question

Entrepreneurship involves

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c) the discovery and exploitation of new business opportunities.

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In the pre-capitalist world, entrepreneurship often took the form of

answer

b) sea and land explorations.

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Profit is

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b) the reward of entrepreneurship

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In a market economy (capitalist system), entrepreneurs are generally

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b) private individuals

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Entrepreneurs are

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c) innovators

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Entrepreneurs are visionaries who

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a) anticipate future consumer demands

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As innovators, entrepreneurs

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c) bridge the gap between the invention and the market

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As risk takers, entrepreneurs

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b) run the risk of losing their invested capital

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How can an entrepreneur give his or her firm a competitive advantage?

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d) all of the above

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Venture capitalists primarily provide entrepreneurs with

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c) financial and management assistance

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Business incubators primarily provide entrepreneurs with

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b) flexible office leases and shared facilities

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A business plan is usually necessary for an entrepreneur to

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a) obtain financing

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Start-ups are usually

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a) new small-scale businesses owned and operated by a few partners

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In the early stages of beginning a new business, entrepreneurs frequently appeal for financing to

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c) friends and family

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Governments can encourage entrepreneurs by

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b) tax incentives

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Capital investment includes the purchase of

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a) machinery by businesses

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Financial investment includes

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b) participating in financial ventures life venture capital partnerships

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The total market value of all goods and services produced in a nation's economy (excluding foreign investments) is its

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d) GDP

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In 2002, the United States has a GDP (Gross Domestic Product) of $10.5 trillion. What does that mean?

answer

b) It is the total money value of all goods and services produced in the United States.

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Why are economists always so concerned with GDP?

answer

b) GDP is the most accurate way to determine if the economy is performing well.

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Economic growth is

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b) growth in a country's GDP

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In the 3rd quarter of 2003, the economy of the United States grew by 8.2% because of

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d) all of the above

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Economic growth can reduce poverty by

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d) all of the above

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Is GDP a good measure of the prosperity of the average person?

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d) No, GDP does not consider the size of the population.

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If per capita GDP is growing, does that mean that everyone is better off economically?

answer

c) No, per capita GDP is only an average figure -- it does not mean everyone is more prosperous

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How do we precisely measure the standard of living in a nation or economy?

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d) No one number is enough.

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Because different nations have vastly different numbers of people living in them, Gross Domestic Product (GDP) is a very poor way to compare the economic well being of people in different countries. What economic statistic is used by economists in its place?

answer

c) weath total

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Which of the following is the economic term that indicates that figures have been adjusted for inflation?

answer

c) real

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Gross Domestic Products (GDP) expressed with no adjustments for inflation is called the?

answer

a) nominal GDP

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Which of the following is the economic definition for recession?

answer

d) Two or more quarters (6 months or more) of declining real GDP is a recession.

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Entrepreneurship is ESSENTIAL to a dynamic market economy because?

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a) it leads to the growth of new businesses

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An established company might want to encourage an entrepreneurial culture in order to..?

answer

d) all of the above

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Companies can encourage hard work and dedication from their employees?

answer

c) through issuing stock options

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Nick wants to be an innovator. This means that he should

answer

b) turn a new product into an actual product

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If Patrick wants to be an entrepreneur, he should

answer

a) identify and exploit a new business opportunity

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To get financing, entrepreneurs generally need a business plan. Which of the following is usually included in a business plan?

answer

d) all of the above

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Who usually provides funds for the early stages of a start-up business?

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c) family and friends

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Why do venture capitalists supply money and other support to entrepreneurs?

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b) They share the rewards if the company is successful.

question

In the later stages of a business that requires a lot of funding, the entrepreneur can seek financing from?

answer

b) financial markets

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Which of the following is a risk taken by entrepreneurs?

answer

a) personal bankruptcy

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New trade agreements are expected to

answer

b) encourage entrepreneruship

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The government can encourage more business start-ups by

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a) cutting taxes for businesses

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A decline in interest rates is expected to

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c) increase economic growth

question

To encourage capital investment by the private sector, governments can

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a) improve the country's physical infrastrucature

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To increase human capital, governments can provide

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d) all of the above

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Advances in technology generally result in

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a) greater productivity

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Ireland is a popular destination for American businesses and investors because

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c) it has business-friendly policies

question

Other things being equal and unchanged, a jump in productivity growth is expected to boost

answer

d) all of the above

question

Other things being equal and unchanged, a jump in inflation is expected to

answer

c) raise the country's cost of living

question

Other things being equal and unchanged, a jump in crime rates is expected to have

answer

a) a negative impact on the standard of living

question

Consider two countries with exactly the same GDP. There is exactly the same number of people living in each country. Call them country A and country B. If country A's GDP grows faster than country's B's then country A's per capital GDP.

answer

c) will grow faster than the per capita GDP of country B

question

Economic growth and standard of living can be low in a country because of

answer

d) all of the above

question

A decline in a country's economy will increase

answer

a) poverty

question

How do capital and human capital increase the GDP, wealth and income of nations?

answer

b) Capital and human capital increase the productivity of land and labor.

question

Which of the following do economists use to determine if an economy is healthy or if it is in a recession or depression?

answer

b) GDP

question

Who or what determines a country's GDP?

answer

a) All of the resources of production together produce the GDP.

question

Is comparing the GDP of two nations the best means of comparing how the average person is doing economically?

answer

c) No, per capita GDP is a much better measure of how people are doing economically.

question

Is everyone in a country with a greater per capita GDP wealthier than those in a nation with a lower per capita GDP?

answer

d) No, the distribution of income must also be considered.

question

How do people determine what country has the best economy?

answer

d) Standard of living is usually used to determine the best economic system.

question

How can economists precisely compare the standards of living in different countries?

answer

a) They cannot because standard of living depends on what people consider to be important.

question

What is the essential difference between real and nominal figures in economics (such as GNP and GDP)?

answer

c) Real figures have been adjusted to eliminate the effects of inflation, while nominal figures are stated in the current value of the money.

question

Why do economics say that real Gross Domestic Products (GDP) should be used to measure growth in an economy (and not nominal GDP)?

answer

b) Growth in real GDP is the only true indicator of whether or not an economy is growing.

question

Why is real Gross Domestic Product (GDP) used to determine if the economy is in recession -- why no use unemployment figures as the measure?

answer

d) Real GDP can be accurately and quickly determined, while higher unemployment figures do not always indicate recession.

question

Each of the following inventors developed machinery that would lead to be increased productivity of farmers between 1790 and 1840 EXCEPT

answer

c) Samuel Morse

question

In the 1870s, an entrepreneur used his entrepreneurial skills to be the first to build steel plants using the Bessemer process, a new steel-making process. This gave his steel company an advantage in the emerging U.S. steel industry. This entrepreneur was

answer

d) Andrew Carnegie

question

In 1882, John D. Rockefeller organized a trust that soon gained a monopoly of the oil-refining business in the U.S. This trust was the

answer

a) Standard Oil Trust

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The _______ century marked a period of considerable entrepreneurial activity with inventions and developments by Thomas Edison, Alexander Graham Bell, Christopher Sholes, Etienne Lenoir, Samuel Morse, and many others.

answer

c) 19th

question

Bill Gates, one of the most successful entrepreneurs of the 20th century, built a computer software company into a corporation that has frequently drawn the concern of competition regulators. In 2000, a U.S. federal judge found Microsoft Corporation guilty of

answer

a) antitrust violations and ordered its break-up

question

According to the chart, the growth rate for female-owned sole proprietorships grew much ______ than their male-owned counterparts in terms of number of businesses, gross receipts, and new income; however, the shares of female-owned sole proprietorships' receipts and net income in total were significantly ______ than their share of the number of businesses.

answer

d) faster, smaller

question

Which conclusion can be drawn about the countries listed in the chart?

answer

a) Bangladesh has the lowest standard of living.

question

Which group of countries had a GDP per capita of between 5,000 and 10,000 international dollars in 1998?

answer

c) 3

question

According to the chart, which country experienced the greatest rate of economic growth but continues to have relatively low standard of living?

answer

a) Malaysia

question

According to the chart, what percentage of all firms in the U.S. in 2003 employed 19 or fewer employees?

answer

a) approximately 76%

question

A firm owned by a single person who shares profits and losses with no one else is a

answer

c) sole proprietorship

question

A firm jointly owned and run by two or more people who share all profits and losses is a

answer

a) partnership

question

A business firm with many owner who each own shares of the company is a

answer

d) corporation

question

A firm that does not seek to make money is a

answer

b) not-for-profit organization

question

What are corporate stocks?

answer

c) Corporate stocks are the paper certificates representing the shares of ownership in a corporation.

question

Which of the following acts for the stockholders to set policies, make major decisions, and hire top corporate management?

answer

c) the board of directors

question

What are the powers and responsibilities of the top management of a corporation?

answer

a) They manage the day-to-day operations of the corporation.

question

What are stock dividends?

answer

c) They are a portion of the corporation's profits that are given to stockholders.

question

How are most stocks bought and sold?

answer

d) Most Investors purchase stocks through stock markets (or exchanges).

question

What is the proper term for money that is available for investment?

answer

a) It is "capital," or even more properly, "financial capital."

question

What is meant by economies of scale?

answer

It is cheaper per unit to produce a large number of product than it is to produce a small number.

question

Is there a term to describe industries where it is more expensive per unit to produce a large number of a product than it is to produce a small number?

answer

d) Yes, "diseconomies of scale."

question

What is the term that describes the fact that owners of sole proprietorships and partnerships are totally personally responsible for all the debts of their firms?

answer

c) unlimited liability

question

What is the term that describes the fact that owners of corporate shares or stocks do not risk anything beyond their original investment?

answer

b) limited liability

question

What is labor in economics?

answer

b) Labor is one of the three resources of production, like land or capital.

question

How do firms purchase or pay for the labor that they use to produce their goods and services?

answer

c) Labor is purchased with wages or salaries.

question

Why are there such great differences in the wages and salaries pain to different people?

answer

b) A worker's human capital is the greatest determinant of his or her wage or salary.

question

18) Are there economic reasons why a nation supports education and training?

answer

d) Yes, much of the human capital of a nation's workforce is acquired in school.

question

Is a worker's human capital and his or her resulting productivity the ONLY determinants of that person's wage or salary?

answer

d) No, like all resources, supple and demand also affect how much a worker is paid.

question

Why are most firms sole proprietorships -- what advantages do they have over other types of organizations?

answer

a) They are easily formed, management is in one person's hands, and profits are not shared.

question

What advantages does a partnership have over a sole proprietorship?

answer

c) Partnerships usually have more management expertise and more financial capital.

question

What is the main reason almost all large companies are corporations?

answer

c) Corporations can attract millions of dollars of financial capital from many people because the owners have limited liability.

question

Why is it usually safer to invest in corporate stocks than to become a partner in a business?

answer

d) Partnerships have unlimited liability, while corporations have limited liability.

question

How do corporate bonds differ from corporate stocks?

answer

d) Bonds are certificates that represent money loaned to corporations, while stocks are certificates that represent the shares of ownership in a corporation.

question

25) If stockholders own the corporation, how do they control and manage it?

answer

b) Stockholders elect the board of directors and that board then oversees the corporation.

question

Who is responsible for a corporation's debt?

answer

c) the corporation

question

How are stock prices determined?

answer

d) Supply and demand set stock prices.

question

Why do investors buy stocks?

answer

c) Stockholders are paid dividends from the company's profits.

question

How is the trading in the stocks of major corporations regulated?

answer

c) Stocks are traded on respected stock markets which are regulated by governments.

question

30) Of the three resources of production (land, labor, and capital), how does capital most differ from the other two?

answer

d) Capital is produced by humans, while land and labor are not.

question

Why has there not been a successful new American auto manufacturing firm formed in over 80 years?

answer

a) The economies of scale in the auto industry make it almost impossible for a new firm to gather enough financial capital to be successful.

question

Is it possible for to become too big to be competitive and earn a profit?

answer

c) Yes, growing firms can face diseconomies of scale.

question

How do charities avoid paying the taxes that other firms must pay?

answer

c) Once they are licensed as not-for-profit organizations, they are exempt from most taxes.

question

Which statement BEST explains the role that labor has in the production of goods and services?

answer

c) Land, labor, and capital are all resources of production necessary to produce goods and services.

question

Why are some workers paid more than others?

answer

b) Pay is mostly determined by supply and demand with the number of workers determining supply and the value of the work performed determining demand.

question

In economic terms, how does a worker make himself or herself more valuable to employers?

answer

d) Increase his or her human capital.

question

37)Why do the workers of some nations have more human capital than those of other nations?

answer

b) Some nations invest more heavily in education and training?

question

38) The violent strike at Carnegie Steel Company's plant in Homestead, Pennsylvania in 1892 ended in a defeat for union members. The workers' defeat

answer

a) stopped the growth of labor unionism in the steel mills for years

question

39) In 1894, the president of the American Railway Union (ARU) called on all American railway workers to support the Pullman workers at the Pullman Palace Car Company of Chicago. The president of the ARU was

answer

d) Eugene Debs

question

The American Federation of Labor (AFL) was one of the first federations of labor unions in the United States. It was founded in 1866 by

answer

c) Samuel Gompers

question

The Coal Strike of 1902 ended after President Theodore Roosevelt pressured mine owners to accept arbitration. This action was highly unusual because

answer

b) earlier presidents has sided with business owners and often sent troops against strikers.

question

In which state will you likely find the highest paid workers?

answer

d) number 2

question

Sole prepreitorships

answer

a) are a large percentage of businesses but bring in the smallest percentage of total business revenue

question

In terms of business done (measured by percentage of total revenue),

answer

d) corporations are a significant part of the U.S. economy

question

According to the chart, which group or person has the most power in a corporation?

answer

c) the stockholders

question

According to the chart, the U.S. economy

answer

a) is dominated by the service sector

Unit 3 Economy – Flashcards

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