Chapter 3 (Purchasing Power) Flashcards
Which of the following schemes involves advertising a basic service at a low price to lure in customers and then selling them additional repairs or services?
low-balling
Which type of inflation occurs when prices are high, then drop due to decreased demand, and then are restored to a revious high level?
reflation
Consumers are allowed to copy the contents of a CD to a portable or other device for personal purposes.
true
Changing prices affect the spending power of both producers and consumers.
true
Generic drugs are similar to brand-name drubs, but they are often less effective.
false
Which of the following acts protects your health and billing information by limiting access to it?
hippa
The U.S. government measures inflation by using tools such as the Consumer Price Index.
true
Value-based pricing involves setting prices for products based ont he competitors’ prices.
false
Businesses base price decisions, in part, on the spending patterns of consumers.
true
Which of the following tyhpes of inflation rapidly rising prices that cause consumers to spend their money as fast as they can to avoid even higher prices?
hyperinflation
Cost-push inflation occurs when cost increases are not offset with higher productivity that lowers the cost of each unit made.
true
Preparing a shopping list will help consumers avoid impulse buying.
true
An example of a product that meets emotional rather than basic needs is
makeup
As inflation rises, the true buying power of each dollar falls; this means an individual’s standard of living will drop.
true
Economizing and optimizing are consumer buying strategies that people use at different times.
true
The buying strategy by which consumers save as much as possible and spend only when necessary is called
economizing
Which form of Internet advertising is used to grab the reader’s attention while the reader is visiting a website?
banner ads
The FDA approves drugs before they can be sold to the public.
true
Advertising is a method used by businesses to create demand for products.
true
Which of the following guarantees the quality and performance of a product or service?
warantee
The Federal Reserve System
- central bank of us
- known as the fed
- created by congress
As resources become scarced or more difficult to get, prices rise in the form of
real cost inflation
Emotional and impulse buying often lead to buyer’s remorse, meaning you later realize you made a poor choice.
true
Reflection occurs when prices are rising at a slow rate.
false
The rate that banks charge their most creditworthy business customers is called the
prime rate
As general price levels rise, the value of money
falls
Door-to-door sales are a form of indirect advertising used to grab consumers’ attention.
false
Consumers should be careful not to let optimizing lead to
overspending
Liquidation prices are always lower than sale prices.
false
Which of the following strategies is effective for consumers to use while they are shopping?
stick to your shopping list
The cost of making and delivering product A is $50. The company marks up this amount by 40% to set the price. What is the price of the product?
70
The method of setting a price so that it will be comptetitive with similar products currently being sold is called
market based pricing
Retail websites
both a and c
Which of the following government agencies enforces laws and prevents the selling of mislabeled foods, drugs, and cosmetics
fda
When merchants place merchandise at key points to attract quick purchases, they are appealing to which of the following consumer buying motives?
impulse buying
Monetary policy refers to actions by the federal govenrment in setting wage rates.
false
The U.S. government measures inflation by using tools such as the Consumer Price Index.
true
