Deck 2: The Environment of Business

Question 1

Which of the following is correct with regard to the business cycle?

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

Answer 1

D

Question 2

Agricultural production has ________ because ________.

A) grown; we have increased total output in that sector
B) increased; Canada imports more agricultural products
C) declined; fewer Canadians are working in agriculture
D) remained unchanged; there have been relatively few changes in agricultural technology
E) increased; more people are involved in farming

Answer 2

A

Question 3

Which of the following best describes nominal GDP?

A) Total quantity of goods and services produced by an economic system
B) Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system
C) 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
D) Total value of all goods and services produced within a given period by a national economy through domestic and international factors of production
E) 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

Answer 3

C

Question 4

How might low inflation levels in the general economy affect a company like McDonald's?

A) McDonald's will pay much higher prices for supplies and will charge customers more for its products.
B) McDonald's will pay higher prices for supplies and will charge customers more for its products.
C) McDonald's will pay relatively constant prices for supplies, but will be unable to increase the price paid by customers.
D) McDonald's will pay relatively constant prices for supplies and will charge customers more for its products.
E) McDonald's will pay higher prices for supplies, but will be unable to increase the price paid by customers.

Question 5

Since the increase in the unemployment level 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?

A) Socio-cultural
B) Economic
C) Environmental
D) Global
E) Political-legal

Question 6

Which statement is true with regard to the standard of living?

A) It is dependent on the size of the city in which one lives.
B) It is comparable for every citizen in every country.
C) It is the amount and quality of goods and services that people can buy with their money.
D) It is improved when high-end stores stock expensive merchandise.
E) It is unaffected by business productivity.

Question 7

________ 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.

A) Aggregate output
B) The national debt
C) Standard of living
D) The business cycle
E) The consumer price index

Question 8

The main measure of growth in an economic system is

A) the business cycle.
B) standard of living.
C) gross national product.
D) gross domestic product.
E) aggregate output.

Question 9

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?

A) Recession and trough
B) Peak and recession
C) Trough and recovery
D) Recovery and peak
E) Any of these answers could be correct.

Question 10

Which of the following best defines the term aggregate output?

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

Question 11

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.

A) half; 0.5
B) half; 2.5
C) one-third; 5
D) three-quarters; 2.5
E) four-fifths; 3

Question 12

In terms of organizational boundaries and environments, which is correct?

A) Large business firms are heavily influenced by events in the external environment, but small business firms are much less influenced.
B) No single firm can control the environment.
C) Most organizations have a single environment, but some have multiple environments they must cope with.
D) The major elements of the external environment are marketing, finance, production, and human resources.
E) The most important features of the external environment are the political and social aspects.

Question 13

Which of the following best describes the term gross domestic product?

A) Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system
B) Conditions of the economic system in which an organization operates
C) The total value of all goods and services produced within a given period by a national economy through domestic factors of production
D) 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
E) The total quantity of goods and services produced by an economic system

Question 14

Which is the best explanation for why standard of living only increases through productivity?

A) The more goods that are available, the lower prices will be.
B) More goods are available without having to come by additional resources.
C) Productivity increases the money supply in an economy.
D) Purchasing power increases when there is more consumer choice.
E) Prices are determined by the standard of living.

Question 15

Which of the following best gives the meaning of the term gross national product?

A) Total quantity of goods and services produced by an economic system
B) Total quantity of goods and services produced within a given period by a national economy, not including foreign production
C) Total value of all goods and services produced within a given period by a national economy through domestic factors of production
D) Total value of all goods and services produced within a given period regardless of where the factors of production are located
E) Total value of all goods and services that are exported

Question 16

A(n) ________ separates the organization from its environment.

A) organizational boundary
B) process boundary
C) enterprise resource
D) aggregate output
E) integration

Question 17

Which of the following would not likely be a consequence of a recession?

A) Aggregate output declines.
B) Producers will hire more employees.
C) Unemployment will increase.
D) Less labour will be needed to produce products.
E) GDP will decrease.

Question 18

Distributors who are in a grocery store restocking shelves are normally considered part of the ________ rather than the ________.

A) environment; culture
B) organization; environment
C) culture; store
D) environment; organization
E) none of these are correct

Question 19

Agriculture efficiency has resulted in

A) Canadians contributing more resources to farms.
B) an increase in the number of people employed in the industry.
C) Canadians needing more farms.
D) a decrease in the number of people employed in the industry.
E) none of these.

Question 20

Which of the following best defines the term business cycle?

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

Question 21

How is per capita GDP computed?

A) GDP minus all expenses incurred to generate GDP
B) Gross wages earned by all workers in Canada divided by the number of workers
C) GNP divided by Canada's population
D) Total gross domestic product divided by Canada's population
E) GNP minus GDP

Question 22

Which of the following best describes real GDP?

A) Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system
B) Total quantity of goods and services produced by an economic system
C) Total value of all goods and services produced within a given period by a national economy through domestic and international factors of production
D) 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
E) 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 23

Which of the following is accurate regarding purchasing power parity?

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

Question 24

Canada's GDP in 2014 was about

A) $275 billion.
B) $950 billion.
C) $1.8 trillion.
D) $3.6 trillion.
E) $8.3 trillion.

Question 25

Which of the following would be excluded from the GDP of Brazil?

A) A Canadian company produces and sells products in Brazil.
B) A U.S. company produces and sells products in Brazil.
C) A Brazilian company produces and sells products in Canada.
D) A Brazilian company produces and sells products in Brazil.
E) It is not possible to tell given the information that is provided.

Question 26

If GDP is going up, the nation is experiencing

A) inflation.
B) growth.
C) an increase in demand.
D) a recession.
E) it is not possible to tell given the information provided.

Question 27

Which of the following would be excluded from the GDP of Canada?

A) A Canadian company produces and sells products in Brazil.
B) A U.S. company produces and sells products in Canada.
C) A Canadian company produces and sells products in Canada.
D) A Brazilian company produces and sells products in Canada.
E) It is not possible to tell given the information that is provided.

Question 28

________ is GDP measured in current dollars with all components valued at current prices.

A) Per capita GDP
B) Net GDP
C) Adjusted GDP
D) Nominal GDP
E) Real GDP

Question 29

Which of the following best describes purchasing power parity?

A) Total quantity of goods and services produced by an economic system
B) Total quantity of goods and services that can be purchased with one paycheque
C) Total quantity of goods and services that could have been purchased if one's pay rose in the same proportion as inflation
D) The principle that exchange rates are set so that prices of similar products in different countries are about the same
E) The principle that a market economy determines supply and demand for consumer products

Question 30

The ________ is the growth rate of GDP adjusted for inflation and change in value of the country's currency.

A) adjusted growth rate
B) gross national product
C) real growth rate
D) per capita GDP
E) real GDP

Question 31

When comparing GNP to GDP, it is correct to say that

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

Question 32

Which of the following would be included in the GNP of Brazil?

A) A Canadian company produces and sells products in Brazil.
B) A Brazilian company produces and sells products in Canada.
C) A U.S. company produces and sells products in Brazil.
D) A Brazilian company produces and sells products in Brazil.
E) It is not possible to tell given the information that is provided.

Question 33

Which of the following would be included in the gross national product of Canada?

A) The wages paid to Peruvian workers producing coffee for a Brazilian company
B) The profits earned by a Canadian-owned automobile plant in Brazil
C) The profits earned by a Brazilian coffee company operating in Canada
D) The profits earned by a Brazilian coffee company operating in Peru
E) The wages paid to Brazilian workers producing coffee for sale in Canada

Question 34

Which of the following would be included in the gross national product of Brazil?

A) The profits earned by a Brazilian coffee company operating in Canada
B) The wages paid to Peruvian workers producing coffee for a Canadian company
C) The profits earned by a Canadian coffee company operating in Peru
D) The profits earned by a Canadian-owned automobile plant in Brazil
E) The wages paid to Peruvian workers producing coffee for sale in Canada

Question 35

The principle of ________ states that exchange rates are set so that the prices of similar products in different countries are about the same.

A) nominal GDP
B) gross national product
C) consumer price index
D) equal prices
E) purchasing power parity

Question 36

________ is a measure of economic growth that compares how much a system produces with the resources needed to produce it.

A) Purchasing power parity
B) Stability
C) Recession
D) Inflation
E) Productivity

Question 37

The ________ is the economic value of all the products that a country exports minus the economic value of imported products.

A) real GDP
B) gross national product
C) nominal GDP
D) balance of trade
E) national debt

Question 38

Which of the following would be included in the GNP of Canada?

A) A Canadian company produces and sells products in Brazil.
B) A Brazilian company produces and sells products in Canada.
C) A U.S. company produces and sells products in Canada.
D) A Canadian company produces and sells products in Canada.
E) It is not possible to tell given the information that is provided

Question 39

Honata Automobiles is a South Korean-owned company. Honata has factories in Indonesia and Brazil. Which of the following is/are affected by the production of Honata automobiles?

A) Indonesia, Brazil, and South Korea's GDP
B) Indonesia and Brazil's GDP
C) South Korea's GDP
D) Indonesia and Brazil's GNP
E) Indonesia, Brazil, and South Korea's GNP

Question 40

With regard to GDP and GNP, which of the following is correct?

A) The profits earned by a Canadian company abroad are included in GDP, but not in GNP.
B) Profits earned by foreign firms in Canada are included in GNP.
C) GDP increased as a result of the BP oil spill in the Gulf of Mexico in 2010.
D) GDP has been increasing for many years.
E) GNP and GDP measure essentially the same thing.

Question 41

Which of the following is correct with regard to budget deficits and the national debt?

A) Canada's national debt is the amount of money Canada owes the United States.
B) A budget deficit occurs when income tax revenue is less than interest payments on the national debt.
C) A budget deficit occurs when government expenditures in a given year exceed government revenues.
D) There is no relationship between annual budget deficits and the total national debt.
E) The national debt is more important than annual budget deficits.

Question 42

The national debt refers to

A) the total amount of money that Canada owes to its creditors.
B) the ratio of Canada's exports to its imports.
C) the result of government spending more in a year than the value of GDP.
D) the excess amount of taxes over what the government spends in one year.
E) the amount of taxes the government collects in one year.

Question 43

The more money the Canadian government borrows (by issuing savings bonds), the ________ money is available for private borrowing and investment that increases ________.

A) more; productivity
B) less; productivity
C) more; purchasing power parity
D) less; GDP
E) more; GDP

Question 44

A ________ balance of trade results when a country exports more than it imports.

A) depressed
B) negative
C) real
D) nominal
E) positive

Question 45

Which of the following statements is correct?

A) GNP refers to the total value of all goods and services produced by a national economy.
B) 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.
C) Growth depends on output increasing at a faster rate than population.
D) Per capita GDP is calculated by dividing purchasing power parity by the rate of inflation.
E) Real GDP compares how much a system produces with the resources needed to produce it.

Question 46

With respect to inflation and deflation, which is correct?

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

Question 47

Canada's GDP per capita (in $US) is approximately

A) $15 000.
B) $31 000.
C) $42 000.
D) $50 000.
E) $66 000.

Question 48

What is the economic condition characterized by widespread increased prices without increased purchasing power?

A) Unemployment
B) Inflation
C) Expansion
D) Deflation
E) Recession

Question 49

If, in the long run, international trade improves the standard of living in participating countries, why might some countries want to place trade barriers, such as tariffs, on imported products?

A) Imported products compete with domestic products and thus put pressure on local business.
B) Imported products are usually not as good quality as domestically made products.
C) Generating government revenue is often more economically valuable than free trade.
D) This is necessary to keep a country's currency strong.
E) International trade tends to lead to political tension.

Question 50

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

A) balance of trade.
B) GDP.
C) productivity.
D) GNP.
E) GNP and productivity.

Question 51

What does productivity measure?

A) The total value of all goods and services produced by a national economy
B) How much a system produces with the resources needed to produce it
C) How much output is necessary to produce a certain level of demand
D) The standard of living relative to purchasing power parity
E) How much gross national product results from inputs of labour

Question 52

Why would a government most likely be concerned about its country carrying a trade deficit?

A) A trade deficit means that the country's productivity is low.
B) A trade deficit means local companies do not have enough competition.
C) A trade deficit ties up money that could be used for economic growth.
D) A trade deficit decreases demand for goods overall.
E) A trade deficit means that consumers do not have enough purchasing power.

Question 53

Canada usually has a ________ balance of trade. It is therefore a ________ nation rather than a ________ nation.

A) positive; creditor; debtor
B) negative; debtor; creditor
C) positive; debtor; creditor
D) negative; creditor; debtor
E) none of these

Question 54

Purchasing power parity gives us a good idea of

A) what people are buying outside their own country while on vacation or while doing international business.
B) what people can actually buy with the financial resources allocated to them by their economic system.
C) what people would like to buy with the financial resources in their economic system.
D) purchasing trends across the globe.
E) average annual income.

Question 55

Which of the following best gives the meaning of the term gross domestic product?

A) Total quantity of goods and services produced by an economic system
B) Total quantity of goods that a country's citizens can purchase with the currency used in their economic system
C) Conditions of the economic system in which an organization operates
D) Total value of all goods and services produced within a given period by a national economy through domestic factors of production
E) Indicators of available goods and services produced within a specific domestic market

Question 56

If Taiwan has a positive balance of trade, this means that

A) money is flowing into the country to pay for imported goods.
B) the total amount of exported goods has increased from the previous year.
C) the total amount of imported goods has decreased from the previous year.
D) the nation is exporting more than it imports from other nations.
E) all of these are correct.

Question 57

Which of the following is the best description of the balance of trade?

A) The total of a nation's revenues from income taxes minus its expenditures on goods and services
B) Changes in currency values and price changes
C) The profitability of business firms that are exporting goods and services
D) The total of a nation's exports minus its imports
E) The total value of all services provided to foreigners during a one year time period

Question 58

A budget deficit refers to

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

Question 59

Paul owns a Canadian shipping company that generates profits as a result of business activities in Brazil. These profits are included in Brazil's

A) GDP.
B) national employment.
C) productivity.
D) GNP.
E) GPI.

Question 60

A nation's ________ is the total amount of money that the government owes its creditors.

A) trade deficit
B) national debt
C) trade deficiency
D) trade shortage
E) trade surplus

Question 61

What are three factors that threaten stability?

A) Purchasing power parity, productivity, and inflation
B) Productivity, inflation, and deflation
C) Purchasing power parity, inflation, and deflation
D) Inflation, deflation, and unemployment
E) Productivity, unemployment, and inflation

Question 62

Which of the following statements about inflation is true?

A) The consumer price index is a good way of measuring inflation.
B) Productivity decreases the purchasing power of consumer dollars.
C) Inflation increases the purchasing power of consumer dollars.
D) Localized price increases can cause inflation across the economic system.
E) The amount of money tends to be distributed evenly during inflationary periods.

Question 63

A financial analyst has noticed a serious increase in inflation. What course of action might the financial analyst advise the government to take to reduce inflation?

A) The government can lower taxes.
B) The government can raise taxes.
C) Encourage the government to increase spending.
D) Encourage consumers to increase spending.
E) Encourage the government to increase spending and lower taxes.

Question 64

Which of the following statements about inflation is true?

A) Inflation increases the purchasing power of consumer dollars.
B) Inflation occurs when people have more money to spend as the quantity of goods available increases.
C) Inflation occurs when the amount of money taken out of the economy exceeds the amount of money put into the economy.
D) Inflation and deflation are really almost synonymous in practice.
E) None of these.

Question 65

Don is unemployed because of a downturn in economic activity; this is an example of ________ unemployment.

A) frictional
B) seasonal
C) structural
D) cyclical
E) none of these

Question 66

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.

A) frictional
B) seasonal
C) cyclical
D) structural
E) none of these

Question 67

The ________ is a measure of the prices of a typical "basket of products" purchased by consumers.

A) consumer price index
B) national debt
C) balance of trade
D) gross national product
E) real GDP

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

A) structural unemployment.
B) full unemployment.
C) cyclical unemployment.
D) bad luck.
E) frictional unemployment.

Question 69

Which of the following best describes what the consumer price index is used to indicate?

A) The average wage rate for a given region
B) The economic performance of key consumer product companies
C) The changes in the cost of consumer products over time
D) The percentage of consumers in the total population looking for work
E) The number of price increases within a given period of time

Question 70

The chance that a society can actually achieve full employment is ________ percent.

A) 10
B) 75
C) 45
D) 1
E) 0

Question 71

Unemployment is the level of joblessness among

A) people over the age of 18 within a given economic system.
B) people who have been previously employed in an economic system.
C) people who have the skills for employment within an economic system.
D) people over the age of 18 and under the age of 65 in a given economic system.
E) people actively seeking work in an economic system.

Question 72

Arnold's is a Canadian company engaged in the manufacture of sports shoes. The CEO cautions that there is a disadvantage associated with the company planning increased globalization of production. Which of the following is the most likely disadvantage the CEO is referring to?

A) Heavy job losses can ensue in the domestic market.
B) Greater disparities in living standards will emerge.
C) Trade barriers will be reduced between countries.
D) Substantial job losses will occur in developing markets.
E) Increased competition will emerge between companies.

Question 73

Deflation refers to

A) a period of falling prices.
B) the occurrence of price increases throughout the economic system.
C) the condition in an economic system in which the amount of money available is greater than the amount of goods produced.
D) the measure of prices in urban areas.
E) the amount of government spending greater than the taxes collected in one year.

Question 74

________ is the economic condition characterized by widespread increased prices throughout an economic system.

A) Stability
B) Deflation
C) Unemployment
D) Stagflation
E) Inflation

Question 75

Which of the following best describes economic stability?

A) The measure of economic growth that compares how much a system produces with the resources needed to produce it
B) A condition in an economic system in which the amount of money available and the number of goods and services produced are growing at about the same rate
C) The economic condition in which a country's exports exceed its imports
D) A relative equality between what the government owes its creditors and the revenue it gets from imports
E) The economic value of all the products that a country exports minus the economic value of all the products it imports

Question 76

A computer programmer who has just quit her job but who will find a new one soon is an example of ________ unemployment.

A) seasonal
B) frictional
C) cyclical
D) structural
E) none of these

Question 77

________ 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.

A) Cyclical; seasonal
B) Frictional; seasonal
C) Seasonal; structural
D) Cyclical; structural
E) Structural; frictional

Question 78

Which of the following is correct regarding unemployment rates in Canada?

A) Unemployment rates have been fairly stable at about 6 percent for the last 30 years.
B) Unemployment rates have been fairly stable at about 2 percent for the last 30 years.
C) Unemployment rates for women have generally been slightly lower than unemployment rates for men.
D) The government did not keep track of unemployment rates for women until the 1980s.
E) The unemployment rate for women is about half the unemployment rate for men.

Question 79

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.

A) seasonal; structural
B) structural; seasonal
C) frictional; cyclical
D) cyclical; frictional
E) seasonal; cyclical

Question 80

________ policy involves the collection and spending of government revenues, while ________ policy focuses on controlling the size of the nation's money supply.

A) Productivity; inflation
B) Taxation; monetary
C) Monetary; fiscal
D) Fiscal; monetary
E) National debt; annual deficit