Question 1

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A favorable balance of trade occurs when the value of:

Select one:

  1. imports equals the value of exports.
  2. the cash inflows equals the value of the cash outflows.
  3. imports is less than the value of exports.

Reflective Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 03-02 Explain the importance of importing and exporting; and understand key terms used in global business. Level of Difficulty: 1 Easy Topic: Trade Strategies Used in Reaching Global Markets

  1. the dollar is greater than the value of the euro.

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The correct answer is: imports is less than the value of exports.

Question 2

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First Engineering, a large U.S.-based mechanical engineering firm, is considering entering the global market. Upon careful analysis of the global market, they will find that global trade:

Select one:

  1. opportunities are diminishing.
  2. is dominated by emerging, developing countries.
  3. is big business today and is expected to be more important in the future.

Data clearly indicate that global trade is big business today. Most U.S. companies cite global expansion as a link to future growth.

  1. is likely to be severely restricted in the future by nontariff trade barriers.

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The correct answer is: is big business today and is expected to be more important in the future.

Question 3

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Last year, the nation of Kwansai reported that it had a favorable balance of trade even though it imported $11 billion worth of goods. This indicates that Kwansai:

Select one:

  1. exported $11 billion worth of goods.
  2. exported more than $11 billion worth of goods.

A favorable balance of trade means exports exceed imports. If Kwansai had a favorable balance of trade and imported $11 billion worth of goods, it exported more than $11 billion worth of goods.

  1. overpriced the value of its exports.
  2. exported less than $11 billion worth of goods.

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The correct answer is: exported more than $11 billion worth of goods.

Question 4

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According to the theory of comparative advantage, a country should buy from other countries those goods it produces most efficiently.

Select one:

True

False

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The theory of comparative advantage states that a country should produce and sell to other countries those products that it produces most effectively and efficiently. Conversely, a country should buy those products produced more efficiently by other countries.

The correct answer is ‘False’.

Question 5

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Which of the following is included when calculating a country’s balance of payments?

Select one:

  1. Foreign aid

Reflective Thinking Accessibility: Keyboard Navigation Blooms: Remember Learning Objective: 03-02 Explain the importance of importing and exporting; and understand key terms used in global business. Level of Difficulty: 1 Easy Topic: Trade Strategies Used in Reaching Global Markets

  1. Domestic unemployment
  2. Domestic inflation rates
  3. Foreign inflation rates

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The correct answer is: Foreign aid

Question 6

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After finishing college, Nathan joined his uncle’s company in Miami, FL, a(n) _______ of bauxite, copper, and other minerals from the Chile. Every day, he brokers trades with mines in Chile to buy and transport these minerals into the U.S.

Select one:

  1. exporter
  2. quota manager
  3. importer

Imports are products and services coming into the country.

  1. domestic trader

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The correct answer is: importer

Question 7

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Business is under pressure from society to be more socially responsible. However, even the strongest advocates for corporate responsibility can’t seem to agree:

Select one:

  1. on what social responsibility involves.

Society is demanding more ethical and moral leadership from business. However, there is uncertainty as to what being socially responsible involves.

  1. who should be policing businesses’ behavior.
  2. if all businesses, large and small, should be held to the same standards.
  3. if politicians should be held to the same standards of behavior.

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The correct answer is: on what social responsibility involves.

Question 8

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Corporate social responsibility describes the firm’s:

Select one:

  1. exclusive responsibility to its stockholders.
  2. ability to plan for the unexpected.
  3. commitment to a management training program.
  4. concern for the welfare of society.

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The correct answer is: concern for the welfare of society.

Question 9

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Going green means:

Select one:

  1. increased global warming.
  2. increasing one’s bottom line, before any other social considerations.
  3. increasing one’s carbon footprint.
  4. increasing one’s initiatives toward a concern for the environment.

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The correct answer is: increasing one’s initiatives toward a concern for the environment.

Question 10

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Moral behavior refers to behavior that is accepted by society as right versus wrong.

Select one:

True

False

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Ethics defines the standards of moral behavior, or the attempt to live by certain values and standards of conduct accepted by society as right rather than wrong.

The correct answer is ‘True’.

Question 11

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An accurate statement regarding this chapter is: “Business law establishes ethical behavior.”

Select one:

True

False

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The most basic step in ethical behavior is the law, but ethics go far beyond legality.

The correct answer is ‘False’.

Question 12

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In recent years, progressive firms have embarked upon __________, where they will commit company resources and expertise toward helping out in emergency type situations.

Select one:

  1. corporate philanthropy
  2. corporate social activism
  3. social civility
  4. corporate social initiatives

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The correct answer is: corporate social initiatives

Question 13

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A comparison of the three major forms of business ownership shows that sole proprietorships are usually the most difficult type of business to establish.

Select one:

True

False

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The correct answer is ‘False’.

Question 14

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Once a business is established, it’s almost impossible to change from one form of business ownership to another.

Select one:

True

False

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The correct answer is ‘False’.

Question 15

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The first step in starting a sole proprietorship is to fill out a proprietorship charter application form and file it with the state government.

Select one:

True

False

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The correct answer is ‘False’.

Question 16

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Which of the following is an advantage of a partnership?

Select one:

  1. Ease of starting and ending the business
  2. Unlimited liability
  3. Shared management and pooled skills
  4. Little time commitment

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The correct answer is: Shared management and pooled skills

Question 17

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Javier is the sole proprietor of a golf shop. Because he is a sole proprietor, any profit Javier’s business earns is:

Select one:

  1. totally tax-free.
  2. taxed only as Javier’s personal income.

A tax advantage of sole proprietorships is that their earnings are only taxed once, as personal income to the owner.

  1. taxed twice, once as business income, then again as Javier’s personal income.
  2. taxed only if and when it is distributed to investors.

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The correct answer is: taxed only as Javier’s personal income.

Question 18

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It is usually easy to start and end a sole proprietorship.

Select one:

True

False

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The correct answer is ‘True’.

Question 19

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The Small Business Administration defines a small business as a firm that:

Select one:

  1. has fewer than 100 partners.
  2. is independently owned but not dominant in its industry.
  3. is dominant in its industry, but small in the number of workers it employs.
  4. has annual receipts of more than a specified amount depending upon the industry.

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The correct answer is: is independently owned but not dominant in its industry.

Question 20

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Pete inherited a thriving dry cleaning business from his father and mother. He continued the tradition of offering quality service to the customers he served. As the surrounding towns expanded, several people suggested that Pete expand the business to offer service in new locations. He chose to maintain only one operation, so as not to lose control and to keep his work life and home life balanced. Pete is a good example of a(n) ____________.

Select one:

  1. small business affiliate
  2. intrapreneur
  3. micropreneur

Micropreneurs are interested in a balanced lifestyle. They generally like what they are doing and do not aspire to grow the business. They know they can be content remaining small and producing quality products and services to their limited market.

  1. enterprise zone participant

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The correct answer is: micropreneur

Question 21

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Apple’s smart team is an example of a firm that succeeded by:

Select one:

  1. encouraging each manager to focus on a well-defined area of the business and build his own specialized department.
  2. bringing together a group of talented and experienced managers to conceive, develop, and market products.

Apple’s smart team is an example of an entrepreneurial team—a group of experienced managers who worked together to conceive, develop, and market products.

  1. emphasizing a low price and low-cost strategy right from the beginning.
  2. assembling a group of employees whose inexperience was a plus, because they did not come with the baggage and institutional ideas of larger companies.

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The correct answer is: bringing together a group of talented and experienced managers to conceive, develop, and market products.

Question 22

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Keaton is an intrapreneur for a multinational electronics company. As an intrapreneur Keaton:

Select one:

  1. is expected to recruit new managerial talent for his firm.
  2. will use the firm’s existing resources to develop new products.

An intrapreneur uses a firm’s existing financial, human, and physical resources to create new products and generate new profits.

  1. is concerned mainly with improving the firm’s public image.
  2. will concentrate on creating new ventures that can be spun off to become independent firms.

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The correct answer is: will use the firm’s existing resources to develop new products.

Question 23

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According to economist Bruce Kirchhoff, small business failures are:

Select one:

  1. lower than traditionally reported.
  2. understated to keep small business creation enthusiasm.
  3. accurate and alarming.
  4. inconclusive.

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The correct answer is: lower than traditionally reported.

Question 24

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Erin developed a new type of exercise equipment she calls the Tush N’ Tone. After unsuccessfully searching for potential investors, she arranged a personal loan and borrowed additional money from her parents. Her willingness to continue believing in her idea and to remain enthusiastic shows that Erin is:

Select one:

  1. characteristically self-nurturing.

Self-nurturing individuals are able to continue believing in an idea and are able to replenish their enthusiasm even when others do not offer support.

  1. better suited to managing a nonprofit organization.
  2. unaware of the risks she was taking.
  3. not a ANSWER: TRUE entrepreneur.

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The correct answer is: characteristically self-nurturing.

Question 25

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Anna recently left a large insurance firm and opened a home-based business preparing medical transcriptions for doctors. Based on recent statistics, she can expect:

Select one:

  1. a negative reaction from friends and family who wonder when she will get a real job.
  2. the emergence of affordable technology will make it less challenging for her to compete with larger firms offering the same service.

Computer technology has leveled the competitive playing field enabling home-based businesses to look and act as big as their corporate competitors. E-based business activities allow small firms to reach new markets.

  1. the government will discourage her attempts to create a home-based business in the hopes that she will opt for locating in an enterprise zone.
  2. to find security, routine and a paycheck from her new enterprise.