Economics Test PDF

1. In economics, capital goods include A. mental and physical work. B. labor and management. C. trees and water. D. buildings and equipment. ** * 2. A primary advantage of labor specialization for the company is A. increased job interdependency. B. simplified worker training. ** C. gr...

1. In economics, capital goods include A. mental and physical work. B. labor and management. C. trees and water. D. buildings and equipment. ** * 2. A primary advantage of labor specialization for the company is A. increased job interdependency. B. simplified worker training. ** C. greater employee turnover. D. higher employee income. 3. Which of the following is an economic service: A. Haircut ** B. Hat C. Hamburger D. Car 4. An economic measure of the dollar value of all goods and services produced by the economy in a year's time is called A. consumer price index. B. gross domestic product. ** C. net exports. D. revenue. 5. A government often changes its fiscal policy in response to a(n) A. import quota. B. business cycle. C. economic problem. ** D. price ceiling. 6. Which of the following is a natural resource that can be renewed through people's efforts: A. Mineral deposits B. Water C. Trees ** D. Crude oil * 7. Your manager has told you that you should be concerned with having products available for the sale next month. Your manager is concerned with ______ utility.  A. price B. form C. time ** D. place 8. Which of the following is a true statement about a country's central bank's role in the economy: A. It creates both recessions and inflation. B. It creates inflation to slow the economy. C. It both stimulates and slows the economy. ** D. It creates recessions to stimulate the economy. 9. A Vermont ski shop has not yet received its November shipment of ski supplies. Since the holiday rush is only days away, you would expect prices of existing stock to A. decrease. B. increase. ** C. fluctuate. D. remain the same. 10. Luxury goods and services usually have ______ demand. A. elastic ** B. inelastic C. predictable D. large 11. Usually during an economic recession, the prices of goods and services will rise very high while the value of money decreases. At the same time, many workers receive an increase in their nominal wages. These workers will be willing to pay the rising prices because their wages are rising by the same amount. This is a good example of the effects of ______ prices. A. competitive B. unfair C. objective D. relative ** * 12. Which of the following is a function of relative price: A. Equilibrium B. Information ** C. Value D. Excess supply * 13. A major characteristic of a market economy is ______ ownership of property. A. limited B. monopolistic C. private ** D. government 14. Producers in a market economy are free to limit their production to those goods and services that will A. sell at high prices. B. conserve natural resources. C. earn enough profit. ** D. pollute the environment. * 15. One way in which government helps protect business property is by A. registering trademarks. ** B. granting subsidies. C. setting tariffs. D. issuing bonds. * 16. Which of the following is one of the original roles that government was intended to have in business: A. Collect taxes ** B. Protect consumers C. Enforce laws D. Conserve resources 17. When price instability exists, what do governments usually do to reverse the trend? A. Monitor budget deficits B. Review import regulations C. Evaluate wage levels D. Change monetary policies ** 18. Which of the following statements regarding private property in the private enterprise system is true: A. The government owns most of the property. B. People cannot share their property. C. You can keep income earned from private property. ** D. Anyone is free to use your property. 19. When a business owner invests money, time, and effort in a business, what kind of monetary reward does the owner expect to receive in return?  A. Pride B. Profit ** C. Experience D. Satisfaction * 20. Technological unemployment often results in A. seasonal unemployment. B. a rearrangement of human resources. ** C. increased consumer demand. D. decreased productivity. * 21. What commonly insured risk would be covered by liability insurance? A. Flood damage B. Shipment losses C. Personal injury ** D. Theft 22. A department store has decided to hire undercover security guards in an effort to reduce shoplifting losses. This is an example of ______ business risk. A. transferring B. preventing ** C. retaining D. ignoring 23. Because of competition, people in our society enjoy A. government control of our economic system and businesses. B. fewer changes in existing goods or services. C. a higher standard of living than that of people in many other countries. ** D. a narrower selection of goods or services. 24. When businesses try to attract customers by offering high-quality products, extra customer services, and convenient locations, they are engaged in ______ competition. A. price B. illegal C. nonprice ** D. unfair * 25. A factory that mass produces clothing increases productivity because it reduces A. levels of management. B. research and development costs.  C. wasted resources. ** D. employee wages. 26. Which of the following is a potential impact of bribery and other corrupt practices on a business: A. Greater efficiency B. Loss of customer trust ** C. Gained resources D. Decreased crime 27. Sharing business goals and objectives with workers is a method of increasing productivity through A. motivation. B. specialization. C. mass production. D. communication. ** * 28. A disadvantage of the specialization of labor is A. simplified worker training. B. increased production rate. C. easier transfer of workers. D. increased worker dependency. ** * 29. Which of the following is true regarding economic wants: A. They are capital goods. B. They are unlimited. ** C. They cost nothing. D. They stay the same. 30. A beginning worker in a craft or trade occupation is called a(n) A. journeyman. B. apprentice. ** C. master. D. union member. * 31. Shelly is a union member who has been having problems with management. Shelly should report her problems to her union's A. mediator. B. president. C. arbitrator. D. steward. ** * 32. The countries of the world have different resources, which makes ______ necessary. A. domestic competition B. economic sanctions C. international trade ** D. product standards * 33. Which of the following situations represents an absolute advantage for Country A: A. Country B produces printers, while Country A produces digital cameras. B. Country B produces sunglasses at $3 each, while Country A produces sunglasses at $4 each. C. Country A produces computers for $300 each, while Country B produces computers for $350 each. ** D. Country A produces scanners at the same cost as Country B. * 34. An increase in population would have the greatest effect on which of the following components of GDP: A. Government purchases B. Gross private investment C. Personal consumption expenditures ** D. Imports * 35. Cheryl makes extra money by babysitting. Babysitting is considered a service rather than a good because it is not A. scarce. B. tangible. ** C. useful. D. transferable. * 36. What will probably result if aggregate demand continues to grow and production cannot meet the demand? A. Inflation ** B. Depression C. Decreased production D. Trough * 37. Which of the following are among the internal causes of business cycles: A. Seasonal and climatic changes, aggregate demand, inventory levels, and international relations  B. Political change, investment in capital goods, international relations, and money supply C. Discoveries and innovations, inventory levels, international relations, and money supply D. Aggregate demand, money supply, investment in capital goods, and inventory levels ** * 38. Which type of inflation is harmful to the economy? A. Cost-push inflation B. Hyperinflation ** C. Demand-pull inflation D. Negative inflation * 39. With each employee a company hires, its marginal product is greater. Which stage of production is this company in? A. First ** B. Third C. Second D. Fourth * 40. Because the leaders of a business set the tone for the business's beliefs and values, they are part of the business's ______ subculture. A. natural B. power ** C. achievement D. independent * 41. A Chilean businessperson wants to greet a British client in English. Instead of saying, "Good afternoon, Mr. Winchester. It is a pleasure to meet you," the Chilean businessperson says, "Hello, Mr. Winchester. I'm happy to see your face." This is an example of a cultural issue related to A. offensive gestures. B. spatial differences. C. inappropriate gift-giving. D. language translation. ** * 42. Which of the following is an external barrier that often affects small businesses: A. Lack of financial knowledge B. Complex licensing requirements ** C. Complicated business policies  D. Ineffective management skills * 43. Small businesses have a positive effect on the local community because they A. limit job growth. B. pay taxes. ** C. charge interest. D. reduce competition. * 44. Which of the following is a benefit of globalization: A. Expanded markets ** B. More expensive labor C. Restricted markets D. More expensive resources * 45. Why do many socially responsible businesses offer their employees benefits such as counseling, retirement planning, and additional training? A. To increase employee satisfaction ** B. To comply with government regulations C. To promote community involvement D. To improve personal relationships * 46. A group of individuals wants to open a museum that will display items from early settlers of the area. The group will charge just enough admission to pay the expenses of operating the museum. Will the museum be a business? A. No, the museum will not be considered a business. B. Yes, the museum will be a for-profit business. C. Yes, the museum will be a not-for-profit business. ** D. No, the museum will be a charitable institution. * 47. Which of the following is a true statement about the business activity of financial analysis: A. Financial analysis is the link between businesses and consumers. B. Financial analysis has an impact on all other business activities. ** C. Financial analysis is responsible for making production decisions. D. Financial analysis maintains the business's personnel records. * 48. An owner's portion of a business is known as their A. tax revenue. B. private enterprise. C. distributive share. **  D. trust fund. * 49. When lower income groups are more affected by a tax than higher income groups, the tax structure in place is A. proportional. B. progressive. C. regressive. ** D. corporate. * 50. A country's easy monetary policy is often used to correct the problem of A. unemployment. ** B. import quotas. C. high taxes. D. globalization. * 51. Which of the following is an advantage of private enterprise: A. The freedom to use private property to make a profit ** B. The equal distribution of property and income C. Periods of unemployment D. The elimination of poverty * 52. Which of the following is an example of a government's fiscal policy: A. Decreasing prices B. Increasing employment C. Decreasing inflation D. Increasing taxes ** * 53. Productive resources include such capital goods as A. land and minerals. B. supplies and equipment. ** C. labor and management. D. raw materials. * 54. According to the concept of economies of scale, when production levels _________, production costs tend to ____________. A. fluctuate; decrease B. increase; decrease ** C. decrease; decrease D. increase; increase * 55. A business goes bankrupt because its president steals a large amount of money from investors. What is the reason this unethical behavior occurred? A. The action is acceptable in a foreign culture. B. The action benefits the company. C. The action is not illegal. D. The action is committed by unethical employees. ** * 56. Which of the following is an economic condition that affects consumer spending: A. Competition B. Infrastructure C. Employment ** D. Depreciation * 57. When consumer spending and consumption decrease, consumer confidence tends to A. rise. B. be unpredictable. C. remain the same. D. fall. ** * 58. A high rate of unemployment usually has a negative impact on a country's A. gross domestic product. ** B. equilibrium price level. C. personal income tax. D. terms of trade. * 59. Businesses in a private enterprise system usually do not raise prices to increase profits because they exist in a(n) _________ environment. A. competitive ** B. prosperous C. recessive D. efficient * 60. A country's central bank issues too much currency given the size of its economy. The country's business sector cannot expand to meet the excess demand caused by the increased amount of currency in circulation. As a result, ____________ will go ____________ and ____________ will result. A. buying power; up; inflation B. prices; up; inflation ** C. buying power; down; deflation  D. prices; down; deflation * 61. According to the law of diminishing returns, what usually decreases at some point with the addition of more employees if all other factors stay the same? A. Productivity ** B. Consumption C. Depreciation D. Inequality * 62. The best time for a business to purchase new equipment is when A. job growth declines. B. the gross domestic product falls. C. interest rates are low. ** D. consumer demand decreases. * 63. During a recession, interest rates are likely to ____________ because demand for money is ____________. A. decrease; strong B. increase; strong C. increase; weak D. decrease; weak ** * 64. Which of the following will foster a business's ability to adapt to changing markets: A. Authoritarian leadership B. Proactive management ** C. Reactive management D. Conservative leadership * 65. Why does the demand for money go down when the demand for bonds goes up? A. Increased transaction costs to buy and sell bonds decreases money demand. B. They are substitutes for each other and have an inverse relationship. ** C. They involve a reduction in interest rates. D. Increased inflation rates decrease money demand and increase bond demand. * 66. How does a country's central bank help control inflation? A. It eliminates the reserve requirement. B. It regulates financial institutions. C. It distributes coin and paper currency to financial institutions. D. It adjusts short-term interest rates. ** * 67. The internet creates/enhances form utility by A. offering online shopping. B. allowing goods to be found and purchased quickly. C. providing TV streaming as an alternative to cable. ** D. providing customers with product information. * 68. One way to regulate the nation's money supply is by changing the A. inflation rate. B. tax policies. C. public stock-exchange policies. D. banks' reserve requirements. ** * 69. Higher prices that result from a tax on luxury goods are likely to result in A. more customers and less productivity. B. more customers and more productivity. C. fewer customers and more productivity. D. fewer customers and less productivity. ** * 70. The exchange rate between U.S. dollars and Canadian dollars, which is determined by the unimpeded interaction of supply and demand in the foreign exchange market, is a _________ exchange rate. A. pegged B. fixed C. cross D. floating ** * 71. Which of the following is an example of how a country's political environment can impact world trade: A. France requires 40% of music on the radio to be played in French. ** B. Development of shipping containers increases international trade. C. Canadian high labor costs increase the outsourcing of jobs to other countries. D. Advanced communication technologies increase globalization. * 72. Which of the following is a global trade issue that directly affects children in developing nations: A. Tariffs B. Labor laws ** C. Quotas D. Exchange rates * 73. Which of the following is a result of emerging economies entering the global market: A. Decrease in the global supply chain B. Less connectivity among countries C. Rapid increase in global trade ** D. Slower world GDP growth * 74. Keri works as a public relations consultant for a large corporation. She reviews issues and makes recommendations to managers. Keri has _________ authority. A. staff ** B. divisional C. functional D. line * 75. A business creates an organizational design in which no employee has to report to more than one manager at a time. This is following an organizational principle called A. span of control. B. the scalar principle. C. line authority. D. unity of command. ** * 76. How has the ability to travel more freely contributed to globalization? A. It escalates competition between businesses. B. It breaks down political barriers between countries. C. It promotes a sense of nationalism. D. It helps enable the spread of culture and ideas. ** * 77. A company in your city recently announced that it is moving most of its manufacturing to another country. The business claims it must do so to save money, but people in your community are upset because the business is engaging in A. licensing. B. brain drain. C. offshoring. ** D. nationalism. * 78. Economic factors can affect a business's operations by A. transforming family roles. B. increasing or decreasing costs. **  C. creating new legislation. D. eliminating the competition. * 79. The Telford Pharmaceutical Company is concerned that proposed regulatory changes may negatively impact its research and development initiatives, profitability, long-term growth, and the well-being of patients who may benefit from using its products. What can the company do to influence legislation and protect its interests? A. Sign a warrant B. Veto the legislation C. Engage in lobbying efforts ** D. Hire an estate attorney * 80. Which of the following is an example of a business's ethical obligation to its stakeholders: A. Doubling investors' money within two years B. Allowing the competition to succeed C. Sharing trade secrets within its industry D. Providing safe working environments for employees ** * 81. Which of the following is a primary factor that affects the economies of scale: A. Capital budgeting process B. Equipment depreciation value C. Accounting control system D. Specialization of labor ** * 82. For a business to adapt to changing markets, it is important that it develops an internal environment that encourages A. creativity. ** B. exclusivity. C. insensitivity. D. ethnocentrism. * 83. When consumer spending increases, the demand for money tends to A. stabilize. B. contract. C. decrease. D. increase. ** * 84. What are businesses contributing to when they financially support local charities? A. High unemployment B. The community ** C. The work environment D. Their profits * 85. Businesses must consider labor laws in other countries due to A. globalization. ** B. communication. C. entrepreneurship. D. monetization. * 86. Jackson travels to many other countries for work. Before he visits a new country, he always researches the customs and language of the country to avoid offending his clients. Jackson is paying attention to _________ considerations. A. cultural ** B. economic C. financial D. technological * 87. Videoconferencing has made it easier for businesses to A. make a profit. B. avoid bankruptcy. C. work globally. ** D. beat competitors. * 88. What do countries belonging to a major trade alliance experience when conducting business with alliance partners? A. Freedom from trade agreements B. Increased tariffs C. Free promotional advertising D. Reduced tariffs ** * 89. Which of the following statements regarding the foreign exchange market is true: A. Only citizens and businesses from certain countries may trade on the forex. B. The foreign exchange market is a global, decentralized market. ** C. The foreign exchange market is open from 9:00 a.m.-5:00 p.m. every day. D. Trades occur on the foreign exchange market in a central location. * 90. Which of the following is a geographic factor that impacts a country's ability to trade: A. Political system B. Industrialization C. Coastal areas and waterways ** D. Taxes on imports and exports * 91. Which of the following illustrates the impact of a country's history on world trade: A. Countries that are adjacent to each other have more opportunities for conflict. B. Countries with widely different religious beliefs have difficulty establishing trust. C. Countries that have engaged in war conflicts have difficulty establishing trust. ** D. Countries speaking different languages have difficulty understanding each other. * 92. If a country with a developing economy participates in free trade, it can expect to encounter A. job loss. B. limited access to new markets. C. better relationships with other countries. ** D. fewer resources. * 93. Which of the following is an advantage of doing business in an emerging economy: A. Emerging economies are unsafe and corrupt. B. There is less demand in emerging economies. C. Governments in emerging economies are difficult to work with. D. There is less competition in emerging economies. ** * 94. Which of the following statements is true regarding international labor issues: A. Foreign businesses are required to provide cost of living increases. B. Work visas are not necessary for professional businesspeople. C. Wage and benefit requirements differ by country. ** D. International law ensures that factories do not hire young children. * 95. A car dealership purchases new cars from a Ford factory and then sells them to consumers. What type of business model is this? A. Distributor ** B. Manufacturer C. Trader  D. Importer * 96. Which of the following is an advantage of opening a franchise: A. Paying royalties B. A well-known brand name ** C. Restrictions on products, prices, and location D. Reliance on raw materials * 97. The U.S. government instituted an expansionary fiscal policy, resulting in increased demand for goods and services. Foreign countries are likely to experience a A. rise in exports to the U.S. and higher currency values relative to the U.S. dollar. ** B. drop in exports to the U.S. and higher currency values relative to the U.S. dollar. C. rise in exports to the U.S. and lower currency values relative to the U.S. dollar. D. drop in exports to the U.S. and lower currency values relative to the U.S. dollar. * 98. Which of the following is a sign of corruption in a developing country: A. Increases in technological advancements B. High involvement in international trade C. The development of a shadow economy ** D. Even distribution of wealth among the rich and poor * 99. What effect does a decrease in overall productivity usually have on the economy? A. Lower prices B. Increased sales C. Decreased unemployment D. Increased labor costs ** * 100. What is the difference between a visa and a passport? A. Visas are for business; passports are for leisure. B. A passport is a supplement to a visa. C. Passports are for business; visas are for leisure. D. A visa is a supplement to a passport. **