Deck 2: Understanding the Environments of Business

Question 1

The pattern of short-term ups and downs in the economy is known as

A) a recession.
B) the business cycle.
C) aggregate output.
D) gross domestic product.
E) economic growth.

Answer 1

B
the business cycle.

Question 2

The three key goals of the Canadian economic system are

A) high interest rates,economic stability,full employment.
B) economic growth,inflation,full employment.
C) economic growth,economic stability,full employment.
D) economic growth,economic stability,low employment.
E) inflation growth,economic instability,low employment.

Answer 2

C
economic growth,economic stability,full employment.

Question 3

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

Answer 3

B
Producers will hire more employees

Question 4

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 5

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) 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 by a national economy within a given period regardless of where the factors of production are located
E) Total quantity of goods and services produced by an economic system

Question 6

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 7

In recent years,the economic environment has been characterized by

A) low growth,rising unemployment,and low inflation.
B) high growth,declining unemployment,and high inflation.
C) low growth,low unemployment,and low inflation.
D) high growth,high unemployment,and high inflation.
E) high growth,declining unemployment,and low inflation.

Question 8

Which of the following is true with respect to the elements in the external environment?

A) The socio-cultural environment has become less important in recent years because of the increasing diversity of the population in Canada.
B) The political-legal environment is something that cannot be influenced by Canadian business firms.
C) The economic environment will affect the performance of almost every business.
D) The boundary between a company and the political-legal environment is more porous than the boundary between a company and the socio-cultural environment.
E) All of these are true.

Question 9

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 10

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 11

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 12

How might moderate unemployment levels in the general economy affect a company like McDonald's?

A) Most people will be able to afford to eat out and McDonald's will be able to pay lower wages and still attract employees.
B) Very few people will be able to afford to eat out,but McDonald's will be able to pay workers less than minimum wage.
C) Few people will be able to afford to eat out and McDonald's will have to pay higher wages to attract employees.
D) Few people will be able to afford to eat out and McDonald's will be able to pay lower wages and still attract employees.
E) Most people will be able to afford to eat out,but McDonald's will have to pay higher wages to attract employees.

Question 13

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

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

Question 14

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 15

Which of the following best describes the term standard of living?

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

Question 16

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 17

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 18

Sales had been low at Stephen's Home Office Supplies for several months,but then business starting picking up again.Stephen's business probably 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 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 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 21

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

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

Question 22

Canada's GDP in 2010 was about

A) $575 billion.
B) $1 trillion.
C) $1.6 trillion.
D) $2.7 trillion.
E) $8.7 trillion.

Question 23

Canada's GDP per capita is approximately

A) $15,000.
B) $35,000.
C) $38,000.
D) $46,000.
E) $56,000.

Question 24

The difference between a country's exports and its imports is known as its

A) balance of trade.
B) national debt.
C) net national income.
D) balance of payments.
E) net national profit.

Question 25

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

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

Question 26

The comparison of what an economic system produces with the resources used to produce it is known as

A) the resource ratio.
B) real GDP.
C) purchasing power parity.
D) the balance of trade.
E) productivity.

Question 27

Because Canada's exports ________ its imports,Canada has a ________ trade balance.

A) are greater than; negative balance of trade
B) are less than; negative balance of trade
C) are greater than; positive balance of trade
D) are less than; positive balance of trade
E) none of the above

Question 28

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 29

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

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

Question 30

Which of the following is correct 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 31

Peter is a Canadian citizen who owns a manufacturing plant located in Brazil.The profits earned by his company will be reflected in ________ in Canada.

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

Question 32

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 33

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

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

Question 34

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 35

Which country has the highest GDP per capita?

A) United States
B) Singapore
C) Luxembourg
D) Canada
E) Japan

Question 36

Which two nations are the most productive in the world?

A) United States and Canada
B) Luxembourg and Norway
C) Singapore and Iceland
D) Japan and China
E) China and Canada

Question 37

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 38

The total value of all goods and services produced by a country in a 12-month period regardless of where the factors of production are located is known as

A) Net National Product.
B) Net National Income.
C) Net National Profit.
D) Gross National Product.
E) Gross Domestic Product.

Question 39

Productivity is

A) a measure of economic growth that compares how much a system produces with the resources needed to produce it.
B) also known as "real gross national product."
C) the total value of all goods and services produced by a national economy in a given period of time regardless of where the factors of production are located.
D) the total value of all the goods produced by a single economy.
E) the total quantity and quality of goods and services that can be purchased with the currency used in an economic system.

Question 40

If,on average,it takes 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 41

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 the above

Question 42

From Confederation (1867)to 1981,Canada's total accumulated debt was only ________,but in the period 1981-1994,annual deficits were in the ________ range.

A) $78.5 billion; $10 to $20 billion
B) $57.8 billion; $100 to $125 billion
C) $40 billion; $20 to $40 billion
D) $85.7 billion; $20 to $40 billion
E) none of these numbers are correct

Question 43

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 44

With regard to the concepts of budget deficits and the national debt,it is correct to say that

A) these two concepts are essentially identical.
B) budget deficits are measured on an annual basis,while the national debt is cumulative over a span of years.
C) Canada is the only major industrialized country that has a budget surplus each year.
D) budget deficits measure the amount of money that Canada owes its foreign investors.
E) budget deficits are more important than the national debt.

Question 45

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 46

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 47

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 48

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 49

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 50

The economy in Palau has been stagnant for some time.The national bank thinks that increasing the money supply will encourage investment within the country,but some economists oppose this idea,arguing that it will cause inflation.Which of the following would support the argument that increasing the money supply will cause inflation?

A) Jobs will be created.
B) Banks will lower interest rates.
C) Wages will decrease.
D) Foreign investment will be discouraged.
E) Only low-technology sectors will benefit.

Question 51

Which of the following statements about inflation is correct?

A) Inflation increases the purchasing power of consumer dollars.
B) The consumer price index is one way to measure inflation.
C) Inflation occurs when people have more money to spend as the quantity of goods available increases.
D) Inflation occurs when the amount of money taken out of the economy exceeds the amount of money put into the economy.
E) Inflation and deflation are really almost synonymous in practice.

Question 52

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

A) A country's national debt is the amount of money its government owes the United States.
B) A budget deficit occurs when income tax revenue is less than interest payments on the national debt.
C) Canada is the only industrialized country in the world that has a budget surplus.
D) Until recently,Canada was the only industrialized country that had an annual budget surplus.
E) All of these statements are correct.

Question 53

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 54

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 55

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 56

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 57

Assume that Statistics Canada reports that inflation is becoming a problem.What should the government do in order to reduce inflation?

A) Lower taxes.
B) Raise taxes.
C) Increase government spending.
D) Encourage consumers to increase spending.
E) The government should increase spending and lower taxes.

Question 58

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 59

The consumer price index

A) measures inflation by measuring price increases.
B) measures price increases but not changes in consumer purchasing patterns.
C) is not able to measure deflation.
D) continues to include the same items in the typical "basket of goods" so that price increases in previous years can be compared to price increases in the current year.
E) is no longer accepted as a good measure of price increases.

Question 60

Deflation

A) is a period of stagnant prices.
B) results when the Bank of Canada lowers interest rates.
C) may occur when prices fall as a result of increased industrial productivity.
D) cannot happen in a modern industrialized economy.
E) is always bad because it means that the economy is not doing well.

Question 61

In 2010,Canadian universities accounted for about ____ percent of R&D spending.

A) 15
B) 25
C) 34
D) 45
E) 55

Question 62

________ is the time (from beginning to end)that it takes a firm to accomplish some recurring activity or function.

A) Vertical integration
B) Processing time
C) Downtime
D) Span of control
E) Cycle time

Question 63

Suppose the Canadian dollar rose from (US)$0.90 to (US)$0.95.Exports of Canadian goods would then be likely to _______,and the Bank of Canada would likely __________interest rates.

A) decrease; raise
B) increase; raise
C) decrease; lower
D) increase; lower
E) it is not possible to tell from the information given

Question 64

Basic research and development describes

A) 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.
B) those activities that do not create value for the firm.
C) the process involved in getting a new technology out of the lab and into the marketplace.
D) improving knowledge in an area without a primary focus on whether any discoveries that might occur are immediately marketable.
E) those activities that increase a company's revenues.

Question 65

Sam,an audiologist,lost his job two years ago and still hasn't found work because 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 66

Research and development (R&D)includes activities that are necessary to provide new products,services,and processes.Two types of R&D include

A) deflationary and inflationary.
B) public and economical.
C) college and university.
D) pure and theoretical.
E) basic and applied.

Question 67

What effect do higher interest rates have on consumer spending?

A) Consumer spending increases as people try to quickly buy goods before rates go even higher.
B) Consumer spending decreases immediately,but then rises sharply after consumers get used to the new higher interest rates.
C) Consumer spending is not impacted by changes in interest rates.
D) Consumer spending decreases.
E) It is not possible to tell from the information given.

Question 68

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 69

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 70

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 been slightly lower than unemployment rates for men during the last 10 years.
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 71

R&D spending in Canada is about ____ percent of GDP,while in countries like the U.S.and Japan,the figure is about ____ percent of GDP.

A) less than 1 percent; 1.5-2.0 percent
B) 2 percent; 1 percent
C) 3 percent; 6 percent
D) 5 percent; 5 percent
E) 10 percent; 15 percent

Question 72

Technology includes

A) human knowledge.
B) work methods.
C) equipment.
D) electronics and telecommunications.
E) all of these.

Question 73

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?

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

Question 74

________ refers to all the ways firms create value for their constituents.

A) Marketing
B) Outsourcing
C) Processing
D) Production
E) Technology

Question 75

Higher interest rates tend to lead to ________ consumer and business spending,while lower interest rates tend to lead to _________spending by consumers and businesses.

A) higher; lower
B) lower; lower
C) higher; higher
D) lower; higher
E) it is not possible to tell from the information given

Question 76

In 2010,the Canadian private sector accounted for about _____ percent of R&D spending,while the government accounted for about _____percent.

A) 25; 10
B) 10; 40
C) 55; 10
D) 25; 30
E) 78; 2

Question 77

R&D spending in Canada in 2010 totalled about ________ billion.

A) $2
B) $6
C) $10
D) $15
E) $22

Question 78

Which of the following is correct with respect to R&D?

A) R&D focuses on physical products,not services.
B) Pure,or basic,R&D involves focusing specifically on how a technological innovation can be put to use to make products that can be sold in the marketplace.
C) Applied R&D involves improving knowledge in an area without regard to how it might be useful in the marketplace.
D) R&D intensity refers to R&D spending as a percentage of a company's sales revenues.
E) All of these statements are correct.

Question 79

________ 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 policy; monetary policy
C) monetary policy; fiscal policy
D) fiscal policy; monetary policy
E) national debt; annual deficit

Question 80

________ includes human knowledge,work methods,physical equipment,electronics and telecommunications,and various processing systems that are used in performing business activities.

A) The technological environment
B) The social environment
C) The political-legal environment
D) The competitive environment
E) The economic environment