1.What is the main reason why General Motors failed while other companies like T

Question

1.What is the main reason why General Motors failed while other companies like Toyota and Ford were able to survive the economic crisis without government assistance?

Select one:

a. General Motors was simply too big, and it is difficult to manage such a large company

b. Toyota and Honda receive large, unfair subsidies from Japan's government

c. The strong dollar made it difficult for GM to expand its operations abroad

d. GM was over-dependent on the sales of SUV, which dropped as gas prices increased

e. GM was involved in a major lawsuit that cost the company billions of dollars

2.Why did the household savings rate in the United States dropped between 1981 and 2005 (briefly becoming negative in 2005)?

Select one:

a. People real income dropped during that period of time making it more difficult for them to save

b. Many people did not have a job during that period of time because unemployment was high, so they could not save

c. The high rate of inflation during that period of time made it difficult for people to save

d. Household savings were largely replaced by government savings through programs like social security

e. The increased availability of credit (borrowing) and low interest rates reduced people's incentive to save

3. Which one of these is an effect that raising minimum wage is likely to create?

Select one:

a. Employment in the economy will increase as more workers join the labor force

b. Firms will make more profit as workers increase their productivity in response to higher wages

c. The Short-run Aggregate Supply will increase as people invest more in human capital

d. Unemployment will rise as some businesses will reduce their workforce

e. A higher minimum wage will raise interest rates, which will stimulate savings and investment

4. Suppose that Transitia, a transition economy, grows at 8% each year and Developam, a highly developed economy, grows at 4% a year. If Transitia has a GDP of $5 billion and Developam has a GDP of $40 billion, how long would it take before Transitia has the same GDP as Developam?

Select one:

a. Never

b. 18 years

c. 36 years

d. 54 years

e. 72 year

Explanation / Answer

1. The right answer is option d. d. GM was over-dependent on the sales of SUV, which dropped as gas prices increased.

Explanation: GM's main product was SUV automobiles which need a higher amount of gas per mile to drive. Higher gas price resulted in a sharp decline in sales of GM's SUVs. The decline in sales was the major reason behind GM's failure.

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