Archives: Quiz

Which of the following is an example of a negative externality? Suppose Mike and Renee are the only two people in a very simple economy and that they produce and exchange two goods, soda and pretzels. Which of the following […]

Everything else equal, as increase in investment in physical and human capital will mean lower living standards in the present, because the opportunity cost of investment is foregone consumer goods. Which of the following is not included in the M1 […]

Suppose a major computer virus struck the nation’s computers and all hard drives were erased. What would happen in the labor market? a. The real wage would increase and so would employment. b. The real wage would not change, but […]

Assuming the economy was in equilibrium, use the following information to determine the total amount of funds demanded in the loanable funds market. a. $0.3 trillion b. $2.2 trillion c. $2.5 trillion d. $3.0 trillion e. $5.2 trillion What could […]

When money is used to compare the costs of different goods and services, it is functioning as a. a unit of account b. a means of payment c. fiat money d. a store of wealth e. legal tender Which of […]

For the average living standard of a nation to rise, the only thing that needs to happen is for nominal GDP to increase faster than the price level. A measure that economists use in order to keep track of employment […]

Figure 4-1 shows the supply and demand for socks. If a price floor of $10 per pair is imposed by the government, the number of pairs actually purchased will be Patents allow manufacturers to block the entry of new firms […]

Refer to Figure 8-1. According to the graph, the equilibrium real hourly wage and quantity of labor employed, respectively, are a. $10, 110 million workers b. $8, 130 million workers c. $8, 150 million workers d. $6, 150 million workers […]

Objections to free trade a. arise because trade harms everyone b. arise when some groups within a nation are harmed by trade c. arise because importers and exporters are often the same people d. are inconsistent with economic rationality e. […]

The labor demand curve slopes downward because a. firms wish to hire fewer workers as the wage rate increases b. households wish to hire fewer workers as the wage rate decreases c. firms wish to hire more workers as the […]

The vertical intercept of the consumption function measures autonomous consumption. It represents the combined impact on consumption spending of all factors other than disposable income. If businesses become very pessimistic and reduce spending, which of the following is the most […]

What fraction of the labor force is cyclically unemployed when structural unemployment is 2 percent, frictional unemployment is 2.5 percent, seasonal unemployment is 1 percent, and the overall unemployment rate is 8 percent? a. 2.5 percent b. 13.5 percent c. […]

The Fed issues bonds to raise money and uses it to finance the U.S. government’s budget deficit. A less elastic demand for a good could result from Answer: E If a variable other than the price level changes, the AD […]

In the short run, those who are hurt by the minimum wage are Which of the following is a reason why a particular job may pay a higher-than-average wage rate? Answer: D An appreciating currency is always a sign of […]

A firm’s labor demand curve is derived from the supply of the goods and services it produces. If the Federal Reserve sells a $2,000 bond to a bond dealer who pays with a check written on an account at Second […]

If there is a sudden increase in government spending, which of the following should the Fed do if it wants to keep the price level steady? a. Do nothing, since the self-correcting mechanism will adjust the economy b. Sell bonds […]

Average variable cost is According to the classical model, if the government wanted to increase employment, it could do so by increasing its own spending. That would lead firms to produce more output, for which they would need to hire […]

Refer to Figure 8-2. The economy is at full employment if a. the quantity of labor supplied exceeds the quantity demanded b. the quantity of labor demanded exceeds the quantity supplied c. 130 million workers are employed d. the real […]

What is true of both expansions and recessions? a. There is a poorer than normal match between workers and their jobs. b. The labor market clears. c. The economy operates at its potential output. d. Cyclical unemployment is zero. e. […]

Economists assume that the goal of the firm is to Productivity efficiency in saving lives Answer: D According to the Coase Theorem Answer: B The rise in equilibrium GDP shifts the money demand curve to the left. Answer: B An […]

Road traffic A natural monopoly exists when Answer: C The federal funds rate is closely tied to many interest rates on many types of loans. Which one is the exception? a. Auto loan rates b. Adjustable rate mortgages c. Adjustable […]

For any value of the MPC (marginal propensity to consume), the formula for the expenditure multiplier is a. 1/(1 – MPC) b. 1/MPC c. 1/(MPC – 1) d. (1 + MPC)/MPC e. 1/(1 + MPC) A nation’s comparative advantage a. […]

If a firm is not forced to take account of a negative externality it creates, it will produce the quantity at which If a price decrease results in no change in seller’s total revenue then Answer: E The national debt […]

Assume that Spain can produce a commodity using fewer resources than any other country. Spain will export this commodity even if other countries have a lower opportunity cost of producing it. Suppose the Federal Reserve wants to increase the money […]

In the classical model, government purchases or tax cuts are appropriate policies to raise GDP. The free rider problem occurs when Answer: A Less-risky professions tend to enjoy compensating wage differentials. Answer: B A contract Answer: B One factor that […]

Money is a. an asset that is widely accepted as a means of payment in the economy b. any asset that is convertible into cash c. an asset that is backed by a precious metal such as gold or silver […]

What is the difference between an intermediate good and a final good? a. Final goods are adjusted for depreciation, intermediate goods are not. b. Final goods are adjusted for changes in the value of the dollar, intermediate goods are not. […]

When the U.S. government runs a deficit, it usually does the following: a. It buys government bonds from the public b. It asks the Treasury Department to print money to pay for the deficit c. It sells new government bonds […]

The difference between microeconomics and macroeconomics is that a. microeconomics deals with only small numbers while macroeconomics is always dealing with numbers in the billions and trillions b. microeconomics deals with the economy as a whole while macroeconomics deals with […]

If the CPI overstates the true rate of inflation, then a. the economy will grow more slowly than if inflation was measured accurately b. the economy will grow more rapidly than if inflation was measured accurately c. social security payments […]

In an economy without international trade, we can expect total output to equal a. consumption spending plus investment spending plus government purchases b. consumption spending minus leakages c. the sum of leakages and injections d. consumption spending plus investment spending […]

Suppose that the government reduces income taxes. Which of the following is the most likely result? a. An increase in human capital investment b. A decrease in consumption c. An increase in government spending d. A decrease in government spending […]

Which of the following is a role of a financial intermediary? a. Increasing risk to lenders b. Combining a large number of loans of small borrowers into a small number of deposits of large savers c. Decreasing liquidity for savers […]

Corporate governance mechanisms are designed to ensure that top managers make strategic decisions that best serve the interests of the entire group of stakeholders. a. True b. False According to the five forces model, an attractive industry would have all […]

Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and provides them with technical and financial assistance to do so. It also promotes longer-term contracts with suppliers and enables engineers in the supplier […]

All of the following were results of Citigroup’s acquisition strategy EXCEPT (Chapter 7 Strategic Focus) a. overly diversified. b. a much smaller, though global, business financial service firm. c. too large. d. lacking in synergy. Michael Porter’s Determinants of National […]

The risk for firms that follow the unrelated diversification strategy in developed economies is that a. external investors tend to dump the stocks of conglomerates during economic downturns. b. conglomerates are typically owned by one powerful entrepreneur and do not […]

P&G’s acquisition of Gillette reshaped its competitive scope by giving P&G a stronger presence in some products for whom men are the target market. a. True b. False One of the potential problems associated with acquisitions is that the additional […]

The profit pool is the a. pool of assets that is distributed to investors. b. total profits earned in an industry along all points of the value chain. c. profits that are accrued when a firm earns above-average returns. d. […]

Firms that continually change their strategic context and strategies because of the continuous changes in the current competitive landscape are in danger of losing sight of their main competitive strengths. a. True b. False In the United States, the fundamental […]

Scandals at Enron, WorldCom, and HealthSouth illustrate the negative effects of poor ethical behavior on a firm’s efforts to satisfy stakeholders. a. True b. False Profit pools allow strategic leaders to predict the outcomes of their decisions before taking efforts […]

Both _______ and ________ affect the awareness and motivation of a firm to undertake actions and responses. a. first-mover advantages; corporate size b. market commonality; resource similarity c. management capabilities; competitive analysis d. speed of management decisions; management actions Compared […]

In general, cross-border alliances are more _______ and _______ than domestic alliances, especially in emerging markets. a. uncertainty reducing; diversifying b. complex; risky c. highly leveraged; tightly monitored d. flexible; trust-based In an SBU structure, _______ is/are evaluated using strategic […]

The centralized structure used by Borders (Chapter 11 Opening Case) did not provide information from local stores that might have been useful in changing its technology strategy more quickly than it did. This example illustrates the effect of structure on […]

A company pursuing the differentiation or focused differentiation strategy would tend to a. build economies of scale and efficient operations. b. develop and maintain cost-effective MIS operations. c. develop flexible systems that allow rapid response to customers’ changing needs. d. […]

Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees’ behavior? a. Effectively Managing the Firm’s Resource Portfolio. b. Determining Strategic Direction. c. Regulating and Controlling Employees. d. […]

CaseScenario3:Bunnywac. Bunnywac is a global producer and seller of batteries for consumer electronics products (radios, flashlights, toys, etc.), and competes primarily with its larger rivals by providing battery products equal in performance at a lower price. The worldwide battery industry […]

Creating customer value is the source of the firm’s potential to earn above-average returns. a. True b. False Actions that effective strategic leaders can take to develop an ethical organizational culture include all of the following EXCEPT a. relying on […]

The cooperative form is an M-form structure in which horizontal integration is used to bring about interdivisional cooperation. a. True b. False Effective use of the generic business strategies allows the firm to favorably position itself relative to the five […]

_______ is an example of a capability that is based in the functional area of distribution. a. Effective use of logistics management techniques b. Effective control of inventories through point-of-purchase data collection c. Effective organizational structure d. Product and design […]