Deck 2: The Environment of Business

Question 1

Which of the following best defines the term business cycle?
The conditions of the economic system in which an organization operates
The pattern of short-term ups and downs in an economy
The total quantity of goods and services produced by an economic system during a given period
The measure of economic growth that compares how much a system produces with the resources needed to produce it
The total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system

Answer 1

The pattern of short-term ups and downs in an economy

Question 2

Distributors who are in a grocery store restocking shelves are normally considered part of the ________ rather than the ________.
environment; culture
organization; environment
culture; store
environment; organization
none of these are correct

Answer 2

environment; organization

Question 3

In terms of organizational boundaries and environments, which is correct?
Large business firms are heavily influenced by events in the external environment, but small business firms are much less influenced.
No single firm can control the environment.
Most organizations have a single environment, but some have multiple environments they must cope with.
The major elements of the external environment are marketing, finance, production, and human resources.
The most important features of the external environment are the political and social aspects.

Answer 3

No single firm can control the environment.

Question 4

Sales had been low at Stephen's Home Office Supplies for several months, but then business starting picking up again. Stephen's business went through which two phases of the business cycle?
Recession and trough
Peak and recession
Trough and recovery
Recovery and peak
Any of these answers could be correct

Question 5

Since the increase in unemployment in a small Atlantic Canadian town, retailers have noticed that sales have decreased. The retailers are being affected by which element of the external environment?
Socio-cultural
Economic
Environmental
Global
Political‒legal

Question 6

Which of the following best describes real GDP?
Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system
Total quantity of goods and services produced by an economic system
Total value of all goods and services produced within a given period by a national economy through domestic and international factors of production
Total value of all goods and services produced within a given period by a national economy, through domestic factors of production measured in current dollars, or with all components valued at current prices
Total value of all goods and services produced by a national economy within a given period, calculated to account for changes in currency values and price changes

Question 7

How might low inflation levels in the general economy affect a company like McDonald's?
McDonald's will pay much higher prices for supplies and will charge customers more for its products.
McDonald's will pay higher prices for supplies and will charge customers more for its products.
McDonald's will pay relatively constant prices for supplies, but will be unable to increase the price paid by customers.
McDonald's will pay relatively constant prices for supplies and will charge customers more for its products.
McDonald's will pay higher prices for supplies, but will be unable to increase the price paid by customers.

Question 8

________ refers to the total quality and quantity of goods and services that a country's citizens can purchase with the currency used in their economic system.
Aggregate output
The national debt
Standard of living
The business cycle
The consumer price index

Question 9

Agricultural production has ________ because ________.
grown; we have increased total output in that sector
increased; Canada imports more agricultural products
declined; fewer Canadians are working in agriculture
remained unchanged; there have been relatively few changes in agricultural technology
increased; more people are involved in farming

Question 10

Which of the following would not likely be a consequence of a recession?
Aggregate output declines.
Producers will hire more employees.
Unemployment will increase.
Less labour will be needed to produce products.
GDP will decrease.

Question 11

The main measure of growth in an economic system is
the business cycle.
standard of living.
gross national product.
gross domestic product.
aggregate output.

Question 12

At one time, about ________ of the population of Canada was involved in producing the food that we needed; today less than ________ percent of the population works in agriculture.
half; 0.5
half; 2.5
one-third; 5
three-quarters; 2.5
four-fifths; 3

Question 13

Which of the following best defines the term aggregate output?
The total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system
The measure of economic growth that compares how much a system produces with the resources needed to produce it
The pattern of short-term ups and downs in an economy
The total quantity of goods and services produced by an economic system during a given period
The conditions of the economic system in which an organization operates

Question 14

Which of the following is correct with regard to the business cycle?
Due to better government management of the economic environment, the business cycle has become less volatile in recent decades
A depression occurs when the trough of the business cycle extends five or more years
There are no recognizable short-term phases in the business cycle; rather, the cycle can only be recognized as a long-term phenomenon
A recession is usually defined as two consecutive quarters when the economy shrinks
All of these are correct

Question 15

Which statement is true with regard to the standard of living?
It is dependent on the size of the city in which one lives.
It is comparable for every citizen in every country.
It is the amount and quality of goods and services that people can buy with their money.
It is improved when high-end stores stock expensive merchandise.
It is unaffected by business productivity.

Question 16

A(n) ________ separates the organization from its environment.
organizational boundary
process boundary
enterprise resource
aggregate output
integration

Question 17

Agriculture efficiency has resulted in
Canadians contributing more resources to farms.
an increase in the number of people employed in the industry.
Canadians needing more farms.
a decrease in the number of people employed in the industry.
none of these.

Question 18

Which of the following would be included in the gross national product of Canada?
The wages paid to Peruvian workers producing coffee for a Brazilian company
The profits earned by a Canadian-owned automobile plant in Brazil
The profits earned by a Brazilian coffee company operating in Canada
The profits earned by a Brazilian coffee company operating in Peru
The wages paid to Brazilian workers producing coffee for sale in Canada

Question 19

Which of the following best describes nominal GDP?
Total quantity of goods and services produced by an economic system
Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system
Total value of all goods and services produced within a given period by a national economy, through domestic factors of production measured in current dollars, with all components valued at current prices
Total value of all goods and services produced within a given period by a national economy through domestic and international factors of production
Total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located

Question 20

Which of the following best describes the term gross domestic product?
Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system
Conditions of the economic system in which an organization operates
The total value of all goods and services produced within a given period by a national economy through domestic factors of production
The total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located
The total quantity of goods and services produced by an economic system

Question 21

The ________ is the economic value of all the products that a country exports minus the economic value of imported products.
real GDP
gross national product
nominal GDP
balance of trade
national debt

Question 22

If GDP is going up, the nation is experiencing
inflation.
growth.
an increase in demand.
a recession.
it is not possible to tell given the information provided.

Question 23

Which of the following would be included in the GNP of Canada?
A Canadian company produces and sells products in Brazil
A Brazilian company produces and sells products in Canada
A U.S. company produces and sells products in Canada
A Canadian company produces and sells products in Canada
it is not possible to tell given the information that is provided

Question 24

The principle of ________ states that exchange rates are set so that the prices of similar products in different countries are about the same.
nominal GDP
gross national product
consumer price index
equal prices
purchasing power parity

Question 25

Purchasing power parity gives us a good idea of
what people are buying outside their own country while on vacation or while doing international business.
what people can actually buy with the financial resources allocated to them by their economic system.
what people would like to buy with the financial resources in their economic system.
purchasing trends across the globe.
average annual income.

Question 26

Which of the following would be included in the GNP of Brazil?
A Canadian company produces and sells products in Brazil
A Brazilian company produces and sells products in Canada
A U.S. company produces and sells products in Brazil
A Brazilian company produces and sells products in Brazil
it is not possible to tell given the information that is provided

Question 27

With regard to GDP, GNP, and GPI, which of the following is correct?
The profits earned by a Canadian company abroad are included in GDP, but not in GNP.
Profits earned by foreign firms in Canada are included in GNP.
GDP and GPI both increased as a result of the BP oil spill in the Gulf of Mexico.
GDP has been increasing for many years, but GPI has been decreasing since the 1970s.
GNP, GDP, and GPI all measure essentially the same thing.

Question 28

Which of the following is accurate regarding purchasing power parity?
It gives us a better idea of what people can actually buy with the financial resources they have.
It reflects the principle that exchange rates are set so that prices of similar products in different countries are unequal.
It does not really give a good sense of the standards of living around the world.
It reflects the principle that capitalism is a better system than communism.
None of these statements are accurate.

Question 29

________ is GDP measured in current dollars with all components valued at current prices.
Per capita GDP
Net GDP
Adjusted GDP
Nominal GDP
Real GDP

Question 30

Which of the following best describes the term gross national product?
Total quantity of goods and services produced by an economic system
Total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located
Total value of all goods and services produced within a given period by a national economy through domestic factors of production
Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system
Conditions of the economic system in which an organization operates

Question 31

________ is a measure of economic growth that compares how much a system produces with the resources needed to produce it.
Purchasing power parity
Stability
Recession
Inflation
Productivity

Question 32

Which of the following would be excluded from the GDP of Brazil?
A Canadian company produces and sells products in Brazil
A U.S. company produces and sells products in Brazil
A Brazilian company produces and sells products in Canada
A Brazilian company produces and sells products in Brazil
it is not possible to tell given the information that is provided

Question 33

The ________ is the growth rate of GDP adjusted for inflation and change in value of the country's currency.
adjusted growth rate
gross national product
real growth rate
per capita GDP
real GDP

Question 34

Which of the following would be included in the gross national product of Brazil?
The profits earned by a Brazilian coffee company operating in Canada
The wages paid to Peruvian workers producing coffee for a Canadian company
The profits earned by a Canadian coffee company operating in Peru
The profits earned by a Canadian-owned automobile plant in Brazil
The wages paid to Peruvian workers producing coffee for sale in Canada

Question 35

When comparing GPI to GDP, it is correct to say that
GPI is a better indicator of economic progress than GDP.
GPI treats activities that harm our quality of life as costs and gives them negative values.
GPI is a better measure of economic growth for advanced industrial countries, but GDP is a better measure for developing countries.
the activities required to clean up an oil spill are not included in the calculation of GDP.
none of these are correct.

Question 36

Which country has the highest GDP per capita?
Brazil
Canada
Qatar
Luxembourg
United States

Question 37

How is per capita GDP computed?
GDP minus all expenses incurred to generate GDP
Gross wages earned by all workers in Canada divided by the number of workers
GNP divided by Canada's population
Total gross domestic product divided by Canada's population
GNP minus GDP

Question 38

Which of the following would be excluded from the GDP of Canada?
A Canadian company produces and sells products in Brazil
A U.S. company produces and sells products in Canada
A Canadian company produces and sells products in Canada
A Brazilian company produces and sells products in Canada
it is not possible to tell given the information that is provided

Question 39

Canada's GDP in 2012 was about
$575 billion.
$1 trillion.
$1.7 trillion.
$2.8 trillion.
$8.3 trillion.

Question 40

Canada's GDP per capita (in $US) is approximately
$15 000.
$31 000.
$42 000.
$50 000.
$66 000.

Question 41

The more money the Canadian government borrows (by issuing savings bonds) , the ________ money is available for private borrowing and investment that increases ________.
more; productivity
less; productivity
more; purchasing power parity
less; GDP
more; GDP

Question 42

Which of the following is correct regarding unemployment rates in Canada?
Unemployment rates have been fairly stable at about 6 percent for the last 30 years.
Unemployment rates have been fairly stable at about 2 percent for the last 30 years.
Unemployment rates for women have generally been slightly lower than unemployment rates for men.
The government did not keep track of unemployment rates for women until the 1980s.
The unemployment rate for women is about half the unemployment rate for men.

Question 43

Which of the following statements is correct?
GNP refers to the total value of all goods and services produced by a national economy.
GDP refers to the total value of all goods and services produced by a national economy regardless of where the factors of production are located.
Growth depends on output increasing at a faster rate than population.
Per capita GDP is calculated by dividing purchasing power parity by the rate of inflation.
Real GDP compares how much a system produces with the resources needed to produce it.

Question 44

If we know that it takes, on average, one Canadian worker and one Canadian dollar to make 10 soccer balls in an 8 hour work day, we can measure Canada's
balance of trade.
GDP.
productivity.
GNP.
GNP and productivity.

Question 45

A ________ balance of trade results when a country exports more than it imports.
depressed
negative
real
nominal
positive

Question 46

Canada usually has a ______ balance of trade. It is therefore a ________ nation rather than a ________ nation.
positive; creditor; debtor
negative; debtor; creditor
positive; debtor; creditor
negative; creditor; debtor
none of the above

Question 47

What are three factors that threaten stability?
Purchasing power parity, productivity, and inflation
Productivity, inflation, and deflation
Purchasing power parity, inflation, and deflation
Inflation, deflation, and unemployment
Productivity, unemployment, and inflation

Question 48

________ is the economic condition characterized by widespread increased prices throughout an economic system.
Stability
Deflation
Unemployment
Stagflation
Inflation

Question 49

Which of the following is correct with regard to budget deficits and the national debt?
Canada's national debt is the amount of money Canada owes the United States.
A budget deficit occurs when income tax revenue is less than interest payments on the national debt.
A budget deficit occurs when government expenditures in a given year exceed government revenues.
There is no relationship between annual budget deficits and the total national debt.
The national debt is more important than annual budget deficits.

Question 50

A nation's ________ is the total amount of money that the government owes its creditors.
trade deficit
national debt
trade deficiency
trade shortage
trade surplus

Question 51

Which of the following statements about inflation is correct?
Inflation increases the purchasing power of consumer dollars.
The consumer price index is one way to measure inflation.
Inflation occurs when people have more money to spend as the quantity of goods available increases.
Inflation occurs when the amount of money taken out of the economy exceeds the amount of money put into the economy.
Inflation and deflation are really almost synonymous in practice.

Question 52

With respect to inflation and deflation, which is correct?
Inflation is caused when consumers buy too many luxury goods.
When inflation occurs, people have more money to spend, and there will be an increased quantity of goods for sale.
When inflation occurs, purchasing power decreases.
Deflation is evident when the amount of money injected into the economic system increases faster than actual output.
All of these statements are correct.

Question 53

John is experiencing __________ unemployment because he is out of work temporarily while looking for a new job, while Sally is experiencing _______ unemployment because she is out work because of a downturn in the business cycle.
seasonal; structural
structural; seasonal
frictional; cyclical
cyclical; frictional
seasonal; cyclical

Question 54

The national debt refers to
the total amount of money that Canada owes to its creditors.
the ratio of Canada's exports to its imports.
the result of government spending more in a year than the value of GDP.
the excess amount of taxes over what the government spends in one year.
the amount of taxes the government collects in one year.

Question 55

Deflation refers to
a period of falling prices.
the occurrence of price increases throughout the economic system.
the condition in an economic system in which the amount of money available is greater than the amount of goods produced.
the measure of prices in urban areas.
the amount of government spending greater than the taxes collected in one year.

Question 56

Paul owns a Canadian shipping company that generates profits as a result of business activities in Brazil. These profits are included in Brazil's
GDP.
national employment.
productivity.
GNP.
GPI.

Question 57

The ________ is a measure of the prices of a typical "basket of products" purchased by consumers.
consumer price index
national debt
balance of trade
gross national product
real GDP

Question 58

A budget deficit refers to
the measure of economic growth that compares how much a system produces with the resources needed to produce it.
government spending more in one year than it takes in during that year.
the total of a country's exports minus its imports.
the total amount of money that Canada owes its creditors.
the exchange rate that is set so prices of similar products in different countries are the same.

Question 59

Which of the following is the best description of the balance of trade?
The total of a nation's revenues from income taxes minus its expenditures on goods and services
Changes in currency values and price changes
The profitability of business firms that are exporting goods and services
The total of a nation's exports minus its imports
The total value of all services provided to foreigners during a one year time period

Question 60

If Taiwan has a positive balance of trade, this means that
money is flowing into the country to pay for imported goods.
the total amount of exported goods has increased from the previous year.
the total amount of imported goods has decreased from the previous year.
the nation is exporting more than it imports from other nations.
all of these are correct.

Question 61

If Canada fell into a depression, the Bank of Canada would most likely
raise interest rates.
leave interest rates alone.
lower interest rates.
it is not possible to tell with the information given.
increase gasoline taxes.

Question 62

The chance that a society can actually achieve full employment is ________ percent.
10
75
45
1
0

Question 63

________ includes human knowledge, work methods, physical equipment, electronics and telecommunications, and various processing systems that are used in performing business activities.
The technological environment
The social environment
The political‒legal environment
The competitive environment
The economic environment

Question 64

An increase in tax rates is an example of ______ policy, while the government influencing banks to lend more to consumers is an example of ______ policy.
GDP; GNP
fiscal; monetary
GNP; GDP
monetary; fiscal
none of these

Question 65

________ unemployment results because workers lack the right skills, while ___________ unemployment results when people are temporarily out of work while they are looking for a new job.
Cyclical; seasonal
Frictional; seasonal
Seasonal; structural
Cyclical; structural
Structural; frictional

Question 66

In 2012, the Canadian private sector accounted for about _____ percent of R&D spending, the government accounted for about _____percent, and universities accounted for about ____ percent.
25; 35; 40
10; 40; 50
52; 10; 38
25; 30; 45
78; 15; 7

Question 67

Unemployment is the level of joblessness among
people over the age of 18 within a given economic system.
people who have been previously employed in an economic system.
people who have the skills for employment within an economic system.
people over the age of 18 and under the age of 65 in a given economic system.
people actively seeking work in an economic system.

Question 68

Sam, an audiologist, lost his job two years ago and still hasn't found work. There is just no market for audiologists at this time. Sam is experiencing
structural unemployment.
full unemployment.
cyclical unemployment.
bad luck.
frictional unemployment.

Question 69

A computer programmer who has just quit her job but who will find a new one soon is an example of ________ unemployment.
seasonal
frictional
cyclical
structural
none of these

Question 70

The advent of the iPod saw an increase in the downloading of music from the internet. Music artists are noticing a decrease in the sales of their CDs, which is an effect of which dimension of the external environment?
Technological
Economic
Socio-cultural
Political
Global

Question 71

R&D spending in Canada in 2011 totalled about ________ billion.
$2
$6
$10
$16
$30

Question 72

________ policy involves the collection and spending of government revenues, while __________ policy focuses on controlling the size of the nation's money supply.
Productivity; inflation
Taxation; monetary
Monetary; fiscal
Fiscal; monetary
National debt; annual deficit

Question 73

The political‒legal environment describes
the relationship between business and government.
the customs, values, attitudes, and demographic characteristics of the society in which an organization functions.
the intensity of the competition in an industry.
the relationship between international and domestic corporations.
the relationship between government and unions.

Question 74

Basic research and development describes
focusing specifically on how a technological innovation can be put to use in the making of a product or service that can be sold in the marketplace.
those activities that do not create value for the firm.
the process involved in getting a new technology out of the lab and into the marketplace.
improving knowledge in an area without a primary focus on whether any discoveries that might occur are immediately marketable.
those activities that increase a company's revenues.

Question 75

Don is unemployed because of a downturn in economic activity; this is an example of ________ unemployment.
frictional
seasonal
structural
cyclical
none of these

Question 76

Research and development (R&D) includes activities that are necessary to provide new products, services, and processes. Two basic types of R&D are
deflationary and inflationary.
public and economical.
college and university.
pure and theoretical.
basic and applied.

Question 77

Ben is unemployed, but he is currently in a training program designed to increase the skills he needs to perform the kinds of jobs that are available. Ben is experiencing __________ unemployment.
frictional
seasonal
cyclical
structural
none of these

Question 78

The government controls the size of the money supply through ________ policies.
revenue
monetary
inflation
economic
fiscal

Question 79

If you were the Minister of Finance taking care of fiscal policy, which one of the following could you implement?
A tax increase
A cut in social security programs
An increase in federal transfer payments
An increase in spending to military bases
All of these ideas could be implemented

Question 80

What effect do higher interest rates have on consumer spending?
Consumer spending increases as people try to quickly buy goods before rates go even higher
Consumer spending decreases immediately, but then rises sharply after consumers get used to the new higher interest rates
Consumer spending is not impacted by changes in interest rates
Consumer spending decreases
It is not possible to tell from the information given