1. The core goal of business is to generate long-term _____ by delivering _____ to their customers.
a. value; products
b. profits; value
c. profits; security
d. value; profits
2. In a business, _____ is equal to sales minus expenses.
3. Value is the relationship between the _____ of a product or service and the benefit that it offers its customers.
b. length of service
4. To be successful, entrepreneurs must be comfortable risking their money and _____ to start and manage a
b. standard of living
5. Successful U.S. firms:
a. attempt to avoid all risk.
b. embrace change.
c. focus on generating short-term profits.
d. avoid new opportunities if what they are currently doing works well.
6. Big Poppa’s Pizzeria will be opening outlets in three new locations, bringing new jobs to its community. It also plans
to purchase all ingredients from local farms and merchants. With these actions, Big Poppa’s Pizzeria is contributing
to a higher _____ for its town’s citizens.
a. environmental standard
b. social involvement
c. city tax base
d. standard of living
7. The Production Era is recognized for:
a. increasingly specialized jobs, resulting in higher productivity and lower costs and prices.
b. power shifting away from business toward consumers.
c. the rise of monopoly power giving big businesses the ability to increase productivity and raise prices almost at
d. creating satisfied customers who act as advocates for business.
8. The Marketing Era introduced:
a. the marketing strategy.
b. the 4 Ps of marketing.
c. the marketing approach.
d. the marketing concept.
9. During the Relationship Era, businesses believed it was more profitable to:
a. concentrate on attracting new customers.
b. cultivate current customers by using technology.
c. focus on immediate customer transactions.
d. focus on print advertising and not customer satisfaction.
10. As products flooded the market after World War II, firms responded by:
a. cultivating their customers.
b. focusing on a low-cost strategy.
c. adopting a bleeding-edge approach to the introduction of products in an attempt to be first to market.
d. branding their products to create distinctive identities.
11. The economy, as a system, represents the:
a. non-efficient use of material resources.
b. flow of resources from production through consumption.
c. means of production only.
d. means of capitalistic systems.
12. From the business perspective, a key reason to study economics is to:
a. gain a better understanding of past business choices in order to make better future decisions.
b. avoid the temptation to focus on past events.
c. ensure that demand exceeds supply.
d. learn how to achieve a monopoly position in markets with the potential to generate high profits.
13. Economics is divided into two core areas of study known as:
a. production and consumption.
b. data collection and forecasting.
c. macroeconomics and microeconomics.
d. supply economics and demand economics.
14. Microeconomics focuses on:
a. the employment rate.
b. individual businesses.
c. the gross domestic product.
d. taxation policies.
15. Subprime loans were attractive to lenders because:
a. financial institutions maintained high reserves.
b. they were secured by many rules and regulations.
c. they were absolutely risk-free.
d. they provided a higher return than many other investments.
16. Fiscal policy refers to _____.
a. government efforts to influence the economy through taxation and spending decisions
b. private efforts to encourage economic growth investment and entrepreneurship
c. methods that boost the economy by encouraging the supply of money
d. actions that shape the economy by influencing interest rates
17. _____ refers to actions that shape the economy by influencing interest rates and the supply of money.
a. Fiscal policy
b. Monetary policy
c. Revenue policy
d. Deficit policy
18. The M2 money supply includes:
a. all currency, credit cards, and most savings accounts.
b. all currency, most savings accounts, money market accounts, and certificates of deposit.
c. only currency and short-term money market accounts.
d. only currency.
19. Why are the members of the Fed Board of Governors appointed to 14-year terms that are staggered, with one
expiring every 2 years?
a. To encourage new approaches and fresh ideas from the Board of Governors
b. So that no single president can appoint all of the members, thereby ensuring that the Fed can act
independently of political pressure
c. To ensure that there are experienced members during all economic cycles
d. Because after 14 years they are automatically eligible to run for Fed Chair
20. Which of the following is a function of the Fed?
a. Every year, it creates a budget, or a financial plan.
b. It provides banking services for member banks and the federal government.
c. Every year, it calculates the expected spending for the federal government.
d. It outlines expected revenue from taxes and fees.
21. A comparison of economic indicators among the six most populous nations indicates that the:
a. U.S. has by far the largest per capita GDP.
b. U.S. has the fastest rate of economic growth.
c. economy of Brazil is growing the fastest.
d. size of the Chinese economy is the second largest, but it is growing very slowly.
22. Although many U.S. firms want to expand their sales in nations with high populations, they face some challenges in
doing so, including the fact that in many of these nations the:
a. purchasing power of most citizens is very low.
b. governments strongly favor socialist economic policies.
c. rate of economic growth is much slower than that of less populous nations.
d. citizens aren’t as interested in material goods as U.S. citizens.
23. What are some of the current business opportunities in the world economy?
a. Finding new ways to use fossil fuels in developing nations is an important aspect of the global economy.
b. Underdeveloped nations can leapfrog technologies by eliminating unnecessary steps in the chain of
c. The Chinese economy is the world’s standard bearer, with low taxes and regulation, and the cost of doing
business here is second to none.
d. Countries like Vietnam will not prosper unless they get on board with UN resolutions on climate change.
24. India and the Philippines consistently attract sizeable amounts of foreign investment for services performed in the
domestic market and sold internationally. The main reason for this foreign interest is that:
a. these countries have outstanding infrastructure, with world class transportation and power supply facilities.
b. these nations have large numbers of highly educated workers who are paid much less than American
c. the dollar’s value is higher in the Asian market than in the American market.
d. the average income of consumers in these nations is among the highest in the world, so these markets have a
lot of potential.
25. The industries in most countries tend to produce products for which they have a(n) _____ compared to other
a. absolute advantage
b. high opportunity cost
c. high production cost
d. comparative advantage
26. When the total value of exports is higher than the total value of imports, a country experiences a _____.
a. trade exchange
b. trade surplus
c. trade deficit
27. A measure of the total flow of money into or out of a country is called _____.
a. balance of trade
b. surplus account
c. balance of payments
d. net national payment
28. Suppose the value of the U.S. dollar strengthened considerably against the Euro. Who would be most likely to
benefit from this result?
a. European tourists traveling in America
b. American manufacturers trying to expand their exports to European markets
c. European firms exporting goods to America
d. European firms operating production facilities in the United States
29. In late 2002, a euro equated to $1.00 of U.S. currency. In late 2007, a euro equated to $1.49. This indicates that
a. U.S. dollar weakened relative to the euro.
b. U.S. dollar strengthened relative to the euro.
c. exchange rate between the dollar and the euro deviated significantly from its market equilibrium.
d. euro weakened relative to the U.S. dollar.
30. The _____ expresses the value of one nation’s currency in terms of another nation’s currency.
a. liquidity ratio
b. exchange rate
c. countertrade ratio
d. discount rate
31. In the business world, social responsibility refers to:
a. decisions individuals make about what is right and wrong.
b. attempts to earn the highest possible return for the owners of a business.
c. the obligation of an organization to contribute to society.
d. the obligation to obey the law in a society.
32. The function of laws in the United States is to establish and enforce _____ that apply to everyone in society.
a. social norms
b. financial norms
c. advanced standards
d. ethical norms
33. Ethics refer to _____.
a. obligations of a business to contribute to society
b. all business donations to nonprofit groups
c. social movements that focuses on key consumer rights
d. sets of beliefs about right and wrong
34. _____ apply to everyone across a broad spectrum of situations regardless of political, religious, class, and ethnic
a. Transnational ethical standards
b. Universal ethical standards
c. Ethical citizenship
d. Ethical touchpoints
35. Business ethics and individual ethics differ based on the fact that business ethics:
a. focus on profits while individual ethics focus on discretionary income.
b. are the obligation of a business to contribute to society and individual ethics are the obligation of an individual
to contribute to society.
c. are the application of right and wrong in a business setting and individual ethics are one’s personal standards
of right and wrong.
d. focus on stockholder contributions and individual ethics focus on personal contributions
36. Iris has been told by her boss that the company is planning to lay off some people, and in her department only one
employee will be retained. In order to keep her job, Iris has to sabotage the professional image and good work of
her colleagues, or she will be laid-off. This situation is an example of:
a. an ethical lapse.
b. an ethical dilemma.
c. sustainable development.
d. a company audit.
37. A written code of ethics is the:
a. cornerstone of any formal ethics program.
b. basis of all performance and actions of an individual.
c. obligation of a business to contribute to society.
d. ethics program that applies to all people across the world.
38. The role of the CEO in setting the ethical tone for a company is:
a. to establish ethical freedom throughout the organization, for every employee to choose his or her ethical
standards at liberty, depending on the situations.
b. not greater or smaller than the role of every other employee in the company; where ethical behavior is
concerned, everyone has an equal responsibility.
c. to making sure that the written code of ethics is enforced throughout the organization.
d. to establish high ethical standards, clearly communicate these standards, and demonstrate a strong personal
commitment to them.
39. Research indicates that organizational culture:
a. has very little impact on individual employees' ethical behavior.
b. has significant influence on the individual employees' ethical behavior.
c. influences the behavior of individual employees only if it involves clearly illegal behavior, such as stealing or
d. will tolerate ethical abuses on the part of top management, but not ethical abuses committed by middle
management or lower-level managers.
40. A person who reports illegal or unethical behavior within an organization is known as a:
a. horn tooter.
41. Which of the following does two-way communication represent?
a. Using both an active and passive voice
b. Speaking and listening
c. Verbal and nonverbal communication
d. Selective hearing and listening
42. Excellent communications skills:
a. are less important to most managers than well-developed technical skills.
b. involve the ability to speak clearly and to write well.
c. come naturally to most people.
d. can dramatically improve your chances for business success.
43. In communication, the term _____ refers to any interference that causes the message received by the audience to
be different from the sender’s intended message.
c. verbal distortion
44. Language barriers to communication:
a. are only a serious problem for spoken communication, but not for written communication.
b. are only likely to be a problem when people speak different native languages.
c. also include wrong body language that can alienate or distract the audience.
d. can arise due to excessive use of jargon and slang.
45. Almost everyone has experienced a conversation where someone has pleaded, “That’s not what I meant!” This
a. the result of good communication between parties.
b. an indication of the comfort level between the messenger and the recipient.
c. an indication of a communication barrier between the messenger and the recipient.
d. the result of a recipient trying to cause trouble for the messenger.
46. According to studies reported in The Wall Street Journal’s Career Journal, during face-to-face communication,
the majority of meaning comes from:
a. the verbal content of the message.
b. tone of voice.
c. body language, including facial expressions and posture.
d. a combination of the words spoken and the tone in which they are spoken, with the spoken words being
slightly more important than the tone of voice.
47. Ivy’s manager asked her to train the new employees on the company’s software program. Although Ivy agreed,
her tone of voice was not warm and welcoming. In this scenario, Ivy disregarded:
a. nonverbal communication.
b. open communication.
c. disconnect communication.
d. two-way communication.
48. Which of the following scenarios illustrates the full use of active listening nonverbal communication?
a. Li is highly educated and very smart; therefore, when he speaks, he expects everyone to listen.
b. When Susan gives presentations, she speaks clearly, observes her audience for signs of understanding, and
encourages feedback and listens to it.
c. Teresa finds that her figure tends to be distracting in her industry (heavy equipment sales), so she wears
loose unrevealing clothing at work.
d. When Rob gives presentations, he uses lots of hand motions and gestures.
49. Which of the following scenarios illustrates nonverbal forms of communication?
a. Bob, who did not know much Mandarin, attempted to say “hello,” but accidentally offended the company’s
best client by swearing at him in Cantonese.
b. Cindy enjoys a fine cigar over extended lunch breaks. This makes her appear to be a slacker to her
c. Tom had called his subordinate to provide instructions. However, the noise on the floor prevented the
subordinate from understanding the instructions.
d. Amy is a wonderful orator, but she tends to look angry when she’s passionate about something.
50. Tanya’s arms are crossed as she listens to the manager’s presentation. When the manager ends the presentation,
she joins the audience in a standing ovation but does not clap her hands with her colleagues. Her _____ illustrates
a. tone of voice
b. facial expression
c. gesture and posture
d. eye contact
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