Economics All of the Following Except Questions

78. What is a franchise

What are the advantages and disadvantages of owning a franchise? Advantages: a. Tested management System b. A name customers already know; national advertising may also be used c. Finical advice and assistance-for supplies, credit, insurance, etc. d. Training: how to operate and advertise the business, also help with problems e. Performance records for other outlets (which you can use to assess your progression) f. Allowed to have some autonomy (able to run business somewhat on your own) Disadvantages: a. Franchisor can exercise total control over how you operate your business- tell you when and how to change your product or your prices, and even how to decorate the place b. Franchisor may charge a monthly payment or royalty(if your outlet dose poorly, most of your profit may go to the franchisor) c. Franchisor may allow territorial conflicts with other outlets d. You will have to work long hours- and you won't really be your own boss.

75. What are GDP and GNP

Which is better in measuring economic output and why? a. GDP measures the gross production within the borders of the United States. GDP does NOT include the production of products made by an American company, if those products are made in another country. It does, however, include the production of products by foreign companies IF the products are made within the borders of the US. GNP measures the gross production of the nation as a whole, including products made by American companies in other nations. Likewise, GNP does NOT include products made by foreign companies within the borders of the United States. Overall, GNP is not as accurate as GDP, because of counting of output (income) by Americans and not the counting of output (income) produced in the United States by foreign-owned resources.

65. All of the following are functions of money, except

a. A medium of exchange b. Standard of value c. Store of value

70. What effect would an increase in the reserve requirement rates have on unemployment

a. An increase in the reserve requirement would take money out of supply, making the dollar worth more in the country. This is one way to fight inflation.

56. All of the following are benefits of competition in a market system, Except

a. Encourages efficient production b. It allows buyers a choice c. Helps with price control

68. All of the following are conditions that must be present in the market structure for monopolistic competition to exist, except

a. Entrance to & exit from industry must be easy & inexpensive b. Goods & services must be similar c. Many firms exist but no single firm has control d. Numerous buyers & sellers e. Advertising

d. Maintain needed functions that cannot be provided by the private sector at a profit 58. All of the following are requirements for the efficient working of a market system, except

a. Freedom of exchange between a buyer and seller b. Profit available c. Competition among the different businesses

67. All of the following are competitive circumstances that may contribute to the dominance of a few large firms in the same industry, except

a. High product costs b. Technology c. Small Market d. High profits

74. If the FED raises the discount rate, what happens to the money supply

a. If the FED raised the discount rate, it would discourage banks from borrowing money. This is because of the amount of interest that the banks would have to pay back on the loans. If borrowing money is discouraged, individuals will also be reluctant in borrowing money from banks, because the banks will have to increase the interest that they charge on loans.

73. If the FED wants to help reduce inflation what (if any) changes should be made to the reserve requirements of banks

a. If the FED wanted to help reduce inflation, they could increase the amount of money banks are supposed to keep in reserve. This would take money out of circulation, and help in making the dollar worth more (or at least preventing it from decreasing in value).

55. Economic indicators are statistics that help economists measure economic performance; all of the following are included in the category of economic indicators, Except

a. Leading Indicators: measure a wide variety of business activity that tends to rise or fall just before a major change in economic activity. b. Coincident Indicators: measure business activities that change some time shifts our economy. c. Lagging indicators: decline or rise after change in general activity has occurred.

62. All of the following are the effects specialization has on factor markets & product markets, except

a. Lowers prices through greater efficiency b. Lowers production cost through greater efficiency c. Benefits workers from adaptable to changing conditions

76. Explain the difference between macroeconomics and microeconomics

a. Macroeconomics looks and examines an economy on a larger scale than microeconomics. Macroeconomics helps individual firms determine their economic performance and their business decisions. Microeconomics examines an economy on a much smaller scale, focusing on even the smallest details.

57. Under Adam Smith's laissez-faire theory, which states that the government should play a limited role in society, and that government should be confined to all of the following areas, except

a. Maintain foreign relations b. Maintain a national defense c. Maintain a police & court system to protect private property, and health, safety, and morals of the population.

66. All of the following are conditions that must be present in the market structure for perfect competition to exist, except

a. No close substitute available b. Buyers must have information about products c. Entrance and exit from industry must be easy & inexpensive

59. All of the following are ways people deal with scarcity, except

a. People simply do without b. People substitute one good for another product c. Producers make more of the desired product

69. All of the following are non-price determinants of supply, except

a. Personal prices b. Techniques of production c. Taxes & subsidies d. Prices of other goods e. Price expectation f. Number of sellers in market

60. Leading indicators tend to rise or fall just before major changes in the economy; all of the following are examples that fall into this category of leading indicators, except

a. Production as a measure: Includes orders for capital equipment, building permits, & new orders for consumer goods. b. Business activity as a measure: number of new businesses formed, the price of stocks, waiting time for delivery of factory orders. c. Employment as a measure: includes average workweek of factory workers & lay off rate.

61. All of the following are functions of the Federal Reserve Board with regard to the money supply, except

a. Reserves: hold deposits made by banks and thrifts b. Check Collection: provide means for collection of checks c. Fiscal Agent: collects money through taxation, government sales & redeems bonds. d. Supervision: FED supervises & performs periodic bank examinations of member banks. e. Control of the money supply: manage money supply in accordance with needs of the economy as a whole.

72. What are the two most common ways the Federal Reserve Board is able to either raise or lower the money supply

a. The FED can determine what percentage of its deposits a bank must keep in reserve; \/ reserve requirement, then the money supply /\ b. FED lends money to banks & charges interest on loans; /\ discount rate, then borrowing is discouraged

63. All of the following is how the money supply effects the economy as a whole, except

a. The rate of economic growth b. The levels of unemployment and inflation

64. All of the following are restrictions on competition in the American system of capitalism, except

a. The suppliers of goods and services are not all the same size b. Employee mobility is difficult c. Knowledge of market conditions is hard to achieve