Business Savvy Exam Prep

Owner-managers of small businesses can make decisions about the business without anyone else's permission. This describes which advantage of staying small? Unlimited profit potential Independence Ability to adapt to change Personal relationships with customers

Ability to adapt to change

Which of the following is not a source of equity financing? Crowdfunding Venture capital Angel investor Bank loan

Bank loan

Understanding which soft skills and characteristics businesses are looking for is part of which reason for studying business? -To improve management skills -Be a successful employee -To be a better informed consumer and investor -Help in choosing a career

Be a successful employee

_________ is an economic system in which individuals own and operate the majority of business that provide goods and services. -Communism -Capitalism -Socialism -A mixed economy

Capitalism

Which of the following is an example of a franchise in which a manufacturer authorizes a number of retail stores to sell a certain brand-name item? -Pepsi soft drink syrup -Chevrolet dealership -Dunkin' restaurant -Subway restaurant

Chevrolet dealership

The _______ provided stringent automotive, aircraft, and factory emission standards. American Recovery and Reinvestment Act (2009) Water Quality Improvement Act (1970) Noise Control Act (1972) Clean Air Amendment (1970)

Clean Air Amendment (1970)

One owner in a partnership may be the creative force behind the product, while another is excellent at managing the finances of the business. For which advantage of general partnerships is this an example? -Combined business skills and knowledge -Availability of capital and credit -Management disagreements -Ease of start-up

Combined business skills and knowledge

Which of the following is not true about the hard-core unemployed? -They may have experienced barriers to employment. -They have been unemployed for a short period of time. -They have little education or vocational training. -Companies can train and teach them skills for employment.

They have been unemployed for a short period of time.

Which of the following is not true of analytic skills? -They help managers to think in abstract terms in order to see the "big picture." -They are the ability to identify problems correctly. -They help managers generate reasonable alternatives. -They allow managers to choose the "best" alternatives to solve problems.

They help managers to think in abstract terms in order to see the "big picture."

During which period of the business cycle would the government most likely use monetary and fiscal policies? -Recession -Recovery -Trough -Peak

Trough

The owner of a sole proprietorship is personally responsible for any debt a business incurs refers to which disadvantage of sole proprietorships? Lack of money Difficulty in hiring employees Unlimited liability Lack of continuity

Unlimited liability

________ provide tighter integration of production and increased control over the supply of crucial inputs. Divestitures Horizontal mergers Vertical mergers Conglomerate mergers

Vertical mergers

If a purchasing manager does business with a company in which they are an investor, it would be considered what type of ethical issue? Bribery Conflict of interest Organizational relationships Communication

Conflict of interest

Which of the following is true during a recession? -Consumers purchase basic, functional products. -Consumers' willingness to spend increases. -Businesses often introduce new products during this period. -Unemployment reaches its peak level.

Consumers purchase basic, functional products.

_______ occurs when one firm employs another business—often in another country—to manufacture its products or product components to the domestic firm's specifications. A joint venture Direct investment Contract manufacturing A strategic alliance Assessment question

Contract manufacturing

Which of the following is true of limited liability companies (LLCs)? -Like S corporations, they are limited in the number of owners they can have. -Earnings of LLCs are taxed once, as personal income of the owners. -Owners have unlimited liability. -They are required to hold annual board meetings.

Earnings of LLCs are taxed once, as personal income of the owners.

Which of the following is true about taxes for partnerships? -Partnerships are only taxed on the profits after the owners are paid their personal incomes. -Earnings pass through the business and are taxed as the owners' personal income. -Profits are taxed as the owners' personal income and again as dividends distributed to stockholders. -Partnerships are exempt from taxes.

Earnings pass through the business and are taxed as the owners' personal income.

To form a sole proprietorship, owners are not required to fill out any special forms or pay any fees. To which of the advantages of sole proprietorships does this refer? Retention of all profits Flexibility of being your own boss Ease of start-up and closure No special taxes

Ease of start-up and closure

Which advantage of corporations being able to easily sell stock of publicly traded corporations illustrate? Ease of transfer of ownership Double taxation Ease of raising capital Perpetual life

Ease of transfer of ownership

When a country suspends trade of a particular product or with a particular country, they are using which type of trade restriction? Embargo Import quota Tariff Foreign exchange control

Embargo

The ______ is in charge of making sure that companies comply with laws designed to protect the environment. Federal Environmental Control (FEC) Environmental Agency Against Pollution (EAAP) Federal Trade Commission (FTC) Environmental Protection Agency (EPA)

Environmental Protection Agency (EPA)

The ________ has adopted a common currency, works to remove trade restrictions, permits the free flow of goods and workers throughout member nations, and promotes human rights within member countries and around the world. -World Trade Organization (WTO) -United States-Mexico-Canada Agreement (USMCA) -European Union (EU) -Association of Southeast Asian Nations (ASEAN)

European Union (EU)

Which of the following is not true about sexual harassment? -Sexual harassment may lead to high turnover and low morale. -Sexual harassment is illegal. -Training programs can help prevent sexual harassment. -Sexual harassment is not very prevalent in workplaces today.

Sexual harassment is not very prevalent in workplaces today.

The _________ prevented monopolies or mergers where competition was endangered. Federal Trade Commission Act (1914) Clayton Antitrust Act (1914) Interstate Commerce Act (1887) Sherman Antitrust Act (1890)

Sherman Antitrust Act (1890)

_______ are university-based groups that provide individual counseling and practical training to owners of small businesses. -Small-business institutes (SBIs) -Small-business development centers (SBDCs) -Service Corps of Retired Executives (SCORE) -The Small Business Administration (SBA) local offices

Small-business development centers (SBDCs)

_______ is the recognition that business activities have an impact on society and the consideration of that impact in business decision making. Corporate citizenship Writing a code of ethics Social responsibility Whistle-blowing

Social responsibility

________ includes member nations the United States, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. -The Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) -The Association of Southeast Asian Nations (ASEAN) -The Common Market of the Southern Cone (MERCOSUR) -The Commonwealth of Independent States

The Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)

________ is an independent agency of the U.S. government whose function is to assist in financing the exports of American firms. -The International Trade Administration -The International Monetary Fund (IMF) -A multilateral development bank (MDB) -The Export-Import Bank of the United States

The Export-Import Bank of the United States

______ provides loans to developing countries to provide safe drinking water, build schools, improve health care and access to water and sanitation, and other efforts. -The World Bank -The International Trade Administration -The Export-Import Bank of the United States -The International Monetary Fund (IMF)

The World Bank

Small businesses fill the needs of society and other businesses by _______. -providing goods and services not only to consumers but also to each other and to larger firms -employing younger workers, older workers, women, or workers who prefer to work part time -being responsible for technological advances -pushing their larger competitors to become more efficient and responsive to consumer needs

providing goods and services not only to consumers but also to each other and to larger firms

The ________ means that consumers should be provided with enough education and product information to enable them to be responsible buyers. right to be informed right to be safe right to be heard right to choose

right to be informed

The ________ means that consumers should be assured that the goods and services they purchase are not injurious with normal use. right to be informed right to be safe right to be heard right to choose

right to be safe

President Gerald Ford added _______ meaning that all consumers are entitled to be informed about their rights as consumers. right to be informed right to consumer education right to service right to be safe

right to consumer education

Personal knowledge, values, and goals are considered _______ factors that affect ethics.

social

Differences in language, religion, and values would be considered a(n) _______ challenge. political and legal economic social and cultural trade restriction

social and cultural

A _____________ is a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capital while a ____________ is an agreement between two or more groups to form a business entity in order to achieve a specific goal.

syndicate, joint venture

Countries using ______ as a trade restriction may be trying to protect a domestic industry from competition. import quotas foreign exchange control tariffs an embargo

tariffs

_______ help managers with the skills required to accomplish a specific kind of work.

technical skills

Small business investment companies (SBICs) are regulated by ________. -the Small Business Administration (SBA) -private angel investors -crowdfunding websites -major banking institutions

the Small Business Administration (SBA)

The trade agreement formerly known as the North American Free Trade Agreement (NAFTA) and now known as USMCA is an agreement between ________. -Mexico, Canada, and Greenland -Canada, the United States, and Brazil -the United States, Canada, and Mexico -the United States, Mexico, and Cuba

the United States, Canada, and Mexico

_______ is an internationally supported bank that provides loans to developing countries to help them grow. -The International Trade Administration -A multilateral development bank (MDB) -The Export-Import Bank of the United States -The International Monetary Fund (IMF)

A multilateral development bank (MDB)

Which of the following is not true? -A social responsibility plan requires the commitment of top executives. -A top manager is responsible for recommending specific policies for the organization. -A social audit is conducted only as needed. -Outside consultants may help with the planning stage of a social responsibility program.

A social audit is conducted only as needed.

Which of the following is true about a monopoly? -A supplier in a monopoly cannot set any price they want. -There are substitutes for goods and services in a monopoly. -Federal antitrust laws were passed to encourage monopolies. -Natural monopolies are not permitted to exist.

A supplier in a monopoly cannot set any price they want.

Which of the following is not true according to Adam Smith's capitalism? -Government should own private property and the resources used to create wealth. -The role of government should be limited to providing defense against foreign enemies, ensuring internal order, and furnishing public works and education. -Economic freedom ensures the existence of competitive markets that allow both sellers and buyers to enter and leave the market as they choose. -The creation of wealth is the concern of private individuals, not the government.

Government should own private property and the resources used to create wealth.

Which of the following is not true about small businesses in the United States? -Small businesses employ about half of all private sector employees. -Smallness may be based on size or revenue depending on the industry. -Half of all businesses are considered small businesses. -Small businesses have generated 65 percent of net new jobs over the past 20 years.

Half of all businesses are considered small businesses.

Small-business owners can work whichever hours and days they choose. This describes which advantage of staying small? Ability to adapt to change Personal relationships with customers Independence Limited potential

Independence

__________ is rising prices caused by some combination of excess demand and increasing cost of factors of production, while __________ is a general decrease in prices.

Inflation, deflation

_______ is/are often a political necessity because of government restrictions on foreign ownership. Strategic alliances Direct investment Joint ventures Contract manufacturing

Joint ventures

Which of the following is not included in material resources? -Machinery -Labor -Buildings -Minerals

Labor

Which section of the business plan would discuss the facilities needed for the business including space requirements and capital equipment? Introduction Critical Risks and Assumptions Manufacturing and Operations Plan Company and Industry

Manufacturing and Operations Plan

________ cannot distribute dividends. Nonprofit corporations Limited liability companies (LLCs) S corporations C corporations

Nonprofit corporations

Which of the following is an advantage for the franchisee? -Bringing in additional revenue -Locations are operated and maintained according to their standards. -Expanding the business without investing their own capital -Opportunity to purchase supplies and business necessities at discounts

Opportunity to purchase supplies and business necessities at discounts

Copying someone else's work without acknowledging the source is considered which type of ethical issue? Communication Conflict of interest Organizational relationships Bribery

Organizational relationships

Which of the following is true about corporations? Corporations are relatively easy and inexpensive to form. A corporation's earnings are taxed once, as personal income of the owners. Corporations cannot continue to operate when an owner withdraws or passes away. Owners have limited liability.

Owners have limited liability.

Which of the following is not true about an oligopoly? -It is difficult for new firms to enter the market. -Product differentiation does not matter in an oligopoly. -There are a few firms that dominate the market. -Firms in the market are interdependent.

Product differentiation does not matter in an oligopoly.

A trade association would most likely do which of the following to encourage ethical behavior? -Provide guidelines for companies -Create a code of ethics -Appoint a chief ethics officer -Pass laws and regulations

Provide guidelines for companies

A balance of payments is different from a balance of trade in that _______. a balance of trade does not consider a country's absolute advantage a balance of payments does not consider a country's comparative advantages a balance of trade measures more than just a country's imports and exports a balance of payments includes investments, money spent by foreign tourists, and other factors

a balance of payments includes investments, money spent by foreign tourists, and other factors

An absolute advantage means that __________

a country has the ability to produce a product more efficiently than any other nation

while a comparative advantage means that ___________

a country has the ability to produce a product more efficiently than any other product

When comparing gross national product (GDP) over several different time periods, one would need to _______. -consider the consumer price index (CPI) -compare the unemployment rates over the same time periods -compare countries of similar sizes -adjust dollar amounts for inflation

adjust dollar amounts for inflation

All of the following are advantages of sole proprietorships except ________. -ease of start-up and closure -flexibility of being your own boss -retention of all profits -unlimited liability

unlimited liability

One reason to study business includes _______, which includes having an understanding of cultural (or workplace) diversity. -helping to choose a career -starting your own business -being a successful employee -being a better informed consumer

being a successful employee

The ________ set the mission and broad objectives for a corporation and appoint corporate officers. stockholders corporation owners board of directors institutional investors

board of directors

Supporters of the socioeconomic model of social responsibility argue that _______. -society will benefit most when business is left alone to produce and market profitable products that society needs -social problems affect society in general, so individual businesses should not be expected to solve these problems -social issues are the responsibility of government officials elected by the people -businesses can create a more stable environment for long-term profitability if they help resolve social issues

businesses can create a more stable environment for long-term profitability if they help resolve social issues

When expenses total more than sales revenue, a business ________. -is operating at a loss -should work to decrease -revenues and increase expenses -must declare bankruptcy -earns a profit

is operating at a loss

Many entrepreneurs start a business with a good idea and a healthy dose of optimism but fail to have the management skills required to run the business. With this in mind,_____________ is the key to success for small businesses.

careful planning

A(n) _______can help employees understand what their company considers acceptable behavior. morality map business plan code of ethics ethics audit

code of ethics

Owners of _______ can vote in stockholders' meetings. common stock preferred stock limited stock institutional stock

common stock

The last step of creating a social responsibility program is ______. -getting commitment from top executives -conducting a social audit -the planning stage -appointing a director

conducting a social audit

With _________ , the entrepreneur repays the invested amount at a later date; with ___________, the entrepreneur is promising investors a share of future profits and an ownership stake in the business.

debt financing, equity financing

About 33 percent of all small businesses fall into the _______ category of industry. production distribution manufacturing service

distribution

A corporation that does business in more than one state is called a(n) ____________ in the state where it is incorporated and a(n) ___________ in the other states in which it does business.

domestic corporation, foreign corporation

The business cycle, inflation and deflation, unemployment, and income all impact the ___________________ .

economic environment

One option for exporting is to use a(n) _______, which is an independent firm that sells the products for the exporter for a commission or fee. export-import agent franchisor contract manufacturer trading company

export-import agent

In a ________, all materials, machinery, and workers required to manufacture a product are assembled in one place. -factory system -service economy -domestic system -trading system

factory system

The Company and Industry section of the business plan would _______. -list the company's name, address, and phone number of the business -list weaknesses of the business and how the company will deal with them and other business problems -discuss markets, market trends, and competitors -give the background of the company, choice of legal business form, and information on products or services

give the background of the company, choice of legal business form, and information on products or services

The process of creating, making, delivering, and promoting products that are environmentally safe is known as _______. green marketing green washing recycling reusing Assessment question

green marketing

Small-business institutes (SBIs) are _______. -groups of senior and graduate students in business administration who provide management and counseling to small businesses -university-based groups that provide individual counseling and practical training to owners of small businesses -a government agency that assists, counsels, and protects the interests of small businesses in the United States -a group of more than 10,000 retired and active businesspeople, including veterans, women, and people of color, who volunteer their services to small-business owners through the SBA

groups of senior and graduate students in business administration who provide management and counseling to small businesses

A plumber who owns their own business is likely to _______. -keep very detailed financial records including an annual report -obtain loans from financial institutions without any issues -have limited potential to grow into a large business -work hours and days set by someone else

have limited potential to grow into a large business

In a ________, companies that make and sell similar products in similar markets become one. conglomerate merger vertical merger horizontal merger divestiture

horizontal merger

An acquisition in which the target firm is being purchased unwillingly is called a _______. conglomerate merger proxy fight hostile takeover leveraged buyout

hostile takeover

In the early 1900s, consumer rights were almost nonexistent. The phrase caveat emptor meant ________________________.

let the buyer beware

In a ________, some partners do not participate in managing the business and in return receive limited liability. general partnership liability partnership limited liability partnership (LLP) limited partnership

limited partnership

Businesses that buy products from manufacturers and resell them would be classified as ________. -manufacturing businesses -marketing intermediaries -e-businesses -service businesses

marketing intermediaries

Which type of essential resource for businesses would buildings and machinery be considered? -Material resources -Informational resources -Financial resources -Human resources

material resources

A _________ occurs when there is a huge investment required to enter a market and it would be impractical to have more than one firm providing the product or service. -limited monopoly -statutory monopoly -natural monopoly -legal monopoly

natural monopoly

In a communist society, the government determines "who gets what" based on _______. -need -wealth -contribution -ability

need

A country that exports more than it imports is said to have a ________. positive balance of payments negative balance of payments negative balance of trade positive balance of trade Assessment question

positive balance of trade

Sustainability is best defined as _______. -incorporating efforts into company processes which aim to reduce the use of harmful materials, improve efficiencies, and increase transparency in supply chain management -the ability to create and maintain conditions under which present and future generations can exist in productive harmony, and permit fulfilling the social, economic, and other requirements of future and present generations -accepting an obligation to give equal weight to profits, consumer satisfaction, and social well-being in evaluating a firm's performance -a loose, subjective measure of how well off an individual or a society is, mainly in terms of want satisfaction through goods and services

the ability to create and maintain conditions under which present and future generations can exist in productive harmony, and permit fulfilling the social, economic, and other requirements of future and present generations

The definition of business ethics is _______. -the application of moral standards to business situations -the study of right and wrong and of the morality of the choices that individuals make -rules and guidelines that can be enforced by governmental authority -standards of proper or acceptable behavior

the application of moral standards to business situations

Passing laws and regulations is one way _________ can encourage ethical behavior. individual companies trade associations stakeholders the government Assessment question

the government

According to _____________, an individual's personal gain benefits others and a nation's economy.

the invisible hand

During the planning stage of developing a social responsibility program, ______. -the key areas of concern in the executives' policy statement are addressed in a proposal for the program -top executives create a policy statement that outlines key areas of concern that will serve as a guide for employees -the company conducts a social audit -a top executive is usually appointed to implement the social responsibility plan

the key areas of concern in the executives' policy statement are addressed in a proposal for the program

The Labor Force section of the business plan would discuss _______. -the succession plan for the company -how the business will impact economic, community, and human development -the quality of skilled workers available and the training, compensation, and motivation of the workers -the management team including their skills, talents, job descriptions, and compensation

the quality of skilled workers available and the training, compensation, and motivation of the workers

The gross domestic product (GDP) is _______. -the sum of all goods and services produced by a nation in a year -the difference between gross domestic output and the nation's imports in a year -the dollar amount of all goods exported out of a nation in a year -the total amount of money earned by a nation's population in a year

the sum of all goods and services produced by a nation in a year

All of the following are true of S corporations except ________. -owners have limited liability -they are restricted to no more than 100 stockholders -they are subject to double taxation -stockholders must be U.S. citizens

they are subject to double taxation

All of the following are arguments against trade restrictions except _______. -to retaliate for another nation's trade restrictions -restriction of consumers' choices -higher prices for consumers -misallocation of international resources

to retaliate for another nation's trade restrictions

The United States currently has a(n) _______. equal balance of trade trade deficit trade surplus favorable balance of trade Assessment question

trade deficit

Affirmative action programs ______. -work to counteract repeated work sabotage; verbal abuse; and/or abusive conduct that is threatening, humiliating, or intimidating -try to make sure that members of underrepresented groups are represented in the organization in the same proportion as the surrounding community -create policies and training programs that help prevent bullying, sexual harassment, and other abusive behaviors in the workplace -provide training programs for workers with little education or vocational training and a long history of unemployment

try to make sure that members of underrepresented groups are represented in the organization in the same proportion as the surrounding community

During the peak period, _______. -unemployment is low and total income is high -unemployment peaks -unemployment rises and total buying power declines -unemployment declines and disposable income increases

unemployment is low and total income is high