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This document contains economics practice questions covering various topics. These questions are designed to test your understanding of economics, business, and financial markets. The document is in PDF format.

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* 59. Businesses in a private enterprise system usually do not raise prices to increase profits because they exist in a(n) _________ environment. A. competitive ** B. prosperous C. recessive D. efficient * 60. A country's central bank issues too much currency given the size of its economy....

* 59. Businesses in a private enterprise system usually do not raise prices to increase profits because they exist in a(n) _________ environment. A. competitive ** B. prosperous C. recessive D. efficient * 60. A country's central bank issues too much currency given the size of its economy. The country's business sector cannot expand to meet the excess demand caused by the increased amount of currency in circulation. As a result, ____________ will go ____________ and ____________ will result. A. buying power; up; inflation B. prices; up; inflation ** C. buying power; down; deflation D. prices; down; deflation * 61. According to the law of diminishing returns, what usually decreases at some point with the addition of more employees if all other factors stay the same? A. Productivity ** B. Consumption C. Depreciation D. Inequality * 62. The best time for a business to purchase new equipment is when A. job growth declines. B. the gross domestic product falls. C. interest rates are low. ** D. consumer demand decreases. * 63. During a recession, interest rates are likely to ____________ because demand for money is ____________. A. decrease; strong B. increase; strong C. increase; weak D. decrease; weak ** * 64. Which of the following will foster a business's ability to adapt to changing markets: A. Authoritarian leadership B. Proactive management ** C. Reactive management D. Conservative leadership * 65. Why does the demand for money go down when the demand for bonds goes up? A. Increased transaction costs to buy and sell bonds decreases money demand. B. They are substitutes for each other and have an inverse relationship. ** C. They involve a reduction in interest rates. D. Increased inflation rates decrease money demand and increase bond demand. * 66. How does a country's central bank help control inflation? A. It eliminates the reserve requirement. B. It regulates financial institutions. C. It distributes coin and paper currency to financial institutions. D. It adjusts short-term interest rates. ** * 67. The internet creates/enhances form utility by A. offering online shopping. B. allowing goods to be found and purchased quickly. C. providing TV streaming as an alternative to cable. ** D. providing customers with product information. * 68. One way to regulate the nation's money supply is by changing the A. inflation rate. B. tax policies. C. public stock-exchange policies. D. banks' reserve requirements. ** * 69. Higher prices that result from a tax on luxury goods are likely to result in A. more customers and less productivity. B. more customers and more productivity. C. fewer customers and more productivity. D. fewer customers and less productivity. ** * 70. The exchange rate between U.S. dollars and Canadian dollars, which is determined by the unimpeded interaction of supply and demand in the foreign exchange market, is a _________ exchange rate. A. pegged B. fixed C. cross D. floating ** * 71. Which of the following is an example of how a country's political environment can impact world trade: A. France requires 40% of music on the radio to be played in French. ** B. Development of shipping containers increases international trade. C. Canadian high labor costs increase the outsourcing of jobs to other countries. D. Advanced communication technologies increase globalization. * 72. Which of the following is a global trade issue that directly affects children in developing nations: A. Tariffs B. Labor laws ** C. Quotas D. Exchange rates * 73. Which of the following is a result of emerging economies entering the global market: A. Decrease in the global supply chain B. Less connectivity among countries C. Rapid increase in global trade ** D. Slower world GDP growth * 74. Keri works as a public relations consultant for a large corporation. She reviews issues and makes recommendations to managers. Keri has _________ authority. A. staff ** B. divisional C. functional D. line * 75. A business creates an organizational design in which no employee has to report to more than one manager at a time. This is following an organizational principle called A. span of control. B. the scalar principle. C. line authority. D. unity of command. ** * 76. How has the ability to travel more freely contributed to globalization? A. It escalates competition between businesses. B. It breaks down political barriers between countries. C. It promotes a sense of nationalism. D. It helps enable the spread of culture and ideas. ** * 77. A company in your city recently announced that it is moving most of its manufacturing to another country. The business claims it must do so to save money, but people in your community are upset because the business is engaging in A. licensing. B. brain drain. C. offshoring. ** D. nationalism. * 78. Economic factors can affect a business's operations by A. transforming family roles. B. increasing or decreasing costs. ** C. creating new legislation. D. eliminating the competition. * 79. The Telford Pharmaceutical Company is concerned that proposed regulatory changes may negatively impact its research and development initiatives, profitability, long-term growth, and the well-being of patients who may benefit from using its products. What can the company do to influence legislation and protect its interests? A. Sign a warrant B. Veto the legislation C. Engage in lobbying efforts ** D. Hire an estate attorney * 80. Which of the following is an example of a business's ethical obligation to its stakeholders: A. Doubling investors' money within two years B. Allowing the competition to succeed C. Sharing trade secrets within its industry D. Providing safe working environments for employees ** * 81. Which of the following is a primary factor that affects the economies of scale: A. Capital budgeting process B. Equipment depreciation value C. Accounting control system D. Specialization of labor ** * 82. For a business to adapt to changing markets, it is important that it develops an internal environment that encourages A. creativity. ** B. exclusivity. C. insensitivity. D. ethnocentrism. * 83. When consumer spending increases, the demand for money tends to A. stabilize. B. contract. C. decrease. D. increase. ** * 84. What are businesses contributing to when they financially support local charities? A. High unemployment B. The community ** C. The work environment D. Their profits * 85. Businesses must consider labor laws in other countries due to A. globalization. ** B. communication. C. entrepreneurship. D. monetization. * 86. Jackson travels to many other countries for work. Before he visits a new country, he always researches the customs and language of the country to avoid offending his clients. Jackson is paying attention to _________ considerations. A. cultural ** B. economic C. financial D. technological * 87. Videoconferencing has made it easier for businesses to A. make a profit. B. avoid bankruptcy. C. work globally. ** D. beat competitors. * 88. What do countries belonging to a major trade alliance experience when conducting business with alliance partners? A. Freedom from trade agreements B. Increased tariffs C. Free promotional advertising D. Reduced tariffs ** * 89. Which of the following statements regarding the foreign exchange market is true: A. Only citizens and businesses from certain countries may trade on the forex. B. The foreign exchange market is a global, decentralized market. ** C. The foreign exchange market is open from 9:00 a.m.-5:00 p.m. every day. D. Trades occur on the foreign exchange market in a central location. * 90. Which of the following is a geographic factor that impacts a country's ability to trade: A. Political system B. Industrialization C. Coastal areas and waterways ** D. Taxes on imports and exports * 91. Which of the following illustrates the impact of a country's history on world trade: A. Countries that are adjacent to each other have more opportunities for conflict. B. Countries with widely different religious beliefs have difficulty establishing trust. C. Countries that have engaged in war conflicts have difficulty establishing trust. ** D. Countries speaking different languages have difficulty understanding each other. * 92. If a country with a developing economy participates in free trade, it can expect to encounter A. job loss. B. limited access to new markets. C. better relationships with other countries. ** D. fewer resources. * 93. Which of the following is an advantage of doing business in an emerging economy: A. Emerging economies are unsafe and corrupt. B. There is less demand in emerging economies. C. Governments in emerging economies are difficult to work with. D. There is less competition in emerging economies. ** * 94. Which of the following statements is true regarding international labor issues: A. Foreign businesses are required to provide cost of living increases. B. Work visas are not necessary for professional businesspeople. C. Wage and benefit requirements differ by country. ** D. International law ensures that factories do not hire young children. * 95. A car dealership purchases new cars from a Ford factory and then sells them to consumers. What type of business model is this? A. Distributor ** B. Manufacturer C. Trader D. Importer * 96. Which of the following is an advantage of opening a franchise: A. Paying royalties B. A well-known brand name ** C. Restrictions on products, prices, and location D. Reliance on raw materials * 97. The U.S. government instituted an expansionary fiscal policy, resulting in increased demand for goods and services. Foreign countries are likely to experience a A. rise in exports to the U.S. and higher currency values relative to the U.S. dollar. ** B. drop in exports to the U.S. and higher currency values relative to the U.S. dollar. C. rise in exports to the U.S. and lower currency values relative to the U.S. dollar. D. drop in exports to the U.S. and lower currency values relative to the U.S. dollar. * 98. Which of the following is a sign of corruption in a developing country: A. Increases in technological advancements B. High involvement in international trade C. The development of a shadow economy ** D. Even distribution of wealth among the rich and poor * 99. What effect does a decrease in overall productivity usually have on the economy? A. Lower prices B. Increased sales C. Decreased unemployment D. Increased labor costs ** * 100. What is the difference between a visa and a passport? A. Visas are for business; passports are for leisure. B. A passport is a supplement to a visa. C. Passports are for business; visas are for leisure. D. A visa is a supplement to a passport. **