Question 1

If the Fed is concerned with a potential recession, what course of action should it take?

Accepted Answer

D) Buying securities and lowering the discount rate increases the money supply, which encourages spending.

Question 2

Which of the following statements about inflation is True?

Accepted Answer

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

Question 3

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

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 4

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?

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 5

The Fed has opted to buy securities and lower the reserve requirement. What will most likely happen as a result of this course of action?

Accepted Answer

A) Buying securities and lowering the reserve requirement will increase the money supply, which in turn stimulates the economy.

Question 6

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?

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 7

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

Accepted Answer

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

Question 8

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

Accepted Answer

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

Question 9

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?

Accepted Answer

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

Question 10

Which of the following best describes nominal GDP?

Accepted Answer

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

Question 11

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

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 12

What is a chief goal of an economic system?

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 13

How would supply affect the aggregate output of an economy?

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 14

Which of the following best describes economic stability?

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 15

Which course of action should the Federal Reserve take if it wishes to reduce inflation and curb consumer spending?

Accepted Answer

B) Selling securities reduces the money supply, thus curbing consumer spending and bringing prices down.

Question 16

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

Accepted Answer

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

Question 17

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

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 18

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?

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 19

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

Accepted Answer

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

Question 20

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?

Accepted Answer

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

Quiz 1: The Us Business Environment