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Exam 1: Exploring the World of Business and Economics

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Question 31

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The factors of production include natural resources, labor, government assistance, and entrepreneurship.

A) True
B) False

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Question 32

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The consumer price index (CPI)

A) is a quarterly index that producers receive for their finished goods.
B) measures increases or decreases in the level of worker performance.
C) is the price of metals, lumber, and raw materials.
D) measures prices paid during periods of deflations.
E) is a monthly index that tracks the prices paid by consumers.

F) A) and E)
G) B) and E)

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Question 33

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Basically, there are four recognized degrees of competition: perfect competition, monopolistic competition, oligopoly, and monopoly.

The Federal Reserve uses ____ when it lowers the interest rate charged to banks on short-term loans.

Why do we say that the U.S. economy is a mixed economy?

____ is a necessary and extremely important by-product of free enterprise.

The terms real gross domestic product and gross domestic product can be used interchangeably.

How the price of homes affects the number of homes built and sold would be an economic issue studied in a Macroeconomics course.

Which of the following represents the biggest customer of American business?

During the peak or prosperity stage of a nation's business cycle, businesses are reluctant to offer new products and services.

Explain how the basic economic questions are answered in capitalistic and command economies.

Andrew Cooper decides to become a part owner of a corporation. As a part owner, he expects to receive a profit as payment because he has assumed the risk of

Which of the following is uncharacteristic of a socialist economy?

In the early 1980s, David Jimenez, a corporate finance manager, was faced with which of the following problems?

Command economies include capitalism, socialism, and communism.

Karl Marx is known as the father of communism.

Satellite Communications Jonathan worked for Satellite Communications for twenty years. In the time that he worked there, he learned a lot about the company and how it operated. The company met its sales and revenue goals every year. However, most of the employees had similar educational and cultural backgrounds. He believed that the company could do much better if it cultivated an environment that promoted many different ideas. Additionally, Satellite Communications was mostly focused on how much revenue it earned in a given year. Jonathan felt that the most important goal should be to satisfy customers. He believed financial success would result from focusing on customers. After a lot of consideration, Jonathan decided to open his own business called Universal Communications and hire employees that reflected a more diverse customer base. He was happy to have this opportunity because it was a dream that he had always had. He had always wanted to make his own decisions about what his company would produce and how. The only aspect of the business he was unsure of was pricing, yet he knew this would be important for his ultimate success. -Refer to Satellite Communications. Jonathan is operating in a ____ because he has the opportunity to decide what and how to do things.

One of Samuel Slater's contributions to the development of American business was the use of

____ is the study of how wealth is created and distributed.

In perfect competition, who sets the price of a product?