Midterm Questions

Which of the following best describes nominal GDP? A. Total quality of goods and services produced by an economic system B. Total value of all goods and services produced within a given period by a national economy, measured in current dollars or with all components valued at current prices. C. Total value of goods and services produced within a given period by a national economy, regardless of where the factors of production are located. D. Total value of of all goods and services produced within a given period by a national economy, adjusted to account for changes in currency values and price changes. E. Total quantity of goods and services that are imported within a given period of time.

B. Total value of all goods and services produced within a given period by a national economy, measured in current dollars or with all components values at current prices.

Which of the following is federally licensed to borrow money from the Small Business Administration to invest in or lend to small businesses? A. SCORE B. SBICs C. SBDC D. FDIC E. SEC

B. SBICs

Which of the following is an advantage of sole proprietorships? A. Ease In attracting a silent partner B. Sales and expenses have tax benefits C. It is easier to borrow money D. There is increased continuity E. Bills are paid out of pocket

B. Sales and expenses have tax benefits

Which of the following is created when a corporation creates a new, independent corporation from the sale of an existing portion of the business? A. Divestiture B. Spin off C. Joint venture D. Merger E. Acquistion

B. Spin off

What is the condition in an economic system in which the amount of money available, and the number of goods and services produced, are growing at about the same rate? A. Unemployment B. Stability C. Deflation D. Inflation E. Oversupply

B. Stability

Which of the following can assist a small business and helps to determine standards based on industry? A. The U.S. Department of Commerce B. The Small Business Administration C. A franchise D. Venture Capitalist E. The Small Business Development Center

B. The Small Business Administration

Which of the following are groups of small investors seeking to make profits on companies with rapid growth potential? A. Community banks B. Venture capital companies C. Equity managers D. Government securities dealers E. Stock brokers

B. Venture capital companies

Why would a government most likely be concerned about its country carrying a trade deficit? A. A trade deficit means that the country's productivity is low. B. A trade deficit means local companies do not have enough competition. C. A trade deficit ties up money that could be used for economic growth. D. A trade deficit decreases demand for goods overall. E. A trade deficit means that consumers do not have enough purchasing power.

C. A trade deficit ties up money that could be used for economic growth.

How would supply affect the aggregate output of an economy? A. Supply would decrease aggregate output B. Increases in both would cause inflation C. Aggregate output would grow as supply grows D. Supply would have no direct effect on aggregate output E. Aggregate output would increase the money supply

C. Aggregate output would grow as supply grows

Which of the following is the economic value of all products that a country exports minus the economic value of all the products it imports? A. National debt B. Gross domestic product C. Balance of trade D. GDP per capital E. Gross national product

C. Balance of trade

Which of the following does a start-up company need in order to estimate the required size of a plant, store, or office, inventory levels, and size of staff? A. Sales forecast B. Tax estimate C. Business objective D. Stock options E. Funding source

C. Business objective

Who is responsible for the day to day management and overall performance of an organization? A. Officers B. President C. Chief Executive Officer D. Board of Directors E. Vice President

C. Chief Executive Officer

Which of the following determines the role of shareholders, directors, and other managers in making decisions and accountability? A. Board of directors B. Stockholders C. Corporate governance D. Venture capitalists E. Corporate officers

C. Corporate governance

Which of the following occurs when an organization sells part of a business or operation to a third party so that it can focus more specifically on its core business? A. Merger B. Acquisition C. Divestiture D. Buy off E. Spin off

C. Divestiture

Which of the following offers expert statistical information on the strength and performance of an economy? A. Market price reports B. Supply curves C. Economic indicators D. Demand curves E. Degrees of competition reports

C. Economic Indicators

Which indicator refers to the total quantity of goods and services produced by an economic system during a given period? A. The business cycle B. Aggregate output C. Gross domestic product D. The consumer price index E. Gross national product

C. Gross domestic product

Which term refers to the total value of all goods and services produced within a given period by a national economy through domestic factors of production? A. Output per capita B. Aggregate output C. Gross domestic product D. Gross national product E. Purchasing power parity

C. Gross domestic product

The total value of all goods and services produced by a country within a given period is measured through what? A. Standard of living B. Aggregate output C. Gross national product D. Output per capita E. Inflation rates

C. Gross national product

In which ownership is an owner most liable for debt, but only based on how much they invested? A. Master limited partnership B. Cooperative C. Limited partnership D. Corporation E. General partnership

C. Limited partnership

Which of the following supports the idea that the prices of similar products in different countries should be about the same? A. Standard of living B. Real growth rate C. Purchasing power of parity D. Trade deficit E. Balance of trade

C. Purchasing power of parity

Which of the following is a period during which aggregate output, as measured by real GDP, declines A. Stagflation B. System-wide economic disorder C. Recession D. Deflation E. Inflation

C. Recession

Which entity is defined as independent and has little influence on its market? A. Corporation B. Joint Venture C. Small business D. Partnership E. Government agency

C. Small business

Which type of government based economic policy includes both fiscal and monetary policy? A. Trade B. Employment C. Stabilization D. Tax E. Foreign

C. Stabilization

Which term refers to total quantity and quality of goods and services that people living in an economic system can purchase? A. Business cycle supply B. Demand and supply schedule C. Standard of living D. Aggregate output E. Consumer price index

C. Standard of living

Who are the owners of a corporation? A. Board of directors B. Financial officers C. Stockholders D. Top managers E. Entrepreneur

C. Stockholder

Which of the following do competitors establish when collaborating on a project that might have mutual gain? A. Stock options B. A new board of directors C. A strategic alliance D. Institutional investors E. A spin off

C. Strategic alliance : Company A and B work together to complete project. Not a new company

What type of corporation issues stock that is held by only a few people and not available to the public? A. Limited liability B. Subchapter S C. Public D. Closely held E. Professional

D. Closely held

Which of the following are used to keep a business on track and alert to potential trouble within the company? A. Capital B. Small Business Association financial programs C. Venture capitalists D. Control systems E. Sales forecasting

D. Control systems

What is the term for the profits that are distributed to all owners of a corporation? A. Tender B. Interest C. ESOP D. Dividends E. Yield

D. Dividends

Why is it important to calculate purchasing power parity in the global market? A. It indicates how much consumers will pay for goods and services B. It determines interest rates on short-term debt C. It identifies how much the nominal GDP should be adjusted D. It helps companies determine standards of living across the globe E. It indicates the level of disposable income in developed nations

D. It helps companies determine standards of living across the globe

What type of partnership allows an organization to sell shares of the partnership to investors on a public market? A. General partnership B. Limited partnership C. Cooperative D. Master limited partnership E. Unlimited partnership

D. Master limited partnership

Which of the following occurs when a country exports more than it imports? A. Recession B. Negative balance of trade C. Economic stability D. Positive balance of trade E. Inflations

D. Positive balance of trade

Which of the following is almost always a key element in entrepreneurship? A. Growth B. Aspiration C. Self-reliance D. Risk E. Planning

D. Risk

Which of the following legal forms of business is owned and usually operated by a single person who is responsible for its debts? A. Cartel B. Corporation C. General partnership D. Sole proprietorship E. Limited partnership

D. Sole proprietorship

Which of the following is the advantage to starting a business from scratch instead of buying an existing business? A. There is a proven ability to attract customers B. Profit is generated sooner C. There is a stronger relationship with leaders and other stakeholders D. There are no ill-effects from the previous owner E. There is no clearer picture of what to expect in terms of start-up

D. There are no ill-effects from the previous owner

Which of the following indicated the level of joblessness among people who are actively seeking work in an economic system? A. Parity B. Deflations C. Balance of trade D. Unemployment E. Inflation

D. Unemployment

What is a major drawback of sole proprietorships? A. Short-term focus of shareholders B. Work flexibility C. Low start up costs D. Unlimited liability E. Structured hours

D. Unlimited liability

Which of the following describes an investor in a business who is liable for some of its debts , but has no active role in its operation? A. General partners B. Unlimited partners C. Master partners D. Limited partners E. Minority partners

D. limited partners

What term do economists use for the pattern of short-term expansions and contractions in the economy? A. Business cycle B. Aggregate output C. Standard of living D. Consumer price index E. Purchasing power parity

A. Business Cycle

Which of the following BEST defines those who assume the risk of business ownership? A. Entrepreneurs B. Customers C. Corporate partners D. The small business administration E. Banks

A. Entrepreneurs

Which of the following is calculated by dividing the total gross domestic product by the total population? A. GDP per capita B. Real growth rate C. Real GDP D. Purchasing power parity E. Standard of living

A. GDP per capita

The amount of money that a government owes its creditors is referred to as that country's A. GDP B. National debt C. Consumer price index D. Inflation rate E. GNP

B. National debt

Why is gross national product (GNP) considered to be a less valuable indicator of domestic economic performance than gross domestic product (GDP)? A. GNP does not consider where the economic performance was located. B. GNP only considers economic performance within the United States. C. GNP is not adjusted for inflation. D. GNP does not consider currency fluctuations at the time of product purchase. E. GNP does not compare output to population rates.

A. GNP does not consider where the economic performance was located.

Which of the following is an indication of national economic growth, shown by measuring aggregate output? A. Gross domestic product B. Standard of living C. Economic indicators D. Gross national product E. Real growth rate

A. Gross domestic product

What is the biggest advantage of incorporating? A. Limited liability B. Increased profits C. Tax advantage D. Increased talent pool E. Limited tender offers

A. Limited liability

Which of the following is used by government to control the size of its money supply? A. Monetary policy B. Inflation C. Stabilization policy D. Trade deficits E. Gross domestic product

A. Monetary policy

Which of the following is the major drawback of accepting venture capital? A. Sharing company control B. Having to pay high interest rates C. Limiting expansion D. Facing a short repayment period E. Having to write proposals

A. Sharing company control

What is considered to be a significant disadvantage of owning a franchise? A. Start-up costs B. Operational guidelines C. Difficulty obtaining loans D. Double taxation E. Competition

A. Start-up costs

When economists measure gross national product, what is being measured within a specific time period, regardless of location? A. The aggregate output B. The economic growth of the nation C. The growth of domestic factors of production D. The growth rate adjusted for inflation E. The total value of all goods and services

A. The aggregate output

When a business owner forms a master limited partnership, what responsibilities does the master partner have toward the minority partner(s)? A. The master partner must provide detailed operating and financial reports. B. The master partner must allow the partners to decide all major business changes and transactions. C. The master partner must take all liabilities clear before the partnership is formed. D. The master partner must give up majority ownership. E. The master partner must allow the partners to take an active role in the business.

A. The master partner must provide detailed operating and financial reports.

What type of company has stock that is widely held and available for sale to the general public? A. Private corporation B. Public corporation C. General partnership D. Limited liability corporation E. Professional corporation

B. Public corporation

Which of the following explains first mover advantage? A. The concept that the first in the market will make the most money B. The concept that a firm who exploits an opportunity before others has an advantage C. The concept that there is an advantage in leaving a market when it becomes flooded D. The concept that large organizations cannot take advantage of an opportunity as quickly as an entrepreneur E. The concept that there is more risk being first, but also more reward, if successful

B AND/OR E

Where can a new business owner go to seek help and learn from other institutions and disciplines? A. The service corps of retired executives (SCORE) B. The small business development center (SBDC) C. Small business investment companies (SBICs) D. Venture capitalist E. Minority enterprise small business investment companies (MESBICs)

B. (SBDC)

Which term refers to the pattern of short term ups and downs in an economy? A. Aggregate output B. Business cycle C. Standard of living D. Balance of payments E. Demand and supply schedule

B. Business cycle

Which type of business is legally considered a separate entity from its owners and is liable for its own debts? A. Sole proprietorship B. Corporation C. Limited partnership D. Cooperatives E. General partnership

B. Corporation

When income is taxed at the corporate level and on shareholder returns as dividends, what is this situation known as? A. Dual costs B. Double taxation C. Regulatory costs D. Double ownership E. Financial balancing

B. Double taxation

Which of the following is used by a government to determine how it collects and spends revenue? A. Deflation B. Fiscal policies C. National debt D. Monetary policy E. Stabilization policy

B. Fiscal policies

Which of the following is a partner who actively manages a firm and has unlimited liability for its debts? A. Limited partner B. General Partner C. Stockholding partner D. Public partner E. Silent partner

B. General partner

Which of the following is measured by productivity? A. The total value of all goods and services produced by a national economy B. How much a system produces with the resources needed to produce it C. How much output is necessary to produce a certain level of demand D. The standard of living relative to purchasing power parity E. How much gross national product results from inputs of labor

B. How much a system produces with the resources needed to produce it

What is the economic condition characterized by widespread increased prices without increased purchasing power? A. Unemployment B. Inflation C. Expansion D. Deflation E. Recession

B. Inflation

Why do companies consider purchasing power parity when pricing goods and services for International markets? A. It measures economic performance for international workers B. It indicates what people can actually buy in their respective economic system C. It shapes the balance of trade between nations D. It prevents inflation E. It enforces compliance with monetary policies in the home country

B. It indicates what people can actually buy in their respective economic system

If a business owner needs money for expansion, but does not want to give up sole control over the business, what type of partnership would be best? A. General partnership B. Limited partnership C. Active partnership D. Master limited partnership E. Cooperatives

B. Limited partnership

Which distinctive competency must an entrepreneur identify when attempting to enter a market segment that is not currently being exploited? A. The ability to identify new markets B. The ability to identify niche markets C. The ability to differentiate themselves from others in the market D. The ability to get the highest return without driving away customers E. The ability to move quickly to take advantage of new opportunities

C. The ability to differentiate themselves from others in the market

Which of the following BEST describes what the consumer price index is used to indicate? A. The average wage rate for a given region B. The economic performance of key consumer product companies C. The changes in the cost of consumer products over time D. The percentage of consumers in the total population looking for work E. The number of price increases within a given period of time

C. The changes in the cost of consumer products overtime

What does an entrepreneur use to summarize his or her business strategy for a proposed new venture? A. Success chart B. Directors guide C. Financial blueprint D. Business plan E. Balance sheet

D. Business plan

What is formed when a corporation establishes a trust on behalf of employees for the purpose of buying shares of ownership? A. Institutional ownership B. Divestiture C. Strategic alliance D. Corporate governance E. Employee stock ownership plan (ESOP)

E. Employee stock ownership plan (ESOP)

Why is the United States considered to be a debtor nation? A. It has a positive balance of trade B. It imposes tariffs on some trade C. The GDP is higher than that of trade partners D. It exports more than it imports E. It has a negative balance of trade

E. It has a negative balance of trade

Who is responsible for delegating the power to run the day to day management of an organization? A. Shareholders B. Corporate governance C. Chief executive officer D. Board of directors E. Officers

E. Officers

Which of the following is organized and operated like a corporation but treated as a partnership for tax purposes? A. Multinational corp B. Professional corp C. Limited liability corp D. Publicly held corp E. S corp

E. S corporation

Which of the following is an outcome of deflation? A. Instability B. Economic growth C. Decreasing unemployment D. Positive balance of trade E. Shrinking economy

E. Shrinking economy

Which of the following will force a sole proprietorship to be legally dissolved? A. Financial limitations B. The partners reorganize the firm's structure C. Tax benefit issues D. The owner donates profits E. The owner dies

E. The owner dies

True or false: Deflation, an indication that the economy is contracting, is characterized by the price stabilization of goods.

False.

True or false: A group of small investors who invest money in companies in return for partial ownership is known as a small-business development company

False. (Venture capitalist)

True or false: Aggregate output refers to a company's annual production of goods or services.

False. It refers to the nations annual production of goods and services

True or false: The primary measure of growth in the business cycle is inflation

False. Not inflation, aggregate output

True of false: Small-business investment companies (SBICs) are sponsored by the federal government.

True