QUESTION A government’s fiscal policy options to maintain economic stability are to raise or lower taxes or to borrow money. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: These two fiscal policy tools enable the government to infuse money into or withdraw money from the general economy.
QUESTION The producer price index (PPI) measures prices of goods at the wholesale level. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: PPI tracks prices of goods being purchased in large quantities for resale.
QUESTION The decline in total household wealth during the Great Recession of the late 2000s was five times greater than the decline of wealth that occurred during the Great Depression. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: The drop in household wealth between December 2007 and December 2008 was […]
QUESTION The development of e-books and e-readers has led to the closure of many brick-and-mortar booksellers. Which of the following likely did NOT drive this change in the marketplace? A) The demand for e-book titles increased. B) The demand for new technology increased. C) The demand for shopping convenience increased. D) The demand for print […]
QUESTION Which of the following would NOT fall within the study of macroeconomics? A) job growth and unemployment B) consumer price index C) U.S. gross domestic product D) bioengineering product development E) periods of economic recession and expansion ANSWER Answer: D Explanation: D) Bioengineering is a distinct business sector, which falls under microeconomics.
QUESTION Which element of economics focuses on the “demand” side? A) product development B) production C) consumption D) distribution E) marketing ANSWER Answer: C Explanation: C) Buyers, or consumers, demand products and services.
QUESTION Securitization is a new financial vehicle developed by bankers in the early 2000s to distribute risks and increase earnings during the housing bubble. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Securitization was developed in 1977. It distributes risks by packaging loans together into mortgage-backed securities sold to many […]
QUESTION In today’s economic system, what has become an increasingly important issue in the area of resource development? A) capital B) human resources C) entrepreneurship D) knowledge E) natural resources ANSWER Answer: D Explanation: D) With the growth of information technology in business, knowledge has become a crucial production factor to gain competitive advantage.
QUESTION What happens when a product is scarce? A) Demand declines to zero. B) Sellers can charge more for it. C) Sellers must charge less for it. D) Buyers will expect to pay less for it. E) Factors of production are meeting demand. ANSWER Answer: B Explanation: B) Because demand is higher for a […]
QUESTION Which field of economic study focuses on factors of production? A) macroeconomics B) microeconomics C) entrepreneurship D) resource development E) central planning ANSWER Answer: D Explanation: D) Factors of production are the means for developing goods and services, which is the focus of resource development.
