Q1. What is the most important advantage of general partnerships? a. the unlimited liability of the partnership b. the ability to grow with the addition of new talent and money c. the ease of implementing an effective control system d. the increased role of luck e. the need for minority partners Q2. An S corporation has stock that is widely held and available for sale to the general public. a. True b. False Q3. Lending institutions are more likely to help finance the purchase of an existing business rather than the start-up of a business from scratch. a. True b. False Q4. What type of business has two or more owners who share in the operation of the firm and are financially responsible for its debts? a. corporation b. partnership c. cooperative d. conglomerate e. nonprofit Q5. Which of the following helps entrepreneurs gain skills that are essential for running a business? a. ESOP b. SBICs c. SEC d. LLC e. SBA Q6. When can a sole proprietorship legally be dissolved? a. sales exceed $1 million b. the partners reorganize the firm's structure c. earnings are less than $500,000 d. the owner donates profits e. the owner dies Q7. What type of company has stock that is widely held and available for sale to the general public? a. private corporation b. public corporation c. general partnership d. limited liability corporation e. professional corporation Q8. Low start-up costs and tax benefits are advantages of sole proprietorships. a. True b. False Q9. Who are the owners of a corporation? a. board of directors b. financial officers c. stockholders d. top managers e. entrepreneurs Q10. American Business Machines is organized as a corporation. Its income will be taxed at the corporate level and also on shareholder returns as dividends. What is this situation known as? a. dual costs b. double taxation c. regulatory costs d. double ownership e. financial balancing Q11. What does productivity measure? a. the total value of all goods and services produced by a national economy b. how much a system produces with the resources needed to produce it c. how much output is necessary to produce a certain level of demand d. the standard of living relative to purchasing power parity e. how much gross national product results from inputs of labor Q12. Which of the following is one of the elements required in private enterprise? a. adequate representation in the government b. freedom from foreign competition c. the opportunity for market leadership d. the right to ownership of property e. numerous regulatory agencies Q13. If, in the long run, international trade improves the standards of living in participating countries, why might some countries want to place trade barriers such as extra taxes on imported products? a. Imported products compete with domestic products and thus put pressure on local business. b. Imported products are usually not as good quality as domestically made products. c. Generating government revenue is often more economically valuable than free trade. d. This is necessary to keep a country's currency strong. e. International trade tends to lead to political tension. Q14. Which course of action should the Federal Reserve take if it wishes to reduce inflation and curb consumer spending? a. The Federal Reserve should buy securities. b. The Federal Reserve should sell securities. c. The Federal Reserve should decrease the reserve requirement. d. The Federal Reserve should lower the discount rate. e. The Federal Reserve should sell securities and lower the discount rate. Q15. The point at which the supply curve and the demand curve intersect is the market price. a. True b. False Q16. Which of the following is characterized by having few sellers, similar prices among sellers, and difficult market entry? a. oligopoly b. pure competition c. monopoly d. monopolistic competition e. state socialism Q17. Which of the following measures indicates the prices of typical products purchased by American consumers living in urban areas? a. GDP per capita b. standard of living c. consumer price index d. purchasing power parity e. Big Mac index Q18. Which of the following best describes economic stability? a. the measure of economic growth that compares how much a system produces with the resources needed to produce it b. a condition in an economic system in which the amount of money available and the number of goods and services produced are growing at about the same rate c. the economic condition in which a country's exports exceed its imports d. a relative equality between what the government owes its creditors and the revenue it gets from imports e. the economic value of all the products that a country exports minus the economic value of all the products it imports Q19. How does monopolistic competition differ from perfect competition? a. There are more sellers in a market characterized by monopolistic competition. b. It is easier for sellers to enter a market or industry characterized by monopolistic competition. c. In a perfectly competitive market, products are more dissimilar. d. In a market characterized by monopolistic competition, individual firms have some control over price. e. In a perfectly competitive market, the size of the firms must be large. Q20. Which of the following best describes purchasing power parity? a. total quantity of goods and services produced by an economic system b. total quantity of goods and services that can be purchased with one paycheck c. total quantity of goods and services that could have been purchased if one's pay rose in the same proportion as inflation d. the principle that exchange rates are set so that prices of similar products in different countries are about the same e. the principle that a market economy determines supply and demand for consumer products Q21. Some actions may be illegal yet considered ethical. a. True b. False Q22. What is the term given to the groups, individuals, and organizations that are directly affected by the practices of an organization? a. primary agents of interest b. social auditors c. senior managers d. organizational stakeholders e. local communities Q23. What act was passed in 2002 as a response to a number of highly publicized accounting scandals? a. Sarbanes-Oxley Act b. McCain-Feingold Act c. Securities and Exchange Act d. Accounting Standards Act e. Dodd-Frank Act Q24. How do top managers best demonstrate a commitment to ethical business practices? a. by adopting written codes of ethics b. by reading employees' e-mails c. by decentralized decision-making practices d. by cooperating with other companies e. by monitoring employees' Web searches Q25. Which of the following occurs when someone uses confidential information to gain from the purchase or sale of stocks? a. identity theft b. a margin purchase c. insider trading d. collusion e. a guarantee Q26. Small businesses must answer many of the same social responsibility questions as big businesses. a. True b. False Q27. Ethical standards relating to business practices are fairly consistent around the world. a. True b. False Q28. When evaluating a decision based on the ethical norm of utility, a manager is most likely to consider which of the following questions? a. Is the decision consistent with what we regard as fair? b. Does the decision respect the rights of the individuals involved? c. Is the decision consistent with people's responsibility to each other? d. Is the decision consistent with best management practice? e. Does the decision optimize the benefits for those who are affected by it? Q29. Zach's company has appointed him to boost the business's level of corporate social responsibility. Which of the following would MOST likely be an appropriate step for Zach toward achieving this task? a. extending employees' hours while paying them the same b. placing less priority on the satisfaction of investors c. reducing the company's number of charitable contributions d. offering employees better health benefits while still increasing the company's profit e. suspending standards designed to protect the environment Q30. A business's social responsibility to investors includes following proper accounting procedures. a. True b. False Q31. Many governments require that products sold in their particular country be at least partly made there. This policy involves what type of laws? a. quota laws b. local content laws c. business practice laws d. free trade laws e. subsidy laws Q32. Which of the following treaties sought to eliminate trade barriers such as tariffs and quotas? a. United Nations Development Assistant Plan b. Fair Labor Standards Act c. General Agreement on Tariffs and Trade d. General Agreement on Trade in Services e. European Union Stability and Growth Pact Q33. Which of the following refers to the situation when a country's imports exceed its exports? a. balance of payments b. balance of trade c. trade deficit d. trade surplus e. trade advantage Q34. What typically happens to a country's balance of trade as the value of its currency falls? a. It improves. b. It declines. c. It remains the same. d. It fluctuates drastically. e. It fluctuates moderately. Q35. Which of the following refers to tariffs that are imposed strictly to raise money for the government? a. revenue tariffs b. protectionist tariffs c. quota tariffs d. subsidy tariffs e. labor tariffs Q36. Which of the following types of payments are usually received by an exporter as an ongoing payment calculated as a percentage of the license holder's sales? a. flat fees b. royalties c. agent fees d. subsidies e. direct investments Q37. Under which of the following treaties are Canada, the United States, and Mexico gradually eliminating tariffs and all other trade barriers? a. the EURO Agreement b. the Pan-American Agreement c. the North American Free Trade Agreement d. the General Agreement on Tariffs and Trade e. the G-3 Free Trade Agreement Q38. Which of the following denotes a government order forbidding exportation and/or importation of a particular product from a particular country? a. tariff b. embargo c. subsidy d. local content law e. business practice law Q39. When the value of one country's currency relative to that of another varies with market conditions, which of the following exists? a. floating exchange rate b. fixed exchange rate c. indexed exchange rate d. flat exchange rate e. balanced exchange rate Q40. Which of the following statements best describes the effects of subsidies? a. A subsidy essentially lowers the prices of foreign goods rather than raising the prices of domestic goods. b. A subsidy essentially raises the prices of domestic goods rather than lowering the prices of foreign goods. c. A subsidy essentially lowers the prices of domestic goods rather than raising the prices of foreign goods. d. A subsidy essentially raises the prices of foreign goods while also raising the prices of domestic goods. e. A subsidy essentially lowers the prices of foreign goods while also lowering the prices of domestic goods.