Download DAVIS D70 FULL FINAL EXAM PRACTICE: Economics and Market Systems and more Exams Finance in PDF only on Docsity!
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- Which of the following is most likely a true statement about the global economy since the 1980s?
A) Socialist governments are intervening more in global exchanges.
B) Wealthy countries are exercising total control over emerging markets.
C) Developing countries are losing growing shares of their foreign-exchange reserves.
D) Emerging economies are adopting the principles and practices of free markets.
Correct answer✓✓D) Emerging economies are adopting the principles and practices of free markets.
2.) Kyle, an international manager for Apex Industries, has been given the task of analyzing the economies of three different emerging countries for the firm's potential expansion. Which of the following questions is LEAST relevant to Kyle's assignment?
A) How much freedom will Apex have to run its foreign operations?
B) What are the current economic policies related to development?
C) What is the likelihood that Apex can fill manufacturing positions with locals?
D) What factors in the country drive or hinder economic change?
Correct answer✓✓C) What is the likelihood that Apex can fill manufacturing positions with locals?
3.) Managers at Morrison Manufacturing are considering expanding the firm's production overseas and want to ensure that the firm is located in a country with a high degree of economic freedom. Presently, which of the following locations would most likely offer Morrison the highest economic freedom?
A) Mexico
B) Hong Kong
C) Venezuela
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D) North Korea
Correct answer✓✓B) Hong Kong
4 ) Since the late 1980s, the growing emergence of freer markets has been powered by the realization that ________.
A) economic growth is directly related to economic freedom
B) economic growth has a limited effect on the standard of living
C) adoption of free market principles contributes to social injustices
D) centrally planned economies are best designed to deliver progress
Correct answer✓✓A) economic growth is directly related to economic freedom
5.) The Economic Freedom Index indicates that economic freedom is positively correlated with all of the following EXCEPT ________.
A) life expectancy
B) literacy
C) environmental sustainability
D) diversity
Correct answer✓✓D) diversity
- The recent global credit crisis has interrupted the trend of national economies ________.
A) rapidly adopting the command market model
B) steadily adopting the free market model
C) moving from the mixed to the command model
D) turning away from the mixed model
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- Communism primarily relies on a system of ________.
A) private business ownership
B) competitive pricing and marketing
C) market-generated supply and demand
D) government controlled economic activity
Correct answer✓✓D) government controlled economic activity
- In a market economy, the patterns of resource allocation are most directly influenced by ________.
A) government administrators who monitor the equilibrium of supply and demand
B) industry coalitions that strive to improve the efficiency of production and service
C) consumer group alliances that negotiate with firms to improve product quality
D) consumers who "vote" by their personal decision to buy or not buy products
Correct answer✓✓D) consumers who "vote" by their personal decision to buy or not buy products
- A system in which individuals, rather than the government, make the majority of economic decisions is commonly referred to as a ________.
A) command economy
B) market economy
C) private economy
D) mixed economy
Correct answer✓✓B) market economy
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- Market economies are primarily characterized by ________.
A) formal cooperation among government, companies, and workers to achieve stable growth
B) heavy government spending and high taxation to pay for a range of social services
C) minimal governmental participation
D) restricted consumer powers
Correct answer✓✓C) minimal governmental participation
- In a command economy, the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold are planned by ________.
A) government officials
B) private industries
C) individual entrepreneurs
D) local trade associations
Correct answer✓✓A) government officials
- In a command economy, ________.
A) businesses and consumers are assumed to be the best judges of how resources should be allocated
B) the government sets goals and determines the price and quantity of what is produced
C) different economic sectors coordinate the activities of the federal government
D) each enterprise sets its goals before making reports to the central government
Correct answer✓✓B) the government sets goals and determines the price and quantity of what is produced
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- Some countries opt for a mixed economic system in the belief that although an economic system should aspire to achieve the efficiencies created by free markets, it must also support policies to ________.
A) destabilize poverty rates
B) achieve low unemployment
C) restrict economic growth
D) inequitably distribute wealth
Correct answer✓✓B) achieve low unemployment
- In the Economic Freedom Index, ________ exhibit high economic freedom whereas ________ exhibit little to no economic freedom.
A) mixed economies; market economies
B) command economies; market economies
C) market economies; command economies
D) centrally planned economies; command economies
Correct answer✓✓C) market economies; command economies
- Which of the following countries is the best example of a mixed economic model?
A) United States
B) France
C) United Kingdom
D) Australia
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Correct answer✓✓B) France
- Country X is in the process of transforming from a command economy to a market economy. This process most likely involves ________.
A) standardized procedures implemented by the state
B) high economic growth rates for the long-term
C) privatization of many factors of production
D) violent political and legal upheaval
Correct answer✓✓C) privatization of many factors of production
- In a country that practices state capitalism, all of the following are most likely to be handled by the state EXCEPT ________.
A) leveraging control of the financial system
B) developing national corporations
C) supporting the local activities of foreign competitors
D) systematically managing trade relations
Correct answer✓✓C) supporting the local activities of foreign competitors
- Gross national income (GNI), the broadest measure of economic activity for a country, is defined as the ________.
A) total of all consumption and investment that takes place in a national economy
B) income generated in one country, regardless of who owns the productive assets
C) total of all economic activity in one country less services, such as government administration, health services, and education
D) income generated by both total domestic production and the international production activities of national companies
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D) degree of human development
Correct answer✓✓B) GNI growth rate
- Eileen, a manager at an international restaurant chain, wants to know if it will be most cost effective to buy 1, pounds of sugar in Country X or in Country Y using U.S. dollars. Which of the following is Eileen most likely trying to determine?
A) purchasing power parity
B) economic growth rate
C) gross domestic income
D) gross national product
Correct answer✓✓A) purchasing power parity
- The United Nations' ________ measures life expectancy, educational attainment, and the standard of living in a given country.
A) Human Development Index
B) Emerging Economic Stability
C) Genuine Progress Indicator
D) Net National Product
Correct answer✓✓A) Human Development Index
- The Human Development Index measures the average achievements in a country on three basic dimensions of human development, including ________.
A) promotion of cultural values
B) quantity of free time
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C) extent of knowledge
D) sustainability
Correct answer✓✓C) extent of knowledge
- The ________ starts with the same accounting framework used to calculate GDP but then adjusts for values assigned to environmental quality, population health, livelihood security, equity, free time, and educational attainment.
A) Gross National Index
B) Net National Product
C) Genuine Progress Indicator
D) Human Development Index
Correct answer✓✓C) Genuine Progress Indicator
- ________ is a general, sustained rise in prices measured against a standard level of purchasing power.
A) Deflation
B) Inflation
C) Expansion
D) Reflation
Correct answer✓✓B) Inflation
- What is the most likely reason that a universal scheme for assessing the performance and potential of a country's economic environment does NOT exist?
A) difficulties of identifying a definitive set of predictive economic indicators
B) a lack of reliable economic data from most developed economies
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D) Deflation
Correct answer✓✓D) Deflation
- In the U.S., the unemployment rate indicates the ________.
A) percentage of the labor force that wants to work full-time but can only find part-time employment
B) number of people who have stopped looking for work because full-time jobs are unavailable
C) percentage of unemployed workers seeking paid work relative to the total labor force
D) number of workers eligible for government services and unemployment benefits
Correct answer✓✓C) percentage of unemployed workers seeking paid work relative to the total labor force
- The so-called "misery index" is the sum of a country's ________.
A) foreign and national debt
B) inflation and unemployment rates
C) unemployment level and total debt
D) trade deficit and long-term inflation rate
Correct answer✓✓B) inflation and unemployment rates
- A government increases its internal debt for all of the following reasons EXCEPT which of the following reasons EXCEPT ________.
A) The tax system is so poorly run that the government cannot collect all the revenues it expects.
B) Government costs such as security and social programs exceed total tax revenues.
C) The government borrows money from international financial institutions.
D) State-owned enterprises run large deficits.
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Correct answer✓✓C) The government borrows money from international financial institutions.
- Country X has a significant amount of external debt. Which of the following is the most likely cause?
A) The government of Country X borrowed money from local banks.
B) The government of Country X borrowed money from other governments.
C) The government of Country X spent more than it collected in revenues.
D) The government of Country X received short-term credits from selling bonds.
Correct answer✓✓B) The government of Country X borrowed money from other governments.
- Uneven income distribution ________.
A) exists in almost every country
B) is largely a problem for poorer nations
C) primarily affects people in urban settings
D) is limited to a small share of the world population
Correct answer✓✓A) exists in almost every country
- Which of the following is most likely a FALSE statement about income inequality?
A) The richest 1% of the world's population claims as much income as the bottom 57%.
B) GNI is the most effective tool for estimating the relative wealth of a nation's citizens.
C) Among industrialized nations, the U.S. has the largest inequality gap between rich and poor.
D) Income inequality between metropolitan and rural areas threatens a country's social stability.
Correct answer✓✓B) GNI is the most effective tool for estimating the relative wealth of a nation's citizens.
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- Which of the following is a statement that summarizes all economic transactions between a country and the rest of the world during a given period of time?
A) trade deficit
B) Gini coefficient
C) balance of payments
D) purchasing power parity
Correct answer✓✓C) balance of payments
- The two main categories in the balance of payments are the ________.
A) merchandise exchange account and the services account
B) external debt and the unilateral transfers account
C) merchandise trade account and the capital account
D) current account and the capital account
Correct answer✓✓D) current account and the capital account
- In a country's balance of payments, the ________ tracks all trade activity in merchandise.
A) capital account
B) current account
C) payment account
D) deficit account
Correct answer✓✓B) current account
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- An economic system is the set of structures and processes that ________ in a country.
A) guides the allocation of resources and shapes the conduct of business activities
B) directs the movement of specific products to specific consumers
C) sets the standards of competitive success for companies in the economy
D) stipulates the roles and responsibilities of consumers
Correct answer✓✓A) guides the allocation of resources and shapes the conduct of business activities
- Pender Pharmaceuticals is considering expanding overseas and is focusing primarily on the BRICs. Which of the following countries is one that Pender is considering?
A) Indonesia
B) Chile
C) Russia
D) Bangladesh
Correct answer✓✓C) Russia
- Taylor Enterprises wants to expand its operations into Asia. Managers are focusing on countries with high degrees of economic freedom most likely because the firm is interested in a country with ________.
A) minimal government intervention
B) standardized minimum wages
C) laws favoring sustainability
D) state-run corporations
Correct answer✓✓A) minimal government intervention
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- According to the concept of green economics, measuring a country's economic performance should also take into account ________.
A) market share
B) population size
C) ecological costs
D) cost-of-living increases
Correct answer✓✓C) ecological costs
- Which of the following calls for economic activity that meets present needs without hindering the future needs of society?
A) privatization
B) state capitalism
C) economic freedom
D) sustainable development
Correct answer✓✓D) sustainable development
- Which of the following ideas calls for assessing a country's performance based on factors such as life expectancy, leisure time, and income equality?
A) microeconomics
B) happynomics
C) macroeconomics
D) green economics
Correct answer✓✓B) happynomics
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- During a time of reflation, the government is most likely to ________.
A) lower taxes
B) print money
C) reduce interest rates
D) support infrastructure
Correct answer✓✓B) print money
- Which of the following governmental actions is LEAST likely to increase national debt?
A) macroeconomic stimulus plans
B) unemployment benefits
C) corporate bailouts
D) T-bond sales
Correct answer✓✓D) T-bond sales
- According to the text, which of the following has resulted from GE's Ecomagination initiative?
A) rising profitability for many GE products
B) increasing doubt among GE's foreign partners
C) reducing investments by GE due to poor returns
D) improving pollution levels near GE plants in China
Correct answer✓✓A) rising profitability for many GE products
- General Electric has focused on being more "green" in recent years most likely because ________.
