econ chapters 5-6
Which of the following must a company that wants to hire guest workers show? A. that the guest workers they hire will eventually leave the United States B. that using guest workers will cause company profits to increase C. that the guest workers they hire will eventually become permanent workers D. that using guest workers will not lower the wages of native-born workers
D. that using guest workers will not lower the wages of native-born workers
Which of the following is NOT information the Bureau of Labor Statistics provides? A. the number of people in the U.S. labor force B. the number of employed and unemployed people in the labor force C. the monthly unemployment rate D. the future employment figures for specific companies
D. the future employment figures for specific companies
In order to do business, what is one regulation that corporations have to follow? A. They have to form limited liability corporations. B. They have to have an advisory board that makes financial decisions. C. They have to sell stocks and bonds on the stock exchange. D. They have to file quarterly and annual reports with the SEC.
D. they have to file quarterly and annual reports with the SEC
Which of the following BEST defines the learning effect theory? B. With increased education comes increased intelligence and an increased tendency to be hard- working A. With increased education comes an increased efficiency of production, resulting in higher wages. B. With increased education comes increased intelligence and an increased tendency to be hard- working C. With increased education comes increased aptitude for memorizing, recalling, and test-taking. D. With increased education comes increased importance in an employee's role in a given company.
A. With increased education comes an increased efficiency of production, resulting in higher wages.
What is a KEY reason that an entrepreneur might choose to establish a corporation rather than a partnership or a sole proprietorship? A. no personal liability B. limited start-up costs C. equal sharing of profits D. ability to pass the business on to children
A. no personal liability
What disadvantage of franchising do all franchisees face? A. absence of brand identity B. lack of autonomy C. inexperience of franchisee D. lack of resources
B. lack of autonomy
Which of the following businesses would most likely be subject to laws that regulate the disposal of dangerous chemicals? A. a greeting card company B. a shoe store C. an auto repair shop D. a dog-walking business
C
Which law requires that men and women performing the same job receive the same pay? A. Civil Rights Act of 1964 B. Fair Labor Standards Act of 1938 C. Equal Pay Act of 1963 D. Federal Employees' Compensation Act
C. Equal Pay Act of 1963
What were the main goals of the early labor movement in the United States? A. equal pay for managers and laborers B. a full-time job for everyone wanting to work C. higher wages, shorter hours, and a safer workplace D. automatic annual increases in worker pay and benefits
C. higher wages, shorter hours, and a safer workplace
Which of the following is a reason that companies engage in offshoring? A. Educational opportunities for workers may be greater in some other countries B. Factories in some countries may utilize newer technology. C. Labor costs may be lower in some other countries. D. The cost of building factories is higher in some other countries.
C. labor costs may be lower in some other countries
What generally happens to the equilibrium wage when demand for workers is low and supply is high? A. It gets higher. B. It gets lower. C. It does not change. D. It moves below demand.
B. it gets lower
Which of these is an advantage that general partners alone enjoy in a limited partnership? A control of business operations B. limited liability C. share of investment D. share of profits
A
Which type of cooperative organization would attract people who wanted to pay a lower price for organic food? A. consumer cooperative B. service cooperative C. producer cooperative D. labor cooperative
A
Why is it easy to start a sole proprietorship? A. Sole proprietors do not need to file a lot of paperwork to start a business. B. Sole proprietors are not subject to zoning laws. C. Sole proprietors do not have any legal obligations. D. Sole proprietors do not need to follow any government regulations.
A
The owner of a factory that manufactures clothing buys several clothing stores to sell the clothing the factory produces. This is an example of A. a horizontal merger. B. a vertical merger. C. a conglomerate. D. a multinational corporation.
B
What is an advantage that the general partners who own a partnership have that the owner of a proprietorship may not have? A. no need to follow government regulations B. better access to capital C. ease of start-up D. no need to hire employees
B
Which is an example of a sole proprietor having personal liability? A. a veterinarian requiring that customers pay for an office visit on the day of the visit B. a store owner having to pay back a business loan after going out of business C. a bicycle mechanic purchasing some new tools D. a caterer taking time off for a vacation
B
Which of the following is an example of money's divisibility? A. Coins and bills can last a long time in circulation. B. Twenty dollar bills are easy to carry around in a wallet or pocket. C. A ten dollar bill can purchase a five dollar item, with five dollars change coming back D. If Jane and Ranita both have a ten dollar bill they can purchase the same $10 t-shirt.
C. A ten dollar bill can purchase a five dollar item, with five dollars change coming back
Which of these is the best example of commodity money? A. silver certificates B. quarters C. salt D. dollar bills
C. salt
What risk do limited partners face that general partners do not? A. complete dependence on business abilities of others B. necessity of meeting rigid operational standards C. need to report earnings from business as income D. possibility of having personal assets used to meet business obligations
A
Replacing human capital with physical capital is a way for A. employers to cut costs B. employers to raise wage rates C. workers to avoid layoffs. D. workers to increase their wages
A
What is one advantage of a vertical merger? A. It can allowa firm to operate more efficiently. B. It can allow a firm to have a monopoly. C. It can allow a firm to avoid government regulations. D. It can allow a firm to purchase unrelated businesses.
A
What is the KEY difference between cooperatives and nonprofits? A. Cooperatives benefit their members; nonprofits mainly benefit the public. B. Cooperatives benefit the public; nonprofits mainly benefit their members. C. Nonprofits use profits to expand; cooperatives use profits for maintenance. D. Nonprofits provide mainly goods; cooperatives focus largely on services.
A
4. What is an advantage of being a franchisee? A. brand recognition B. control over products sold to customers C. franchising fees D. royalty payments
A
How might employers benefit from workplace safety laws? A. Employers can offer lower wages because more employees will want to work in a safer environment. B. Employers can pay for safety improvements in the workplace. C. Employers can hire fewer workers because the workplace is safer. D. Employers can raise wages because the workplace is safer.
A
Which advantage of a sole proprietorship could also be a disadvantage? A. A sole proprietor has full control. B. A sole proprietor can easily start a business. C. A sole proprietor is the sole receiver of profit. D. A sole proprietor has to follow relatively few regulations
A
Which of the following is an example of commodity money put to use? A. A cow used to purchase land B. Mowing a lawn for a friend who, in turn, gives you a haircut C. Giving a store clerk a five dollar bill for a $4 purchase D. Writing an I.O.U. to a friend in exchange for a loan
A. A cow used to purchase land
How do right-to-work laws diminish union power? A. Unions with fewer members have less influence over management. B. Unions with more members have less influence over management. C. Workers who don't belong to unions have greater influence over management. D. Management prefers negotiating with unions with more members.
A. Unions with fewer members have less influence over management.
Corporate shares were offered for sale to the public for the first time yesterday. According to the company's founders, they hope to use the funds raised in this initial public offering to invest in building several new factories. Based on the excerpt from a news story, which statement is true? A. The corporation is raising money by selling bonds. B. The corporation is raising money by selling stocks. C. The corporation is raising money by building new factories. D. The corporation is raising money by becoming a closely-held corporation.
A. the corporation is raising money by selling stocks
Which type of cooperative organization would attract people who needed help preparing their income tax returns? A. consumer cooperative B. service cooperative C. producer cooperative D. labor cooperative
B
A publicly held corporation has A. no legal identity beyond that of its owners. B. many shareholders who can buy or sell its stock. C. a few stockholders who are often family members. D. stockholders who rarely trade their shares of stock.
B
Shania and Nick own a convenience store together. They share equal responsibility and liability for their business, and each person receives 50 percent of the profits. What kind of business organization is it? A. sole proprietorship B. partnership C. cooperative D. nonprofit
B
The fact that coins can last a long time in circulation shows which characteristic of money? A. Money is portable. B. Money is durable. C. Money is divisible. D. Money is uniform.
B. Money is durable.
If you were raising catfish on a farm in Mississippi, which type of cooperative might you join for marketing help? A. a purchasing cooperative B. a service cooperative C. a producer cooperative D. a consumer cooperative
C
Which of the following could be a reason a worker joins a labor union? A. to obtain a new job B. to avoid paying employment taxes C. to improve working conditions D. to avoid a wage increase
C. to improve working conditions
How does a lack of financial resources for fringe benefits affect a sole proprietor's ability to run a business? A. It makes it difficult for the owner to make a profit. B. It makes it difficult for the owner to promote the business. C. It makes it difficult for the owner to pay competitive wages. D. It makes it difficult for the owner attract good employees.
D
Which of the following is true about bartering? A. It is usually fast and convenient B. It is often used in urban areas the United States C. it involves the exchange of currency D. It involves the exchange of goods and services
D. it involves the exchange of goods and services
Which term describes a perceived barrier that may prevent qualified women from receiving promotions to top-level jobs? A. "women's work" B. "the glass ceiling" C. "human capital" D. "women's career paths"
B. "the glass ceiling"
Why did union membership rise in the 1930s? A. The economy was doing well. B. Congress passed laws benefiting unions. C. More yellow-dog contracts were signed. D. Samuel Gompers founded the American Federation of Labor.
B. Congress passed laws benefiting unions.
Which of the following is a reason for employers to hire more temporary workers instead of permanent workers? A. Employers know that statistics show that most people prefer temporary employment. B. Employers can cut costs because temporary workers typically receive fewer benefits. C. Employers don't have to pay Social Security and Medicare taxes for temporary workers. D. Employers can pay temporary workers less than the federal minimum wage.
B. Employers can cut costs because temporary workers typically receive fewer benefits.
How does automation affect wages? A. It increases the demand for labor, which decreases wages. B. It decreases the demand for labor in some jobs, which decreases wages. C. It increases the demand for labor, which increases wages. D. It decreases the demand for labor, which increases wages.
B. It decreases the demand for labor in some jobs, which decreases wages.
Suppose data show an increase in offshoring by U.S. companies. Which of the following describes a possible effect on the unemployment rate? A. The unemployment rate would remain steady, because offshoring has no effect on jobs in the United States. B. The unemployment rate would increase, because jobs formerly taken by U.S. employees are now located in other countries. C. The unemployment rate would decrease, because offshoring creates new jobs in other countries. D. The unemployment rate would decrease because U.S. workers can easily find other jobs in other industries.
B. The unemployment rate would increase, because jobs formerly taken by U.S. employees are now located in other countries.
Which term does the Bureau of Labor Statistics use to describe people who once sought work but have given up looking for a job? A. part-time workers B. discouraged workers C. unemployed workers D. under-employed workers
B. discouraged workers
Over the past two decades, the U.S. economy has shifted from a manufacturing economy toward a(n) _____________ economy. A. industrial-based B. service-producing C. high-tech D. agricultural-based
B. service-producing
What determines the equilibrium wage of labor? A. the demand for workers in a labor market is less than the supply B. the supply of workers in a labor market meets the demand for for workers C. the supply of workers in a labor market exceeds the demand for workers D. the demand for workers in a labor market exceeds the supply
B. the supply of workers in a labor market meets the demand for for workers
The fact that every five-dollar bill buys five dollars worth of goods is an example of money's A. durability B. uniformity C. portability D. divisibility
B. uniformity
In the 1800s, why was there a greater need for labor unions than there is now? A. Factories were safe. B. Workers worked longer hours. C. Strong child-labor laws had been passed. D. Wages were reasonable.
B. workers worked longer hours
Why might a limited partnership have a greater ability to raise capital than a general partnership? A. increased access to corporate funds B. increased limits on liability C. increased probability of corporate acquisition D. increased share if profits with more investors
B
What service to its members might a trade association offer? A. keeping members up-to-date on industry trends B. supporting members by answering consumer complaints C. lobbying Congress to increase members' wages D. negotiating to obtain better fringe benefits for members
A
The ultimate source of the region's wealth is Washington's unparalleled human capital. The population is the best educated of any large metro's in the United States; about half the region's adults hold bachelor's degrees, and nearly a quarter have graduate degrees. -Richard Florida, "The Boom Towns and Ghost Towns of the New Economy," The Atlantic, October 2013 Which statement can be inferred from the excerpt? A. Having college or graduate degrees has contributed to the wealth of many adults in Washington, D.C. B. Washington, D.C., has the best colleges and universities in the nation. C. In order to become wealthy, an individual must have a graduate degree. D. To get a government job, a person must have an abundance of human capital.
A. Having college or graduate degrees has contributed to the wealth of many adults in Washington, D.C.
When would two sides in a labor dispute bring in a mediator? A. If a strike continues for a long time and neither side can reach an agreement. B. If the two sides disagree with an arbitrator's ruling C. If they are close to reaching an agreement D. If public opinion supports the union's position
A. If a strike continues for a long time and neither side can reach an agreement.
Why do you think a business owner would want to move jobs to a country where labor is not unionized and cheap? A. It would increase profits. B. It would diversify the workforce. C. It would lead to a more skilled workforce. D. It would increase wages.
A. It would increase profits.
Julia plans to become a sole proprietor who upholsters furniture in her home. Which statement about Julia's plan is true? A. Julia will have to obtain a business license if required by law to do so. B. Julia will have to obtain a site permit for her business. C. Julia will not have to pay income tax, because she is the sole receiver of profit. D. Julia will have limited liability for any losses she incurs because she is working from home.
A. Julia will have to obtain a business license if required by law to do so
Which of the following is a negative aspect of bartering rather than using currency? A. Bartering requires you to find someone who wants what you have. B. Bartering does not require you to have any cash. C. Bartering usually takes less time than using currency. D. Bartering makes it easy to determine the relative value of items.
A. bartering requires you to find someone who wants what you have
Why does fiat money have value? A. because it is backed by a government in which people have confidence B. because it is always more portable and divisible than commodity money C. because it has all of the characteristics of representative money D. because it is the only form of currency that meets the six characteristics of money use of currency
A. because it is backed by a government in which people have confidence
What does a partner in a limited liability partnership have that a limited partner in a limited partnership does not have? A. business involvement B. investment in the partnership C. limited liability D. share of profits
A. business involvement
Replacing human capital with physical capital is a way for A. employers to cut costs. B. employers to raise wage rates. C. workers to avoid layoffs. D. workers to increase their wages.
A. employers to cut costs
If an advertising business buys new computers for its employees, how might its productivity of labor be affected? A. It would increase. B. It would decrease. C. It would double. D. It would stay the same.
A. it would increase
How are nonprofit organizations different from corporations? A. Nonprofits are exempt from income taxes. B. Nonprofits function like business organizations. C. Nonprofits are not subject to government regulation. D. Nonprofits do not make any profits.
A. nonprofits are exempt from income taxes
Multinationals benefit consumers and workers by providing jobs and products around the world. Often the jobs they provide help people in poorer nations enjoy better living standards. Which of the following counterarguments to the statement above is true? A. Multinationals don't benefit poorer nations because multinationals don't have to pay taxes in the countries in which they operate. B. Multinationals often provide jobs with low wages and poor working conditions in the countries in which they operate. C. Multinationals don't sell their products in the same countries in which they hire workers. D. Multinationals typically use old-fashioned technology in poorer nations.
B
Some businesses are not organized to maximize profits. Instead their are to work for the good of all their members or to work for the good of society in general. What types of businesses is this passage describing? A. franchises and multinationals B. cooperatives and nonprofits C. general and limited partnerships D. horizontal and vertical mergers
B
Which best describes a sole proprietorship? A. a business owned by two partners B. a business owned by an individual C. a business owned by a corporation D. a business owned by the government
B
Which of the following characteristics do corporations share with many nonprofits? A. They are driven by a quest for profits. B. They may use lobbyists to influence lawmakers. C. They pay income taxes. D. They invest all profits in the organization.
B
Which of the following is a potential disadvantage of multinational corporations? A. They sell stocks and bonds in other countries. B. They have an undesired influence on politics and culture in other countries. C. They provide jobs in other countries. D. They spread new technologies to other countries.
B
Which statement about sole proprietorships is true? A. Sole proprietorships can be owned by more than one person. B. Sole proprietorships are the most common form of business organization C. Sole proprietorships generate about 40 percent of all sales in the United D. Sole proprietorships do not have to pay employment taxes.
B
Do multinationals have more or fewer regulations than corporations that are in just one country? A. fewer, because they pay less taxes than regular corporations B. the same, because they only have to obey the laws and pay the taxes of the country they are headquartered in C. more, because they have to obey laws and pay taxes in more than one country D. more, because they are not allowed to have vertical or horizontal mergers
C
How do corporations raise capital? A. by transferring funds from the owners to the investors B. through grants from the board of directors C. by taking out loans against the owners' assets D. by selling stocks and bonds
D
Suppose a business is owned by two partners. What skill does each partner need that a sole proprietor would not necessarily need? A. decision-making ability B. management expertise C. ability to collaborate with an equal D. advertising expertise
C
What disadvantage do partners and franchisees share? A. domination by national corporation B. limited access to national advertising C. limits on control of the business D. payment of fees and royalties
C
What happens to the stockholders when a corporation files for bankruptcy? A. The stockholders must also file for bankruptcy. B. The owners can force the board of directors to pay the debt. C. The owners can lose only the money they have invested. D. The owners can avoid paying the debt by forming a limited liability corporation.
C
Which could be an advantage of opening a franchise for a franchisee who has limited access to resources? A. complete freedom to make business decisions B. receiving royalties from the parent company C. receiving training from the parent company D. paying fees to the parent company
C
Which of the following activities is most closely associated with nonprofit professional organizations? A. resolving consumer complaints B. persuading legislators to make laws that about products or services favor a particular industry C. improving its members' wages, benefits, and working conditions D. providing information and training related to specific occupations
C
Which of the following is among the reasons why average real wages have declined in the last couple of decades? A. Less competition from foreign countries has decreased the demand for workers. B. A decrease in the number of people obtaining college degrees has decreased the number of high- wage jobs. C. Deregulation of some industries has increased competition, causing employers to cut wages. D. A decreased use of temporary work has limited wage growth.
C. Deregulation of some industries has increased competition, causing employers to cut wages.
Why is the demand for labor called a derived demand? A. It is set by the supply of labor. B. It is set by the demand for labor at the lowest price. C. It is set by the demand for another good or service. D. It is set by the supply of goods and services demanded.
C. It is set by the demand for another good or service.
Which is a reason that there are fewer union jobs in the South? A. There are fewer blue-collar workers in the South. B. Foreign competition has a greater impact on the South. C. There are more right-to-work laws in the South. D. There are more manufacturing jobs in the South.
C. There are more right-to-work laws in the South.
Which of these is NOT one of the three uses of money? A. A medium of exchange B. A store of value C. A means to barter D. A unit of account
C. a means to barter
Which describes a way the government provides an incentive to a non-profit hospital so that it can offer free services to poor patients? A. Having fewer doctors at the hospital B. Not requiring the hospital to maintain health standards C. Not requiring the hospital to pay taxes D. Allowing the hospital to turn away some patients who need services
C. not requiring the hospital to pay taxes
Why is using money as a medium of exchange preferable to bartering? A. the relative value of bartered goods remains the same over time B. The value of money fluctuates over time. C. The relative value of goods is difficult to establish in a barter system. D. The value of bartered goods decreases after they are purchased.
C. the relative value of goods is difficult to establish in a barter system.
Why would someone be willing to share the economic right to business ownership by forming a general partnership? A. to benefit from being connected to a well-known brand name B. to enjoy a greater share of profits C. to limit liability D. to avoid paying additional income tax
C. to limit liability
Consumer and producer cooperatives are focused mainly on A. lending money. B. keeping members healthy. C. providing cheap insurance. D. buying and selling goods.
D
Cooperatives are based on several principles, which include voluntary and open membership, democratic control of the organization by its members, and sharing of contributions and benefits by members. What does "democratic control" LIKELY mean in this context? A. Members can engage in political discussions. B. Members are free to open their own businesses. C. Members belong to the Democratic Party. D. Members make decisions by voting.
D
Ivers Paint, founded in 1999, is a corporation that manufactures paint supply products. On Friday, officials announced that the company would merge with the Kildare Paint Supply Store, a partnership started in 1995 by the Kildare brothers. "This merger will benefit consumers because Ivers will be able to operate more efficiently and offer our products at a lower price at the Kildare Paint Supply Store," said a representative from Ivers Paint. Based on the excerpt from a news story, which statement best describes the merger of Ivers Paint and Kildare Paint Supply? A. It is a conglomerate merger because one company is involved in manufacturing and the other in selling. B. It is a partnership merger because one of the companies is a partnership. C. It is a horizontal merger because both companies are involved in the paint supply business. D. It is a vertical merger because the two companies are involved in different stages of the paint supply business.
D
Suppose a firm that makes appliances merges with a company that produces running shoes, and it later buys a dairy. What is the combination called? A. franchise B. horizontal merger C. cooperative D. conglomerate
D
The board of directors and the officers of a corporation make decisions that have a major impact on the corporation's earnings, which may result in profits and losses. In either case, the corporation's stockholders will hold management accountable for the company's performance. Under what circumstances might stockholders be displeased with a corporation's performance? A. if the company's stocks are bought on the stock exchange B. if the company's stocks are sold on the stock exchange C. if the company's stocks increase in value on the stock exchange D. if the company's stocks lose value on the stock exchange
D
What does the board of directors in a corporation do? A. work in the various departments of the corporation B. run the corporation and oversee its operations C. own the corporation D. make all major decisions for the corporation
D
What role does the Securities and Exchange Commission fulfill with regard to corporations? A. It trades securities on the stock market. B. it issues licenses to business owners. C. It forms limited liability corporations. D. It regulates the stock market.
D
Which is a disadvantage of sole proprietorships? A. full control B. few regulations C. easy to start and end D. limited access to resources
D
Which type of business organization might offer low-interest loans to its members? A. a business association B. a trade association C. a consumer cooperative D. a service cooperative
D
Why is liability the biggest disadvantage of a sole proprietorship? A. The owner may not be able to complete work on time. B. The owner might be unable to pay his or her employees. C. The owner may have difficulty getting loans from banks. D. The owner could lose personal property if the business fails.
D
Why is the demand for labor called a derived demand? A. the supply of labor is derived from the demand for labor B. the demand for labor is derived from the supply of labor C. the demand for a product or service is derived from a demand for workers who can supply that product or service D. The demand for labor is based on a demand for a product or service that workers can supply
D. The demand for labor is based on a demand for a product or service that workers can supply.
Why might a company lay off union workers who have successfully negotiated for higher wages? A. An arbitrator has told the company that the workers must be laid off. B. The company wants to encourage other workers to work for less money. C. The company no longer needs to remain competitive. D. The employer cannot afford the higher wages.
D. The employer cannot afford the higher wages.
Which of the following is a practice that U.S. companies might follow to lower costs? A. hiring fewer female workers B. hiring fewer foreign-born workers C. hiring more full-time workers D. hiring more part-time workers
D. hiring more part-time workers
Which of these describes an action an employer may take to reduce the cost of wages? A. hiring permanent, rather than temporary, workers B. including featherbedding jobs in union contracts C. substituting workers for machines D. outsourcing jobs to another country
D. outsourcing jobs to another country
The fact that you can pay for a five-dollar item with a ten-dollar bill and get five dollars back in change shows which of the following? A. that money is durable B. that money is a store of value C. that money is uniform D. that money is divisible
D. that money is divisible
