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What could be the effects of a good training program for factory employees?
Increase Productivity
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What is the key component of a free enterprise system?
Profits
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What does the circular flow of economic activity describe?
Economic independence between businesses and households.
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What is one major goal of the US economy?
Freedom to operate a business.
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Personal freedom to own property, start a business, and make economic decisions characterizes what type of economic system?
Capitalistic
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The skills and knowledge gained by students in school and through work study are referred to as?
Human Capital
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The inability of a store to get the quantity of a product that it can sell indicates an increase in what?
Demand
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Name two types of business organizations that have unlimited liability?
Sole Proprietorship and Partnerships
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When the US government purchases a submarine form a company, the government has made a major transaction in what type of market?
Product
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Sharon decided to open a dry cleaning business. She borrowed some money from her sister and took a loan from a bank. She hired one helper. What is a major disadvantage of her business?
Unlimited Liability
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What is true about a shareholder in a corporation?
The shareholder is part owner
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In a free market what will happen to the supply to typists if as the wages paid to typists increase?
More people will seek jobs as typists.
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What is the result when the government tax revenues exceed spending?
Surplus in Federal Budget
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When citizens demand more government services, public officials must consider a lot of things except the campaign strategy for next year?
A lot of things except campaign strategy
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When there is an increase in the market supply and decrease in demand of certain product what will be the affect upon future production?
It will slow down
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What can cause the price of a companies stock to decrease?
More people wanted to sell their stock
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What is a disadvantage of buying on credit?
People spend money they dont have
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What is the most important factor affecting consumer spending?
Average Consumer Income
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Define Productivity.
Efficient output of goods and services
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Because resources are limited and wants are unlimited people must do what?
Decide how to use their resources efficiently
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What are wages most influenced by in a market economy?
the productivity of labor
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What is the name for an economic system in which government makes economic decisions?
Command
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Where there is free competition the market works mainly according to what?
The laws of supply and demand
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What are the factors of production?
Land, Labor, Capital, and Entrepreneurship
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When a city gives up the building of a new park for the improvement od schools it is called an:
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What influences consumers to pay a higher price foe a product or find a substitute?
Scarcity
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What is another name for factors of production?
Productive Resources
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Ford can produce more cars per year now than in 1940 because why?
Technology Advances
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Define voluntary exchange.
People freely engage in market transactions
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List the productive resources.
Land, Labor, Capital, and Entrepreneurship
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Sharon decided to open a dry cleaning business. She borrowed some money from her sister and took a loan from a ban. She hired one helper. Whats one major disadvantage of her business?
Unlimited Liability
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What is an advantage of a corporation?
Limited Liability
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What types of business organizations are you likely to use if you want complete control and exclusive rights to all profits?
Sole Proprietorship
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Sometimes a company agrees, for a fee, to let another person or group set up an enterprise that uses the original companys name to sell goods and services. What type of organization is this?
Franchise
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What is a major advantage of a corporation?
Limited Liability
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Name three disadvantages of a corporation
Double taxation, less direct control, difficult to start
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What is one disadvantage of US corporations opening divisions in developing countries?
Increased trade barriers
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What is the principle incentive for taking risks to be in business?
Profits
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Why do doctors typically earn more than farmers?
Because doctors are relatively scarcer give the demand for their services
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Because US citizens dont save a large portion of their income, what do businesses wishing to borrow capital tend to do?
Look for forging lenders
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What will happen when a tariff is imposed on a good?
The price for the imported good will rise
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How would American farmers benefit from beef exports to Europe?
Larger markets for their product
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What types of taxes are regressive?
Sales tax on food
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What investment types involve the least amount of risk?
Saving account
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In the American economy, the goal of economic equality is most connected with?
giving participants a fair chance to succeed
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What causes a price decrease in a corporations stock?
more people want to sell their stock
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In a free market what is the most profitable way to set prices?
set the prices above the production cost but below the other supplier
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A business which has a local owner who pays royalties to a national corporation for support, marketing, and assistance is called what?
franchise
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What is the oldest form of business organization and the most common?
sole proprietorship
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List advantages of a corporation.
Has limited liability
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What markets are where productive resources are sold?
product market
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When a choice has to be made between two or more selections, what is lost or trade off is called what?
opportunity cost
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What basic economic problem do both high-income and low-income nations have?
Scarcity of resources
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Define Specialization.
A technic use to increase the amount of goods produced in a company
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What group is most likely to benefit from a tariff imposed by the USA on imported fruit?
Domestic orange growers (farmers)
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The idea that producers make goods that consumers like are willing to pay for is a principle of what economic system?
Market
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What occurs in market economy when prices rise?
• Suppliers will increase what they produce• Potential suppliers will be attracted to the market• Total output will increase
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What are the differences between stocks and bonds?
Unlike bonds stocks give the holder part company ownership
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Which business form can change its ownership through stock transfers?
• Corporation
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Why is investing in the stock market risky?
• There is no guarantee that stock value will rise
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What is the most likely reason that sugar farming in the US is dominated by a limited number of large corporations?
• Sugar industry has not been profitable enough to attracts small independent invertors
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How do inventors earn profits by purchasing and selling stock?
By selling stocks after they increase in value
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What is the primary purpose of NAFTA (North American Free Trade Agreement)?
To reduce trade barriers among the US Canada and Mexico
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Why do many consumers use credit?
It enables a persons to buy now and pay later
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If Billy took out a $5000 dollar loan at a simple interest rate of 9% what would be the principle and interest balance in 5 years?
$7250
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What is one disadvantage of US corporations opening divisions in developing countries?
Nations can increase trade barriers
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In the 1980s and 1990s, our country experienced an unfavorable balance of trade with Asian countries, which sell us more electronic goods than we sell to them. When such trade imbalances occur, what has happened?
The government has lowered minimum wage so the US products can be made as cheep as domestic goods
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A newspaper reports, COFEE GROWERS MONOPOLY BROKEN INTO SEVERAL COMPETINGFIRMS. If this true, we would expect the coffee-growing industry to
Increase output and decrease prices
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Why do some economists argue that the minimum wage should not be increased?
Because firms will be obliged to lay off workers
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Give an example of structure unemployment in an economy.
Someone whose jobs skills dont match the economys needs
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Armed is a skilled carpenter who lives in Minnesota. He builds homes form April to November. What has the greatest impact on why Armands company shuts down for the winter?
Extreme weather conditions
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What determines the division of the economys output among groups and individuals in a market system?
incomes of individuals
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When a company attempts to control all of the business in a particular area, why would the government intervene?
Because the situation would create a monopoly
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Give an example of a capital outflow form the US economy.
The US sends wheat to Europe
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Market size can be affected by
• Decision of private businesses, government policies, and new technology
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What will happen to U.S. imports to Japan if the dollar becomes expensive in terms of Japanese yen? Is this a relevant question for the study of macroeconomics?
Yes
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Give an example of the use of technology to increase productivity.
Using robots in the automobile industry
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In which economic system does the government own the means of production?
Command
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Define Productivity.
Efficient output of goods and services
-
Describe investment in human capital.
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Why is investing in stock risky?
Because there is no guarantee the stock price will rise
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What is an important factor for economic growth?
Availability of resources
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As more units of a product are consumed, the satisfaction from each additional unit
Decreases
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Define Corporation.
Although many people are involved, it is treated by the law as one person
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In a market economy an increase in supply results in
• A lower market price for the good
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Define Non-Profit.
A type of business whose goal is to benefit society
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Define Sole-Proprietorship.
Owner receives all the profit, also takes all the risks
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Timothy works for many years at a highly successful computer corporation. After a while he decides to lave the company and open his own clothing store, To raise capital for the store, Timothy sells all the vested stock he acquired while working a the computer corporation. The clothing store can be considered
• A Sole Proprietorship
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Define Social Security.
• A financial program that provides monthly payment to people who can’t work
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Define Fiscal Policy.
• Government set of financial policies on taxation and spending
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An increase in real interest rates provides an incentive for people to take what economic action?
To save more and borrow less
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If the US dollar gains strength against the Chinese Yen, we would expect a merchandise trade_________________?
• Increase
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If there is an increase in the use of consumer credit, _______________will occur?
Economic Expansion
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Define Commodity Money.
• Using gold to make purchases
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Define Favorable Balance of Trade.
Exporting more than imported
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Loans extend for longer periods of time often involve higher interest rates in order to
Compensate the lender for greater risk
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Example of Progressive Tax.
Individual income tax
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How do owners of common stock benefit financially?
Through dividends and capital gains
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