Chapter 1-3 Business

True or False: Things that are required in order to live are known as wants.
False

True or False: Goods and services are purchased by businesses as well as by individuals
True

True or False: Buildings, equipment, and supplies are examples of natural resources.
False

True or False: All economic resources have a limited supply
True

True or False: The basic economic problem results from not having enough resources to satisfy every need
Tue

True or False: The final step in the decision-making process is to select the best choice from among the alternatives.
False

True or False: Although all nations differ in the type and amount of economic resources they have, they all have the same economic needs
False

True or False: Communism refers to the private ownership of resources by individuals, rather than by the government
False

True or False: A person who buys and uses goods and services is called a consumer
True

True or False: Generally, a lack of competition will result in lower prices for goods and services
False

True or False: Economic growth refers to a steady increase in the production of goods and services in an economic system
True

True or False: One component of gross domestic product is the value of a country’s exports plus the value of the imports into the country
False

True or False: The more goods and services produced, the healthier an economy is considered to be
True

True or False: Molly is a 14-year old student. She would not be considered a part of the labor force in the US
True

True or False: In the US, all people over the age of 21 who do not have a full-time, paying job are considered “unemployed”
False

True or False: An ability to produce more goods and services makes it possible to reduce the number of hours in a workweek
True

True or False: Stan receives a monthly social security check from the US government. This would not be counted when measuring Stan’s personal income.
False

True or False: Business cycles are the recurring ups and does of gross national product
False

True or False: During periods of deflation, prices drop so demand increases greatly
False

True or False: The money for capital projects comes from two main sources: stock investments and bonds
False

True or False: Most business activities occur within a country’s own borders
True

True or False: A country can have an absolute advantage in only one area
False

True or False: Without foreign trade, all of the items you buy would cost less, because they would not need to be shipped here from other lands
False

True or False: A nation with a trade surplus is said to have a favorable trade position
True

True or False: It is possible for the US to have a trade surplus with one country and a trade deficit with another
True

True or False: Some countries limit the amount of money their citizens can take out of the country when they travel
True

True or False: Because of international trade, all nations of the world use the same banking system
False

True or False: When a country has a favorable balance of payments, the value of its currency is usually constantly rising
True

True or False: Countries that devote most of their economies to agriculture usually provide more and better goods and services for their citizens
False

True or False: A joint venture is an agreement between two or more countries to remove duties and trade barriers on products traded among them
False

What is an example of an economic need?
Water

What are things you can see and touch?
Goods

What country is the largest producer of goods and services in the world?
US

People producing goods and services are called _________
Human resources

If everybody had an unlimited supply of economic resources, what would not exist?
Scarcity

Jonah had $25 to spend. He decided to buy a new shirt instead of going to the park with his friends. Jonah has
made an economic trade-off

What is the first step in the decision making process?
Define the problem

What is the final step of the decision making process?
Review your decision

In every nation on Earth,
people must deal with the problem of scarcity

All nations must decide
all of the above

The government of Erewhon owns and controls all economic resources. This is a type of _______________.
Command economy

Who owns the economic resources in a market economy?
the people of the country

Which type of economy is usually centered mainly on meeting people’s basic needs?
traditional economy

Another name for the economic system in the US is
all of the above

Which of the following is NOT an especially important principle of the US economic system?
tradition

In the US, you can own anything you want and decide what you want to do with it, as long as it does not violate the law. This describes the principle of
the right of private property

The rivalry among businesses to sell their goods and services is known
competition

Generally, as the price of a product increases
businesses will be willing to supply larger quantities of the product

Which of the following scenarios will probably cause prices to drop?
Many companies begin producing a product in relatively high demand

Which of the following is probably a competitor to Mary’s CD Shop?
B Flat Records and Tapes

GDP measures a country’s economic output during
one year

GDP does not include
the value of the work you do for yourself

Which of these items would be counted when measuring GDP
a fully assembled washing machine

Dividing GDP by the total population of a country results in that country’s
GDP per capita

All of the following people are part of the labor force EXCEPT
Lindsay, a stay at home mom with two children

If wages increase faster than gains in productivity, prices will rise. Why?
Because the cost of producing goods increases

In the early 1890s, the average employee in the US worked about how many hours per week
60

Which of the following probably would result in a DECREASE in worker productivity?
A company pays for raises for top management by laying off 60 percent of its employees

Retail sales
indicate general consumer spending patterns in the economy

At the peak of the business cycles is
Prosperity

Which of the following is NOT a characteristic of a depression?
a high demand for goods and services

If GDP growth slows for at least _____ quarters in a calendar year, the economy is probably in a recession
2

A recession often affects some groups of workers in related businesses. The drop in related businesses is called
the ripple effect

Inflation
is most harmful to people living on fixed incomes

Suppose wages are going up faster than prices. What is the most likely effect?
Unemployment will worsen because businesses will tend to hire fewer workers.

The interest rate banks charge their best businesses customers is the
prime rate

The major influence on the level of interest rates is
the supply and demand for money

Which of the following is an example of a capital project?
A small business purchases two new pickup trucks

If you purchase a corporate or government bond, you are a
creditor

The money people deposit in banks and other financial institutions
is lent to businesses to fund capital projects

The making, buying, and selling of goods and services within a country is called
domestic business

The US conducts trade with over ___ countries
180

Which of the following countries has an absolute advantage in coffee production?
Brazil

Goods and services sold to other countries are called
exports

About how many US jobs depend on international business
1 out of 6

The difference between a country’s total exports and total imports is called the
balance of trade

The difference between the amount of money that comes into a country and the amount that goes out of it is called the
balance of payments

Which of the following scenarios is likely to cause the value of a country’s currency to rise
increased demand for the nation’s products and currency

Which of the following is NOT a cultural/social factor that affects international business?
climate

The key effects on a country’s level of economic development are
literacy level, technology, and agricultural dependency

A tax that a government places on certain imported products is called a
tariff

A limit that a government places on the quantity of a product that may be exported or imported during a given period is called a
quota

What is a free-trade zone?
A selected area which products can be imported duty-free and then stored, assembled, or used in manufacturing

Common market members
have a common external duty on products being imported from nonmember countries

A country in which an MNC places business activities is called
host economy

Selling the right to use some intangible property for a free or royalty is called
licensing

Which of the following is NOT a goal of the World Trade Organization
strengthening import quotas

Licensing
has a low financial investment, so the potential financial return is often low

This international trade organization was created in 1944 to provide loans for rebuilding after WWII
World Bank

standard of living the amount of goods and services the average citizen can buy business cycle repeated rise and fall of economic activity over time WE WILL WRITE A CUSTOM ESSAY SAMPLE ON ANY TOPIC SPECIFICALLY FOR YOU FOR ONLY …

business cycle Recurring fluctuations in economic activity consisting of recession and recovery and growth and decline; Fluctuations in economic activity, such as employment and production expansion phase the period of time during which economic activity is increasing, Where production is …

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How is economic activity measured by economic indicators What are some examples of economic indicators Growth, Production, and comparison to other countries WE WILL WRITE A CUSTOM ESSAY SAMPLE ON ANY TOPIC SPECIFICALLY FOR YOU FOR ONLY $13.90/PAGE Write my …

Inflation The rise in the general level of prices Investing The use of savings to earn financial return WE WILL WRITE A CUSTOM ESSAY SAMPLE ON ANY TOPIC SPECIFICALLY FOR YOU FOR ONLY $13.90/PAGE Write my sample Investing Risk The …

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