Exam (elaborations) TEST BANK Understanding Business 10th Edition by William G. Nickels, James M. McHugh and Susan M. McHugh

1. (p. 30) America's business success is largely due to an economic and social climate that allows businesses to operate freely. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #1 Topic: How Economics Conditions Affect Business 2. (p. 30) Global economics and politics have no significant influence on businesses in the United States. FALSE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #2 Topic: How Economics Conditions Affect Business 3. (p. 30) The study of how society chooses to employ resources to produce goods and services and to distribute them for consumption among various competing groups and individuals is known as sociology. FALSE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms click it ,it has the solutions manual and test bank contact me: Nickels - Chapter 02 #3 Topic: What is Economics? 4. (p. 30) Economists study how people use resources to produce and distribute goods and services for consumption among competing groups and individuals. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #4 Topic: What is Economics? 5. (p. 30) Macroeconomics is the economic perspective that looks at the operation of a nation's economy as a whole. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #5 Topic: What is Economics? 6. (p. 30) Microeconomics focuses on the decisions and behavior of people and organizations in particular markets. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #6 Topic: What is Economics? 7. (p. 31) Resource development is concerned with finding the best way to utilize the fixed amount of resources a society has available. FALSE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #7 Topic: How Economics Conditions Affect Business 8. (p. 31) Resource development is the study of how to increase resources and to create the conditions that will make better use of those resources. TRUE AACSB: Reflective Thinking click it ,it has the solutions manual and test bank contact me: Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #8 Topic: What is Economics? 9. (p. 31) Peace and prosperity will flourish if we can find the one best way to divide existing resources among nations. FALSE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #9 Topic: What is Economics? 10. (p. 32) Thomas Malthus believed that overpopulation was a major cause of poverty. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #10 Topic: The Secret to Creating a Wealthy Economy 11. (p. 32) In developing nations of the world, population has leveled off and is not expected to increase dramatically in the future. FALSE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #11 Topic: The Secret to Creating a Wealthy Economy 12. (p. 32) Studies about the effects of population growth on the economy are part of macroeconomics. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #12 Topic: The Secret to Creating a Wealthy Economy 13. (p. 32) Economic progress can occur when business owners provide jobs and economic growth for their employees, their communities, and themselves. TRUE AACSB: Reflective Thinking click it ,it has the solutions manual and test bank contact me: Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #13 Topic: The Secret to Creating a Wealthy Economy 14. (p. 33) Economist Adam Smith's important contribution was an inquiry as to why some nations are wealthy, while others remain poor. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #14 Topic: The Secret to Creating a Wealthy Economy 15. (p. 33) Adam Smith believed the self-interest of businesspeople would lead them to create needed goods, services, and jobs. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #15 Topic: Adam Smith and the Creation of Wealth 16. (p. 33) The "invisible hand" in Adam Smith's theory turns self-directed gain into social and economic benefits for all. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #16 Topic: How Businesses Benefit the Community 17. (p. 33) According to Adam Smith, the "invisible hand" refers to the government's effort to always keep a check on the wealth creation of individuals, so that no one business would control a market for a particular good or service. FALSE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #17 Topic: How Businesses Benefit the Community click it ,it has the solutions manual and test bank contact me: 18. (p. 32) A contemporary economic challenge is creating profitable businesses by selling goods and services that contribute toward a healthier environment. TRUE AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 1: Knowledge of key terms Nickels - Chapter 02 #18 Topic: Thinking Green Box 19. (p. 30) An economist is examining how consumers in the automobile market have responded to recent price increases by car manufacturers. He is examining a microeconomic situation. TRUE Microeconomics examines the economic behavior of consumers and organizations in particular markets. AACSB: Reflective Thinking Blooms: Comprehension Learning Goal: 02-01 Explain basic economics. Level of Difficulty 2: Understanding of concepts and principles Nickels - Chapter 02 #19 Topic: What is Economics? 20. (p. 30) Macroeconomics looks at long run economic problems while microeconomics examines short run economic problems. FALSE The key distinction between macroeconomics and microeconomics is that macroeconomics is concerned with the performance of the economy as a whole while microeconomics is concerned with the behavior of people and organizations in particular markets. AACSB: Reflective Thinking Blooms: Knowledge Learning Goal: 02-01 Explain basic economics. Level of Difficulty 2: Understanding of concepts and principles Nickels - Chapter 02 #20 Topic: What is Economics? click it ,it has the solutions manual and test bank contact me: 21. (p. 32) Thomas Malthus believed that people in most countries would never be able to achieve high standards of living unless the problems of overpopulation were addressed. TRUE Thomas Malthus viewed rapid population growth as a major problem that would prevent standards of living from rising above subsistence levels. There are still people, called neo-Malthusians, who believe that Malthus was correct. AACSB: Reflective Thinking Blooms: Comprehension Learning Goal: 02-01 Explain basic economics. Level of Difficulty 2: Understanding of concepts and principles Nickels - Chapter 02 #21 Topic: The Secret to Creating a Wealthy Economy 22. (p. 33) Adam Smith believed that since businesspeople are motivated to improve their own prosperity, their actions are unlikely to benefit society as a whole. FALSE The principle of the invisible hand says that activities directed toward self-gain actually end up helping others. For example, when entrepreneurs start up a new business in search of personal profits, they end up creating jobs for others and producing goods and services that satisfy the wants of consumers. AACSB: Reflective Thinking Blooms: Comprehension Learning Goal: 02-01 Explain basic economics. Level of Difficulty 2: Understanding of concepts and principles Nickels - Chapter 02 #22 Topic: How Businesses Benefit the Community 23. (p. 33) Adam Smith believed that an economic system couldn't truly prosper unless people were taught to value the welfare of others above their own personal gain. FALSE Smith believed that people would only work hard and create wealth if they were rewarded for doing so. Thus, self-gain is the primary source of motivation in Smith's view of the economy. Smith also pointed out that this desire for self-gain would result in the production of goods and services and the creation of jobs that would benefit others within the economy. AACSB: Reflective Thinking Blooms: Comprehension Learning Goal: 02-01 Explain basic economics. Level