techniques. c. repositioning. d. alpha testing. e. product launch.

b. data mining techniques.

A market surplus occurs if the quantity: Select one: a. demanded is greater than the quantity supplied. b. demanded is less than the quantity supplied. c. demanded is equal to the quantity supplied. d. supplied is less than the quantity demanded.

b. demanded is less than the quantity supplied.

The income households receive less the personal income taxes they pay is Select one: a. net savings. b. disposable personal income. c. gross private domestic investment. d. personal consumption.

b. disposable personal income.

Prior to the Great Depression, the dominant economic view held that Select one: a. fiscal policy could effectively eliminate a recessionary gap and return the economy to its potential output. b. economies should be able to reach full employment through a process of self-correction. c. monetary policy should be used to move the economy back to its potential output because it was more immediate than fiscal policy. d. any movement away from potential output was due to either an excess aggregate demand or an excess aggregate supply.

b. economies should be able to reach full employment through a process of self-correction.

Expenditures that vary with the level of real GDP are called Select one: a. aggregate expenditures. b. induced aggregate expenditures. c. marginal expenditures. d. autonomous aggregate expenditures.

b. induced aggregate expenditures.

The purpose of a value proposition is to Select one: a. provide the firm with a reason why buyers prefer their product or service offering. b. provide the buyer with a reason why the product or service is superior to competing offers. c. provide the buyer with a price point for purchase. d. provide the firm with a moral code of ethics. e. provide the seller with a price point for purchase.

b. provide the buyer with a reason why the product or service is superior to competing offers.

The existence of alternative uses of a resource implies that it is: Select one: a. free. b. scarce. c. expensive. d. plentiful.

b. scarce.

All other things unchanged, an increase in government spending will Select one: a. shift the aggregate demand curve to the right. b. shift the aggregate demand curve to the left. c. make the aggregate demand curve flatter. d. make the aggregate demand curve steeper.

b. shift the aggregate demand curve to the left.

Suppose households become more future-oriented and decide to save more at each income level. All other things unchanged, this will Select one: a. shift the aggregate demand curve to the right. b. shift the aggregate demand curve to the left. c. not affect aggregate but rather aggregate supply because firms will now produce less. d. shift both the aggregate demand curve and the aggregate supply curve to the left.

b. shift the aggregate demand curve to the left.

The _____ process helps an organization allocate its resources under different conditions to accomplish its objectives, deliver value, and be competitive in a market-driven economy. Select one: a. corporate planning b. strategic planning c. business planning d. market forecasting e. business forecasting

b. strategic planning

The _____ section of the marketing plan offers the opportunity to create a compelling argument as to what you intend to do and why others should invest in the strategy. Select one: a. executive summary b. strategy c. business challenge d. market e. conclusion

b. strategy

The group of customers toward which an organization directs its marketing efforts is known as the _____. Select one: a. constituency b. target market c. direct market d. value group e. key market

b. target market

Opportunity cost is: Select one: a. the costs of all sacrifices not chosen when a choice is made. b. the highest valued other choice that could have been made. c. the result of having made a bad choice. d. the result of not making choices at the margin.

b. the highest valued other choice that could have been made.

A newspaper article recently stated that there are 45.06 million people over the age of 16 who have completed college education. Of this number, 36.21 million are in the labor force and 35.44 million are employed. What is the unemployment rate for this group of people above the age of 16? Select one: a. 2.44% b. 2.17% c. 2.13% d. 1.71%

c. 2.13%

When the Great Depression reached its trough in 1933, real GDP had fallen by ________ since the depression began in 1929. Select one: a. 5% b. 10% c. 30% d. 50%

c. 30%

Which of the following examples best illustrates the marketing concept? Select one: a. A mail-order company begins using less expensive packing material to increase profits per sale. b. A manufacturing firm opens a new distribution facility closer to the factory. c. A catering firm decides to expand its hours of operations to better serve working mothers. d. A beverage distributor installs vending machines which show the operation of the machine to the customer. e. A food company puts nutritional information on its packages.

c. A catering firm decides to expand its hours of operations to better serve working mothers.

The body of economic thought associated with 19th century economist Select one: a. David Ricardo is called Ricardian economics. b. Adam Smith is called Smithian economics. c. David Ricardo is called classical economics. d. Adam Smith is called classical economics.

c. David Ricardo is called classical economics.

Which of the following are reasons why monetarists oppose activist stabilization policies? I. Monetary policy lags are so long and variable that trying to stabilize the economy using monetary policy can be destabilizing. II. Monetary policy affects a nation's currency exchange rate and affects the nation's competitiveness in the global market. III. Because of crowding-out effects, fiscal policy has no effect on GDP. IV. Fiscal policies must be financed by government borrowing or tax increases, both of which affect aggregate demand negatively. Select one: a. I only b. I and II only c. I and III only d. I, II, III, and IV

c. I and III only

What is a sub-prime mortgage? Select one: a. It is a mortgage loan offered at an interest rate below the prime lending rate. b. It is a mortgage loan made to a homeowner by an insolvent lender. c. It is a mortgage loan made to a buyer whose credit or income would not ordinarily qualify for a mortgage loan. d. It is a mortgage loan made to a buyer whose excellent credit score earns the buyer a preferential interest rate.

c. It is a mortgage loan made to a buyer whose credit or income would not ordinarily qualify for a mortgage loan.

Consumer preferences, prices of related goods, income, and demographic characteristics are often termed: Select one: a. market technologies. b. demand prices. c. demand shifters. d. supply determinants.

c. demand shifters.

What is the interest rate effect that explains why the aggregate demand curve slopes downward? Select one: a. It refers to the effect of changes in the price level on quantity of investment demanded which in turn affects interest rates. b. It refers to the effect of interest rates on borrowing which in turn affects consumption spending. c. It refers to the effect of changes in the price level on interest rates which in turn affects the quantity of investment demanded. d. It refers to the shifts in aggregate demand when interest rates change.

c. It refers to the effect of changes in the price level on interest rates which in turn affects the quantity of investment demanded.

Which of the following best explains the multiplier effect as a result of a $100 million increase in government spending on highways? Select one: a. To fund the government spending, more money must be printed. The resulting increase in money supply lowers interest rates which in turn stimulates consumption and investment spending. b. The initial change in spending will cause an increase in real GDP and it also becomes income to someone else. As a result, the government's tax revenue increases which in turn allows the government to further increase its spending. c. The government spending creates a demand for domestically produced goods and services which in turn increases income and higher incomes will lead to increased consumption. d. The initial change in government spending creates a supply of jobs and stimulates production of domestically produced goods and services. The resulting increases in wages and investment demand leads to increased real GDP.

c. The government spending creates a demand for domestically produced goods and services which in turn increases income and higher incomes will lead to increased consumption.

Demand is defined as: Select one: a. an amount that is purchased at a specific price, given supply. b. a schedule that establishes the price of a good. c. a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged. d. the amount that will be bought at a specific price.

c. a schedule that shows how much will be purchased at various prices during a particular period, all other things unchanged.

Marketing information systems involve all of the following EXCEPT Select one: a. a system for collecting market intelligence on an ongoing basis. b. a system for recording marketing research information. c. a system for collecting test market information. d. a system for recording internally generated data and reports. e. marketing analytics software to help managers with their decision making.

c. a system for collecting test market information.

Data is combined with statistical techniques by Select one: a. marketing interns. b. market trend analysis. c. analytics software. d. CRM. e. the intranet.

c. analytics software.

The advantage of market research is that it Select one: a. can be expensive. b. takes time. c. can help make a good decision. d. is infallible. e. is always done.

c. can help make a good decision.

Prior to the Great Depression of the 1930s, macroeconomics was dominated by Select one: a. Keynesian economics. b. monetarism. c. classical economics. d. supply-side economics.

c. classical economics.

If people demand more of product A when the price of B falls, then A and B are: Select one: a. not related. b. substitutes. c. complements. d. inferior.

c. complements.

The Smoot-Hawley Tariff Act of 1930 Select one: a. was passed to protect domestic jobs by imposing fines on firms that imported raw materials from abroad. b. mandated the federal budget be balanced. c. dramatically raised tariffs on products imported into the U.S. and led to retaliatory trade-restricting legislation around the world. d. subsidized domestic firms which produced products for export.

c. dramatically raised tariffs on products imported into the U.S. and led to retaliatory trade-restricting legislation around the world.

An answer to the question "How are goods produced?" determines: Select one: a. who receives the goods that are produced. b. how tastes and preferences are determined. c. how resources are combined in the production of goods. d. the types and quantities of goods and services produced.

c. how resources are combined in the production of goods.

In the long run, an increase in aggregate demand, all other things unchanged, will cause the price level to Select one: a. increase and potential output to increase. b. decrease and potential output to decrease. c. increase and potential output to remain stable. d. decrease and potential output to remain stable.

c. increase and potential output to remain stable.

Consider the following statement: "A consistent countercyclical policy has no effect on employment and output, since individuals will recognize those policies as systematic and will anticipate them correctly." This statement is most closely associated with Select one: a. classical theory. b. Keynesian theory. c. new classical theory. d. monetarist theory.

c. new classical theory.

Suppose that your annual income has averaged $40,000 for the past 10 years and that you expect it will average $40,000 over the next 10 years. If your income this year increases to $50,000 but your consumption expenditures don't change, then you are most likely acting according to the Select one: a. transitory income theory of consumption. b. current income hypothesis. c. permanent income hypothesis. d. disposable personal income theory of consumption.

c. permanent income hypothesis.

How might a marketer increase a consumer's personal value equation? Select one: a. decrease the benefits offered and associated with the exchange b. increase the price associated with the exchange c. reduce the hassle and increase the benefits associated with the exchange d. increase the hassle and the price associated with the exchange e. decrease the hassle and the benefits offered with the exchange

c. reduce the hassle and increase the benefits associated with the exchange

Economics is a: Select one: a. social science that studies goods with no alternative uses. b. natural science that studies goods with no alternative uses. c. social science concerned chiefly with how people choose among alternatives. d. social science concerned chiefly with reasons why society has unlimited resources.

c. social science concerned chiefly with how people choose among alternatives.

The consumption function shows Select one: a. the amount of consumption at each level of aggregate demand, holding all other determinants constant. b. the amount of consumption at each price level, holding all other determinants constant. c. the amount of consumption at each level of disposable income, holding all other determinants constant. d. the amount of consumption at each wage rate holding all other determinants constant.

c. the amount of consumption at each level of disposable income, holding all other determinants constant.

Macroeconomics deals with: Select one: a. bits and pieces of the economy. b. the question of how a business unit should operate profitably. c. the analysis of the aggregate values in the economy. d. ceteris paribus.

c. the analysis of the aggregate values in the economy.

Disposable personal income is Select one: a. the income households receive after paying personal taxes and personal debt. b. the income households earn from supplying labor services for the production of aggregate output. c. the income households receive after paying personal taxes. d. the income households have leftover after paying personal taxes and purchasing necessities.

c. the income households receive after paying personal taxes.

An indexed payment is a payment for which: Select one: a. the nominal value does not change with the rate of change in the price level. b. the nominal value is constant. c. the nominal value changes with the rate of change in the price level. d. the nominal value is equal to the real value, when inflation is positive.

c. the nominal value changes with the rate of change in the price level.

What is the difference between a nominal value and a real value? Select one: a. A nominal value is measured in monetary units adjusted for inflation, unlike a real value. b. A nominal value is measured in market rates while a real value is measured in terms of exchange rates. c. A nominal value is measured in units of constant purchasing power while a real value is measured in units of current purchasing power. d. A nominal value is measured in current market prices while a real value is measured in base year prices.

d. A nominal value is measured in current market prices while a real value is measured in base year prices.

What are the four sources of aggregate demand? Select one: a. Consumption, private investment, taxes, and expenditures b. Consumption, private investment, wage increases, and government expenditures c. Consumption, private investment, expenditures, and net exports d. Consumption, private investment, government purchases, and net exports

d. Consumption, private investment, government purchases, and net exports

The CPI is used for calculating payments from the U.S. government to individuals. To the extent that it is biased upward, which of the following is likely to occur? Select one: a. It leads to the payment of lower nominal benefits than would be the case if the index accurately measures inflation. b. It raises the government's revenue earnings through Social Security taxes. c. It allows retirees to keep their purchasing power constant. d. It raises government expenditure on programs such as Social Security.

d. It raises government expenditure on programs such as Social Security.

Factor prices, returns from alternative activities, technology, number of firms, producer expectations, and natural events are often termed: Select one: a. demand determinants. b. demand quantities. c. supply prices. d. supply shifters.

d. supply shifters.

Suppose net exports decreases by $100 million due to a slump in foreign economies. If the value of the multiplier is 2, what happens to the domestic aggregate demand curve? Select one: a. Since less will be produced, the aggregate demand does not shift. The aggregate supply curve shifts to the left by $100 million at each price level. b. It shifts to the left by $50 million at each price level. c. It shifts to the left by $100 million at each price level. d. It shifts to the left by $200 million at each price level.

d. It shifts to the left by $200 million at each price level.

Keynes believed that wages and prices were sticky. Therefore, a rightward shift of the aggregate demand curve would cause Select one: a. a decrease in the level of income. b. an increase in the unemployment level. c. a change in the long-run aggregate supply curve. d. an increase in employment, production, and income.

d. an increase in employment, production, and income.

The marginal propensity to consume is the Select one: a. slope of the saving function. b. slope of the consumption-saving curve. c. slope of the saving-investment curve. d. change in consumption divided by the change in disposable personal income.

d. change in consumption divided by the change in disposable personal income.

The value, at current market prices, of the final goods and services produced during a particular period is: Select one: a. net national product. b. gross foreign factor output. c. gross personal product. d. gross domestic product.

d. gross domestic product.

All of the following statements are true about the short-run aggregate supply curve except Select one: a. it is a graphical representation of the relationship between production and the price level. b. it is a result of the stickiness or inflexibility of some prices and wages. c. it is upward-sloping. d. it is drawn holding price level constant.

d. it is drawn holding price level constant.

The firm's _____ states the purpose of the organization and why it exists. Select one: a. value proposition b. business plan c. marketing plan d. mission statement e. financial report

d. mission statement

Wage and price stickiness Select one: a. gives rise to a vertical long-run aggregate supply curve. b. gives rise to a vertical short-run aggregate supply curve. c. creates a surplus or a shortage of real GDP. d. prevents the economy from producing its potential level of real GDP.

d. prevents the economy from producing its potential level of real GDP.