BADM 101 Unit 1 Test

The economic environment

In September 2008, during the fiscal crisis in the United States, the stock market lost more than a third of its value, and 11.1 million Americans were out of work. Neither businesses nor individuals could borrow funds to meet their needs. Which of the following dimensions of the business environment does this illustrate?

In the context of factors of production, the value of all natural resources tends to:

rise with high demand, low supply, or both.

In the context of ethical choices, research results from the Ethics Resource Center (ERC) illustrate that:

misconduct by employees rose when they felt that the Great Recession negatively impacted the ethical culture of their company.

In the context of the code of ethics of a company, which of the following is a step that is virtually always included when experts advocate a forceful, integrated approach to ethics?

Communicating about the importance of ethics

\_____ is the authority granted by a domestic firm to an overseas firm for the rights to produce and market its product or to use its trademark/patent rights in a defined geographical area.

Foreign licensing

Trade restrictions were created to:

protect domestic industry.

Which of the following is one of the core purposes of the Fed?

Influencing the size of the money supply

In its role as the government's bank, the Fed:

keeps the U.S. currency supply in good condition.

Walid, an IT professional, is known for his perseverance, his self-discipline, and taking accountability for his actions. In the context of universal ethical standards, Walid most likely possesses the core value of \_____.

responsibility

Promoting high-calorie/low-nutrient foods with inadequate information about the risks is a(n) \_____ practice.

legal but unethical

In the context of the fundamental principles of a free market system, the \_____ is associated with the point at which the quantity demanded of a product equals the quantity supplied.

equilibrium price

Microeconomics focuses on:

individual businesses.

\_____ means buying products domestically that have been produced or grown in foreign nations.

Importing

In the context of key economic considerations when entering a foreign market, which of the following is an example of the communication infrastructure in a country?

Banking

Which of the following is a key dimension of the business environment?

The technological environment

President Barack Obama spearheaded passage of a massive economic stimulus package, which was designed not only to create jobs but also to build infrastructure, with a focus on \_____.

renewable energy

Pearsil & Pearsil, a real estate company, now personally certifies the validity of the company's financial statements. Given this information, the CEO most likely follows the\_____.

Sarbanes-Oxley Act

The obligation of a business to contribute to society is referred to as \_____.

social responsibility

When the government takes steps to reduce the risks of starting and running a business, it is most likely to result in:

an increase in free enterprises.

Which of the following is an example of a nonprofit organization?

Hollorg, a community museum that is funded by a trust and is free for public use

A \_____ is formed when two or more companies share resources, risks, and profits without actually merging, to pursue specific opportunities.

joint venture

A(n) \_____ refers to a group of countries that have eliminated tariffs and harmonized trading rules to facilitate the free flow of goods among the member nations.

foreign franchise

The Fed directly stimulates spending by:

buying government securities

Macroeconomics involves the study of:

the gross domestic product of a country.

Which of the following statements is true of nonprofit organizations?

They employ people and take in revenue.

The Federal Trade Commission:

actively promotes fair competitive practices.

In response to inflation, the Fed is likely to:

increase the discount rate.

In the context of supply and demand, which of the following statements is true of the free market system?

People tend to buy more products with lower prices.

Compared to the United States, China and India have:

higher gross domestic product growth rates.

In the context of international trade, which of the following statements is true of comparative advantage?

As technology changes, nations may gain or lose comparative advantage in various industries.

In the context of globalization, which of the following is the most challenging issue faced by companies and individuals that are involved in international business?

Bribery

In the context of business ethics, \_____ refers to a decision that involves a conflict of values.

an ethical dilemma

Despite the U.S. economic crisis of 2008, research suggests that:

most budding entrepreneurs still plan to launch their firms in the next three years.

Susan, the Human Resources Director at Trangend Cosmetics, is responsible for recruiting, hiring, and training employees. In the context of the given scenario, Susan is a \_____.

factor of production

Lily, a salesperson at a clothing store, observes the department head misbehaving with a customer. She brings the issue to the notice of the store manager, and the offender is immediately dismissed from his job. In this scenario, Lily is a \_____.

whistle-blower

Crumbie, a cereal company, not only provides nutritional information on the packaging box of its product but also goes a step ahead by providing a pamphlet that gives a detailed description of the production process. Given this information, it can be deduced that Crumbie is an advocate of \_____.

developmentalism

Which of the following is a difference between the supply curve and the demand curve?

Unlike the supply curve, the demand curve for most goods and services slopes downward as it moves to the right.

Which of the following is a feature of capitalism?

Private-sector businesses are free to make their own choices regarding what they will produce.

Which of the following statements is true of international trade?

It offers companies an invaluable source of new ideas.

\_____ refers to selling products in foreign nations that have been produced or grown domestically.

Exporting

In a business cycle, the \_____ is a period of robust economic growth and high employment.

expansion

The economic system of the United States is called \_____.

capitalism

In \_____, firms either acquire foreign firms or develop new facilities from the ground up in foreign countries.

direct investment

In the context of global trade, a balance of payments deficit means that:

more money flows out than in.

Which of the following is a characteristic of entrepreneurs?

They risk their time, money, and other resources to start and manage their business.

In the context of the technological environment of business, which of the following statements is true of e-commerce?

Business-to-business selling comprises the vast majority of total e-commerce sales.

In the context of the legal and ethical dimensions of business conduct, embezzling money is:

illegal and unethical.

Mark and Augustine are employees of an advertising firm. Following a personal disagreement, Augustine steals Mark's idea for an advertisement and presents it as his own in a meeting. In this scenario, Augustine is guilty of \_____.

an ethical lapse

Spacein, a hard drive manufacturer, is accused of deliberately creating flaws in its product design. News reports hint that the company has been doing this for years to reduce the time between consumer repurchases. In the context of social responsibility, Spacein has been accused of \_____.

planned obsolescence

Universal ethical standards can solve the problem of too many people viewing ethics as \_____.

relative

Which of the following countries most likely has a comparative advantage?

An Asian country that produces quality automobiles with little opportunity cost compared to other countries

The term \_____ refers to the shortfall that occurs when the total value of a nation's imports is higher than the total value of its exports.

trade deficit

High taxation, excess regulation, and limited choices in a business environment are likely to result in a(n):

decrease in entrepreneurial activities.

In the context of factors of production, which of the following statements is true of entrepreneurs?

They thrive in an environment that supports economic freedom.

In the context of monetary policy, which of the following statements is true of money supply?

The M1 money supply includes all currency plus checking accounts and traveler's checks.

In the context of the free market system, which of the following statements is true of oligopoly?

It typically avoids intense price competition.

Real gross domestic product (GDP) measures the total value of final goods and services produced within a nation's physical boundaries over a given period of time, adjusted for:

inflation

The term \_____ refers to the quantity of products that producers are willing to offer for sale at different market prices.

supply

When the industries in a country tend to produce products that have the lowest opportunity cost relative to other countries, the country most likely has a \_____.

comparative advantage

Unless they face major trade barriers, the industries in any country tend to produce products for which they have a \_____, which means that they tend to turn out those goods that have the lowest opportunity cost compared to other countries.

comparative advantage

Ethics refer to:

sets of beliefs about right and wrong.

In the context of the legal and ethical dimensions of business conduct, rewarding integrity is an example of \_____.

legal and ethical behavior

In the context of the history of American business, which of the following statements is true of the production era?

The assembly line became standard across major manufacturing industries.

In the context of the dimensions of the business environment, which of the following is true of the competitive environment?

Vocal promoters of a firm's products can get the firm new customers effectively.

In the context of economic systems, the two key phases of a business cycle are:

contraction and expansion.

Which of the following is an example of a natural monopoly?

Public utilities

The most socially responsible companies establish \_____ for their vendors, setting clear policies for human rights, wages, safety, and environmental impact.

codes of conduct

To bring a code of ethics to life, experts advocate a forceful, integrated approach to ethics. According to this, \_____.

when people violate ethical norms, companies must respond publicly to retain employee trust

In the context of customer satisfaction, a product has value when:

its benefits to the customer are equal to or greater than the price that the customer pays.

As life spans increase and birth rates decrease, the American population is rapidly aging. This may most likely lead to:

an increase in taxes as state and federal governments stretch to serve the aging population.

Which of the following statements is true of foreign outsourcing?

It drives down the cost of production.

Mewpeth, an Asian nation, is the world's largest producer of cotton. The country was able to achieve this status by increasing the production of cotton and compromising on the production of wheat. The given scenario exemplifies the concept of \_____.

opportunity cost

In the context of business ethics, \_____ involves clear misconduct, unlike an ethical dilemma that involves a conflict of values.

an ethical lapse

In the context of monitoring ethics and social responsibility, which of the following statements is true of a social audit?

The threat of government legislation keeps some industries motivated to self-regulate.

Which of the following countries exemplifies the concept of opportunity cost?

An Asian country that increases its production of sugar by decreasing its production of cocoa

In the context of key economic considerations when entering a foreign market, the energy infrastructure in a country most likely includes \_____.

utilities

A coal mining company has employed around 250 miners who work 8-hour shifts every day. In the context of factors of production, the miners can be classified as \_____.

human resources

In the context of factors of production, which of the following is a natural resource?

land

Which of the following statements is true about socialist economy?

Tax revenues fund services that citizens in free enterprise systems would have to pay for themselves.

To bring inflation under control, the Fed:

reduces the money supply.

Lefrada, a luxury watchmaker, stops production for three months and lays off 30 employees because of a sharp decline in its sales during the period of recession. In the given scenario, the laid off employees are facing \_____.

cyclical unemployment

Which of the following factors acts as a motivator for business owners in a capitalist economy?

The right to spend after-tax income however one sees fit

In the context of the social environment of business, which of the following is likely to happen as the American population rapidly ages?

Creative companies will reimagine their current products to serve older clients.

Which of the following statements is true of the technological environment of business?

It represents a rich source of competitive advantage for fast-moving firms.

In the context of the barriers to international trade, which of the following is the best way to jump over sociocultural barriers?

Conducting thorough customer research

Which of the following countries has a trade deficit?

A European country that has a higher total value of imports than exports

Socially responsible firms support consumer choice by:

following laws that prevent anticompetitive behavior such as collusion.

\_____ is a widely accepted social movement that supports a buyer's right to be informed, to be safe, to choose, and to be heard.

consumerism

Identify a true statement about pure market economies.

They do not make sufficient provision for the old, the young, and the sick.

Which of the following statements is true of a capitalist economy?

Individuals are free to choose how much they are willing to pay for products.

Which of the following statements is true of the economic environment of a business?

It is affected by corruption.

Which of the following can be considered a business?

Davent, an online shopping portal that offers discounted prices on clothes

Resorto, a European country, exported sugar worth $600 million between 2015 and 2016 and imported tea worth $750 million during the same period. In this scenario, Resorto most likely had a \_____ between 2015 and 2016.

trade deficit

A \_____ refers to the overage that occurs when more money flows into a nation than out of that nation.

balance of payments surplus

In the context of the stakeholder approach to business, the federal government is a key stakeholder in:

pharmaceutical companies.

Companies that step in with on-site day care programs for employees facing challenges such as caring for elderly parents are fulfilling their:

social responsibility.

When a business brings in less money than it needs to cover expenses, it incurs a \_____.

loss

In the context of the free market system, which of the following market structures has a low barrier to entry?

Pure competitions

In the context of fundamental principles of a free market system, which of the following statements is true of a demand curve?

It shows the relationship between price and quantity from a customer standpoint.

The arguments for and against trade restrictions are called \_____.

protectionism