Ch. 1-3 Business Study Guide

Esterotia, a European country, requires red-tape-intensive licenses for all alcohol imports. In this scenario, which of the following types of trade restrictions does the country use?

A non-tariff barrier

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

Elision Inc, an American software development company, outsourced its support operations to Luzenza, an Asian nation, because it found that Luzenza has a large cohort of English-speaking college graduates who are ready to work for one-fourth the pay of comparable American workers. Which of the following is most likely to have influenced Elision Inc.'s decision to outsource its support operations to Luzenza?

Access to factors of production.

Grettzee, a musical intruments manufacturing company, imports high-quality maple wood from Resumbro, a South Asian country where maple is found in abundance. Which of the following is most likely to have influenced Grettzee's decision to import raw materials from Resumbro?

Access to factors of production.

In the context of international trade, which of the following companies is facing the barrier of legal differences?

An Asian company that can only import a limited amount of crude oil from an Arab country because of international trade restrictions.

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.

The United States goes through a period of recession because of the continuous decrease in the nation's gross domestic product. The Fed intervenes and improves the situation by reducing the discount rate. This move by the Fed will result in:

Banks obtaining funds at a lower cost.

Rochester, an Asian country, follows an economic system that facilitates private ownership. The country's economy is based on economic freedom and fair competition. Given this information, the economic system followed by Rochester is ___________.

Capitalism

_____________ is a form of unemployment that involves layoffs during recessions.

Cyclical

Meria Het, a footwear company, designs formal and casual footwear for White American women However, to increase its customer base, it introduces a line of footwear for Chinese women in the United States, even though they form only a small market in the country. Which of the following dimensions of the social environment does this scenario exemplify?

Diversity

Torino Mex, a men's fashion boutique, is renowned for creating designer clothes for Latino Americans. However, it introduced a new line of designer closing 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

Lewis Gretsz, the owner of a small railroad company in the 1960s, started gaining more influence and money as his business started to flourish to a point where he began controlling the entire northern half of services. He followed a ruthless and cunning business strategy that involved exploiting workers and decimating the environment. In the context of the history of American business, Lewis Gretsz most likely belonged to the ___________.

Entrepreneurship era

Minsk Revel, a food and beverage company, recently faced criticism when customers found worms in some of its products. As a result , the company was obligated to have a better level of transparency between its products processes and its consumers. Identify the dimension of the social environment that this scenario exemplifies.

Ethics

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

Exporting

_____________ 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

Negacho, a food and food company, introduced a new flavor of potato chips called South Indian Chillis. It received a positive response from consumers, which prompted Brex Mex, another food company, to introduced its own Szechuan flavored chips. In this scenario, which of the following is most likely to have influenced Brex Mex to produce a product similar to Negacho's?

Inflow of innovation.

The____________ is an organization of 188 member nations that promotes global economic cooperation and stable growth.

International Monetary Fund

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

It is affected by corruption.

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.

Who among the following is most likely to benefit in a case where there is a weak dollar against a euro?

John is an American who exports goods to Europe.

Alice, the global marketing director of a multinational electronics manufacturing firm, is assigned the task of expanding her firm in growing new markets. She learns that hiring labor is expensive and that the required technical manufacturing equipment is unavailable in the international market. In this case, which of the following is most likely affecting the global trade of Alice's firm?

Limited access to factors of production.

_____________ refers to Federal Reserve decisions that shape the economy by influencing interest rates and the supply of cash.

Monetary policy

Vertiaplume, a drug manufacturing company, exports its products to more than 15 countries around the world. Regardless of reduced sales in one of these countries, Veriaplume is able to maintain its overall profits. In the given scenario, which of the following is a reason behind Vertiaplume's ability to maintain its overall profits?

Reduced risk.

Chargon Flasks, a restaurant specializing in Asian cuisine, focuses solely on customer satisfaction. It allows patrons to customize the quantity of their meals and only charges them half the price if their meal unsatisfactory. The restaurant also has a voluntary service charge policy. In this context, which dimension of the business environment is affected the most?

The competitive environment.

Quezi, an East Asian, borrows $300 million from Muranico, a North American country, to fund its infrastructure projects. Quezi exports petroleum worth $700 million to Muranico and other countries. Besides this, Quezi provides foreign aid worth $40 million. In this scenario, this flow of money into and out of Quezi can be measured by _____________.

balance of payments

The government of Laslow, an Asian nation, earned more revenue than its total expenditure in the last fiscal year. Given this information, the government of Laslow incurred a __________.

budget surplus

Melvin and Neil run a pawnshop in their neighborhood. They offer loans to individual for personal items of higher or equal value, which are used as collateral. If an individual is unable to repay the loan, Melvin and Neil then sell these items at higher rates. In this scenario, Melvin and Neil's pawnshop is an example of a ___________.

business

In the context of factors of production, the synthetic resources that a business needs to produce goods or services are referred to as ___________.

capital

Nippennie and Mirasa, two developing countries, bartred cotton for jute rather than for currency. In this scenario, the two countries engaged in _________.

countertrade

The country of Trevanvia goes through a period of recession, which leaves a large number of people unemployed due to extensive layoffs by companies. The companies use the strategy of job termination to cut down their costs and reduce their output as the people are now more cautious with their spending. In the given scenario, the layoffs that take place exemplify _____________.

cyclical unemployment

A newly appointed government in the United States requests Congress to raise the amount of money that the government can borrow. This borrowed money is intended to be used to cover the costs of the major policies that it plans to implement. In this scenario, the government has asked the Congress too hike its ___________.

debt ceiling

In the context of the social environment dimension of a business, ___________ is the measurable characteristics of a population.

demographics

Boston 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

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

direct investment

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

expansion

Tanya Williams, the chief executive officer of Willister Computers, believes that the firm is currently best equipped to enter the market of Troyesna, a fast-development country. The firm offers a small-scale producer in Troyesna the right to produce and market its goods based on a set of specific operating functions and requirements. This scenario of Willister Computers illustrates __________.

foreign franchising

Quistor Inc., a company based in the country of Waltefa, contracts with a small-scale supplier in the country of Carlesna to manufacture its computers and tablets across the world. This strategy by Quistor Inc. illustrates _____________.

foreign outsourcing

The U.S. government uses the consumer price index (CPI) and the producer price index (PPI) to evaluate:

inflation.

Mora, an American jewelry manufacturing company, wants to import diamonds from Renoria, an Asian country. However, the officials in charge of the trade in Renoria agree to formalize the transaction only if they are paid a certain amount of money for their personal benefit. Since American businesses are prohibited from offering bribes to any foreign nation, Mora has to look to another exporter of diamonds. In the given scenario, Mora is most likely facing the barrier of __________.

legal differences

Vieorien, a company based in the country of Dannistel, has permitted a foreign company, the rights to produce its products and to use the Vieorien trademark. However, Vieorien does not have the authority or the rights to dictate the business operations of the foreign company. In this scenario, the foreign company that Vierien deals with is the __________.

licensee

Pride of peers is bakery chain that specializes in preparing homemade confectionaries. The company donates most of its earnings to rehabilitation centers for war victims and keeps just enough to buy raw materials. The primary goal of the company is to contribute to the rehabilitation of war victims. In this scenario, Pride of Peers would most likely be classified as a ___________.

nonprofit organization

A giant telecommunications company that was previously owned by the government of Sunzabia, a European country, is sold to an independent industrialist to ensure that the company is handled in a more efficient way. This scenario exemplifies ___________.

privatization

The government of the South Asian nation of Albana is unable to maintain the electronics business effectively because of slack in management and lack of skilled employees. It sells the business to a company called Ramington Electricals. The company has no association with the government and operates on its own terms. The sale of the government-owned electronics business to Ramington Electricals is an example of ___________.

privatization

Rayman Automobiles, an automobile manufacturing company, was founded in 1912. The company primarily focused on creating greater efficiencies by refining its processes and creating specialized jobs. This allowed the company to increase its output and lower the prices of its products. As a result, automobiles became an affordable commodity. In the context of the history of American business, Rayman Automobiles was most likely founded during the ___________.

production era

Trade restrictions were created to:

protect national security interests.

The district of Dansas in Nerito, a European country, is a major producer of walnuts. All producers in the district sell packaged walnuts. The market structure is flexible enough for producers to enter and leave the market as and when they wish, but no single producer has control over the prices of the product. Which of the following market structures is existent in Dansas?

pure competition

Merticao, a French textile company, supplied most of its products to its primary market in Hestonia, a North American nation. However, when Hestonia faced an economic downturn and its citizens began to reduce their expenditures, Merticao began to focus more on its domestic market. As a result, Merticao was able to survive the loss of its primary market because of__________ in global trade.

reduced risk

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

supply

Wichasha, an African country, exports barley and cotton worth $100 million to Illema, a European country, and its imports sugarcane worth $25 million from Illema. As such, the total value of Wichasha's exports is higher than the total value of its imports. This differance between the value of Wichasha's exports and imports is known as __________.

the balance of trade

The central banking system in the country of Darmos issues a notice to all its commercial banks stating that they must possess 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