Chapter 2 (Multiple Choice)

C; command

in a ____________________ economy, the government holds the primary influence on economic decisions. a. traditional b. market c. command d. free enterprise

A; financial

most new business fail due to poor ______________ planning. a. financial b. production c. managerial d. none of the above

C; $2.5 trillion

over the past 20 years, U.S. business investments in other countries have grown to nearly a. $500 million b. $1 trillion c. $2.5 trillion d. $5 trillion

C; market price

the ____________________ of a product or service provides the balance between supply and demand. a. available money b. resources c. market price d. unlimited wants

D; supply and demand

the economic principle that people have more wants and needs that can be satisfied with the available products and services is a. choice b. scarcity c. limited resources d. supply and demand

D; all of the above

the form of business ownership determines which type of responsibility of the owner? a. financial b. legal c. managerial d. all of the above

C; corporation

the form of financial ownership in which profits can be taxed twice is a. sole proprietorship b. partnership c. corporation d. none of the above

D; the foreign exchange market

the largest trading market in the world is a. the New York Stock Exchange (NYSE) b. NASDAQ c. the Chicago Board of Trade d. the foreign exchange market

B; foreign exchange market

the largest trading market in the world is the a. U.S. stock market b. foreign exchange market c. long-term capital market d. international investment market

A; term

the length of time invested money is controlled by others is known as the a. term b. conditions c. agreement d. return

C; corporation profits are subject to double taxation

the major financial disadvantage to the ownership of a corporation is a. each owner is individually liable of all losses. b. corporate tax rate are usually higher than individual rates c. corporate profits are subject to double taxation d. stock prices can decrease in value as well as increase.

D; stock market

the organization exchange of the ownership shares or public corporations is a a. capital market b. financial market c. commodity market d. stock market

C; people have unlimited wants and needs and limited resources

the science of economics is needed because a. today people have everything they need b. governments must make all economic decisions c. people have unlimited wants and needs and limited resources d. people cant be trusted to make good decisions

C; risk

the uncertainty that an expected profit will not be achieved is a financial a. market b. return c. risk d. investment

B; risk and return

what two things must be balanced when selecting an investment? a. cost and benefit b. risk and return c. income and expenses d. supply and demand

D; all of the above are appropriate reasons

which of the following is NOT a reason for companies to make international business investments? a. to increase operating efficiency and reduce costs b. to reduce political, legal, and regulatory hurdles they might otherwise face in other countries c. to diversify their operations d. all of the above are appropriate reasons

A; how much money is needed?

which of the following is NOT one of the important decisions that must be made about a country's economy? a. how much money is needed? b. what products and services will be produced? c. how will the needed products and services be produced? d. for whom will the products and services be produced

C; a major government role in the economy

which of the following is not a principle of a free enterprise economy? a. right of private ownership b. competition among businesses c. a major government role in the economy d. freedom of choice

C; corporation

which type of business does not end when the current owner dies or sells his or her ownership in the business? a. sole proprietorship b. partnership c. corporation d. none of the above

B; partnership

a _________________ is a business owned and managed by two or more people under the conditions of a legal written agreement. a. sole proprietorship b. partnership c. corporation d. none of the above

B; financial market

a ______________________ exists to facilitate the exchange of things of value between buyers and sellers. a. stock b. financial market c. bank d. none of the above

B; a global business

a company that transcends national boundaries and is not committed to a single home country is a. a foreign national company b. a global business c. an international corporation d. a virtual business

Borrow

a typical way for businesses to obtain financing without offering ownership is to _____________________ money from financial institutions.