QUESTION Assuming other factors remain constant, Anon would have the most power to raise prices if widgets were which of the following? A) life-saving drugs B) automobiles C) beverages D) toys E) jewelry ANSWER Answer: A Explanation: A) Companies have the most power to charge high prices when their products or services are absolutely […]
QUESTION What is microeconomics? What will be an ideal response? ANSWER Answer: Microeconomics is focused on the behavior and operations of individual economic units such as particular groups of people, businesses, organizations, and markets. Explanation: This is contrasted with macroeconomics, which studies the economy as a whole, focusing on large economic units.
QUESTION What is the “welfare state”? What will be an ideal response? ANSWER Answer: Government social services that give citizens economic security when they are unemployed, ill, or elderly are part of a structure called the welfare state. Explanation: Characteristics of the welfare state are present in all economies but are more prevalent in […]
QUESTION Describe how fiscal policy is used by the U.S. government to achieve stability. What will be an ideal response? ANSWER Answer: The government can stimulate the economy as needed by a policy of taxation and borrowing. Lower taxes tend to stimulate a sluggish economy and government borrowing can be used to increase the […]
QUESTION Describe the business cycle. What will be an ideal response? ANSWER Answer: The business cycle is a regular pattern of ups and down in total economic production. Explanation: The business cycle is a long-term pattern marked by both periods of growth and slowdown.
QUESTION Who are “underemployed” workers? What will be an ideal response? ANSWER Answer: People who have part-time jobs but want to work full time, or are working for jobs they are overqualified for, are known as underemployed workers. Explanation: These people are not factored into determining the unemployment rate.
QUESTION Technology usually is a benefit to economic vitality. How did technology play a role in the Great Recession? What will be an ideal response? ANSWER Answer: It led to the speculation-fueled dot.com bubble, which laid the foundation for the subprime bubble. Explanation: The collapse of the dot.com bubble led to low interest rates […]
QUESTION How is a country’s gross domestic product measured? What will be an ideal response? ANSWER Answer: The total value of all goods and services that a country produces within its borders in one year is called the gross domestic product. Explanation: GDP is key to tracking activity in the business cycle.
QUESTION What are the criteria for economic stability? What will be an ideal response? ANSWER Answer: When there are enough desirable goods and services to satisfy consumer demand, and consumers have the purchasing power to buy the products they want, business is in a period of economic stability. Explanation: Supply satisfying demand is not […]
QUESTION How is an economic “bubble” characterized? What will be an ideal response? ANSWER Answer: An economic bubble is a period in which stocks and other securities rise far above their actual value. Explanation: The United States has already experienced technology and housing bubbles in the 21st century.
