business 1301 midterm

Ricord Books, a publication house, faced huge losses after 2008. The majority of its readers were born during the late 1950s, whose population was rapidly declining. Most modern readers preferred using e-books rather than reading from hard copies. This resulted in a decrease in the sales of Ricord Books. Identify the dimension of the social environment that this scenario exemplifies.

Aging population

In the context of federal debt, if spending is lower than revenue, the government incurs a budget deficit.

False

The value of all natural resources tends to rise with low demand, high supply, or both.

False

In the context of monetary policy, which of the following is a result of an increase in the reserve requirement?

Interest rates begin to rise.

Regency Placade, a renowned European electronics company, wants to set up a subsidiary in Finim, an Asian country. After conducting a survey, the company finds that Finim lacks the resources required for production. Therefore, Regency Placade decides to abandon the idea. In this scenario, which of the following most likely affected Regency Placade's plan?

Limited access to factors of production

Which of the following statements is true of nonprofit organizations?

They employ people and take in revenue.

The structure of the Board of Governors of the Federal Reserve is such that no single president can appoint all of the Board's members.

True

Unfair business practices such as predatory pricing hinder capitalism from achieving its potential.

True

Value is the relationship between the price of a good or a service and the benefits that it offers its customers.

True

The government in the town of Rodenham has granted exclusive rights to a few telecommunications companies to operate in specific geographic areas. The companies have to provide their services in the areas allotted to them, and no company is allowed to extend its services to the areas allotted to its competitors. This system has been put in place because it would be inconvenient for each company to build its own infrastructure in all areas. The given scenario exemplifies:

a natural monopoly.

The Federal Trade Commission:

actively promotes fair competitive practices.

In the context of the legal and ethical dimensions of business conduct, it is illegal but ethical to:

collaborate with other medical clinics to guarantee low prices in low-income counties.

Openi, an island nation, is able to increase its textile production without having to compromise on the production of other materials. This is in contrast to other nations that need to lower the production of other materials to increase their textile production. In this scenario, Openi has a _____ in textile production.

comparative advantage

A Japanese company encourages its employees to participate in charitable activities. The company gives annual paid leave of ten days to its employees to volunteer at nonprofits or take part in activities that support environmental causes. Given this information, the company's initiative is an example of _____.

corporate philanthropy

Children's Campground is a summer program for school children. It advertises that there is one counselor for every four children and that several other highly-trained professionals are part of its staff. Children's Campground advertisements indicate that the program relies heavily on its _____ factor to provide its services.

human resources

The term _____ refers to a market structure with many competitors selling differentiated products; the barriers to enter such a market structure are low.

monopolistic competition

In the context of the barriers to international trade, establishing standards on how certain products are produced is most likely a(n) _____.

nontariff barrier

In its role as a regulator, the Fed:

oversees mergers and acquisitions.

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

pharmaceutical companies.

The Board of Governors of the Federal Reserve holds a meeting to discuss its concern over the decreasing gross domestic product of the country. All members agree that the situation can be brought under control and the economy can be stimulated if they use the discount rate as a tool. In this scenario, the Fed is most likely to:

reduce the discount rate.

New Tapan, an African country, invested resources in the defense sector, and as a result, its budget deficit grew. To decrease the budget deficit, the government of New Tapan cut down its expenditures in several other sectors and imposed higher taxes. Similar measures implemented by the government in the United States would most likely create _____.

the fiscal cliff

The central banking system in the country of Darmos issues a notice to all its commercial banks stating that they must hold funds that are equal to 48% of the deposits held by their customers. In the given scenario, the central banking system's notice exemplifies _____.

the reserve requirement

The government of Lebitz, a European country, learns that low-priced textile imports from Pruneia, an Asian country, are affecting the sales of domestic textile companies. The Lebitzian government decides to levy a 6% tax on all textile goods imported from other countries. In this scenario, which of the following trade restrictions does the Lebitzian government impose?

A tariff

Torino Mex, a men's fashion boutique, is renowned for creating designer clothes for Latino Americans. However, it introduced a new line of designer clothing that especially caters to young Hispanic Americans to widen its customer base. Which of the following dimensions of the social environment is highlighted in this scenario?

Diversity

A social audit is a systematic evaluation of the positive and negative views of the public about a business firm.

False

An ethical dilemma involves clear misconduct at the workplace.

False

In the context of carbon footprint, emissions that occur outside a company's boundary, but over which it has some control, are classified as Scope 2 emissions.

False

Marina, a garments manufacturing company, signed a contract with Tertch Tex, a textile company, to receive 2 million pounds of yarn at a rate of $2 per pound. However, Tertch Tex hikes up the price to $5 per pound just before the day of delivery. Marina files a lawsuit against Tertch Tex for breaking an enforceable contract and receives $100 million in compensation. In this context, which dimension of the business environment is affected the most?

The economic environment

When Ruben wanted to start a new online news service, he was skeptical about investing in it because of the financial crisis in his country. However, he was put at ease after learning about the government's policy of levying low federal taxes on startup businesses. In this context, which dimension of the business environment is affected the most?

The economic environment

A country has an absolute advantage when it can produce more of a good than other nations, using the same amount of resources.

True

According to research from the Ethics Resource Center (ERC), organizational culture is most influential in shaping the ethical conduct of individual employees.

True

Although a trade deficit signals the wealth of an economy that can afford to buy huge amounts of foreign products, a large deficit can be destabilizing.

True

Balance of payments includes financial flows such as foreign investments.

True

Balance of trade incorporates trade with all foreign nations.

True

Capital, one of the factors of production, includes machines, tools, buildings, information, and technology.

True

Deflation refers to a period of falling average prices across an economy, which is a sign of economic trouble that goes hand-in-hand with very high unemployment.

True

Digital natives only spend when a business offers them value.

True

Disinflation is defined as a period of slowing average price increases across an economy.

True

Each year, the Federal Open Market Committee holds eight regularly scheduled meetings to make decisions about open market operations.

True

Fiscal strategies are closely tied to political philosophy.

True

Foreign licensing helps circumvent government restrictions on importing in closed markets.

True

Globalization has made ethics and social responsibility complicated for workers at every level.

True

Gross Domestic Product (GDP) levels tend to be somewhat understated, since they don't include any illegal activities, which can represent a significant portion of some countries' production.

True

In foreign licensing, licensors run the risk that unethical licensees may become their competitors, using information that they gained from the licensing agreement.

True

In the context of international trade, often countries with the highest trade barriers have the least competition.

True

In the context of monetary policy, when the economy contracts, the Fed typically decreases the money supply.

True

In the context of the barriers to international trade, per capita income is a key factor that determines the economic differences between two countries.

True

In the context of the barriers to international trade, the infrastructural differences between two countries fall into the category of economic differences.

True

In the context of the competitive environment of business, unlike leading-edge firms, bleeding-edge firms offer products just as the market becomes ready to embrace them.

True

In the context of the diversity in the American population, Caucasians continue to represent the largest chunk of the population at 63%.

True

In the context of the three types of emissions tracked by corporations, Scope 1 emissions refer to direct emissions produced by corporate operations.

True

Planned obsolescence represents a clear violation of social responsibility.

True

Reserve requirement is a rule of the Fed which requires that all of its member banks hold funds which are more than the stated percentage of the deposits held by their customers.

True

Sustainable development means weaving environmentalism throughout the business decision-making process.

True

The amount of input divided by the amount of output equals productivity.

True

The central banking system of the United States is the Federal Reserve.

True

The consumer market basket of goods and services, in which the consumer price index (CPI) measures the change in weighted-average price over time, is created by the U.S. Bureau of Labor Statistics.

True

The personal needs, the culture, and the family of an individual influence his or her ethical choices.

True

Boson Corp., an American software development company, wants to expand its business in international markets. Therefore, it buys property in Greitch, a South Asian country, and sets up a production facility despite the high costs involved. In this scenario, Boson Corp. is most likely involved in _____.

direct investment

Socially responsible firms support consumer choice by:

following laws that prevent anticompetitive behavior such as collusion.

Rubicon Inc., an American guitar manufacturing company, signed a contract with a supplier in Umreia, an Asian country, to manufacture guitars. Rubicon then imported these products and sold them in its markets under its own brand name. Rubicon did this because of the availability of cheap labor in Umreia that substantially cut down Rubicon's cost of production. In this scenario, Rubicon is most likely involved in _____.

foreign outsourcing

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 workforce advantage in the business environment, finding and holding the best talent will likely become a crucial competitive issue in the next decade as the baby boom generation begins to retire. However, job market contraction may not be an issue, because:

many baby boomers opt to postpone retirement in the face of inadequate financial resources.

In the context of international trade restrictions, _____ are limitations on the amount of specific products that may be imported from certain countries during a given time period.

quotas

During a period of grave financial crisis in the United States, Congress is pressurized to raise the limit on the maximum amount of money the government can borrow. Congress increases the limit on the condition that it will implement sharp tax hikes and across-the-board spending cuts to compensate for the raise and to ensure that the overall budget deficit decreases. In this scenario, the measures implemented by Congress will most likely create:

the fiscal cliff.

Corporate philanthropy includes all business donations to nonprofit groups except employee time.

False

Demographic factors include the milestones achieved during the developments in the field of computers, telecommunications, and other digital products.

False

Despite the growth rates in many high-population countries being weak, most of these nations remain ahead of the United States in terms of development and prosperity.

False

Despite their huge populations, China and India represent a much smaller opportunity in terms of size and economic growth.

False

Economists declare an official recession when gross domestic product decreases for six consecutive quarters.

False

Gross Domestic Product (GDP) measures the total value of all the imports and exports of a nation on a quarterly basis.

False

In the United States, nonprofits employ about one in hundred workers, accounting for less paid workers than the entire construction industry and less than the finance, insurance, and real-estate sectors combined.

False

In the context of business behavior, producing products that you know will break before their time is illegal and unethical.

False

In the context of competitive advantage, the value of the first-best choice represents the opportunity cost of producing a second product.

False

In the context of foreign direct investment, a joint venture involves the merger of companies.

False

In the context of foreign direct investment, a partnership typically involves a less formal, less encompassing agreement than a strategic alliance.

False

In the context of global trade, the exchange rate can directly measure global commerce.

False

In the context of monetary policy, when the Fed reduces the discount rate, banks will have to obtain funds at a higher cost.

False

In the context of social responsibility, a corporation that does not have profits as a first priority is referred to as a D-Corp.

False

In the context of the legal and ethical dimensions of business conduct, practicing collusion with competitors is legal but unethical.

False

In the context of the strategies for reaching global markets, franchising is a strategy to seek foreign suppliers.

False

Millennials outnumber digital natives by one million people.

False

Online technology prevents leading-edge companies from offering customized products at prices that are comparable to standardized products.

False

People can create natural resources by growing and harvesting agricultural products.

False

Socialism is an economic system that encourages privatization and believes that all enterprises should be publicly owned.

False

Speed-to-market is the rate at which a company's competitors copy its product innovations.

False

Stakeholders refer to groups of people who have a malicious intent toward an organization and who often resort to harmful actions.

False

The balance of trade is also referred to as countertrade.

False

The physiological environment is a key dimension of the business environment.

False

In the context of business ethics, in an ethical dilemma, every potential course of action has some significant negative consequences.

True

In the context of consumerism, smart businesses view customer complaints as an opportunity to create better products and stronger relationships.

True

In the context of creating and maintaining an ethical organization, when employees perceive more management commitment, they tend to be more fully engaged.

True

In the context of ethical behavior, encouraging fraudulent accounting is illegal and unethical.

True

In the context of your career choice, the broader economy will influence the level of your personal financial success.

True

Which of the following is a difference between the millennial generation and Generation Z?

Unlike the millennial generation, Generation Z approaches adulthood planning to work for success.

In the context of the history of American business, which of the following was a result of rapid industrialization in America from the mid-1700s to the mid-1800s?

Unprecedented production efficiency

A clothing company, Clendtine Fashions, pledges five percent of its annual revenue to environmental causes around the world. Being one of the top international companies, the founders of the company have an obligation to contribute toward the betterment of the world. This scenario is an example of Clendtine Fashions's participation in _____.

social responsibility

With an increasing number of workers facing challenges such as raising kids and caring for elderly parents, responsible companies are stepping in with programs such as on-site day care, company-sponsored day camp, and referral services for elder care. These actions show that these companies are fulfilling their _____.

social responsibility

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