chp 3

Question 1

Factors driving demand

Answer 1

is a graph of the amount of a
product buyers will purchase at different
prices under a given set of conditions DOWNWARD

Question 2

Factors driving supply

Answer 2

different prices and the quantities of sellers

Question 3

Mixed market economies

Answer 3

most countries operate mixed
market economies: economic systems that
draw from both types of economies to varying
degrees.

Question 4

Privatization

Answer 4

portion of private and public enterprise can vary widely in mixed economies

Question 5

Flattening the business cycle

Answer 5

economy tends to flow through
various stages of a business cycle: prosperity,
recession, depression, and recovery.

Question 6

GDP

Answer 6

sum
of all goods and services produced within a
nation’s boundaries in a given year.

Question 7

Fiscal policy

Answer 7

influence the economy is fiscal policy: taxation
and spending decisions designed to control
inflation, reduce unemployment, improve the
general welfare of citizens, and encourage
economic growth.

Question 8

Monetary policy

Answer 8

a common method of influencing economic
activity is monetary policy: government action
to increase or decrease the supply of money
by changing interest rates or banking
requirements.

Question 9

List and define the factors that collectively determine supply.

Answer 9

a. costs of inputs: changes in the costs of factors of production,
such as natural resources, capital, human resources and
entrepreneurship, affect the amount of supply offered.
b. costs of technologies: changes in the costs of new technologies
can affect the supply of products or services using that
technology.
c. taxes: an increase or decrease in taxes levied will impact
suppliers’ willingness to supply the product or service.
d. number of suppliers: where more suppliers enter the market the
supply curve shifts right. The opposite occurs if the number of
suppliers decreases.

Question 10

Describe two ways countries like Canada aim to help developing countries
modernize their economies.

Answer 10

a. Nations in the industrial world, including Canada, are currently
struggling to find ways to help developing nations modernize their
economies. One proposal is to forgive the debts of some of these
countries, particularly those in Africa, to stimulate their economies
to grow.
b. Leaders of these countries should be encouraged to allow citizens
to own property, lower their tax rates, avoid devaluing their
currencies, lay a path for new businesses to start, and reduce trade
barriers.

Question 11

monopoly

Answer 11

there is only one seller in the industry

Question 12

monopolistic competition

Answer 12

producer are able to differentiate their products

Question 13

pure competition

Answer 13

the industry is made up of many forms of similar size whose products are indistinguishable

Question 14

oligopoly

Answer 14

the industries require large capital investments there are very few producers

Question 15

stage characterized by low unemployment and strong consumer
confidence is called

Answer 15

prosperity

Question 16

A contraction in the gross domestic product (GDP) that lasts six months
or more is called

Answer 16

recession

Question 17

The most important measure of a company or nation’s efficiency and
competitiveness is its level of productivity

Answer 17

true

Question 18

socialism

Answer 18

in a planned economy, the governments control determines business ownership profit and resource allocation to accomplish government goals rather than the goals of individuals
the government owns and operates the
major industries

Question 19

communism

Answer 19

all property is shared equally by the people of the community under the direction of a strong central government

Question 20

price level changes

Answer 20

• an important indicator of economic stability within an economy