202. When a business distributes profits to business owners, these profits become household income and are removed
from the circular flow of the economy.
a. True
b. False
203. The services that government provides would not be produced by private business firms or would be produced only
for those who could afford them.
a. True
b. False
204. The government uses taxes to purchase resources and products required to provide services.
a. True
b. False
205. Command economies include capitalism, socialism, and communism.
a. True
b. False
206. In a socialist economy, the key industries are owned and controlled by the government.
a. True
b. False
207. Karl Marx is known as the father of communism.
a. True
b. False
208. Productivity is the total output per worker per year.
a. True
b. False
209. Reducing costs and enabling employees to work more efficiently are at the core of all attempts to improve
productivity.
a. True
b. False
210. Fewer workers producing more goods and services can lead to higher overall employment rates.
a. True
b. False
211. Gross domestic product is a loose, subjective measure of how well a society can satisfy its people through goods
and services.
a. True
b. False
212. The terms real gross domestic product and gross domestic product can be used interchangeably.
a. True
b. False
213. Real gross domestic product is an economic measure that has been adjusted for price increases of goods and
services during a given period of time.
a. True
b. False
214. Inflation is a general rise in the level of prices experienced by people in a nation.
a. True
b. False
215. Deflation is a general decrease in the level of prices.
a. True
b. False
216. The consumer price index (CPI) and the producer price index (PPI) actually measure the same economic factors.
a. True
b. False
217. The recurrence of periods of growth and recession in a nation’s economic activity is a depression.
a. True
b. False
218. During the peak or prosperity stage of a nation’s business cycle, businesses are reluctant to offer new products and
services.
a. True
b. False
219. Economists define a recession as two or more consecutive three-month periods of decline in a country’s gross
domestic product.
a. True
b. False
220. A depression is a severe recession that lasts longer than a recession.
a. True
b. False
221. Monetary policies exert the government’s influence on the amount of savings and expenditures by altering the tax
structure and changing the levels of government spending.
a. True
b. False
222. The national debt in the United States is about $1.1 trillion.
a. True
b. False
223. Basically, there are four recognized degrees of competition: perfect competition, monopolistic competition, oligopoly,
and monopoly.
a. True
b. False
224. Perfect competition is the market situation in which a product has many buyers and sellers, and no single buyer or
seller is powerful enough to affect a product’s price.
a. True
b. False
225. As the price of a product increases, the amount of the product that a producer is willing to supply increases.
a. True
b. False
226. As the price of a product increases, the amount of the product that consumers purchase increases.
a. True
b. False
227. The equilibrium or market price exists when the supply of a product exceeds the amount that consumers are willing
to purchase.
a. True
b. False
228. The products available in a monopolistically competitive market are similar in nature and are intended to satisfy the
same need.
a. True
b. False
229. An oligopoly is a market situation in which there is one producer and a few large buyers.
a. True
b. False
230. In a monopoly situation, there is no close substitute for the product or service.
a. True
b. False
231. A copyright of a product exists indefinitely.
a. True
b. False
232. A legal monopoly is often referred to as a natural monopoly.
a. True
b. False
233. A factory system of manufacturing involves the separation of a manufacturing process into separate tasks and the
assignment of different tasks to different employees.
a. True
b. False
234. Specialization is meant to increase the efficiency of industrial workers.
a. True
b. False
235. Typical service businesses in the U.S. include real estate, repair companies, and restaurants.
a. True
b. False
236. Because of technology and the Internet, the use of information by business managers has increased.
a. True
b. False
237. During the 1930s, government became deeply involved in business for the first time.
a. True
b. False
238. According to global experts, India is the fastest-growing economy in the world.
a. True
b. False