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Introduction to Economics quiz #2

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  • Which of these effects of expansionary spending would a government most want to avoid?
    A government would want to avoid excessive inflation.
  • What are the three basic economic questions?
    What to produce, how to produce, and for whom to produce.
  • What is correct regarding the role of the small-business sector in the United States?
    Small businesses create many jobs and drive innovation.
  • How do money and currency relate?
    Currency is a physical form of money used as a medium of exchange.
  • An increase in inventories will increase which component of gross domestic product?
    An increase in inventories raises investment in GDP calculations.
  • What types of goods or services are found in the product market?
    Goods and services are found in the product market.
  • What does an economic system determine?
    An economic system determines resource allocation and production methods.
  • What are some costs associated with cyclical unemployment?
    Lost income and reduced economic output are costs of cyclical unemployment.
  • What does it mean to say that money is divisible?
    Money can be broken into smaller units for transactions.
  • What is an example of fiscal policy?
    Government changing tax rates is an example of fiscal policy.
  • What famous book did Adam Smith write?
    Adam Smith wrote 'The Wealth of Nations.'
  • What is the purpose of Michael Porter's five forces model?
    Porter's model helps firms analyze industry competition.
  • What is the first step of the consumer decision making process?
    Recognizing a need is the first step.
  • What is the definition of the term commodity?
    A commodity is a basic good that is interchangeable with others of its kind.
  • Who is most likely to benefit from an economy of scale?
    Large firms benefit from economies of scale.
  • Why would a business want to make sure that its supply chain is diverse?
    A diverse supply chain reduces risk and increases reliability.
  • Why do people invest in human capital?
    Investing in human capital increases productivity and earnings.
  • The public power company is an example of which market structure?
    A public power company is typically a monopoly.
  • What is an example of a nonrenewable resource?
    Coal is a nonrenewable resource.
  • What is omitted in a barter transaction?
    Money is omitted in a barter transaction.
  • Which is most useful in understanding how the cost of a college education has risen?
    Examining inflation rates is most useful.
  • What are two characteristics of mixed economies?
    Mixed economies combine private enterprise with government regulation.
  • What economic function does money most likely represent?
    Money is a medium of exchange.
  • Which is the definition of holding cost in the EOQ model?
    Holding cost is the expense of storing unsold inventory.
  • What does a mixed-market economy allow consumers to do?
    Consumers can make choices while the government regulates some activities.
  • What is the difference between the consumer market and the business market?
    Consumer markets sell to individuals; business markets sell to other businesses.
  • What is an intermediate good?
    An intermediate good is used as input in the production of final goods.
  • Why does a firm need to grow?
    Growth can increase market share and profitability.
  • What is an example of a non-price determinant of demand?
    Consumer income is a non-price determinant of demand.
  • Which explains why Romans were upset by the emperor’s decision to create more coins?
    Creating more coins led to inflation and reduced the value of money.
  • What are the five basic channels for consumer goods?
    Direct, retailer, wholesaler, agent, and internet channels.
  • Which of these best describes prices in a market economy?
    Prices are determined by supply and demand.
  • When marketers seek to evaluate market attractiveness, what are they assessing?
    They assess potential demand, competition, and profitability.
  • What is an example of a microeconomic question?
    How does a price change affect consumer demand for a product?
  • What is the purpose of a protective tariff?
    A protective tariff shields domestic industries from foreign competition.
  • What are examples of consumer durable goods?
    Cars and refrigerators are consumer durable goods.
  • What role do entrepreneurs play in economics? (Everfi)
    Entrepreneurs create businesses, drive innovation, and contribute to economic growth.
  • What is the main reason a business operates?
    The main reason is to earn a profit.
  • What is a basic characteristic of all economic systems?
    All economic systems must allocate scarce resources.
  • What kind of economy does China have: developed, emerging, developing, or undeveloped?
    China has an emerging economy.