Business Economics
Final Exam
Course Introduction
Business Economics explores the application of economic theory and methodologies to real-world business decision-making. This course covers fundamental concepts such as supply and demand, market structures, production and cost analysis, pricing strategies, and the impact of government regulation on businesses. Students will learn how to analyze how economic forces influence business environments, interpret economic data, and use economic reasoning to solve problems related to resource allocation, risk assessment, and strategic planning in both domestic and global contexts.
Recommended Textbook
Macroeconomics 10th Edition by Stephen Slavin
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19 Chapters
5438 Verified Questions
5438 Flashcards
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Chapter 1: A Brief Economic History of the United States
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258 Verified Questions
258 Flashcards
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Sample Questions
Q1) The worst recession since World War II started in which year?
A)1953
B)1957
C)1973
D)1981
E)2007
Answer: E
Q2) For most of the 19th century in the American West,there was
A)an abundance of labor relative to land.
B)abundance of land relative to labor.
C)an abundance of both labor and land.
D)a scarcity of both labor and lanD.
Answer: B
Q3) The United States emerged from ___________ with its industrial plant intact.
A)Both World War I and World War II
B)Neither World War I nor World War II
C)World War I,but not World War II
D)World War II,but not World War I
Answer: A
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Page 3
Chapter 2: Resource Utilization
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265 Verified Questions
265 Flashcards
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Sample Questions
Q1) A production possibilities frontier demonstrates
A)that there are limits to what a society can produce.
B)the various choices a society can make in allocating its resources.
C)the concept of opportunity cost.
D)it demonstrates all of the choices stateD.
Answer: D
Q2) Which is the most accurate statement?
A)In order to have full production,there must be full employment.
B)In order to have full employment,there must be full production.
C)Both statements are accurate.
D)Neither statement is accurate.
Answer: A
Q3) Our economy would be operating at full employment with labor unemployment rate of ___ percent and a capacity utilization rate of _____ percent.
A)5;95
B)5;85
C)10;95
D)10;85
Answer: B
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Page 4
Chapter 3: The Mixed Economy
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262 Verified Questions
262 Flashcards
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Sample Questions
Q1) Which one of the following is NOT a government failure?
A)The "bridge to nowhere" in Alaska
B)The FEMA reaction to Hurricane Katrina
C)Allowing federal budget deficits to be financed by foreigners while calling for further tax cuts to help incumbent politicians get reelected
D)Water pollution
Answer: D
Q2) Sweden and Norway would best be described as _______ countries.
A)Capitalist
B)Fascist
C)Communist
D)Socialist
Answer: D
Q3) The most glaring economic problem in the former Soviet Union was
A)a shortage of military goods
B)a surplus of military goods
C)a shortage of civilian goods
D)a surplus of civilian goods
Answer: C
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Page 5
Chapter 4: Supply and Demand
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255 Verified Questions
255 Flashcards
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Sample Questions
Q1) The forces of demand and supply ensure that at equilibrium
A)there are no shortages or surpluses.
B)there are no shortages,but there may be surpluses.
C)there are no surpluses,but there may be shortages.
D)there may be shortages or surpluses.
Q2) If price were $12,there would be _____ (shortage or surplus)of about _____.
Q3) The basic reason for the gas lines in 1973 and 1979 was _____.
Q4) Which statement is true?
A)Most economists support rent control laws.
B)Usury laws and rent control are price ceilings.
C)Usury laws have never had any effect because they are set well above interest rates.
D)None of these choices are true.
Q5) Which of the following is not true of equilibrium price?
A)All consumers can buy all they demand.
B)It is determined by the interaction of supply and demand.
C)It is set by the government.
D)It is also known as the market-clearing price.
Q6) When there are price ceilings,_____ tend to develop.
Q7) The demand and supply curves cross at the _____ point.
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Chapter 5: The Household Consumption Sector
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312 Verified Questions
312 Flashcards
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Sample Questions
Q1) The increase in two wage earning families in the U.S.has resulted in a substantial increase in the percentage of disposable income spent on
A)Food
B)Appliances and computers
C)Services and transportation
D)Luxury items
Q2) If we save 20 percent of our income,our APC is A)-0.2.
B)0.
C)0.2.
D)0.8.
E)1.2.
Q3) If the APC is .6,we consume
A)4 percent of our income.
B)6 percent of our income.
C)40 percent of our income.
D)60 percent of our income.
Q4) At what level of disposable income is saving zero?
Q5) Most of C is spent on __________________.
Q6) In 2005 the United States had a ___________ savings rate.
Page 7
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Chapter 6: The Business Investment Sector
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295 Verified Questions
295 Flashcards
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Sample Questions
Q1) When disposable income is 3,000,how much is C?
Q2) When disposable income is 500,C + I is A)200
B)500
C)580
D)700
E)800
Q3) Which is the most accurate statement?
A)Most investment in the U.S.involves stock market speculation.
B)Investment involves sacrifice.
C)Net investment during recession years is usually negative.
D)Investment is carried out mainly by individual savers.
Q4) When disposable income is 2,000,C + I is A)500.
B)2,000.
C)2,500.
D)None of the answers are correct.
Q5) If a group of investors wanted to gain control of a publicly held corporation,it would buy that corporation's ________.
Q6) Practically speaking,how much money would it take to control it?
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Chapter 7: The Government Sector
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301 Verified Questions
301 Flashcards
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Sample Questions
Q1) Which of the following accounts for the largest percentage of all federal expenditures?
A)Income security such as Social Security
B)National defense
C)Interest on the public debt
D)Veterans' services
Q2) Statement 1: The first President George Bush and President Bill Clinton will go down in history as two of our greatest tax cutters.
Statement 2: Presidents Ronald Reagan and the second President Bush will go down in history as two of our greatest tax cutters.
A)Statement 1 is true and Statement 2 is false.
B)Statement 2 is true and Statement 1 is false.
C)Both statements are true.
D)Both statements are false.
Q3) "Taxable income" is
A)total income less deductions and exemptions.
B)earned income less property income.
C)all income other than wages and salaries.
D)wage and salary income only.
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Page 9
Chapter 8: The Export-Import Sector
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) Volkswagen's New Beetle is made in A)Germany.
B)The U.S.
C)Canada.
D)Mexico.
Q2) Prominent among the protesters at the WTO meeting in Seattle in late 1999 were these three groups: (1)_________________; (2)__________________; (3)___________________.
Q3) If U.S.imports of goods and services exceed exports
A)GDP in the United States will be less than the sum of consumption,investment,and government purchases.
B)GDP in the United States will exceed the sum of consumption,investment and government purchases.
C)net exports for the United States are positive.
D)None of the choices are true.
Q4) Net exports are
A)the smallest component of GDP.
B)income after taxes.
C)the largest component of GDP.
D)included in government spending.
10
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Chapter 9: Gross Domestic Product
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336 Verified Questions
336 Flashcards
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Sample Questions
Q1) National income accountants can avoid multiple accounting by
A)including transfers in their calculations.
B)counting both intermediate and final goods.
C)only counting final goods.
D)only counting intermediate goods.
Q2) Suppose the GDP of Brazil were to rise from $1 trillion in 2001 to $2 trillion in 2011,when the GDP deflator is 160.And suppose that Brazil's population rose from 100 million in 2001 to 110 million in 2011.(1)How much is per capita real GDP in 2011;and (2)by what percentage did per capita real GDP rise between 2001 and 2011? Hint: Do the problem in four steps: (1)Find real GDP in 2011; (2)Find per capita real GDP in 2011; (3)Find per capita real GDP for 2001;and (4)Find the percentage rise in per capita real GDP between 2001 and 2011.
Q3) In 1933 net private domestic investment was a minus $5.8 billion.This meant that A)gross private domestic investment exceeded depreciation by $5.8 billion.
B)the economy was expanding in that year.
C)the production of 1933's GDP used up more capital goods than were produced in that year.
D)the economy produced no capital goods at all in 1933.
Q4) Wages,salaries and fringes are about _______% of national income.
Q5) Find net domestic product.
Page 11
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Chapter 10: Economic Fluctuations, unemployment, and Inflation
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394 Verified Questions
394 Flashcards
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Sample Questions
Q1) The unemployment rate is computed by dividing the _____ by the ____.
Q2) The most severe recession since WWII was in A)1973-1975.
B)1981-1982.
C)2007-2008.
D)1991-2001.
Q3) If the cost of living in the base year is $20,000 and it rises to $25,000 in the current year,how much is the CPI in the current year?
Q4) The experience of the 1970s and 1980s suggests that the cost of engaging in the process of disinflation is that A)exports must increase.
B)deflation must occur.
C)nominal interest rates will be expected to increase.
D)unemployment will most likely increase.
Q5) If the labor force rose and the number of unemployed stayed the same,the unemployment rate would A)rise.
B)stay the same.
C)fall.
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Chapter 11: Classical and Keynesian Economics
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241 Verified Questions
241 Flashcards
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Sample Questions
Q1) The principal cause of the Great Depression of the 1930s was
A)a collapse in aggregate demand.
B)a collapse in aggregate supply.
C)a collapse in the average price level.
D)a collapse in government spending.
E)the outbreak of the Second World War.
Q2) Which of the following supports the classical theory of employment?
A)The interest rate will not always equalize savings and investment.
B)Not everything produced will necessarily be purchased.
C)Saving and investing are done by different people for different reasons.
D)Wages and prices are flexible downwards.
Q3) The classical theory of employment held that
A)total consumption would always equal total saving.
B)the savings of wealthy households would be borrowed and spent on consumer goods by poor households.
C)investment might either be less than,or greater than,saving.
D)the savings of households would all be borrowed and invested by businesses.
Q4) A curve showing the amount of real output we collectively wish to purchase at various alternative price levels is called the __________.
Q5) The long-run aggregate supply curve is ____.
Page 13
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Chapter 12: Fiscal Policy and the National Debt
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377 Verified Questions
377 Flashcards
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Sample Questions
Q1) Without automatic stabilizers
A)real GDP would fluctuate much more widely.
B)real GDP would not be affected.
C)the budget would be in balance during a time of recession.
D)the real GDP would fluctuate less widely.
Q2) Which one of these is our greatest economic problem today?
A)High unemployment
B)High inflation
C)High imports
D)Deflation
Q3) Which of the following does NOT explain why the record budget surplus in 2000 turned into record budget deficits by 2008?
A)The bursting of the dot.com bubble
B)The recession of 2001
C)The strong recovery from the 2001 recession that led to high interest rates
D)The events of 9/11
E)The economic disruption caused by the war in Iraq
Q4) If equilibrium GDP is $900 billion greater than full employment GDP and there is a deflationary gap of $300 billion,how much is the multiplier?
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Chapter 13: Money and Banking
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278 Verified Questions
278 Flashcards
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Sample Questions
Q1) The transaction demand for money is most clearly related to its use as a
A)medium of exchange.
B)standard of value.
C)measure of value.
D)store of value.
E)standard of deferred payment.
Q2) If a goldsmith has 200 gold coins in his safe and there are 400 receipts in circulation,how much is his reserve ratio?
Q3) Which one of the following is in M2,but not in M1?
A)Currency
B)Checking deposits
C)Small denomination time deposits
D)Travelers checks
Q4) Banks would like to keep about ______% of their deposits on reserve.
A)2
B)10
C)40
D)75
E)100
Q5) The FDIC raises its funds by ____________.
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Chapter 14: The Federal Reserve and Monetary Policy
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365 Verified Questions
365 Flashcards
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Sample Questions
Q1) A reserve ratio of 10% means that the deposit expansion multiplier is ________.
Q2) If a bank pays 12% interest,and that bond has a selling price of $1,200 and a face value of $1,000,how much interest does it pay?
Q3) The Federal Reserve System
A)has regional Federal Reserve Banks that make most of the decisions.
B)makes decisions subject to the approval of the President.
C)makes its major policy decisions in its Open Market Committee.
D)makes decisions subject to the approval of Congress.
Q4) In January 2009,how many members of the Federal Reserve board had been appointed by George Bush?
A)4.
B)6.
C)7.
D)9.
Q5) If the Fed sells United States government securities on the open market,this will cause
A)an increase in the interest rate which reflects as increase in money supply.
B)interest rates to fall in the loanable funds market.
C)an increase in the money supply.
D)an increase in the interest rate which discourages borrowing for investment.
Page 16
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Chapter 15: A Century of Economic Theory
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308 Verified Questions
308 Flashcards
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Sample Questions
Q1) Statement I: The classical economists believed recessions were temporary and would cure themselves.
Statement II: The Keynesians believed the economy was basically unstable and that government intervention was needed to cure depressions.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q2) The concept that shows the relationship among GDP,the money stock,and the velocity of circulation of money is called the
A)law of diminishing marginal utility.
B)equation of exchange.
C)law of demand.
D)law of diminishing returns.
E)the quantity theory of money.
Q3) In order for the crude quantity theory to be valid,______ and ______ need to be constant.
Q4) The quantity theory of money is based on the equation of _____.
Q5) The classicals assumed ________ wages and _________ prices.
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Chapter 16: Economic Growth and Productivity
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231 Verified Questions
231 Flashcards
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Sample Questions
Q1) About _____ of the world's population live in LDCs.
Q2) One way to ensure productivity growth would be to A)restrict immigration.
B)raise the savings rate.
C)increase military spending.
D)slow the introduction of new technology.
Q3) Each of the following has lowered our rate of economic growth except A)immigration.
B)a low rate of productivity growth.
C)a low savings rate.
D)a declining educational system.
E)high interest rates.
Q4) With the advent of the Great Recession,the combined state,local,and federal deficit was $_______ in 2009.
Q5) Americans worked less than _____ hours in the year 2008,while German laborers worked less than _____ hours.
Q6) The birth rate in most LDCs is _____ than in most industrial countries.
Q7) There is a permanent underclass totaling about ______% of our population.
Page 18
Q8) The industrial revolution first began in ________.
Q9) Historically,our rate of economic growth has been about ______% a year.
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Page 19
Chapter 30: Income Distribution and Poverty
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285 Verified Questions
285 Flashcards
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Sample Questions
Q1) In 2008 if the poverty line had been set higher,the poverty rate would have been _____.
Q2) Each of the following is a provision of the 1996 welfare reform law except that
A)the federal guarantee of cash assistance for poor children is ended.
B)the head of every welfare family would have to work within 2 years or the family would lose benefits.
C)after receiving welfare for two months adults must find jobs or perform community service.
D)women who have more children while on welfare will have their benefits reduceD.
Q3) Among non-Hispanic whites,blacks,and Hispanics,the group with the highest poverty rate is ____.
Q4) The _____________ program of President Lyndon Johnson was designed to lift people out of poverty.
Q5) Which statement is true?
A)The poverty line is raised each year.
B)The poverty line is lowered each year.
C)The poverty line stays the same from one year to the next.
D)None of the statements are true.
Q6) What is the percentage of the lower two quintiles earned on line Y?
Page 20
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Chapter 31: International Trade
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268 Verified Questions
268 Flashcards
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Sample Questions
Q1) At the core of the American trade problem is that
A)Americans spend too much on consumption.
B)the dollar is too low.
C)the Japanese are excluding American products by means of high protective tariffs.
D)American manufacturers are too quality conscious and should instead concentrate on reducing costs.
Q2) Statement I: Our overall imbalance of trade has never exceeded $100 billion. Statement II: Our overall imbalance of trade was lower in 2009 than it was in 1990.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.
Q3) Most economists _________ tariffs and _________ quotas.
A)favor;favor
B)oppose;oppose
C)favor;oppose
D)oppose;favor
Q4) In 2009,our trade deficit was about _______________ dollars.
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Page 21
Chapter 32: International Finance
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230 Verified Questions
230 Flashcards
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Sample Questions
Q1) The free floating exchange rate system has been in effect since A)1900.
B)1933.
C)1945.
D)1973.
E)1985.
Q2) The gold standard
A)worked well until World War II.
B)will not work well when the world's gold supply increases as fast as the world's need for money.
C)fell apart as the Great Depression spread,as nation after nation devalued its currency.
D)makes monetary policy more effective.
Q3) The average trade balance from 2005 through 2008 was $____________ billion which was reduced to $____________ billion in 2009.
Q4) Drug trafficking leads to
A)a net outflow of money from the United States.
B)a net inflow of money into the United States.
C)no net outflow or net inflow.
Q5) Under the gold standard,balance of trade deficits (or surpluses)were _________.
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