Chapter 2: Economics: The Framework for Business

TRUE/FALSE

1. An economy is both a social and a financial system.

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2. Financial or social systems are not essential to the development of a strong economy.

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3. The study of economics focuses on how people, businesses, and governments choose to allocate resources.

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4. A key economic goal is to provide a deep understanding of past choices that can be used to guide future business decisions.

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5. Economists forecast business needs based on a deep understanding of past choices.

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6. Microeconomics is the study of broad, economy-wide issues such as the unemployment rate, gross domestic product, and inflation.

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7. Macroeconomic conditions impact day-to-day life by influencing variables such as the availability of jobs, the amount of take-home pay households have available after paying taxes, and the buying power of those incomes.

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8. Luke is taking an economics class that focuses on decisions made by individual business firms and consumers. Luke’s class is concerned with microeconomic issues.

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9.. Capitalism is based on private ownership, economic freedom, and fair competition.

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10. Capitalism places paramount importance on the need for the government to intervene in the economy to ensure a fair and equitable distribution of income.

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11. Market equilibrium is the point at which the supply curve intersects the demand curve.

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12. Federal law has made all types of