Part One: Multiple Choice, Select the correct answer. 1  point each.

1. The federal government agency whose actions have a major effect on interest rates is the:

a. Small Business Administration                    b.. Federal Reserve Board  c. Federal Trade Commission           d. None of the above

1. When the US limits the number of pounds of beef it will allow to be imported into the US in a given year, it isimposing a(n):        a. embargo       b. tariff            c. lockout   d. quota

The total dollar value of all goods and services produced by the citizens of a specific nation during a one-year period is called:

a. productivity quotient b. gross domestic product (GDP) c. standard of living   d. circular flow

_____________is the study of how wealth is created and distributed.a. Productivity   b. Inflation   c.. Capitalism   d. Economics

A system where the basic economic questions are determined through centralized government planning is referred to as a(n): a.          a. free market economy  b. supply economy  c. iconoclasm economy       d. command economy

When a business has plants located in many foreign countries, it is called a(n):

a. exporting business  b. multinational corporation      c. licensing firm  d. offshore monolith

The purpose of a _________________is to evaluate an organizationàprogress toward implementing programs that are socially responsible.

1. a. Social audit  b. Annual report  c. Federal disclosure statement  d. Code of ethics

A firmàcarbon footprint is 

a. The number of employees hired in a particular community

b. Its legacy in terms of how much public good it dispersed over its lifetime

c. The amount of carbon it releases in its effort to do business

d. The measurable level of carbon within its facilities

When working with international firms, US companies

1. a.  Should ignore the ethics of their business partners

b. Should expect socially responsible behavior from their business partners

c. Feel that their ethical responsibility is limited to US operations

d. Should try to avoid judging international business partners by US standards

A carefully constructed guide for starting a business is known as a(n):

a. limited liability plan   b.  business plan  c.   entrepreneur plan d. proxy plan

A board of directors of a corporation is elected by:a. the officers b. employees  c.  bondholders d. stockholders

1. Officers of the corporation are selected by:   a board of directors b. shareholders c. employees d. bondholders

A corporate guide to acceptable ethical behavior is usually called:

a. social audit    b. code of ethics  c. affirmative action program     d. consumer bill of rights

14. All of the following are factors of production except:

a. natural resources   b. labor    c. capital      d. advertising

The total flow of money into the country minus the total flow of money out of the country is referred to as:a. outflow     b. balance of payments  c. absolute advantage d. currency flow

1. When US firms choose to hire skilled and unskilled workers in other countries to produce goods and services, rather than producing them in the US, we refer to this as

a. Offshore procurement     b. domestic outsourcing  c. offshore outsourcing  d. none of  the above

If a group of stockholders or management obtain all the stock of a previously publicly traded firm for themselves, this is referred to as

a. Capitalizing    b.  Stock turning  c.  A leveraged buyout  d. Taking the firm private

One result of taking a firm private is

a. the firmàstock is no longer available for purchase on the open market

b. managers lose some control as the number of stockholders increase

c. the public image of the firm will suffer

1. d. the firm will have access to more capital

The nation which most recently has joined the US, the European Union and Japan as the key drivers of the world economy is

a. England    b. India  c. China    d. Brazil

20. A conglomerate merger will

a. Diversify business operations and investments

b. Allow the firm to have a less dominant position in its market

1. c, Enable the firm to have a higher degree of specialization

d. Give the firm a more secure access to needed materials and better control over supply

In the middle of a severe recession, the Government greatly increases spending and lowers taxes. This strategy follows which economic theory?

a.  Keynesian  b. Malthusian  c. Mercantilism  d. Marxism

When two large competitors consolidate into one company, the result is called

a. a horizontal merger  b. a vertical merger  c. a conglomerate merger  d. a monopoly

The merger of VictoriaàSecret (a lingerie retailer) with a company that owns factories which produce clothing is an example of

a. a vertical merger     b. a conglomerate merger  c.a horizontal merger  d. none of the above.

1. A(n) occurs when one company buys the property and obligations of another company.

a. Leveraged buyout  b. Consolidation  c. Acquisition  d. Merger

Dave and Sam own all the stock of XYZ, Corp. The stock is not sold to the general public. Dave and Sam own

a. a limited liability company   b. an alien corporation  c. a publicly held corporation  d. a close corporation

The __________________is usually the easiest form of business ownership to start and end.

a. Sole proprietorship  b. Corporation  c. Limited liability company  d. partnership

Stockholders, employees and environmentalists are examples of stakeholders whose interests

a.  Are usually ignored     b. Are usually the same  c. Center purely on profit  d. Often conflict

PART TWO.

TRUE  OR FALSE:   (1 point each)-you may write a brief explanation of your answer but are not require do so.

28.___________Insider trading involves investors using private company information to further their own fortunes.

1. ____________ A limited liability company is a form of business ownership that is taxed like a partnership, in other words, the individual owners are taxed, but not the limited liability company itself.

____________ A major advantage of partnerships is limited liability, that is only the partnership, and not the individual partners are liable for the debts of the business.

___________ The difference between a countryàexports and its imports is called its balance of trade.

___________ The ability to produce a specific product more efficiently than any other nation is referred to as absolute advantage.

__________ NAFTA is composed of the U.S., Canada, and Alaska.

__________ A tax that is levied on a foreign product entering a country is called a quota.

__________If a country imports more than it exports, it is said to have a trade deficit.

__________Monetary policy refers to the Federal Reserve Boardàactions to influence interest rates.

___________A Virginia corporation doing business in Maryland is referred to as a foreign corporation.

__________ A sole proprietor pays a special tax on business profits to the federal government.

39.__________The Federal Reserve Board provides guaranteed loans to small businesses.

________The recurrence of periods of growth and recession in a nation’s economic activity is called the business cycle.

1. ________The profits of a sole proprietorship are taxed as the personal income of the owner.

________Sole proprietorships are attractive for people who want to invest but who do not personally want to operate a company.

________ An intrapreneur is someone who quits his job for a large corporation and starts his own business.

________Since technology changes so rapidly, entrepreneurs are less important for our economy than in past times.

________While entrepreneurs often earn significant profits for themselves, their impact on American society is quite small.

________Entrepreneurs usually avoid risk and place a higher value on security.

1. 47.________Ethical behavior in a business setting usually involves clear choices of right or wrong action.

_______Partnerships are the most common form of business ownership.

49.________An initial public offering is the coming together of two companies to form one larger public corporation.

_______Once a business is started it is difficult to change from one form of business ownership to another.

______A legal entity with authority to act and have liability separate from its owner is called a sole proprietorship.

_______The first step in forming a sole proprietorship is filling out a proprietorship charter and filing it with the state government.

1. 53.______ A horizontal merger unites two companies at different stages of related businesses.

_______A merger involving a commercial bakery and a grocery retailer would be an example of a horizontal merger.

________ In recent years in the US, almost all new job creation has been in the manufacturing sector.

_____ A corporate officer who believes businesses should be left alone by the government to maximize profits is probably a follower of the economic model of social responsibility. 

_____ High prices of imported goods are often given as a reason from import restrictions.

1. _____ The WTO has replaced the GATT as a permanent body for encouraging trade between buyers and sellers in different countries.

_____ Profits are what a business earns after paying expenses and salaries.

_____ An advantage of small business is the low risk of failure.

_____ To reduce inflation, the Federal Reserve Board should increase interest rates.

______The value of a firmàintellectual capital refers to the average educational level of management.

_______The Foreign Corrupt Practices Act deals with environmental pollution by US firms in foreign waters.

_______A co-pay is the percentage of sales a franchisee pays to the franchisor.

PART THREE:

A. Explain the concept of strategic alliance in global business.

B. Franchising has always been a key component of the American economy. List briefly the advantages and disadvantages of franchising.

C. What is demography or demographics? Identify two demographic trends in the US and describe how they will impact business. 

1. D. US laws, in particular the Civil Rights Act of 1964, prohibits discrimination in hiring, firing, promotion, etc. on the basis of race, color, gender, national origin, etc. ARVON, a defense contractor operates in the Middle East. A managerial position opens in its facility in Saudi Arabia. Karen Essex, an African America is well qualified for the job, and seeks the promotion to that position. Executives of the company worry however that placing a woman in a managerial position in their Saudi Arabian office ight not be good for business Should they hire someone else for the position? Why or why not? (This is an ethics question, not a legal question about interpretation of the Civil Rights Act.)