Chapter 3 Review Questions How does microeconomics affect business? How does macroeconomics affect business people to understand the fundamentals of each? Describe the four different types of competition in the private enterprise system

Chapter 3 Review Questions

1. How does microeconomics affect business? How does macroeconomics affect business people to understand the fundamentals of each?

3. Describe the four different types of competition in the private enterprise system. In which type of competition would each of the following businesses be likely to engage?

4. Distinguish between the two types of planned economies. What factors do you think keep them         from flourishing in today’s economic environment?

5. What are the four stages of the business cycle? In which Stage do you believe the U.S. economy is now? Why?

6. What is the gross domestic product? What is its relationship to productivity?

7. What are the effects of inflation on an economy? What are the effects of deflation? How does the consumer price index work?

8. What does nation’s unemployment rate indicate? Describe what type of unemployment you think each of the following illustrates:

9. Explain the difference between monetary policy and fiscal policy. How does the government raise funds to cover the costs of its annual budget?

10. What is the difference between the budget deficit and the national debt? What are the benefits of paying down the national debt? What might be the negative effects?