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Questions and Answers

In an oligopoly, what is a primary barrier that prevents new companies from entering the market?

Strict government regulations that favor existing firms.
Lack of consumer demand for new products.
Extremely high initial investment costs. (correct)
Patents protecting existing companies product lines.

Which of the following scenarios best describes cyclical unemployment?

A factory worker who loses their job due to a decline in consumer demand during a recession. (correct)
An agricultural worker who is unemployed after the harvest season.
A construction worker who is laid off every winter due to weather conditions.
A recent college graduate actively seeking their first job.

If a country experiences disinflation, what is happening to the inflation rate?

It is negative, indicating deflation.
It remains constant at a high level.
It is positive but decreasing. (correct)
It is increasing at an increasing rate.

Which of the following is a key characteristic of a monopoly?

A single seller controlling the total supply and price of a product. (A) Signup and view all the answers

What fundamentally defines capitalism as an economic system?

Individual ownership of factors of production operated for profit. (C) Signup and view all the answers

Which phase of the business cycle is characterized by increasing GDP, high employment, and expanding business investments?

Boom (A) Signup and view all the answers

During which phase of the business cycle would you expect to see the highest levels of unemployment?

Recession (A) Signup and view all the answers

Which statement best describes the role of the state in a communist economic system?

The state makes almost all economic decisions and owns major factors of production. (D) Signup and view all the answers

In a socialist economy, what is the typical rationale for government ownership of basic businesses?

To ensure profits are evenly distributed among the people. (A) Signup and view all the answers

Which of the following is the MOST accurate description of the difference between macroeconomics and microeconomics?

Macroeconomics studies the economy as a whole, while microeconomics studies specific markets and individual decisions. (C) Signup and view all the answers

Canada operates under a mixed economy. What does this imply about the country's economic structure?

The economy combines elements of free markets and government intervention. (A) Signup and view all the answers

In a purely free market economy, which entity primarily determines the prices and quantities of goods and services?

Supply and demand (C) Signup and view all the answers

Which characteristic is MOST indicative of a communist economic system?

Government control over almost all major production facilities. (C) Signup and view all the answers

Which economic indicator is most commonly used to measure the overall health and size of an economy?

Gross Domestic Product (GDP). (A) Signup and view all the answers

Why is productivity considered an important statistic in economics?

It reflects the efficiency with which inputs are converted into outputs, influencing economic growth. (B) Signup and view all the answers

Canada is described as having a "mixed" economy. What does this MOST accurately mean?

Canada's economy combines elements of capitalism and socialism. (D) Signup and view all the answers

Which of the following scenarios best illustrates the concept of an equilibrium point in a free market?

A street vendor selling Nathan's hotdogs in Coney Island adjusts their price until they sell most of their stock each day without much left over. (D) Signup and view all the answers

In a perfectly competitive market, what is the likely outcome if one seller attempts to significantly raise the price of their product above the prevailing market price?

The seller will likely lose customers to competitors offering the product at the market price. (D) Signup and view all the answers

Which scenario best exemplifies the principles of free-market capitalism?

Individuals start a tech company and successfully compete in the market, leading to innovation and profits. (B) Signup and view all the answers

How do microeconomics and macroeconomics differ in their scope of analysis?

Microeconomics focuses on individual behavior and specific markets, while macroeconomics examines the economy wide phenomena. (B) Signup and view all the answers

Which economic system prioritizes government control over production and distribution to ensure equal access to goods and services?

Communism (C) Signup and view all the answers

Which characteristic is most indicative of an oligopoly?

A few large sellers controlling a significant portion of the market. (A) Signup and view all the answers

In the context of supply and demand curves, what does the equilibrium point represent?

The point where the quantity demanded equals the quantity supplied. (A) Signup and view all the answers

How does socialism differ most significantly from communism in economic practice?

Socialism permits a blend of free markets and government intervention, while communism mandates total government control. (D) Signup and view all the answers

Which of the following scenarios exemplifies a market structure that is closest to perfect competition?

Numerous small farmers sell identical produce at a local market. (C) Signup and view all the answers

In a mixed economy, what is the role of the government in influencing economic activity?

The government regulates certain industries, provides social safety nets, and may own some key sectors. (D) Signup and view all the answers

Considering the principles of a free market, what typically determines the prices of goods and services?

Negotiations between buyers and sellers based on supply and demand. (D) Signup and view all the answers

How did Adam Smith's 'The Wealth of Nations' influence the development of capitalist economies?

By arguing that individuals' pursuit of self-interest in a free market can benefit society as a whole. (A) Signup and view all the answers

How might businesses utilize macroeconomic data, like GDP growth and inflation rates, to make strategic decisions?

Making production and investment decisions based on anticipated consumer spending and borrowing costs. (D) Signup and view all the answers

Which economic system is characterized by decentralized decision-making, where buyers and sellers determine production and prices?

Capitalism (C) Signup and view all the answers

Which of the following activities falls under the scope of microeconomics?

Examining consumer behavior in response to a change in the price of electric vehicles. (C) Signup and view all the answers

Under a purely capitalistic economy, what entity primarily determines the allocation of resources?

The collective decisions of individual consumers and producers interacting in free markets. (B) Signup and view all the answers

Which of the following scenarios best illustrates an increase in workforce productivity?

A factory adopts new machinery, enabling its existing workforce to produce more goods in the same amount of time. (B) Signup and view all the answers

How does increased productivity typically affect production costs and prices?

It decreases production costs, potentially leading to lower prices. (C) Signup and view all the answers

In the context of economics, what is the primary difference between 'standard of living' and 'quality of life'?

'Standard of living' assesses the ability to purchase goods and services, while 'quality of life' encompasses overall well-being including social and environmental factors. (C) Signup and view all the answers

Which of the following best describes how productivity is measured?

Total output of goods and services divided by the total hours of labor (A) Signup and view all the answers

Canada's economy is described as a service economy. Why is productivity a particular concern for service-based firms in Canada?

Service-based firms are often more labour-intensive. (D) Signup and view all the answers

A recent university graduate is searching for their first job. Which type of unemployment are they primarily experiencing?

Frictional unemployment (D) Signup and view all the answers

A manufacturing company closes down its factory in one province and moves its operations to another province where labor costs are lower. This leads to many workers in the original factory losing their jobs. What type of unemployment are these workers primarily experiencing?

Structural unemployment (B) Signup and view all the answers

An experienced software engineer quits their job to travel for a few months before looking for a new position in a different tech company. What type of unemployment are they experiencing?

Frictional unemployment (D) Signup and view all the answers

Signup and view all the answers

Flashcards

Macroeconomics

Studies a nation's economy as a whole.

Microeconomics

Studies behavior of people/organizations in specific markets.