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Business & Entrepreneurship Quarter 1 Exam

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

 1. 
What is the final step of the decision-making process?
a.
act on your choice
b.
make a decision
c.
review your decision
d.
define the problem
 

 2. 
Dividing GDP by the total population of a country results in that country’s
a.
GDP per capita.
b.
gross GDP rate.
c.
unemployment rate.
d.
personal income per capita.
 

 3. 
The government of Erewhon owns and controls all economic resources and decides how those resources will be used. The government even assigns people specific jobs and careers. Erewhon uses which type of economic system?
a.
market economy
b.
command economy
c.
traditional economy
d.
laissez-faire economy
 

 4. 
Who owns the economic resources in a market economy?
a.
the people of the country
b.
the tribal elders
c.
the government
d.
business people and entrepreneurs but not consumers
 

 5. 
Retail sales
a.
usually remain stable in times of economic growth.
b.
indicate general consumer spending patterns in the economy.
c.
include the sales of services bought by businesses.
d.
all of the above
 

 6. 
GDP measures a country’s economic output during
a.
one week.
b.
one month.
c.
one year.
d.
five years.
 

 7. 
In the early 1890s, the average employee in the United States worked about how many hours per week?
a.
40
b.
60
c.
75
d.
100
 

 8. 
Which of the following is NOT an especially important principle of the U.S. economic system?
a.
freedom of choice
b.
private property
c.
tradition
d.
profit
 

 9. 
Which of the following probably would result in a DECREASE in worker productivity?
a.
An office replaces its 10-year-old computers with brand-new machines and the latest software.
b.
A company pays for raises for top management by laying off 60 percent of its employees.
c.
A factory trains workers how to use shop equipment more efficiently.
d.
The boss promises a bonus to all employees who come into work over the weekend to finish an important project.
 

 10. 
A limit that a government places on the quantity of a product that may be exported or imported during a given period is called a
a.
tariff.
b.
quota.
c.
luxury tax.
d.
trade surplus.
 

 11. 
If wages increase faster than gains in productivity, prices will rise. Why?
a.
Business owners will demand higher prices because they know workers have more money to spend.
b.
Because demand will increase for all products.
c.
Because the cost of producing goods decreases.
d.
Because the cost of producing goods increases.
 

 12. 
People producing goods and services are called
a.
human resources.
b.
natural resources.
c.
capital resources.
d.
limited resources.
 

 13. 
In the U.S., you can own anything you want and decide what you want to do with it, as long as it does not violate the law. This describes the principle of
a.
scarcity.
b.
competition.
c.
the command economy.
d.
the right of private property.
 

 14. 
What is the first step in the decision-making process?
a.
identify the choices
b.
define the problem
c.
evaluate the choices
d.
act on your choice
 

 15. 
Generally, as the price of a product increases,
a.
consumers will be willing to purchase larger quantities of the product.
b.
businesses will be willing to supply larger quantities of the product.
c.
the supply curve will slope downward.
d.
demand will increase.
 

 16. 
The difference between a country’s total exports and total imports is called the
a.
foreign debt.
b.
balance of trade.
c.
trade surplus.
d.
trade deficit.
 

 17. 
Which of the following counties has an absolute advantage in coffee production?
a.
the United States
b.
Saudi Arabia
c.
Brazil
d.
Ireland
 

 18. 
Which of the following is an example of a capital project?
a.
A large corporation gives all employees a 5 percent wage increase.
b.
A small office buys several boxes of paper for the printer.
c.
A mid-size company restocks the supply cabinet with pencils and markers.
d.
A small business purchases two new pickup trucks.
 

 19. 
Jonah had $25 to spend. He decided to buy a new shirt instead of going to the amusement park with his friends. Jonah has
a.
purchased a service.
b.
made an economic tradeoff.
c.
made a poor economic decision.
d.
ignored the concept of scarcity.
 

 20. 
If you purchase a corporate or government bond, you are a(n)
a.
creditor.
b.
stockholder.
c.
entrepreneur.
d.
partner.
 

 21. 
A recession often affects some groups of workers in related businesses. The drop in related businesses is called
a.
the ripple effect.
b.
the business cycle.
c.
the placebo effect.
d.
the halo effect.
 

 22. 
A country in which an MNC places business activities is called the
a.
home country.
b.
host country.
c.
economic community.
d.
free-trade zone.
 

 23. 
GDP does not include
a.
consumer spending for food.
b.
the value of the work you do for yourself.
c.
government spending to pay employees.
d.
business spending for equipment.
 

 24. 
At the peak of the business cycle is
a.
recovery.
b.
depression.
c.
recession.
d.
prosperity.
 

 25. 
The largest producer of goods and services in the world is
a.
Japan.
b.
Russia.
c.
the United States.
d.
China.
 

 26. 
About how many U.S. jobs depend on international business?
a.
1 out of 2
b.
1 out of 4
c.
1 out of 6
d.
1 out of 10
 

 27. 
Inflation
a.
increases the buying power of the dollar.
b.
always discourages economic growth.
c.
tends to decrease wages.
d.
is most harmful to people living on fixed incomes.
 

 28. 
Suppose wages are going up faster than prices. What is the most likely effect?
a.
Consumers will begin to buy more products, businesses will need to hire more workers, and unemployment will go down.
b.
A time of economic recovery will begin soon.
c.
Unemployment will worsen because businesses will tend to hire fewer workers.
d.
A period of deflation will begin soon.
 

 29. 
The interest rate banks charge their best business customers is the
a.
discount rate.
b.
prime rate.
c.
mortgage rate.
d.
T-bill rate.
 

 30. 
Goods and services sold to other countries are called
a.
exports.
b.
tariffs.
c.
imports.
d.
contraband.
 

Completion
Complete each sentence or statement.
 

 31. 
Personal ____________________ refers to salaries and wages as well as investment income and government payments to individuals.
 

 

 32. 
When you make an economic choice, the ____________________ is the value of the next-best alternative that you did not choose.
 

 

 33. 
The ____________________ bond rate is the cost of borrowing for large U.S. corporations.
 

 

 34. 
The ____________________ curve for a product illustrates the relationship between the price of a product and the quantity businesses will produce.
 

 

 35. 
____________________ are businesses offering very similar products to the same customers.
 

 

 36. 
A nation’s plan for answering the three economic questions is called its _________________________.
 

 

 37. 
Intangible things that you purchase are referred to as ____________________.
 

 

 38. 
____________________ is the production output in relation to a unit of input, such as a worker.
 

 

 39. 
A nation’s transportation, communication, and utility systems is referred to as its ____________________.
 

 

 40. 
The accepted behaviors, customs, and values of a society are referred to as ____________________.
 

 

 41. 
A(n) ____________________ economy combines elements of the command and market economies.
 

 

 42. 
____________________ spending refers to money spent by a business for an item that will be used over a long period.
 

 

 43. 
____________________ is the quantity of a good or service that consumers are willing and able to buy.
 

 

 44. 
Foreign ____________________ is the amount a country owes to other countries.
 

 

 45. 
____________________ rates are the cost of using someone else’s money.
 

 

 46. 
The movement of the economy from one condition to another and back again is called a business ____________________.
 

 

 47. 
When a government spends less than it takes in, a budget ____________________ is the result.
 

 

 48. 
A negative or ____________________ balance of payments occurs when a country sends out more money than it brings in.
 

 

 49. 
An economic ____________________ is the phase in which unemployment begins to decrease, demand for goods and services increases, and GDP begins to rise again.
 

 

 50. 
When a government completely stops the import or export of a product, it is called a(n) ____________________.
 

 

 51. 
Retail sales include the sales of durable and nondurable goods bought by ____________________.
 

 

 52. 
____________________ represents ownership, or equity, in a corporation.
 

 

 53. 
International business is frequently referred to as world or ____________________ trade.
 

 

 54. 
A bond represents ____________________ for an organization.
 

 

 55. 
The situation in which a country specializes in the production of a good or service at which it is relative more efficient is called ____________________ advantage.
 

 

 56. 
Items bought from other countries are called ____________________.
 

 

 57. 
A trade ____________________ is a restriction to free trade.
 

 

 58. 
____________________ is a period in the business cycle when demand begins to decrease, businesses lower production, and GDP growth slows for two or more quarters of the calendar year.
 

 

 59. 
If a nation imports more than it exports, it has a trade ____________________.
 

 

 60. 
The ____________________ rate is the value of a currency in one country compared with the value in another.
 

 



 
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