1. A rapidly growing GDP indicates a(n) ________ economy with ________ opportunity for a firm to increase sales.

A) stagnant; little

B) stagnant; ample

C) expanding; little

D) expanding; ample

E) stable; no

2. Assume that the Federal Reserve decreases the money supply. This action will cause ________ to decrease.

A) interest rates B) the unemployment rate

C) investment in the economy D) trade balance

3. If the currency of your country is depreciating, the result should be to ________ exports and to ________ imports.

A) stimulate; stimulate

B) stimulate; discourage

C) discourage; stimulate

D) discourage; discourage

E) not affect; not affect

4. Fiscal policy is difficult to implement quickly because

A) it requires political negotiations.

B) much of government spending is nondiscretionary and cannot be changed.

C) increases in tax rates affect consumer spending gradually.

D) it requires political negotiations and much of government spending is nondiscretionary and cannot be changed.

E) it requires political negotiations and increases in tax rates affect consumer spending gradually.

5. In the maturity stage of the industry life cycle

A) the product has reached full potential.

B) profit margins are narrower.

C) producers are forced to compete on price to a greater extent.

D) the product has reached full potential and profit margins are narrower.

E) the product has reached full potential, profit margins are narrower, and producers are forced to compete on price to a greater extent.