Chapter 02
Chapter Two
Economics: The Framework for Business
Review Questions
1. How did the global economic crisis unfold?
The economy changed for the worse when the dot.com bubble burst in 2000, and 9/11 terrorist attacks happened in 2001.
2. What steps did the Federal government and the Federal Reserve take to mitigate the crisis?
They decreased interest rates, and subprime mortgage came into play. They seized a few companies that controlled a lot of the mortgage. The congress passed a 700 billion dollar bailout plan. As the new administration began Obama passed a 825 billion dollar bailout plan.
3. Compare and contrast microeconomics and macroeconomics. How do the two approaches interrelate? Use a specific example to explain.
Macroeconomics is the study of a country's overall economic issues such as performance, structure, behavior, decision making, and study rates. Microeconomics focuses on smaller economic units such as individual consumers, families and businesses. They can affect how much and what you can buy for your family.
4. What is the difference between fiscal and monetary policy? What role does politics play in shaping these policies?
Fiscal policies refer to government efforts to influence the economy through taxation without representation and spending decisions that are designed to encourage growth. Monetary policies refer to actions that shape the economy by influencing interest rates and the supply of money. Politics plays a role by making taxes higher and by influencing interest rates.
5. What are the fundamental elements of the free market economic system? How can businesses thrive within this system?
The fundamental elements are rights to own a business and keep after-tax profits, the right to private property, the right to free choice, and the right to fair competition. They can profit from these by getting extra money after taxes by owning their own property, and have some freedom to do what they like.
6. Describe the
Economics: The Framework for Business
Review Questions
1. How did the global economic crisis unfold?
The economy changed for the worse when the dot.com bubble burst in 2000, and 9/11 terrorist attacks happened in 2001.
2. What steps did the Federal government and the Federal Reserve take to mitigate the crisis?
They decreased interest rates, and subprime mortgage came into play. They seized a few companies that controlled a lot of the mortgage. The congress passed a 700 billion dollar bailout plan. As the new administration began Obama passed a 825 billion dollar bailout plan.
3. Compare and contrast microeconomics and macroeconomics. How do the two approaches interrelate? Use a specific example to explain.
Macroeconomics is the study of a country's overall economic issues such as performance, structure, behavior, decision making, and study rates. Microeconomics focuses on smaller economic units such as individual consumers, families and businesses. They can affect how much and what you can buy for your family.
4. What is the difference between fiscal and monetary policy? What role does politics play in shaping these policies?
Fiscal policies refer to government efforts to influence the economy through taxation without representation and spending decisions that are designed to encourage growth. Monetary policies refer to actions that shape the economy by influencing interest rates and the supply of money. Politics plays a role by making taxes higher and by influencing interest rates.
5. What are the fundamental elements of the free market economic system? How can businesses thrive within this system?
The fundamental elements are rights to own a business and keep after-tax profits, the right to private property, the right to free choice, and the right to fair competition. They can profit from these by getting extra money after taxes by owning their own property, and have some freedom to do what they like.
6. Describe the