test 1

Question 1

individuals or organizations who try to earn a profit by providing products that satisfy people’s needs.

Answer 1

business

Question 2

Earning profit requires

Answer 2

management skills
marketing expertise
financial resource
social responsibility and acting ethically

Question 3

stakeholders

Answer 3

include customers, employees, investors, government regulators, and community (they are impacted). by a company’s decisions)

Question 4

shareholder

Answer 4

they own a part of the company

Question 5

socialism

Answer 5

government owns basic industries, but individuals own most businesses (taxes and unemployment are generally higher) > ex. postal services, telephone, utilities, transportation, health care

Question 5

economics

Answer 5

resources distributed for production of goods and services

Question 6

communism

Answer 6

people own all nation’s resources
suffer from: low of living, high prices, little freedom, corruption (karl marx)

Question 7

capitalism/free enterprise

Answer 7

individuals own/operate majority of businesses

Question 8

profits (socialism)

Answer 8

Profits earned by small businesses may be reinvested in the business; profits from government-owned industries go to the government.

Question 8

profits (communism)

Answer 8

Excess income goes to the government. The government supports social and economic institutions

Question 9

profits (capitalism)

Answer 9

Individuals and businesses are free to keep profits after paying taxes.

Question 10

GDP

Answer 10

Gross domestic product; the sum of all goods and services produced in a country during a year

Question 11

economic expansion

Answer 11

occurs when the economy is growing and people are spending more money (may lead to inflation, reduces buying power)

Question 12

economic contraction

Answer 12

slow down of economy, may lead to recession

Question 13

inflation

Answer 13

Inflation is characterized by a continuing rise in prices

Question 14

recession

Answer 14

categorized as rising levels of unemployment (severe recession may turn into depression

Question 15

deflation

Answer 15

occurs when rising unemployment stifles demand, forcing prices down.

Question 16

business ethics

Answer 16

standards set by society; determine acceptable conduct in business organizations

Question 17

conflict of interest

Answer 17

Exists when person must choose whether to advance personal interests or those of others.

Question 18

whistle blowing

Answer 18

Employee exposes employer’s wrongdoing to outsiders

Question 19

argument for social responsibility

Answer 19

1) business helped create problems and should help to solve them;
(2) business has the financial and technical resources to help solve problems;
(3) as a member of society, business should do its fair share to help others;
(4) social responsibility can help prevent increased government regulation; and
(5) social responsibility helps to ensure economic survival

Question 20

argument against social responsibility

Answer 20

(1) social responsibility detracts from the profit-making objectives of business;
(2) participation in social responsibility programs gives business power at the expense of other segments of society; (3) business may not have the expertise to solve social problems; and
(4) social problems are the responsibility of government agencies

Question 21

Sarbanes-Oxley Act

Answer 21

help protect shareholders, employees and the public from accounting errors and fraudulent financial practices.

Question 22

WTO

Answer 22

world trade organization; an international organization dealing with the rules of trade between nations

Question 23

absolute advantage

Answer 23

the only or most efficient producer of an item (monopoly)

Question 24

comparative advantage specializes

Answer 24

specializes in products that it can supply more efficiently; however, it is not the sole producer of those products.

Question 25

balance of trade

Answer 25

difference between exports and important

Question 26

Balance of payments

Answer 26

Difference between flow of money in and out

Question 27

import tariff

Answer 27

Fixed tariff is specific amount of money levied on each unit of product brought into country.

Question 28

quota

Answer 28

Established voluntarily or by government. (restriction on the number of units of a particular product that can be imported into a country)

Question 29

embargo

Answer 29

Established due to political, economic, health, or religious reasons. (a prohibition on trade in a particular product)

Question 30

dumping

Answer 30

the act of a country or business selling products at less than what it costs to produce them.

Question 31

outsourcing

Answer 31

Transferring of manufacturing or other tasks (to where costs are lower)