Day 3

Question 1

How are variations in business cycles described?

Answer 1

Described in terms of how long they last (duration) the degree of the peak or trough (intensity).

MCQ-06986

Question 2

Name the phases of a business cycles in order starting with Peak

Answer 2

Peak, recession, trough, recovery

MCQ-08742

Question 3

Define: Trough

Answer 3

Unused productive capacity and an unwillingness to risk investment

MCQ-03221

Question 4

What is true regarding an economy at the peak of a business cycles?

Answer 4

The economy will be at a natural rate of unemployment at 0% - the economy is working at it’s full potential

MCQ-05024

Question 5

When markets are perfectly competitive, consumers:

Answer 5

Have goods and services produced at the lowest cost in the long run

MCQ-03421

Question 6

Characteristics of monopolistic competition:

Answer 6

• numerous firms with differentiated products
• ease of entry - few barriers
• firms exact some influence over price and market
• non-price competition is frequent and critical

MCQ-03438

Question 7

Any business that has the ability to control the price of the product it sells has:

Answer 7

Downward sloping demand curve

MCQ-03450

Question 8

Under pure competition, strategic plans focus on

Answer 8

Maintaining the market share and being responsive to market conditions related to sales price

MCQ-03479

Question 9

Under monopolistic competition, strategic plans focus on:

Answer 9

Maintaining the market share and planning for enhanced product differentiation

MCQ-03485

Question 10

What is true regarding the variety of products and price under monopolistic competition vs perfect competition?

Answer 10

Monopolistic competitive industry produces a greater variety of products at a higher cost per unit

MCQ-04310

Question 11

Characteristics of an Oligopoly:

Answer 11

• few firms in the market
• significant barriers to entry
• differentiated products
• fixed (or semi fixed) prices
• kinked demand curve

MCQ-03445

Question 12

What does kinked demand curve mean?

Answer 12

When an oligopolist lowers it’s price, the other Oligopoly firms will match the price reduction

BUT

When the oligopoly raises it’s price the other firms will ignore the increase

MCQ-03815

Question 13

Under Monopoly, strategic plans focus on:

Answer 13

Profitability from production levels that maximize profits

MCQ-03489

Question 14

The government is most likely to reduce taxes on investments when:

Answer 14

Capital spending is expected to be unusually low

MCQ-05021

Question 15

The US government and the federal reserve are working to help the economy rebound from an economic slump. What would they do?

Answer 15

Sell US Treasury bills and notes

MCQ-14535

Question 16

What ways can the federal reserve decrease the money supply?

Answer 16

1. Sell government securities on the open market
2. Increase the discount rate
3. Increase the required reserve ratio

MCQ-03378