BUS 101 - First Exam

Where are the two area where preferred stockholders get preferential treatment?

1) Claim on Assest (Money first when bankruptcy occurs) 2)They get dividends class.

Define recovery

A period of economic growth and employment

In the context of business ethics, ______________ involves clear misconduct, unlike an ethical dilemma that involves a conflict of values.

An ethical lapse

Define money

Anything generally accepted as a medium of exchange or payment

Define recession

Downturn- decrease in GDP for 2 quarters

What are mixed economies the most reasonable explanation of today's economy in the United States?

Each economic system yields its own benefits but when they're put together they can provide ultimate insight for economic health

Define contraction

Economic downturn - rising unemployment, falling production

An____________ is a total ban on the international trade of a certain item, or a total halt in trade with a particular nation.

Embargo

In theory, the market price in any category adjusts to the point where supply curve and the demand curve intersect . This is called the ...

Equilibrium point

_________________ measures the value of a nation's currency in the relation to another nations currency.

Exchange Rate

The Banking Act of 1933 (The Glass-Steagall Act) established what entity and why was it important?

FDIC, They insure money. This reduces risk.

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. T/F

False

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

False

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

False

In the context of monetary policy, the money supply includes credit cards. T/F

False

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

False

The Federal Reserve Act of 1913 is important because...

It establised the federal bank as the bank of the United States.

In the context of global trade, which of the following statements is true of balance of payments?

It includes foreign borrowing and lending.

Explain the difference between macroeconomics and microeconomics

Macro- looks at the country's economy as a whole Micro- looks on a smaller scale (families, individuals)

The advantage of electronic communication networks (ECNs) is that they:

Make it possible for investors to trade securities after the U.S. exchanges are closed.

Define pure competition

Many companies selling the same product, barrier entry is low

Financial Diversification is a strategy that helps investors to...

Minimize risk

Define budget surplus

Overage that occurs when revenue is higher than expenses

What is the business cycle?

Periodic expansion & contraction of the economy

Nescat Autos, an automobile manufacturing company, developed a secondary market for its products in a foreign country. This allowed the company to minimize its losses when its primary market failed to generate enough revenue to benefit the company. In this scenario, which of the following is most likely to have influenced Nescat Autos's decision to set up a market in another country?

Reduced risk

Universal ethical standards can solve the problem of too many people viewing ethics as ________.

Relative

Define the function Reserve Requirement

Rule set that specifies the minimum amount of reserves % from bank deposits

A drawback of communism, which was adopted by some countries in the 1900s, was the inability of people to make basic choices such as where to work or what to buy. T/F

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. T/F

True

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

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. T/F

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. T/F

True

Which of the following countries has a trade surplus?

An Asian country whose total value of exports exceeds its total value of imports

What is an IPO?

An initial public offering (IPO) occurs when a company issues stock in the public market for the first time.

Fiscal Policy and decisions for the United States are those related to things such as taxation and spending, and are generally made by...

Congress

Anaida is an entrepreneur who believes in providing equal opportunity to people regardless of their age, gender, race, or religion. She is open-minded and detests the idea of taking advantage of others. In the context of universal ethical standards, Anaida most likely possesses the core value of ________.

Fairness

Corporate etiquette is the obligation of a business to contribute to society. T/F

False

The traditional retirement age in the United States is 60. T/F

False

Define Oligopoly

Few seller selling products (same/different), barrier entry is high

Explain the difference between fiscal policy and monetary policy.

Fiscal- Influences economy through taxation, congress makes this Monetary- Influences people by interest rates & money supply

CuberTech, an American electronics company, set up its production facilities in Chuaga, an Asian country, because the workers in Chuaga work for about one-third the pay of American workers. This substantially lowered CuberTech's cost of production. This scenario is an example of __________________.

Foreign Franchising

Define socialism

Government owns key enterprises that affects welfare

Define communism

Government owns virtually all enterprises

The chairman of a welfare organization asks an employee to head a fundraising activity. The employee, however, embezzles $250,000 from the funds raised from the activity and falsifies financial records. In this scenario, the behavior of the employee is ___________________.

Illegal and unethical

Prost was the first automobile company in the world to introduce child safety locks in its vehicles. This feature soon became a major selling point for consumers all over the world. As a result, other automobile companies began providing a similar feature in their vehicles. In this scenario, which of the following is most likely to have influenced other companies to install child safety locks?

Inflow of innovation

Which of the following statements is true of international trade?

It offers companies in invaluable source of new ideas.

Identify a true statement about exporting.

It represents an especially strong opportunity for small and mid-sized companies.

A ____________ is formed when two or more companies share resources, risks, and profits without actually merging, to pursue specific opportunities.

Joint venture

To achieve its basic mission of promoting international cooperation and stable growth, the International Monetary Fund (IMF):

Lends money to member nations

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 Vieorien deals with is the ________.

Licensee

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

Limited access to factors of production

Define monopoly

One producer dominating the industry, barrier is insurmountable

Clark and Nestor start a catering business together. They sign a legal contract that states that the business is owned by them. The agreement also states that they will have equal share in profits of the business and will be equally liable for any losses incurred by the business. This scenario exemplifies a ___________.

Partnership

Define capitalism

Private enterprise, based on private ownership economic free claim and fair competition

What are commercial banks?

Privately owned financial institution that accepts demand deposits, make loans, and provide other services.

The basic relationship between the production of goods and services, and the resources needed to produce them is known as...

Productivity

Define the function of discount rate charges

Rate of interest changed when it loans funds to banks

Adhering to a new act passed in 2002, the CEO of Pearsil &Pearsil, a real estate company, now personally certifies the validity of the company's financial statements. Given this information, the CEO most likely follows the ________________.

Sarbanes-Oxley act

Fritzman Inc., a market research company, stocks its office pantry with an array of organic drinks and snacks to promote healthy eating habits among its employees. It also provides all its employees a free membership to a local gym. These gestures are Fritzman Inc's. Idea of ____________________.

Social Responsibility

What is the federal debt?

Sum of all of the money that the Fed had borrowed and not repaid

__________ are levied against tax imports.

Tariffs

Monetary Policy decisions pertain to things like interest rates and the supply of money, and are generally made by...

The Federal Reserve

Nakato, a South Asian country, exported goods worth $500 million and imported goods worth $400 million in the last fiscal year. The country also made foreign investments worth $300 million and provided foreign aid worth $100 million in disaster relief. Besides this, the outcry took a loan of $5 billion from the World Bank. This flow of money into and out of Nakato is measured by ____________________

The balance of payments

In the context of the history of American business, which of the following statements is true of the marketing era?

The balance of power shifted away from producers and toward customers.

Who sets monetary policy?

The federal reserve

Define economics

The study of choices that people make in allocating society's resources.

Barter Bate, a wholesale store chain, was the first in the city to launch an online shopping website. Its website allowed customers to select required products and collect them from the nearest Barter Bate outlet. In this context, which of the following dimensions of the business environment is affected the most?

The technological environment

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

True

In the context of bonds, the current yield expresses a bond's interest payment as a percentage of the bond's present market price rather than its par value. T/F

True

Define unemployment rate

% of workforce that shows who doesn't have jobs

Define economy

A financial & social system of how resources flow through society. Production-Distribution-Consumption

Define M1 money supply

All currency & checking & travelers checks

Define M2 money supply

All of M1 money & savings & money market accounts & C of deposits

Which of the following countries exemplifies the concept of opportunity cost?

An Asian country that increases its production of sugar by decreasing its production of cocoa

In mid-2016 the United Kingdom voted to leave the EU, This was known as ___________

Brexit

Define the function of Open Market Operations

Buying & selling government securities which include treasury bonds, notes, and bills

Define monopolistic competition

Companies selling different products, barrier entry is low

Define depression

Deep and long lasting recession (2008)

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

Direct investment

The Goal of ______________ ___________ is to bolster Europe's trade position and increase its international, political, and economic power.

European Union

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

False

In the context of your career choice, your own business skills cannot influence the level of your personal financial success. T/F

False

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. T/F

False

One core responsibility of business is to deliver consumer value by providing quality products at fair prices. _______________________ are critical components of this equation.

Honesty and communication

Give an example of a commercial bank

Huntington Bank

______________ means that on average, prices are rising.

Inflation

When a business brings in less money than it needs to cover expenses, it incurs a ____.

Loss

Define budget deficit

Shortfall that occurs when expenses are higher than revenue

What do Alan Greenspan, Janet Yellen, Ben Bernanke, and Jerome Powell have in common?

They've held a chair on the board of governors

Define gross domestic product (GDP)

Total value of all goods produced w/in a nations boundaries w/in a time period

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

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

True

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. T/F

True

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

Lily, a salesperson at clothing store, observes the department head misbehaving with a customer. She brings the issue to the notice of the store manager, and the offender is immediately dismissed from his job. In this scenario, Lily is a _____________.

Whistle-blower

Lydia sells her ancestral property for a handsome amount of money. She invests this money in various securities. She decides no to trade the securities for a while and lets her money increase with the growth of the overall market. However, after almost eight years, when she feels that the value of the securities has risen considerably, Lydia sells her stocks and receives high returns on her investment. In this scenario, Lydia has used the __________ investment strategy.

Buy-and-hold

What is the function of the Federal Reserve Bank?

Carry out Federal policy & perform banking services for commercial banks, control the supply of money

Finwes is an advertising company. Because of certain untoward incidents in the company, the management decides to create a formal written document that would guide the employees in making right decisions in various professional situations. In this scenario, the management wants to create a ____________.

Code of ethics

Andy invests in Orelon Corp., a plastic manufacturing company. As a stockholder, he owns a part of the company and he holds the right to vote on company issues. However, he is entitled to dividends only when the company's board of directors decides to declare them. According to the company policies, if Orelon Corp. faces dissolution in the future, Andy will receive his assets only after the company satisfies the claim of the preferred stockholders. Based on given information, it can be concluded that Andy is a _________________.

Common stockholder

When the industries in a country tend to produce products that have the lowest opportunity cost relative to other countries, the country most likely has a ___________________.

Comparative advantage