WGU C201 BUSINESS ACUMEN NEW VERSION REAL
EXAM 700 QUESTIONS AND DETAILED ANSWERS.
balanced budget - ANSWERsituation in which total revenues raised by taxes equal the
total proposed spending for the year.
budget - ANSWERorganization's plan for how it will raise and spend money during a
given period of time.
taxes, fees, and borrowing. - ANSWERThe primary sources of government funds to
cover the costs of the annual budget are
budget deficit - ANSWERsituation in which the government spends more than the
amount of money it raises through taxes.
budget surplus - ANSWERexcess funding that occurs when government spends less
than the amount of funds raised through taxes and fees.
capitalism - ANSWEReconomic system that rewards companies for their ability to
perceive and serve the needs and demands of consumers; also called the private
enterprise system.
- Pure Competition
- Monopolistic Competition
- Oligopoly
- Monopoly - ANSWERTypes of Competition
communism - ANSWEReconomic system in which all property would be shared equally
by the people of a community under the direction of a strong central government.
Consumer Price Index (CPI) - ANSWERmeasurement of the monthly average change in
prices of goods and services.
core inflation rate - ANSWERinflation rate of an economy after energy and food prices
are removed.
cyclical unemployment - ANSWERpeople who are out of work because of a cyclical
contraction in the economy.
deflation - ANSWERopposite of inflation, occurs when prices continue to fall.
demand - ANSWERwillingness and ability of buyers to purchase goods and services.
,demand curve - ANSWERgraph of the amount of a product that buyers will purchase at
different prices.
economics - ANSWERsocial science that analyzes the choices people and
governments make in allocating scarce resources.
equilibrium price - ANSWERprevailing market price at which you can buy an item.
expansionary monetary policy - ANSWERgovernment actions to increase the money
supply in an effort to cut the cost of borrowing, which encourages business decision
makers to make new investments, in turn stimulating employment and economic
growth.
fiscal policy - ANSWERgovernment spending and taxation decisions designed to control
inflation, reduce unemployment, improve the general welfare of citizens, and encourage
economic growth.
frictional unemployment - ANSWERapplies to members of the workforce who are
temporarily not working but are looking for jobs.
gross domestic product (GDP) - ANSWERsum of all goods and services produced
within a country's boundaries during a specific time period, such as a year.
hyperinflation - ANSWEReconomic situation characterized by soaring prices.
inflation - ANSWEReconomic situation characterized by rising prices caused by a
combination of excess consumer demand and increases in the costs of raw materials,
component parts, human resources, and other factors of production.
macroeconomics - ANSWERstudy of a nation's overall economic issues, such as how
an economy maintains and allocates resources and how a government's policies affect
the standards of living of its citizens.
microeconomics - ANSWERstudy of small economic units, such as individual
consumers, families, and businesses.
mixed market economies - ANSWEReconomic system that draws from both types of
economies, to different degrees.
monetary policy - ANSWERgovernment actions to increase or decrease the money
supply and change banking requirements and interest rates to influence bankers'
willingness to make loans.
monopolistic competition - ANSWERmarket structure in which large numbers of buyers
and sellers exchange heterogeneous products so each participant has some control
over price.
,monopoly - ANSWERmarket structure in which a single seller dominates trade in a good
or service for which buyers can find no close substitutes.
national debt - ANSWERmoney owed by government to individuals, businesses, and
government agencies who purchase Treasury bills, Treasury notes, and Treasury bonds
sold to cover expenditures.
No, a balanced budget does not erase the national debt; it just doesn't increase it. -
ANSWERDoes a balanced budget erase the national debt?
The U.S. government acquires funds through taxes, fees, and borrowing. -
ANSWERWhat are the three primary sources of government funds?
An expansionary monetary policy increases the money supply in an effort to cut the cost
of borrowing. A restrictive monetary policy reduces the money supply to curb rising
prices, overexpansion, and concerns about overly rapid economic growth. -
ANSWERWhat is the difference between an expansionary monetary policy and a
restrictive monetary policy?
Gross domestic product (GDP), general level of prices, core inflation rate, the
Consumer Price Index, and the unemployment rate are all measures used to determine
the health of an economy. - ANSWERWhat are some measures that economists use to
determine the health of an economy?
The four stages are prosperity, recession, depression, and recovery. *Prosperity* is
characterized by low unemployment and strong consumer confidence. *Recession* may
include consumers postponing major purchases, layoffs, and decreased household
savings. A *depression* occurs when an economic slowdown continues in a downward
spiral over a long period of time. In *recovery*, consumer spending increases and
business activity accelerates. - ANSWERDescribe the four stages of the business cycle.
A change in the cost or availability of any of the inputs considered to be factors of
production can shift the entire supply curve, either increasing or decreasing the amount
available at every price. - ANSWERHow do factors of production influence the overall
supply of goods and services?
A demand curve is a graph of the amount of a product that buyers will purchase at
different prices. A supply curve shows the relationship between different prices and the
quantities that sellers will offer for sale, regardless of demand. - ANSWERExplain
demand and supply curves.
Microeconomics is the study of economic behavior among individual consumers,
families, and businesses. Macroeconomics is the study of a nation's overall economic
issues and how an economic system maintains and allocates its resources. -
ANSWERWhat is the difference between microeconomics and macroeconomics?
, Privatization is the conversion of government-owned and operated companies into
privately held businesses. - ANSWERWhat is privatization?
The U.S. economy is based on the private enterprise system. - ANSWEROn which
economic system is the U.S. economy based?
Pure competition is a market structure in which large numbers of buyers and sellers
exchange homogeneous products, and no single participant has a significant impact on
price. Monopolistic competition is a market structure in which large numbers of buyers
and sellers exchange differentiated (heterogenous) products, so each participant has
some control over price. - ANSWERWhat is the difference between pure competition
and monopolistic competition?
oligopoly - ANSWERmarket structure in which relatively few sellers compete and high
start-up costs form barriers to keep out new competitors.
planned economy - ANSWEReconomic system in which government controls determine
business ownership, profits, and resource allocation to accomplish government goals
rather than those set by individual firms.
communism and socialism - ANSWERTwo forms of planned economies are
privatization - ANSWERconversion of government-owned and operated companies into
privately held businesses.
productivity - ANSWERrelationship between the number of units produced and the
number of human and other production inputs necessary to produce them.
pure competition - ANSWERmarket structure in which large numbers of buyers and
sellers exchange homogeneous products and no single participant has a significant
influence on price.
recession - ANSWERcyclical economic contraction that lasts for six months or longer.
regulated monopolies - ANSWERmarket structure in which a local, state, or federal
government grants exclusive rights in a certain market to a single firm.
restrictive monetary policy - ANSWERgovernment actions to reduce the money supply
to curb rising prices, overexpansion, and concerns about overly rapid economic growth.
seasonal unemployment - ANSWERjoblessness of workers in a seasonal industry.
socialism - ANSWEReconomic system characterized by government ownership and
operation of major industries such as communications.
