Principles of Economics

Technological advances may increase the chance of job obsolescence. For workers, this is a(n) __________ labor specialization. A. disadvantage of B. advantage of C.scope factor in D.reason to support

A Disadvantage of.

A manager's allowing employees to set the pace of their work is an example of providing job A. enrichment. B. enlargement. C.rotation. D. satisfaction.

A Enrichment.

During the peak phase of a business cycle, a business could be expected to have A. high prices. B. reduced sales. C. low profits.D. staff reductions.

A High prices.

When changes in a product's price cause corresponding changes in consumer demand, the product has A. elastic demand. B. usefulness. C. utility. D. inelastic demand.

A:Elastic demand.

If three employees each work 35 hours a week and produce a total of 9,765 items, what is their total hourly productivity level? A. 31 B. 93 C. 67 D. 105

B 93.

When consumer spending is high, the economy usually is in a(n) A. depression. B. growth stage. C. inflationary period. D. recession.

B Growth stage.

If a government wants to decrease economic growth, it would use a contractionary fiscal policy that might involve A. increasing government spending. B. increasing taxes. C. decreasing regulations. D. decreasing unemployment.

B:Increasing taxes.

An important aspect of continuous quality improvement within an entire business organization requires management to A. obtain daily reports to monitor progress. B. make as few changes as possible. C. hire additional staff to oversee quality control. D. solicit input from employees.

D Solicit input from employees.

A group of entrepreneurs is trying to decide which of five new product ideas to select. Which tool can be used to help make the decision? A. Decision matrix B. Entrepreneurial discovery process C. Business processes D. Opportunity cost analysis

A Decision matrix.

To stimulate the economy, the government is likely to A. increase spending. B. restrict trade. C. raise prices. D. decrease expenses.

A Increase spending.

Arm and Hammer baking soda, which was originally developed as a cooking ingredient, is now being sold as an effective refrigerator deodorizer. This is an example of ____________ innovation. A. positioning B. process C. distributed D. associative

A Positioning.

Entrepreneurial discovery is an important process in a free-enterprise economic system because an entrepreneur or small-business owner can A. satisfy an unmet demand. B. form a technological monopoly. C. improve economic sanctions. D. change legal requirements.

A Satisfy an unmet demand.

Which of the following does consumption rely on to provide goods and services: A. Producers B. Consumers C. Owners D. Deciders

A: Producers.

When assessing global trends for potential business opportunities, an entrepreneur often looks for a market that has A. few financial resources. B. an unmet want. C. a volatile income. D. several tax incentives.

B An unmet want.

In some states, it is against the law to sell alcohol on Sundays. This law was created to honor the Christian religious belief that Sunday is a special day of rest. This is an example of culture impacting the __________ of goods. A. production B. distribution C. pricing D. packaging

B Distribution.

A country's standard of living can be calculated by dividing the goods and services its people have by A. social services. B. population. C. output. D. total production.

B Population.

Which of the following actions would the Federal Reserve System take to expand monetary policy:A. Raise the Federal Discount Rate B. Buy securities on the open market C. Increase Reserve Requirements D. Open additional financial institutions

B: Buy securities on the open market.

When customers buy the exact amount of goods that producers are selling at a specific price, the __________ price exists. A. market B. equilibrium C. unit D. production

B: Equilibrium.

Which of the following is a business comparing when it analyzes the cost of buying wood desks versus the cost of buying metal desks: A. Excess demand B. Relative price C. Inflated price D. Incentives

B: Relative price.

When management and union leaders negotiate but cannot reach an agreement, either one may call for a(n) A. grievance.B. injunction. C. arbitrator. D. probation.

C Arbitrator.

Many different workers are needed to carry out the steps in processing milk before it can be distributed to consumers. This is an example of A. specialization by profession. B.job obsolescence. C.specialization by stages of production. D. job enlargement.

C Specialization by stages of production.

What often happens when a nation has a high unemployment rate? A. The gross domestic product increases. B. The consumer price index decreases. C. The nation experiences an economic slowdown. D. The stock market remains unaffected.

C The nation experiences an economic slowdown

The use of thorough job orientation helps to increase productivity through A. mass production. B.participative decision making .C.training and education. D. quality of work life.

C Training and education.

A government's fiscal policies that are intended to encourage economic growth are known as __________ policies.A. appropriate B. complementary C. expansionary D. realistic

C:Expansionary.

One way for a business to increase productivity is to increase its A. imports B. environmental concern. C. prices D. research and development.

D Research and development.

What is often the result when businesses are able to achieve and maintain a quality culture? A. Customer satisfaction B. Technological advantage C. Employee convenience D. Social responsibility

A Customer satisfaction.

To continuously improve and achieve quality throughout the business, management must A. establish standards. B. eliminate the competition. C. follow rigid rules. D. limit communication.

A Establish standards.

When consumer spending and consumption decrease, consumer confidence tends to A. fall. B. rise. C. remain the same. D. be unpredictable.

A Fall.

Which of the following is an example of paradigm innovation: A. Windows computer operating system B. Energy-saving light bulbs C. The latest model of the Honda Civic D. Rechargeable batteries

A Windows computer operating system.

During which phase of the business cycle would there most likely be shortages of workers in certain skill areas? A. Expansion B. PeakC. Trough D. Contraction

B Peak.

When applying the law of diminishing returns, businesses know that there is a point at which production A. is too expensive to continue. B. reaches its maximum level. C. equals the amount of revenue. D. passes that of the competition.

B Reaches its maximum level.

The gross domestic product (GDP) is calculated each year in the United States to determine A. the level of exports.B. the health of the economy.C. whether income taxes should be lowered or raised.D. how much money should be printed during the year

B The health of the economy.

A U.S. company begins selling its products in France. Despite brisk sales, the company doesn't make enough profit to cover its expenses. When setting prices, the company simply used the same prices in both countries. For example, $5.99 = 5.99 French francs; $2.89 = 2.89 French francs. What risk of international business did the company not consider? A. Language variations B. Currency fluctuations C. Differences in laws D. Opportunity costs

B Currency fluctuations.

Which of the following is a program that some managers implement to achieve quality in all aspects of the business: A. Theory X B. Six Sigma C. PERT D. Gantt chart

B Six Sigma.

If interest rates go down, which of the following would most likely occur: A. Banks will pay more to borrow money. B. The stock market will go up. C. Consumers will spend less. D. U.S. exports will decrease.

B The stock market will go up.

Which of the following would NOT be analyzed in a feasibility study: A. Staffing needs B. The venture's past sales C. Estimated return on investment D. Raw materials needed

B The venture's past sales.

Why do most businesses use some type of quality control method at work? A. To organize employees B. To minimize errors C. To attract vendors D. To guarantee safety

B To minimize errors.

A couple constructs a decision matrix to select which charity will receive a $500 donation. Since "helping children" is the most important criteria to the couple, which of the following weights should it be assigned? A. .325 B. .25 C. .60 D. .100

C .60

The young children's section of a U.S. amusement park features cartoon characters from a German TV show. Although the amusement park signed an agreement and paid a fee to display images of the cartoon characters, the TV show doesn't own or manage the park in any way. This is an example of A. a strategic alliance. B. franchising. C. licensing. D. exporting.

C Licensing.

Which of the following is NOT an example of a business process? A. All employees using an organizational chart B. Managers using a list of questions and a group interview for evaluating job applicants C. Purchasing agents completing a checklist of actions before purchases are made D. Employees responding to each of their emails with a personalized message

D Employees responding to each of their emails with a personalized message.

The value of a country's currency declines when it implements policies that restrict trade. The primary factor affecting the change in value of the currency in this situation is A. cultural differences. B. civil unrest. C. demographics. D. isolationism.

D Isolationism.

The primary purpose of a feasibility study is to answer which of the following questions: A. Is the business plan valid? B. What technology will be needed for this project? C. What are the opportunity costs of this project? D. Should we proceed with this project?

D Should we proceed with this project?

Which of the following is an example of a change in culture affecting the production of a good or service: A. A shortage of chocolate chips causes a cookie company to stop production. B. Laws banning smoking in restaurants result in a decrease in demand for cigarettes. C. An oil spill in the ocean causes local seafood restaurants to lose business. D. The "green movement" leads to an increase in demand for recycled products.

D The "green movement" leads to an increase in demand for recycled products.

An automobile assembly line currently has 75 cars being assembled. These partially-complete cars are considered A. direct labor utilization. B. flow time. C. direct labor content. D. work in process.

D Work in process.

Which of the following might cause supply of a good to decrease: A. Advertising B. Sales skills C. Inelastic demand D. Government regulations

D: Government regulations.

The market's way of rationing limited resources, goods, and services to consumers in a market economy is through A. commissions. B. profits. C. incentives. D. prices.

D: Prices.

Which of the following is an economic activity: A. Following the stock market B. Reading a bank statement C. Balancing a checkbook D. Purchasing a candy bar

D: Purchasing a candy bar.

What is a likely result when workers' wages rise throughout the economy while productivity decreases? A. Lower prices B. Inflation C.Prosperity D. Increased sales

Inflation.

To reduce the chance of investigations and orders to cease production, businesses should A. adhere to government regulations. B. specialize. C. purchase the most up-to-date technology available. D. lobby members of Congress.

A Adhere to government regulations.

The category of GDP called gross private domestic investment includes A.all purchases of capital goods. B.all exports of goods and services. C. purchases made by private individuals. D. inventories held over from previous years.

A All purchases of capital goods.

To calculate total revenue, a business multiplies the number of units sold by A. average price per unit. B. marginal revenue. C. fixed costs.D. marginal costs.

A Average price per unit.

Which of the following is a decision about production that a business might make based on the law of diminishing returns: A. Establish a desired level of productionB. Produce as many products as possibleC. Limit production to leave room for growthD. Produce the same amount from year to year

A Establish a desired level of production.

When consumers purchase gasoline, telephone services, and tobacco products, they must often pay a(n) ___________ tax.A. excise B. income C. property D. proportional

A Excise.

Which of the following is an example of a business paying property taxes:A. The Bellman Corporation submits a $8,792 check to the government, which is based on the value of its office building. B. Cortland Hotel withholds a certain percentage of its employees' earnings, which it forwards to the federal tax agency. C. Manny's Gas Station collects a gasoline tax from its customers at the point of purchase. D. North-South Airline allocates $4,000 of its earnings to give to a college's scholarship fund.

A The Bellman Corporation submits a $8,792 check to the government, which is based on the value of its office building.

What is the most common type of labor specialization? A. Trade or profession B. Stage of production C.Human resources D. Task

A Trade or profession.

Mary is a bagger at Glen's Market. On a weekly average, she works 30 hours and fills 876 bags of groceries. Her productivity is ___________ bags of groceries per hour. A. 29.2 B. 26.2 C. 28.6 D. 22.8

A 29.2.

When consumers' purchasing power decreases, the economy will experience a period of A. contraction. B. expansion. C. containment. D. emergence.

A Contraction.

Higher prices that result from a tax on luxury goods are likely to result in A. fewer customers and less productivity. B. more customers and more productivity. C. fewer customers and more productivity. D. more customers and less productivity.

A Fewer customers and less productivity.

The U.S. government is offering a decrease in taxes to citizens who install solar panels on their homes. Using economic terms, how would you describe this incentive? A. Financial and positive B. Non-financial and positive C. Non-financial and negative D. Financial and perverse

A Financial and positive.

The best time for a business to purchase new equipment is when A. interest rates are low. B. consumer demand decreases. C. job growth declines. D. the gross domestic product falls.

A Interest rates are low.

What is likely to occur when the inflation rate increases, and workers do not receive pay increases? A. Lower standard of living B. Higher consumer demand C. Decreased unemployment D. Increased spending

A Lower standard of living.

What usually results when interest rates continue to increase? A. Spending decreases. B. Production increases. C. Purchasing power increases. D. Unemployment decreases.

A Spending decreases.

Why are human resources limited? A. Some people are unable to work. B. New equipment is expensive. C. Countries lack needed technology .D. World population continues to grow.

A: Some people are unable to work.

Which of the following factors affects consumers' decisions to buy goods or services: A. Buying power B. Competition C. Labor costs D. Production costs

A:Buying power.

The payment of taxes to the federal government allows it to provide goods and services to ___________ and ___________ .A. businesses; resource markets B. businesses; households C. households; product markets D. businesses; product markets

B Businesses; households.

The use of robots in assembly-line work is a form of specialization involving A. natural resources. B.capital goods. C.capitalism. D. human resources.

B Capital goods.

As the gross domestic product increases, it is easier for all levels of government to A. maintain trade deficits. B.carry out their functions. C.reduce their spending. D.conserve natural resources.

B Carry out their functions.

When a business cycle is affected by international relations, new discoveries, and social or political changes, it is said to have been changed by __________ factors. A. extraneous B. externalC. internalD. intrinsic

B External.

The highest level of labor union organization is the A. state. B. federation.C. national.D. local.

B Federation.

When union members of Local 654 arrived at work today, they found a sign on the door stating that the business had closed temporarily and the employees were not allowed to work. This is a pressure strategy known as a(n) A. injunction. B. lockout. C. boycott.D. strike vote.

B Lockout.

What is one of the main reasons why governments levy taxes? A. To control costs B. To raise revenue C. To regulate money D. To limit salaries

B To raise revenue.

How do spending levels impact the economy in an inflationary period? A. Overall spending generally remains unchanged. B. Consumers and businesses spend less. C. Consumers spend less, but businesses tend to spend more. D. Consumers keep spending no matter what; businesses are more cautious.

B Consumers and businesses spend less.

Interest rates rising and falling by a wide range on a regular basis often are an indication of A. seasonal unemployment. B. economic instability. C. flexible capital. D. price equilibrium.

B Economic instability.

Which of the following is a negative economic incentive: A. Tax reductions on fuel-efficient cars B. High taxes on cigarettes C. A 1% decrease in city taxes for residents who recycle D. Free flu shots for all citizens

B High taxes on cigarettes.

Which of the following government actions is most likely to stimulate the economy: A. Raising the prime interest rate B. Lowering tax rates C. Printing less money D. Borrowing more money

B Lowering tax rates.

John only had $40 to spend and couldn't decide whether to buy a new pair of jeans or to go to an amusement park. He finally decided to spend his money on the amusement park. What was the opportunity cost of his decision? A. $40 B. New pair of jeans C. Trip to amusement park D. No opportunity cost was involved.

B New pair of jeans.

Why might businesses decide to hold on to products to sell later when the economy is experiencing high levels of inflation? A. Taxes will limit production. B. Prices will continue to rise. C. Cash will be in short supply. D. Income will remain constant.

B Prices will continue to rise.

When a nation's inflation rate is low, prices tend to A. increase dramatically. B. remain stable. C. fluctuate daily. D. reduce currency values.

B Remain stable.

Vernon was the milkman in his neighborhood for 30 years. Then, supermarkets started selling milk right in the store, and Vernon's job became obsolete. Vernon is a victim of ___________ unemployment. A. seasonal B. structural C. frictional D. cyclical

B Structural.

What is the effect on society of a falling growth rate in productivity? A. Resources are used more efficiently. B. The standard of living drops. C. Inflation is prevented. D. Increased labor disputes may occur.

B The standard of living drops.

Why should productivity be measured? A. To find new ways to meet customer needs B. To see whether the business's objectives are being met C. To determine the best ways to invest company profits D.To locate new sources of inputs

B To see whether the business's objectives are being met.

What is the ratio of a pound of yellow squash @ $ .40 a pound and a pound of butternut squash @ $1.20 a pound? A. 1 to 4 B. 1 to 3 C. 1 to 2 D. 1 to 1

B: 1 to 3.

Why are resources considered limited? A.Entrepreneurs do not invest enough of them. B.There are not enough available so that everyone can have as much of them as desired. C.Everyone has them, and they change. D.There are so many that people must decide which ones to choose at any one time

B: There are not enough available so that everyone can have as much of them as desired.

Which of the following actions would the Federal Reserve System take to expand monetary policy:A. Raise the Federal Discount Rate B. Buy securities on the open market C. Increase Reserve Requirements D. Open additional financial institutions

B:Buy securities on the open market.

Which of the following is an example of excess supply: A. Price = $500, demand = 500, supply = 300 B. Price = $700, demand = 300, supply = 500 C. Price = $600, demand = 400, supply = 400 D. Price = $400, demand = 600, supply = 200

B:Price = $700, demand = 300, supply = 500.

When producers are hopeful about the economic business outlook, they often A. decrease their inventory levels.B. decrease their purchase of new goods. C. increase their investment in capital goods. D. increase their investment in savings.

C Increase their investment in capital goods.

A six-month decline in GDP is known as a A. depression. B. productivity increase. C. recession. D.trade deficit.

C Recession.

One of the functions of certain types of taxes is to A. control employee compensation. B. limit business profit. C. regulate business activity. D. decrease employee liability.

C Regulate business activity.

Which of the following statements is true regarding a nation's unemployment rates: A. Globalization does not usually have a major effect on a nation's unemployment rates. B. A nation's business cycles do not usually impact the country's unemployment rates. C. A nation always has a certain percentage of unemployed citizens at any given time. D. During times of great expansion, a nation's workers are generally underemployed.

C A nation always has a certain percentage of unemployed citizens at any given time.

Justin is trying to decide whether he wants to spend a $50 birthday check on a new DVD player or tickets to a concert. If he chooses the DVD player, what is the opportunity cost of this decision? A. Birthday check B. DVD player C. Concert tickets D. $50

C Concert tickets.

Which of the following is a true statement about currency exchange rates: A. The value of a nation's currency increases when it experiences rapid inflation. B. World events do not usually impact currency exchange rates. C. Currency exchange rates change frequently. D. When the demand for a nation's currency increases, its currency's value decreases.

C Currency exchange rates change frequently.

The government uses some of the tax money it collects from individuals and businesses to support public welfare programs. What is the benefit of these welfare programs to businesses in a private enterprise economy? A. Recipients don't have to work. B. Businesses must budget more money for taxes. C. Funds received by recipients are spent in businesses. D. Government has control of how the recipients spend their money.

C Funds received by recipients are spent in businesses.

Sam has been invited to go to the movies with one friend and to Dairy Queen for ice cream with another friend. Because he has only $5.00, Sam can't do both. If he decides to go the movies, the opportunity cost of his choice is A. staying at home. B. both the ice cream and the movie. C. ice cream at Dairy Queen. D. the movie.

C Ice cream at Dairy Queen.

A country is experiencing civil unrest. What is likely to happen to the value of its currency? A. It will stabilize. B. It will increase. C. It will decrease. D. It will not be affected.

C It will decrease.

The formula that is generally used to measure productivity is A. goods divided by time. B. labor divided by resources. C. outputs divided by inputs. D. inputs divided by labor.

C Outputs divided by inputs.

Which of the following would policy makers monitor to understand personal consumption expenditures (PCEs): A. S&P 500 Stock Index B. Consumer Price Index (CPI) C. Retail sales D. Real Gross Domestic Product (GDP

C Retail sales.

Which of the following actions would government take to increase economic growth:A. Decrease exports B. Increase taxes C. Increase government spendingD. Decrease government subsidies

C: Increase government spending.

What type of government policy involves raising or lowering taxes, and increasing or decreasing government spending?A. Disciplinary B. Monetary C. Fiscal D. Social

C:Fiscal.

A country's easy monetary policy is often used to correct the problem of A. globalization. B. high taxes. C. unemployment. D. import quotas.

C:Unemployment.

A country's easy monetary policy is often used to correct the problem ofA. globalization. B. high taxes. C. unemployment. D. import quotas.

C:Unemployment.

Which of the following represents a good time for a country's government to use its fiscal policy to increase taxes:A. While the economy is expanding B. When a recession lasts too long C. When inflation is too high D. While the economy is contracting

C:When inflation is too high.

Which of the following is important information that businesses consider when deciding whether it would be profitable to increase production :A. Finance charge B. Discretionary income C. Cash flow D. Marginal cost

D Marginal cost.

The addition of too many workers on a job may cause the marginal product to turn A. variable.B. upward. C. positive.D. negative.

D Negative.

The overall objective of workers who form labor unions is to A. obtain reasonable working hours.B. promote better working conditions.C. obtain fair wages.D. strengthen their bargaining power.

D Strengthen their bargaining power.

Which of the following is true when a potato farmer keeps some of the farm's potatoes for personal use: A. The potatoes must be reported in the gross domestic product. B.The farmer is engaging in an illegal activity. C.The farmer is not producing salable goods. D.The potatoes are not counted in the gross domestic product.

D The potatoes are not counted in the gross domestic product.

How long do most business cycles last?A. Two full years B. Two consecutive quarters C. At least 10 yearsD. Varying lengths of time

D Varying lengths of time.

What kind of strike occurs when the members of a union local stop work without the consent of their national organization? A. SympatheticB. Limited C. JurisdictionalD. Wildcat

D Wildcat.

What is one reason why the overall unemployment rate understates the actual employment situation? A. The rate reflects regional differences. B. The rate is not seasonally adjusted. C. Underemployed people are listed. D. Discouraged workers are not included.

D Discouraged workers are not included.

What do businesses usually expect will increase when the economy experiences a continued rise in the level of inflation? A. Consumer spending B. Employment levels C. Industry growth D. Interest rates

D Interest rates.

Dividing the dollar value of total sales by the cost of making those sales is one way that businesses often measure their A. accountability. B. profitability. C. liability. D. productivity.

D Productivity.

What usually decreases as the rate of inflation increases? A. Money supply B. Interest rates C. Export quotas D. Purchasing power

D Purchasing power.

A large number of underemployed workers indicates that there is a problem in the economy because underemployment means that A. seasonal employees work only part of the year. B. many people have stopped looking for work. C. some workers are taking time off between jobs. D. there are not enough jobs for qualified people.

D There are not enough jobs for qualified people.

Why does the Federal Reserve System raise interest rates? A. To overcome inequalities of income distribution B. To increase demand for products C. To decrease supply of products D. To fight inflation

D To fight inflation.

The amount of a product that is produced is most directly affected by A. labor unions. B. product utility. C. product value. D. consumer demand.

D: Consumer demand.

Which of the following is characteristic of a buyer's market: A. High demand B. Steady demand C. Low supply D. Low prices

D:Low prices.

One of the main functions of a country's monetary policy is to A. monitor government spending. B. supervise the banking system. C. issue new currency. D. regulate the economy.

D:Regulate the economy.