Intro to Bus. Ch. 2

When President Obama was elected, the U.S. economy was in trouble, and had slid into a recession. Consumer spending was low and getting worse. In an effort to stop the decline, President Obama proposed an economic stimulus package which included government spending on roads, bridges, and schools, among other things, and a tax cut that each U.S. worker would see in her or his paycheck. Apparently, President Obama was a proponent of:

Keynesian economic theory

What's going on here? As soon as Dewey Cheatum and Howe Motors increase the prices on their SUVs, then so does their only competitor, You Betcha Motors! Their prices are basically the same for similar vehicles, although their advertising says their products are really very different. What kind competition exists here?

Oligopolistic competition

You studied for two hours each day, for an entire week, before your first marketing exam. When you turned in the test, you felt confident that your effort would pay off. At the next class meeting, your instructor said she was considering curving the grades because the class average was lower than she had anticipated. All of a sudden, your 98% score did not have the same impact that it did when you first saw it! Now the guy next to you that got an 84% is likely to have an "A" grade too. As you analyze this situation, you realize that it parallels an economic system such as ________________, where even if you work harder than another person, you are likely to realize the same benefit.

socialism

The way in which a country's resources are utilized to produce goods and services and the way those goods and services are distributed among those who desire to have them depends upon the

system under which the country operates

The following chart reflects the U.S.'s recent GDP (Gross Domestic Product). Which of the following statements best reflects the health of the U.S. economy during this time period? 2006-$12.96 trillion 2007-$13.21 trillion 2008-$13.16 trillion 2009-$12.70 2010-$13.09 2011-$14.29 2012-$16.44 2013-$16.72

The U.S. economy fell into recession in 2008 and 2009.

The foundation of the U.S. economic system is considered to be:

capitalist

The American Society of Civil Engineers published a report card for America's interstates. It was reported that road repairs cost the American taxpayers $67 billion per year. Through the enactment of ___________, the U.S. government collects tax dollars and then spends some of these funds to maintain the infrastructure of the nation. Increasing taxes has the effect of drawing money away from the private sector.

fiscal policy

Robert Redford created The Sundance Film Festival, where talented, young directors and producers can submit their films for review and possible screening. The festival attracts thousands of tourists each year, employs many others at various capacities, and provides important exposure to up-and-coming artists who may otherwise not be able to get their works noticed. Ultimately, the festival provides social and economic benefit for many. Adam Smith believed that one's self-directed gain would eventually create prosperity for many, and called the process the

invisible hand

Citizens of socialist nations can rely on the government to provide all of the following except:

money to start a business

Jason's mom specifically asked for a CIP cast iron pan for her birthday. As Jason scanned the stock in two department stores, he found ten different brands, none of which were CIP. When he found CIP in a kitchen specialty shop, he was challenged to tell the difference between his mom's choice and the others. In his business class, he learned about ______________, where many sellers may be offering very similar products. Through various means, each seller differentiates his product from the competition.

monopolistic competition

The sum of all the federal deficits over time is known as the:

national debt

At Six City Wellness Center, Greg operates a new state-of-the-art MRI scanner that serves approximately 10 patients during his 8-hour shift. Patients are scheduled for various lengths of time, depending on which part(s) of their body requires scanning. The image quality is significantly superior to what it was on previous scanners, but the number of patients served per day remains the same. This situation attests to the fact that ____________.

the service sector has seen improvement in quality of service, but productivity remains about the same.

The U.S. unemployment rate is a key economic indicator because most of us need jobs to maintain our standard of living. A criterion used to calculate the unemployment rate is _________.

unemployed persons age 16 and over, who have been looking for work during the past four weeks.

For the last several years, the country of Amerensia has been moving from a communist country to a more mixed economic system. Which of the following most likely would not occur in Amerensia?

An increase in the level of government involvement in trade.

___________________are economic systems where some allocation of resources is made by the market and some by the government.

Mixed economies

Which of the following best describes a capitalistic nation?

Most or all of the factors of production and distribution are privately owned and operated for a profit.

Which of the following is not a part of the business cycles that occur in economies over time?

Structural unemployment

In a free-market economic system, if consumers perceive the price for a state-of-the-art smartphone as too high for the value received, they are likely to avoid buying it. In the same light, if the

consumer's desired price is too low, producers may limit the amount produced.

In terms of economic systems, the trend has been for:

countries that are mostly capitalist to move toward more socialism.

Socialist systems tend to:

discourage the best from working as hard as they can.

At a young age, Eliza's coaches were confident she had the potential to be a world-class swimmer. They encouraged her parents to do as much as they could to further develop her skills, because a future in Olympic swimming could set her up for life, including promotional endorsements and coaching positions when her competitive days were over. After four years on an athletic scholarship and Olympic experience under her belt, she chose a different path. With her savings and personal connections, she rented a corner building in a bustling San Francisco neighborhood and pursued her dream: a surf shop business. After several successful years, Eliza was certain that Adam Smith would smile because

he laid the foundation for her success: she had freedom of choice

The CPI (consumer price index) measures ________________ and ________________.

inflation and deflation; includes energy and food as part of the market basket of goods and services that it measures.

In order for the value of goods and services to be counted as part of a nation's gross domestic product, the goods and services must be ___________.

produced within the physical boundaries of a particular nation.

Charlie Hayes owns his own landscaping business, including all the land on which they grow their plants, and all the equipment. Charlie's son Josh has just graduated from college with an architectural landscaping degree. Charlie hopes to retire in a few years and turn the business over to Josh, and Josh will inherit the business when Charlie dies. This is an example of the ______________ in a capitalist system.

right to private property

Imagine the following: New sources of energy have become marketable and the industries involved have hired thousands to operate the emergence of new businesses. Construction companies cannot build homes fast enough for workers in the energy industry. Due to increasing salaries in several other industries that partner with energy companies, the demand for everything from food to entertainment to travel has increased. High demand has brought about shortages in some product categories. To help manage the situation in the short term, ___________.

the Fed will likely increase interest rates.