BUSINESS CYCLES

1) What are business cycles?

a) The periods of various success, struggle, and medium-quality profits encountered by companies
in the normal course of the economy

b) Times when businesses have record profits in an ecomomy with full employment and stable
growth rate

c) Times when businesses are recording record losses

d) The periods wherein businesses neither lose nor make money

2) What is the difference between a boom and a bust?

a) Booms feature economic growth; busts feature economic downturn

b) Booms help businesses and consumers financially; busts harm them

c) Booms and busts are basically the same

d) 1 and 2

3) What are business contractions?

a) Periods during which the economy shrinks by 50-60%

b) Periods during which entire states' economies and completely destroyed

c) Normal periods of reduction in business after prolonged growth

d) Normal periods of rapid economic growth after a long period of increasing wages

4) How are recessions different than business contractions?

a) They last longer - usually at least a few months

b) They are characterized by GDP decreases

c) They can indicate larger problems with the economy

d) All of the above

5) Which of the following are affected by boom and bust cycles?

a) Only businesses are affected

b) Only consumers are affected

c) Both businesses and consumers are affected

d) Neither businesses nor consumers are affected

1) What is competition in business?

1 An annual physical competition between company executives

2 Steps taken by companies to enlarge their profits and success by taking business away from
others

3 One of the most important business elements, and one that’s responsible for drastically reducing
prices

4 2 and 3

What is reverse competition in business?

1 The process of giving products away for free, to improve brand recognition

2 The process of undercutting companies that are selling products for less than the market value

3 The process of helping another business improve their profits

4 Nobody is quite sure

3) What are some of the effects of a monopoly?

1 Little-to-no competition

2 Increased prices

3 Massive profits at the expense of consumers

4 All of the Above

4) What is an oligopoly?

1 A business phenomenon characterized by one company ruling a market with little to no

2 A business phenomenon characterized by a group of companies limiting their competition to

3 A business phenomenon characterized by full competition

4 A business phenomenon characterized by artificially low prices

5) How do consumers benefit from competition?

1 By enjoying lower prices

2 By being able to choose from optimized products

3 By being able to enter the business world themselves, if an opportunity arises

4 All of the above

1) What is gross domestic product (GDP)?

1 The measure of all the products made, services offered, and business conducted in a country
over a set period of time

2 All the money currently in a country

3 The total value of assets currently in a country

4 An indicator of inflation

2) Which country has the largest GDP in the world?

1 China

2 Australia

3 Russia

4 United States

3) How is GDP calculated?

1 By counting all the money in a country’s banks

2 By referencing a country’s national debt

3 By adding up private and public consumption

4 None of the above

4) What is the main difference between nominal and real GDP?

1 Nominal calculates for inflation and real does not

2 There are no differences between the GDP types

3 Real GDP accounts for annual inflation

4 Real GDP is accurate, while nominal GDP is not

5) Why is GDP important?

1 It can be used by businesses to maximize profits

2 It can help a country be as successful as possible, as GDP can be shown-off on the world stage to
attract investors

3 It indicates the relative economic capabilities of a country

4 1 and 2
INFLATION

What effect does inflation have on currency?

1 It increases its value

2 It decreases its value

3 It doesn’t affect its value

4 Economists are still trying to figure this out

2) What are central banks, and what process allows them to increase the flow of currency?

1 Central banks are the institutions tasked with managing countries’ economies, and they mint
new money

2 Central banks are local establishments that make loans to residents

3 Central banks are digital money distributors that protect credit card companies

4 None of the above

3) What is the main difference between panics and recessions?

1 There aren’t any differences between the two

2 Recessions are shorter than panics

3 Panics are characterized by affordable prices, while recessions are not

4 Recessions last longer than panics and could be indicative of largescale economic downturns

4) What is purchasing power?

1 The strength of one’s credit score

2 A measure of someone’s wealth

3 A typical measure of how many goods/services currency can be exchanged for

4 1 and 2

5) What is deflation, and how does it compare to inflation?

1 Deflation and inflation are basically the same

2 Inflation is always good, while deflation is always bad

3 Deflation is the increased value of something due to a modest supply, while inflation is a
reduced value of something due to an enhanced supply

4 Researchers are still attempting to find the differences between the two
SUPPLY AND DEMAND

1) What is supply and demand?

1 The amount of something that’s available to purchase

2 How much consumers are willing to pay for a product

3 The maximum possible price for a product

4 The force of consumers in relation to the available supply

2) What prices do high and low demands create, generally speaking?

1 High demand creates low prices

2 Low demand creates high prices

3 High demand creates high prices and low demand creates low prices

4 Both demand types create low prices

3) If a company produced a small quantity of an in-demand product, what would happen to

1 They would rise

2 They would fall

3 They would stay the same

4 None of the above

4) Companies sometimes limit their supplies to:

1 Decrease demand

2 Increase prices

3 Increase demand and lower prices

4 Decrease demand and lower prices

5) What is commonly associated with low demand and low prices?

1 Proprietary products

2 Ample competition

3 Items that can be crafted by many companies

4 2 and 3
UNEMPLOYMENT

1) What is unemployment?

1 The act of being fired from a job

2 The time employees spend away from the office

3 The state of being out of work for those who are fit to hold a job

4 The process of a company downsizing its employee count

2) What is the unemployment rate?

1 The official percentage of work-eligible persons who aren’t currently hired

2 A figure that’s used to gauge the overall health of an economy

3 The number of individuals who’ve been hired in the past month

4 1 and 2

3) What is full employment?

1 The status of a company that has too many staff members

2 The condition of employees who’re satisfied with their work

3 An unemployment rate wherein almost every eligible employee is working

4 None of the above

4) What unemployment rate is generally indicative of full employment?

1 10%

2 50%

3 5%

4 rate has to be zero to call it full employment

5) Low unemployment rates typically indicate which of the following:

1 A booming economy

2 A poorly performing economy

3 No economic shift

4 Much lower-than-normal wages

1) What is utility?
1 The price of specific goods

2 The value of currency at any given time

3 The state of being beneficial and useful

4 The definition depends on which economist is consulted

2) Which of the following best describes demand?

1 The desire or need of consumers to own a certain product or receive a certain service

2 The process of customers calling for cheaper products and services

3 The amount of money companies charge for goods and services

4 1 and 3

3) Which natural human desire results in demand?

1 The desire to own as much stuff as possible

2 The desire to spend money

3 The desire to improve the quality of life

4 The desire to be part of the economy

4) How can demand be eliminated?

1 By lowering the prices of products

2 By increasing the number of products and services available to buy

3 By banning individuals from owning money

4 Demand is natural and cannot be eliminated

5) How do companies offer the most possible utility through their products and services?

1 They only sell very important goods and services, like water and medicine

2 They adjust their products to demand and provide things that people want to benefit from

3 They don’t do so

4 They release as many products and services as possible and hope one will stick
BANKING

1) What are banks?

1 Desktop containers wherein money is stored

2 Multifaceted financial institutions that provide an array of services

3 Places where companies earn extra money

4 Establishments used exclusively by investors to increase their worth

2) How is money most commonly stored in a bank?

1 In the vault

2 In the form of stocks and bonds

3 In personal checking and savings accounts

4 In a number of safes

3) What is a home mortgage?

1 A means through which banks pay customers for their home

2 A complex home ownership plan sold by banks to clients

3 Fees charged by a bank for home repair costs

4 A loan commonly issued by banks that allows qualified clients to own their home, provided they
offer a down payment and pay their monthly mortgage bill for the agreed upon period

4) What is a personal loan?

1 Money given freely by creditors for almost any purpose

2 A loan offered by creditors to be used for the payment of a house

3 A loan issued by a creditor to a qualified individual for a pre-determined purpose

4 Money available to anyone who visits a bank twice weekly

5) What is interest?

1 The amount of attention given or shown by a person

2 A percentage of a sum that is charged to credit customers

3 The means through which a creditor or provider of funds is paid for his or her support

4 2) and 3)
INVESTING

1) Where are stocks bought and sold?

2 Over the phone, through a 24/7 hotline

3 From company employees, managers or members of the Board of Directors

4 Through stock exchanges, with the assistance of a licensed stockbroker, brokerage firm, and/or
brokerage website

2) What is a bond?

1 Essentially the same thing as a stock

2 A piece of debt purchased and compensated for through interest paid to purchasers

3 A publicly traded piece of a company

4 A short-term investment

3) How large are dividends, typically?

1 55% of total investment

2 75% of total investment

3 95% of total investment

4 It depends, but usually a very small percentage of total investment

4) What is one key benefit of purchasing a bond?

1 Not having to worry about a company's performance, in relation to being paid

2 Being free to sell as is personally convenient, with no penalty

3 Making a substantial amount of money in as little as a few days

4 Being able to show-off to friends and family members

5) Why is it a good idea to invest in stocks and bonds?

1 Doing so wisely will increase one's worth

2 Doing so may help expedite one's retirement savings status

3 Doing so allows one to be an active member of the financial sphere

4 All of the above

1) What's traded on the stock market?

2 Shares, or pieces of publically traded companies

3 Property and other physical assets

4 Privately owned companies

2) How can stock be purchased by an investor?

1 Through a licensed stock-trading website

2 Through a licensed stockbroker

3 Through a licensed stock brokerage firm (as opposed to an individual broker)

4 All of the Above

3) How can each stock be bought and sold at any time; how are there so many different
customers?

1 Stocks that nobody wants are sold into thin air

2 Certain stocks cannot be bought and sold at one's convenience

3 The stock exchange is a massive international platform that bases its stocks' prices on demand,
and there are therefore always buyers and sellers available

4 Some companies buy their own stock back

4) What is an IPO (initial public offering)?

1 Any company's scheduled, fixed-amount payout to investors

2 The trading price of a company that's makings its stock exchange debut

3 The amount a publicly held company pays to become privately traded

4 A company's value

5) How is the value of a company's stock determined?

1 By company executives

2 By the company's CEO

3 By the company's customers

4 By stock market investors, who respond to a company's outlook by buying or selling, and in turn,
enhancing or minimizing demand