Question 1

Which of the following BEST gives the meaning of the term gross domestic product?
A) total quantity of goods and services produced by an economic system
B) total quantity of goods that a country's citizens can purchase with the currency used in their economic system
C) conditions of the economic system in which an organization operates
D) total value of all goods and services produced within a given period by a national economy through domestic factors of production
E) indicators of available goods and services produced within a specific domestic market

Accepted Answer

D)Gross domestic product (GDP)is the total value of all goods and services produced within a given period by a national economy through domestic factors of production; this figure does not include goods and services produced by domestic firms overseas.

Question 2

Which of the following BEST describes economic stability?
A) the measure of economic growth that compares how much a system produces with the resources needed to produce it
B) a condition in an economic system in which the amount of money available and the number of goods and services produced are growing at about the same rate
C) the economic condition in which a country's exports exceed its imports
D) a relative equality between what the government owes its creditors and the revenue it gets from imports
E) the economic value of all the products that a country exports minus the economic value of all the products it imports

Accepted Answer

B)Economic stability is evident when the amount of money available and the number of goods and services produced are growing at about the same rate; inflation and unemployment, in particular, threaten economic stability.

Question 3

In the United States,milk is produced on thousands of farms,with no producer dominating the market.Producers sell milk at the going price and are unable to influence this price.Millions of gallons of milk are purchased every day.What type of competition is the market for milk?
A) a monopoly
B) an oligopoly
C) perfect competition
D) monopolistic competition
E) a cooperative

Accepted Answer

C)In perfect competition, there are many sellers who are not individually powerful enough to influence price.

Question 4

What type of policy is made up of fiscal and monetary policy?
A) trade
B) employment
C) stabilization
D) tax
E) foreign

Accepted Answer

C)A stabilization policy is a government goal to smooth out fluctuations in output and unemployment and to even out prices.

Question 5

In the city of Westminster,Christmas trees are being sold for $25.At this price,buyers are able to satisfy their demand,though some trees remain unsold.What is the term used to describe this market condition?
A) surplus
B) stoppage
C) shortage
D) demand deficit
E) equilibrium price

Accepted Answer

A)A surplus is defined as a situation in which quantity supplied exceeds quantity demanded.

Question 6

What is a chief goal of an economic system?
A) economic stability
B) income equality
C) money supply growth
D) national debt reduction
E) product innovation

Accepted Answer

A)With stability, the amount of money available in an economic system and the quantity of goods and services produced in it are growing at about the same rate.

Question 7

Honata Automobiles is a South Korean-owned company.Honata has factories in Indonesia and Brazil.Which of the following is/are affected by the production of Honata automobiles?
A) Indonesia, Brazil, and South Korea's GDP
B) Indonesia and Brazil's GDP
C) South Korea's GDP
D) Indonesia and Brazil's GNP
E) Indonesia, Brazil, and South Korea's GNP

Accepted Answer

B)GDP measures goods and services produced within a country regardless of where the companies are based.

Question 8

Which of the following BEST gives the meaning of the term business cycle?
A) the conditions of the economic system in which an organization operates
B) the total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system
C) the measure of economic growth that compares how much a system produces with the resources needed to produce it
D) the number of businesses started during a given time period
E) the pattern of short-term ups and downs in an economy

Accepted Answer

E)A business cycle is represented in the short-term ups and downs in the economy, as measured by prosperity, recession, and so on.

Question 9

Which of the following statements about inflation is TRUE?
A) The consumer price index is a good way of measuring inflation.
B) Productivity decreases the purchasing power of consumer dollars.
C) Inflation increases the purchasing power of consumer dollars.
D) Localized price increases can cause inflation across the economic system.
E) The amount of money tends to be distributed evenly during inflationary periods.

Accepted Answer

A)The consumer price index is a good measurement of inflation; inflation occurs with widespread price increases.

Question 10

How would supply affect the aggregate output of an economy?
A) Supply would decrease aggregate output.
B) Increases in both would cause inflation.
C) Aggregate output would grow with supply.
D) Supply would have no direct effect on aggregate output.
E) Aggregate output would increase the money supply.

Accepted Answer

C)Supply is the amount of goods available, and aggregate output is the production of goods, so increased supply would increase aggregate output.

Question 11

The global business environment encompasses many international forces that influence the outcomes of companies doing business in foreign countries.Which of the following scenarios would BEST count as evidence of globalization?
A) Diamonds mined in Country X are sold on the markets in Country Y. The proceeds are then used to fund a coup against the government in Country X.
B) A natural disaster disables factories in Country X that produce computer chips for Company Y. Company Y reduces the number of employee shifts and raises the price of its products.
C) Farmers in Country X have lost most of their wheat crops due to a drought. The market price for wheat triples and the government pays the farmers for a percentage of the lost wheat.
D) Country X has almost mined all of its available natural energy sources. The government has been investing in alternative energy research for years and now an efficient synthetic energy source has been developed.
E) Country X has raised the tax on oil products. As a result more people are taking public transportation and reducing unnecessary car travel.

Accepted Answer

B)Globalization is the movement toward a more interconnected and interdependent world market. One consequence of this is that countries and companies become more reliant on each other and events in one part of the world can directly affect conditions in another part of the world.

Question 12

The CEOs of Company A and B are investigating expansion into new markets,which will provide greater trade volume.Which scenario describes an economic environment that is most suitable for an importing-exporting opportunity?
A) Country X invests primarily in its textile industry, while Country Y focuses on producing high-yield crops.
B) Company A is willing to provide parts used in the production of equipment by Company B in exchange for discounts on manufacturing equipment.
C) The southern region of Country X over-produces a wide range of produce, while few crops can be efficiently grown in the northern region.
D) Company A and Company B are exploring the possibility of a joint venture to provide goods to Country X.
E) Country X is looking to invest in foreign markets and Country Y currently has a large trade deficit.

Accepted Answer

A)The economic environment refers to relevant conditions, such as import and export opportunities, that exist in the economic system in which a company operates. In the above case, importing and exporting both refer to the movement of goods between different countries. Countries X and Y focus on a particular industry, which implies that these are areas in which they have an import-export opportunity.

Question 13

Which of the following would be included in the gross domestic product of Brazil?
A) the profits earned by a U.S.-owned automobile plant in Brazil
B) the profits earned by a Brazilian coffee company operating in the United States
C) the profits earned by a Brazilian coffee company operating in Peru
D) the profits earned by U.S. suppliers to Brazil operating in the United States.
E) the profits earned by Peruvian companies operating outside Brazil

Accepted Answer

A)Gross domestic product refers to the value of goods and services produced in a given period domestically.

Question 14

Robert has established a start-up business manufacturing a range of outdoor wear for the leisure market.Which possible scenario would BEST show that Robert is positioning his business for the global business market?
A) Robert launched a Web site for his business and hired two new employees to handle national and international shipping.
B) Robert launched a Web site and filmed a commercial for television and recorded a radio version for local stations.
C) Robert created a page for his business on a networking site and offered store coupons to his first 100 friends.
D) Robert had his Web site translated into Korean in order to better serve the local Korean community.
E) Robert took a full-page ad out in the state's official tourism brochure.

Accepted Answer

A)By creating a Web site, which can be viewed worldwide, and expanding his business to handle national and international shipping, Robert is actively engaging in market globalization.

Question 15

Which is the BEST explanation for why standard of living only increases through productivity?
A) The more goods that are available, the lower prices will be.
B) More goods are available without having to come by additional resources.
C) Productivity increases the money supply in an economy.
D) Purchasing power increases when there is more consumer choice.
E) Prices are determined by the standard of living.

Accepted Answer

B)Productivity is the amount of goods that can be made using a given amount of resources. If it takes more resources to produce more goods, prices will not decrease as long as demand keeps pace. But if more goods can be made using the same resources, prices will go down and purchasing power will increase.

Question 16

Which of the following BEST describes nominal GDP?
A) total quantity of goods and services produced by an economic system
B) total value of all goods and services produced within a given period by a national economy through domestic factors of production, measured in current dollars or with all components valued at current prices
C) total value of all goods and services produced within a given period by a national economy regardless of where the factors of production are located
D) total value of all goods and services produced within a given period by a national economy through domestic factors of production, adjusted to account for changes in currency values and price changes
E) total quantity of goods and services that are imported within a given period of time

Accepted Answer

B)Nominal GDP is not adjusted to make up for inflation and/or changes in currency values.

Question 17

Which of the following BEST describes purchasing power parity?
A) total quantity of goods and services produced by an economic system
B) total quantity of goods and services that can be purchased with one paycheck
C) total quantity of goods and services that could have been purchased if one's pay rose in the same proportion as inflation
D) the principle that exchange rates are set so that prices of similar products in different countries are about the same
E) the principle that a market economy determines supply and demand for consumer products

Accepted Answer

D)Purchasing power parity gives us a good idea of what people can actually buy with the financial resources allocated to them by their respective economic systems.

Question 18

Which of the following BEST describes what the consumer price index is used to indicate?
A) the average wage rate for a given region
B) the economic performance of key consumer product companies
C) the changes in the cost of consumer products over time
D) the percentage of consumers in the total population looking for work
E) the number of price increases within a given period of time

Accepted Answer

C)The consumer price index is a measure of the prices of typical products purchased by consumers living in urban areas. It is expressed as a percentage of prices as compared to a base period.

Question 19

Which of the following is a likely cause of increased prices for products,decreased purchasing power,and decreased profit margins?
A) low unemployment
B) stagnant wages.
C) declining living standards
D) cyclical inflation
E) limited credit

Accepted Answer

A)Potential results of low unemployment include increased prices, decreased purchasing power, and decreased profits.

Question 20

Which of the following BEST gives the meaning of the term gross national product?
A) total quantity of goods and services produced by an economic system
B) total quantity of goods and services produced within a given period by a national economy, not including foreign production
C) total value of all goods and services produced within a given period by a national economy through domestic factors of production
D) total value of all goods and services produced within a given period regardless of where the factors of production are located
E) total value of all goods and services that are exported

Accepted Answer

D)Gross national product includes even the value of goods and services produced by domestic companies abroad.

Quiz 1: The U.S.Business Environment

Which of the following BEST gives the meaning of the term gross domestic product?

Which of the following BEST describes economic stability?

In the United States,milk is produced on thousands of farms,with no producer dominating the market.Producers sell milk at the going price and are unable to influence this price.Millions of gallons of milk are purchased every day.What type of competition is the market for milk?

What type of policy is made up of fiscal and monetary policy?

In the city of Westminster,Christmas trees are being sold for $25.At this price,buyers are able to satisfy their demand,though some trees remain unsold.What is the term used to describe this market condition?

What is a chief goal of an economic system?

Honata Automobiles is a South Korean-owned company.Honata has factories in Indonesia and Brazil.Which of the following is/are affected by the production of Honata automobiles?

Which of the following BEST gives the meaning of the term business cycle?

Which of the following statements about inflation is TRUE?

How would supply affect the aggregate output of an economy?

The global business environment encompasses many international forces that influence the outcomes of companies doing business in foreign countries.Which of the following scenarios would BEST count as evidence of globalization?

The CEOs of Company A and B are investigating expansion into new markets,which will provide greater trade volume.Which scenario describes an economic environment that is most suitable for an importing-exporting opportunity?

Which of the following would be included in the gross domestic product of Brazil?

Robert has established a start-up business manufacturing a range of outdoor wear for the leisure market.Which possible scenario would BEST show that Robert is positioning his business for the global business market?

Which is the BEST explanation for why standard of living only increases through productivity?

Which of the following BEST describes nominal GDP?

Which of the following BEST describes purchasing power parity?

Which of the following BEST describes what the consumer price index is used to indicate?

Which of the following is a likely cause of increased prices for products,decreased purchasing power,and decreased profit margins?

Which of the following BEST gives the meaning of the term gross national product?