test 1 study notes

Flashcard maker : Lily Taylor
1. One drawback of socialism is that it may result in a reduction in the individual’s incentive to work hard.
2. Global economics and politics have no significant influence on businesses in the United States.
3. Sarah owns a bakery that specializes in cupcakes. Until recently, she charged a price of $5 for each treat. At this price Sarah’s customers bought an average of 384 cupcakes each week. For the last few weeks, she has reduced her price to $3.95 per cake, and her customers have purchased an average of 596 cupcakes each week. These results are consistent with the economic concept of demand.
4. In recent years, U.S. manufacturing sector has experienced ___________ productivity.
5. In socialist economies, the government owns some, if not most, basic businesses such as telecommunications systems and utilities
A free market is one in which decisions about what to produce and in what quantities are made by:
the market
If a shortage exists for a good in a free-market economy, the:
price of the good will rise
Demand refers to the quantity of a good that consumers are willing and able to buy at different prices at a specific time.
Adam Smith believed the self-interest of business people would lead them to create needed goods, services, and jobs.
In a mixed economy, the government’s goal is to grow the economy and maintain some measure of social equality.
Fiscal policy involves increases or decreases in:
government spending and taxes
Inflation refers to the persistent rise in the purchasing power of money.
Monica notices that just a few big companies produce the vast majority of soft drinks. She would be correct in describing the soft drink industry as an oligopoly.
An economy is said to be in a recession if GDP declines for two or more consecutive quarters.
An oligopoly is a market that is characterized by:
a few large sellers who dominate the market
A command economic system is characterized by:
reliance of the government to determine what is produced and who gets the output.
At the equilibrium price, the quantity consumers desire to buy equals the quantity sellers desire to sell.
In a free-market economic system, the mechanism of __________ is the key determinant used to signal to producers what to produce and how much to produce.
Governments that were predominantly capitalist are moving toward socialism, while governments that were predominantly socialist are moving toward capitalism.
Keynesian economic theory suggests:
short-term increases in government spending to stimulate the economy.
A simple supply curve shows a relationship between the:
price of a good and the quantity of that good sellers are willing to offer for sale at a specific point in time.
John complained to his buddy, Frank, that prices have increased a lot over the past year. Frank disagreed, saying that the prices of some goods have gone up a bit, but other prices have declined, noting that you can get some good buys on houses right now. Frank feels that the average price of consumer goods hasn’t changed. Frank and John can refer to the __________ to learn how government economists currently view the price situation.
Efforts by the Federal Reserve Bank (the Fed) to control the money supply and interest rates are known as:
monetary policy
One of the greatest concerns associated with capitalism is that:
some business people may let greed guide their behavior
Like most nations, the United States has a mixed economy.
Emerson, Inc., reported that it owns and operates 265 companies worldwide with 23% of its sales coming from Europe, 18% from Asia, 46% from the U.S., and 13% from other parts of the world. Clearly, Emerson exemplifies ______________.
a multinational coroporation
Denmark requires foreign companies that sell butter in Denmark to sell it in cubes, not tubs. This type of requirement is known as a:
non tariff barrier
Current trade data indicates that the nation of Bogusland exports more to other nations than it imports. Bogusland has:
a trade surplus.
Granting a foreign company the right to manufacture your product or to use your firm’s trademark in return for a fee is called:
In order to level the playing field in trade between the U.S. and China, U.S. policymakers have called upon China’s government to allow the yuan to float freely, as other world currencies. Through government regulation, China maintains an undervalued currency, which results in:
maintaining robust Chinese exports and a favorable balance of trade for China.
A sociological challenge that must be overcome in order to be successful in the global market is:
a lack of cultural understanding.
As the most powerful economy in the world, the United States does not need to concern itself with having an unfavorable balance of payments.
As a business strategy, the strategy behind “dumping” is to __________.
gain a foothold in a new market
A devaluation of the U.S. dollar would make American goods cheaper to foreign buyers.
A free-trade agreement is likely to result in:
an increase in imported goods and services.
In an effort to protect domestic jobs, some countries will place a limit on the number of certain types of products that can be imported. These limits are called:
import quotas.
An example of foreign direct investment would be Pepsi granting a Japanese firm the use of its formula and trademark, for a fee.
An example of a U.S. import would be the purchase of oil by U.S. companies from Saudi Arabia.
Free trade is the movement of goods and services between nations without political or economic barriers.
A form of foreign direct investment, where a domestic company purchases a company in a foreign country to produce a similar product or service, is a:
foreign subsidiary.
Export trading companies:
connect sellers in the U.S. with buyers in other nations, and help with customs, documentation and payments.
From a sociocultural perspective, U.S. business people are often accused of ethnocentricity.
Companies may have several reasons for creating joint ventures. Which of the following statements is one reason why firms may decide to form a joint venture?
They will save time to market if they pool their technological know-how.
A __________ is a partnership in which two or more companies (often from different countries) join together and share the risk and costs in order to undertake a major project.
joint venture
An influential foreign government official approaches your firm requesting a large sum of money. In return for this bribe, the official promises that your firm will receive preferential treatment in future government contracts. You refuse the request, explaining that the _________ Act of the United States prohibits you from making such payments.
Foreign Corrupt Practices
A major concern voiced by U.S. critics of the North American Free Trade Agreement (NAFTA) was that it would result in:
loss of jobs in the U.S. economy.
Comparative advantage theory states that a country should sell to other countries those products that it produces most efficiently and buy from other countries those products it cannot produce as efficiently.
As students think about a career in the business world today, which of the following is a good strategic suggestion?
Study a foreign language.
China has approximately 95% of the world’s Neodymium, a rare earth metal used in consumer and military electronics and contemporary technology. The fact that this is a necessary metal for the production of many products we use today—everything from smartphones to smart bombs—means China can almost name its price! Which of the following describes this situation?
China has a near absolute advantage in Neodymium.
Casey is typical of many U.S. businesspeople. Casey feels the U.S. culture defines the model for the rest of the world, and that the “American way” of doing things is the best. Casey is guilty of:
Two recent studies found a strong correlation between academic dishonesty among undergraduates and dishonesty at work.
One good reason for managing a business ethically is to help reduce employee turnover.
Often it is the threat of negative publicity that pressures businesses to enforce their corporate code of ethics.
The majority of CEOs blame unethical employee conduct on:
a failure of leadership to establish ethical standards.
Purposefully understating your firm’s income to avoid paying higher taxes is an example of:
illegal behavior.
Legal behavior and ethical behavior are basically the same.
When WorldCom used intentional accounting irregularities to make the company look more profitable than it actually was, it:
engaged in illegal behavior.
The difference between an organization’s positive social contributions and its negative social impacts is called their:
net social contribution.
________ refers to standards of moral behavior.
Last week, the Local Citizens for a Greener America sent a formal document to Chipper’s Golf Resort asking the private club to measure its carbon footprint and publicly disclose the amount of fertilizer and other carbon-emitting substances that it uses on its two award-winning golf courses. LCGA is an example of _________.
a watchdog group
A firm’s carbon footprint is:
the amount of carbon it releases in its effort to do business.
Overly ambitious business goals and employee incentives can lead to unethical behavior.
Top leaders in government and business today are:
held to higher ethical standards than in the past.
Some investors believe it makes financial as well as moral sense to invest in companies whose practices promote sensitivity toward the environment.
Moral behavior refers to behavior that is accepted by society as right versus wrong.
U.S. businesses have little influence over the behavior of businesses from other countries.
Last year the Bank of Plenty, Inc., made an all-out effort to go paperless. The bank’s public relations arm promoted the strategy both internally and externally. Customers were strongly encouraged to utilize the bank’s online banking for all their banking needs. Customers could sign up for local workshops where employees were dedicated to showing them how to navigate the bank’s new website and find the information they required. The bank’s initiative demonstrates:
an area where the firm can contribute to the green effort, as well as cut costs.
Many businesses have developed internal procedures to enforce their ethical policies. Which of the following is an example of an outside group urging ethical behavior in businesses?
union officials
When Donut Plaza employs in-store recycling and composting, and uses nontoxic cleaners, Donut Plaza is participating in:
corporate responsibility.
Which of the following is an unresolved ethical issue that surrounds global trade?
Labor standards
Many Americans define ethical behavior according to the situation in which they find themselves. This suggests that there may be situations where ________ to cheat, steal, or lie.
it might be okay
While speaking with his sales force, the director of sales explains, “Anyone caught violating a sales law will be fired.” After studying business ethics, you recognize this remark as a reference to the firm’s __________ ethics.
While telling an abusive joke about an ethnic group may not be unlawful, it is unethical.
Sharon, a CPA for a large firm, noticed that the company’s accounting records drastically overstated the amount of inventory on hand, which led to overstating the assets of the firm. Initially, she brought it to the attention of her supervisor, but when nothing was done to correct the mistake in a timely manner, she decided the best course of action was to report it to the appropriate government official. Although her actions took her outside the company, she was counting on current law, under the __________, to protect her against company retaliation.
Sarbanes-Oxley Act

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