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Exam 2: How Economic Issues Affect Business

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Question 21

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The "invisible hand" in Adam Smith's theory refers to the efforts of the government to control the operation of markets.

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Question 22

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The study of how society employs resources to produce goods and services and distribute them for consumption among various competing groups and individuals is known as:

A) human resource management
B) finance
C) marketing
D) economics

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Question 23

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The greed of businesspeople represents the greatest danger to the operation of a free market system.

The government of Ruritania has implemented many programs that promote equality,but has become concerned about the very slow rate of growth that has plagued the national economy for many years.In order to address this problem,the government is likely to:

Jorge Martinez is a hard working entrepreneur who operated a successful business in his home country of Margintina for many years.Recently,however,he immigrated to Canada and applied for Canadian citizenship."In Margintina,tax rates were very high",Jorge complained."The government used the taxes I paid to finance all sorts of social programs to help the less fortunate.While this is a noble goal,it has really undermined the profit incentive of individuals such as myself.I really feel that these high taxes have stifled economic growth".Jorge's comments illustrate the reason many socialist countries are experiencing a(n) :

A(n) __________ exists when the entire supply of a good is controlled by a single seller.

Market price is determined only by supply.

___________ studies the operation of a nation's economy as a whole.

Most countries throughout the world can be classified as either purely capitalist or purely socialist.

Frictional unemployment occurs because the economy is experiencing a recession.

Under capitalism:

In the long run,the actual market price tends to adjust toward the equilibrium price.

Like most nations,Canada has a mixed economy.

Countries that wish to avoid shortages and surpluses of goods should adopt a communist economic system.

The market price of apples is currently rising.In a free-market economy,the most likely explanation of this price change is that:

Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain.

Maureen is the office manager of a service company.She has recently spent a lot of money installing new computers and office equipment that will be used by the workers in her office as they provide services to clients.If Maureen's company is like most service companies,she will probably see a big jump in the productivity figures reported for workers in her office.

Samir,a friend of yours,has called for more government regulation of business."After all",he says,"businesspeople are out to make a profit,not to create jobs or serve their customers.The government must pass more laws to require businesses to take the interests of consumers and workers into account".From these comments,it is clear that Samir:

When prices are free to adjust over time,the market price of a good tends to:

Which of the following statements would a follower of Adam Smith be most likely to make?