Business Principles

List the two international financial organizations that are instrumental in fostering global trade.

The World Bank International Monetary Fund

The original purpose of the _____ was to help build infrastructure in developing countries and to help relief the debt burden of these countries.

World Bank

A _____ regulation in the United States bans the use of foreign steel in constructing U.S. highways.

buy-national regulation

An economic system based on complete freedom of trade and little, if any, government control is known as:

capitalism

In terms of economic trends, the complete opposite to communism is:

capitalism

Venezuela can grow and sell cut flowers for floral bouquets more easily and more cheaply than most other countries can produce the same flowers. When it comes to flowers, Venezuela has a(n):

comparative advantage

U.S. Lumber Company's purchase of EnviroPlastics, a manufacturer of plastic cutlery, is an example of a _____ merger.

conglomerate

The two types of inflation are:

demand-pull and cost-push

In terms of financial intermediation, the couple who went to a bank and took out a $200,000 loan to buy a new house is an example of a:

demander of funds

All of the following terms are associated with international trade EXCEPT:

discount rate

A natural barrier that faces Argentina when it sells beef to Siberia is:

distance

An S corporation:

does not make the owners of the corporation personally liable for its debts

Which of the following describes a disadvantage associated with a corporation?

double taxation cost of formation government regulations complexity of formation all of the above****

The least costly and least risky method for selling a product on the global market is:

exporting

Economics is the study of a society's financial institutions.

false

If the company wants employees to take ethical training seriously, the training should not include games.

false

The higher the price of a good or service, the greater the quantity demanded.

false

A(n)_____ occurs if a country's total expenditures are higher than the revenues received from the taxes it gathers.

federal budget deficit

When a firm goes public, it must reveal such information as:

financing plans product details financial data operating data all of the above*****

Currency markets operate under a system called _____. This means that prices of currencies vary based upon demand and supply of that currency.

floating exchange rate

The franchisor generally does NOT provide the franchisee with:

help in employee selection

The U.S. has one of the very few areas in the world where kaolin can be mined. Kaolin is a necessary ingredient in many products ranging from stomach medication to paper. The U.S.-produced kaolin is sold all over the world. Kaolin is a(n) _____ for the countries that purchase it.

import

The Blue Bird Bus Company in Georgia sells buses to the South African government. To South Africa, these buses are an example of:

imports

Jamaica has 35 airports, 18,700 kilometers of paved and unpaved road and a total of 272 kilometers of railroad track. This is a partial description of the nation's:

infrastructure

The Federal Deposit Insurance Corporation (FDIC):

is accurately described by all of the above

Utilitarianism:

is difficult to implement because it is hard to tell how one decision will impact a large number of people

The _____ is a protectionist argument that says the U.S. should use tariffs to keep foreign labor from taking away U.S. jobs.

job-protection argument

U.S. plane manufacturer McDonnell-Douglas has authorized Mitsubishi Heavy Industries, a Japanese company, to use its trademarks, patents, and other proprietary knowledge to manufacture F-15 fighter planes. Mitsubishi Heavy Industries pays McDonnell-Douglas. This is an example of:

licensing

A corporation has:

limited liability ease of transferring ownership continuity of life ability to attract financing all of the above********

The most frequently used and the most flexible tool that the Federal Reserve has that it can use to change the economic environment is:

open market operations

Dividends are:

payments to the shareholders from company earnings

A company has achieved the level of _____ responsibilities when it has met its ethical, legal, and economic responsibilities.

philanthropic

During a two-month period Lladro Comercial, S.A., the manufacturer of handcrafted porcelains, donated ten percent of its retail profits to the Susan G. Komen Breast Cancer Foundation. The action was legal and ethical and allowed the company to still be profitable. According to the pyramid of corporate social responsibility, it was acting at the _____ responsibilities level.

philanthropic

Laws passed by the U.S. Congress concerning how U.S. businesses trade with Cuba would be an example of _____ factors that influence the business environment.

political and legal

Which of the following is NOT one of the key characteristics required in order for money to be an acceptable medium of exchange?

profitability

Federal Reserve banks must hold a certain portion of their deposits in reserve. This percentage is called the:

reserve requirement

In finance, the opportunity for profit is called:

return

A group of investors in a retirement fund removed their money from the fund when they learned the fund manager had invested in a gambling casino. The investors' religious beliefs lead them to believe in the fundamental evil of all forms of gambling. These investors were engaging in:

social investing

Wal-Mart has announced that it will only sell fresh and frozen fish that come from environmentally sound sources and bear the label of the Marine Stewardship Council. Wal-Mart's size gives it a unique opportunity to improve the fishing industry. This concern for _____ is one of many initiatives Wal-Mart is introducing to improve our environment.

social responsibility

Seeds of Change manufactures and markets certified organic entrees. Its mission reads, "At Seeds of Change, we're committed to making delicious foods that are healthy for you as well as the planet." In support of this mission, the company donates money to support environmental protection activities. In other words, Seeds of Change engages in:

strategic giving

A strategic alliance is sometimes called a(n):

strategic partnership

The Banking Act of 1933 gave the Federal Reserve System the authority to:

tell banks how much reserve to maintain ban interest on demand deposits regulate interest rates on time deposits keep banks from investing in specific securities do all of the above*****

Hudson Kling mows yards during the summer. Which of the following is an example of revenue for Kling?

the $10 tip Mrs. Pierre gave him for doing such a fine job of mowing her yard

Which of the following is the best example of a good?

the birthday candles you purchased to go on your sister's birthday cake

With a communist economy system:

there is complete freedom of trade consumers can expect a mixed economic reaction there are strong incentives for workers basic industries such as railroads and utilities are owned by government, while other industries are owned by the private sector none of the above is true*******

One of the advantages multinational corporations have over other companies is their ability to sidestep regulatory difficulties.

true

A term that means that business damages and/or debts can also be attached to the personal assets of the owners is ______ liability.

unlimited

A(n) _____ is a type of loan often used to finance buildup of inventory for seasonal (cyclical) businesses just before their strongest sales period.

unsecured bank loan

The corporation's board of directors elects the corporate officers.

True

The most basic responsibility of all businesses is its economic responsibility.

True

The national debt is the accumulation of deficits that have occurred in the past as a result of expenditures exceeding tax revenues.

True

The situation in which the average of all prices of products is rising is called inflation.

True

Suzanne Pogell wanted to learn to sail, but she could find no one to teach her because men were the ones who sailed, and women were their crew. She finally did convince someone to teach her to sail, and after mastering sailing, she started an all-woman sailing school called Womanship as a sole proprietorship. When she dies, the:

business dies with her

A kennel designed for boarding small dogs has current assets of $8,000, current liabilities of $2,000, and fixed assets of $25,000. The small company has a current ratio of:

4

Which of the following statements about cooperatives is true?

Cooperatives increase their members buying power.

What happens when a country lowers the value of its currency relative to other countries?

Devaluation makes that country's exports cheaper and should help the balance of payments. It gives its exports an unfair competitive advantage.

Which of the following is a disadvantage of sole proprietor ownership?

Difficulty in raising capital

When Grand Metropolitan, a British company, purchased U.S.-based Pillsbury Co. in order to expand its product line and the market for its existing consumer products, it was an example of a(n):

Direct foreign investment

_____ combine the inputs in the production of goods and services for what are intended to be profitable ventures.

Entrepreneurs

A farmer's market where sixty farmers come weekly to sell the produce they grow in their gardens is an example of monopolistic competition.

False

A person who buys a franchise has the same level of control as an entrepreneur who opens his or her own sole proprietorship.

False

Armenia had a favorable balance of trade in 2018 when it exported $800 million in goods and services and imported $1.5 billion.

False

Articles of incorporation usually specify the life of a corporation as a certain number of predetermined years.

False

As a factor of production, capital includes money.

False

Cooperatives are regulated with the same tax laws and rates as corporations.

False

Dissolving a partnership is easier than dissolving a sole proprietorship.

False

Enlightened firms are realizing that empowerment puts too much stress on employees and are eliminating empowerment programs.

False

Ethical decision making begins in the marketing department.

False

Ethics training programs typically teach how to disguise unethical behavior and not how to avoid unethical behavior.

False

Which form of business ownership is an ideal way to test new business ideas?

Sole Proprietorship

List the three major categories of business ownership.

Sole Proprietorships, partnerships, and corporations.

Who are the owners of a corporation?

Stockholder/ Shareholders

Baby boomers are having a strong effect on the franchise industry.

True

Human rights include an individual's right to life, to freedom, and to the pursuit of happiness.

True

It is a firm's responsibility to its customers to deliver what it has promised.

True

Many people consider knowledge to be a fifth factor of production.

True

Social factors influence what, how, where, and when to purchase products or services.

True

Some multinational corporations are so large that they resemble small countries.

True

The International Monetary Fund (IMF) was created to promote trade through financial cooperation by working to eliminate trade barriers.

True

Which of the following businesses provides its customers with a service?

a law office

Ennis Worth has a six-month loan for $7,500 that he used to refurbish the fishing boat he uses to earn his living. This loan is an example of:

a long-term liability

PGE supplies all of the electricity to Portland, Oregon. PGE is an example of:

a pure monopoly

Another name for a stockbroker is a(n):

account executive

Which of the following factors would most likely result in a shift in the supply curve?

an increase in the price of raw materials used in the production process

Savings banks:

are a type of thrift institution

The implementation of a contractionary policy by the Federal Reserve would result in:

lower inflation

For a college student who needs to buy an $80 textbook, the money she received from her parents for the purchase of school supplies would be used as a:

medium of exchange

French language purists on both sides of the Atlantic are on the warpath. Fed up with the growing prevalence of English on the Web, a French state institution founded in the 17th century to maintain the purity of the language unveiled a dictionary of newly-coined French equivalents to English Internet terms in 2000. This is symptomatic of the difficulties in doing business in France because in many situations, the business must be conducted in French. Therefore, it is easy to assume that _____ is extremely important in France.

nationalism

An industry in which a few firms produce most or all of the output of a product and in which large amounts of capital are needed is called a(n):

oligopoly

In the middle of the desert in Arizona, there are five service stations competing for all the business that exists in this isolated location. When one service station lowers its price on gas, all must follow suit. These service stations are operating in a(n) _____ market structure.

oligopoly

A _____ is a form of trading arrangement in which part or all of the payment for purchased goods or services is in the form of other goods and services.

countertrade

In a complicated negotiated, Minmetals in China agreed to purchase at least 24,000 tons of copper cathode for $35 million from Pasar in the Philippines. According to the terms of the sale, Pasar will provide at least $12 million worth of coal to a Chinese power company that will provide the electricity needed to operate Minmetals. This is an example of a(n):

countertrade

The Department of Natural Resources spent money to promote the use of national parks as perfect sites for a summer vacation causing motels, campgrounds and other tourist attractions in the private sector to become less attractive to consumers. Consequently consumers spent more money on trips to the national parks and less money in the private sector for their vacations resulting in _____.

crowding out

Structural unemployment is unemployment that results from:

the changing structure of an industry

Expropriation is a political risk in which a country seizes the assets of a foreign firm and does not compensate the firm.

False

Telecommunications equipment manufacturers in the United States sell their products to people who live in Canada. To Canadians, the telecommunications equipment is an export.

False

When a domestic company allows a foreign firm to use its brand in exchange for royalty fees, it is called a joint venture.

False

Which of the following statements about the partnership as a form of business ownership is true?

Formation of the partnership is simple.