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Full file at http://testbank360.eu/test-bank-understanding-business-9th-edition-nickels Q2-1. Which of the following would be a topic emphasized in a microeconomics class? A) How a nation's GDP is computed. B) The reason's why the unemployment rate for the economy is rising or falling. C) How market conditions determine the price of a specific product. D) How the government can use fiscal and monetary policies to stabilize the economy. Answer: C Learning Goal: 02-1 Level of Learning: 3 – Application of principles Bloom’s: Application AACSB: Reflective Thinking Topic: What is Economics? Page: 30 Explanation: Microeconomics is the study of economics that focuses on the economic considerations of specific markets. It is concerned with the behavior of people and organizations with respect to specific products and services. Q2-2. Reality Entertainment, Inc is a major producer of reality TV programming. The company faces fierce competition from three other major producers of similar shows. Together, Reality Entertainment and its three rivals control almost the entire reality TV programming. Their market environment is called: A) An oligopoly. B) A duopoly. C) Monopolistic competition. D) A quasi-monopoly. Answer: A Learning Goal: 02-2 Level of Learning: 3 – Application of principles Bloom’s: Application AACSB: Reflective Thinking Topic: Competition Within Free Markets Page: 39 Explanation: An oligopoly is a degree of competition when you have a few sellers dominating the market. Q2-3.

In the long run, the point on a graph where the supply for a product or service equals the demand for the product or service is _____________. A) the total profit earned by producers B) the total amount of labor that will be employed in that market C) the amount of time it takes to bring together the buyers and sellers of the good D) the equilibrium price Answer: D Learning Goal: 02-2 Level of Learning: 3 – Application of principles Bloom’s: Application

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Full file at http://testbank360.eu/test-bank-understanding-business-9th-edition-nickels AACSB: Reflective Thinking Topic: Figure 2.3 Page: 37-38 Explanation: The equilibrium point is the crossover point where, for the same price, the supply for a product and the demand for a product are the same. In the long run, it becomes the market price – the price at which the demand will trend. Q2-4. While touring Greece last year, Angela landed in the hospital for five days when she was run-over by a careless motorcyclist. To no avail, her son and daughter who were also on the trip tried frantically to pay for the medical care required to set her broken bones. There she lay with no casts, limbs hanging until the state’s doctors deemed it her turn for attention. In nations where medicine is ____________, individuals often wait for several days, and often several years for proper medical attention. A) communized B) capitalized C) socialized D) equalized Answer: C Learning Goal: 02-3 Level of Learning: 3 – Application of principles Bloom’s: Application AACSB: Reflective Thinking Topic: Understanding Socialism Page: 40-42 Explanation: Socialism is an economic and political system where major industries are owned and operated by the government. Although it provides wider coverage of medical services for persons who may not normally be able to afford medical care, there are often complaints by persons who wait a long time for service. Q2-5. Which of the following people would tend to favor a socialist economy? A) John wants to live in a country with low marginal tax rates. B) Robin wants to live in a country that encourages rapid economic growth. C) Liz wants to live in a country with limited government regulation. D) Fred prefers to live in a country that promotes social equality. Answer: D Learning Goal: 02-3 Level of Learning: 3– Application of principles Bloom’s: Application AACSB: Reflective Thinking Topic: Understanding Socialism Page: 42 Explanation: Nations that promote social equality, where government policies trend toward equal distribution of goods and services usually adopt a socialist economy. Q2-6. The next wave of marketable innovations may involve new ways to produce and Nickels, McHugh & McHugh, Understanding Business, Ninth Edition

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Full file at http://testbank360.eu/test-bank-understanding-business-9th-edition-nickels conserve energy. If we can turn new technology into marketable products and services that produce energy to run our businesses and homes, the U.S. could see a surge in output of goods and services. The Department of Economic Development would document this surge by measuring the ______. A) Gross Domestic Product B) Consumer Price Index C) Consumer Marginal Index D) number of workers who are frictionally employed Answer: A Learning Goal: 02-5 Level of Learning: 2 – Understanding of concepts and principles Bloom’s: Comprehension AACSB: Reflective Thinking Topic: Understanding the U.S. Economic System Page: 45 Explanation: The Gross Domestic Product (GDP) equals the total amount of goods and services produced in a nation, in one year. Q2-7. Which of the following indicators provides the clearest indication that an economy is experiencing deflation? A) A decrease in the unemployment rate B) A decrease in GDP C) An increase in the PPI D) A decrease in the CPI Answer: D Learning Goal: 02-5 Level of Learning: 2 – Understanding of concepts and principles Bloom’s: Comprehension AACSB: Reflective Thinking Topic: Understanding the U.S. Economic System Page: 46 Explanation: The Consumer Price Index (CPI) measures the pace of inflation. It measures inflation and deflation: rising prices and decreasing prices of a market basked of goods measured by the U.S. government. Q2-8. While scanning the movies section in your local online newspaper, you click on the business section by mistake. While you’re there, you quickly scan a report that says government spending will again exceed tax revenues in the current year. This means that the: A) total national debt is likely to increase. B) national deficit is likely to decrease. C) rate of inflation is likely to fall. D) monetary policies pursued by the Fed need tightening. Answer: A

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Full file at http://testbank360.eu/test-bank-understanding-business-9th-edition-nickels Learning Goal: 02-6 Level of Learning: 3 – Application of principles Bloom’s: Application AACSB: Reflective Thinking Topic: Stabilizing the Economy through Fiscal Policy Page: 49-50 Explanation: The Federal Government tries to keep the economy stable by raising and lowering taxes. If the government spends more than it collects in taxes, then it must borrow these funds. This increases the yearly national deficit. If the national deficit increases, it automatically increases the national debt, which is the sum of all recorded national deficits. Q2-9.

The Federal Reserve System operates: A) as a semi-private organization not under the direct control of the government. B) under the direct control of the executive branch of the government. C) under the direction of the Banking Oversight Committee of Congress. D) as a special agency of the U.S. Treasury. Answer: A Learning Goal: 02-6 Level of Learning: 2 – Understanding of concepts and principles Bloom’s: Comprehension AACSB: Reflective Thinking Topic: Using Monetary Policy to Keep the Economy Going Page: 51 Explanation: The Federal Reserve System is an agency of the federal government. It is the Fed’s responsibility to make decisions about raising and lowering interest rates, the federal funds rates.

Q2-10.

Senator Gong Lee is alarmed at the state of the economy. Unemployment is high and GDP is low. Senator Lee wants Congress to take action to increase its expenditures and cut taxes in order to stimulate the economy. The actions called for by Senator Lee are examples of: A) monetary policy. B) fiscal policy. C) incomes policy. D) social investment policy. Answer: B Learning Goal: 02-6 Level of Learning: 3 – Application of principles Bloom’s: Application AACSB: Reflective Thinking Topic: Stabilizing the Economy through Fiscal Policy Page: 50

Explanation: Fiscal policy decisions are the responsibility of Congress. Congress votes on whether to raise or lower taxes, and whether to increase or decrease expenditures on Nickels, McHugh & McHugh, Understanding Business, Ninth Edition

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Full file at http://testbank360.eu/test-bank-understanding-business-9th-edition-nickels various governmental budgets and projects.

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Test bank understanding business 9th edition nickels