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Homework answers / question archive / Palomar college BUS 100 - CHAPTER 2 1)In terms of economic systems, the trend has been for: countries that are mostly socialist to move toward communist systems

Palomar college BUS 100 - CHAPTER 2 1)In terms of economic systems, the trend has been for: countries that are mostly socialist to move toward communist systems


Palomar college


1)In terms of economic systems, the trend has been for:

countries that are mostly socialist to move toward communist systems.

countries that are mostly capitalist to move toward more socialism.

countries that are capitalist to move toward communism.

countries to remain primarily within the economic system the country has in place.





2 The U.S. economy experienced a robust economy, particularly during the first three years.

The U.S. economy fell into recession in 2008 and 2009.

The U.S. economy was experiencing recovery in 2007 and 2008.

Although the GDP decreased in 2008 and 2009, the decline was not enough for businesses and consumers to feel its negative effects.


3 The U.S. unemployment rate is a key economic indicator because most of us need jobs to maintain our standard of living. A criterion used to calculate the unemployment rate is _________.

anyone under the age of 60 who does not have a job and lives within the physical borders of the U.S.

all persons claiming not to have a job, except students; full-time and part-time students are excluded from the calculation

persons who were dismissed from their last job, and subsequently have been out of work for over a year

unemployed persons age 16 and over, who have been looking for work during the past four weeks


4 Which of the following is not a part of the business cycles that occur in economies over time?

Economic boom


Structural unemployment



5 Citizens of socialist nations can rely on the government to provide all of the following except:


health care

unemployment and retirement benefits

money to start a business


6 Robert Redford created The Sundance Film Festival, where talented, young directors and producers can submit their films for review and possible screening. The festival attracts thousands of tourists each year, employs many others at various capacities, and provides important exposure to up-and-coming artists who may otherwise not be able to get their works noticed. Ultimately, the festival provides social and economic benefit for many. Adam Smith believed that one’s self-directed gain would eventually create prosperity for many, and called the process the ___________.

amateur opportunity

deliberate intervention

opportunistic behavior

invisible hand


7 In a free-market economic system, if consumers perceive the price for a state-of-the-art smartphone as too high for the value received, they are likely to avoid buying it. In the same light, if the __________.

seller’s price is too low, consumers will definitely consider it of poor quality

consumer’s desired price is too low, producers will want to produce an abundance of the product

consumer’s desired price is too low, producers may limit the amount produced

consumer’s desired price is too low, producers will refuse to make a substitute


8 The foundation of the U.S. economic system is considered to be:






9 The sum of all the federal deficits over time is known as the:

national debt

gross national debt

fiscal policy

aggregate demand for money


10 Which of the following best describes a capitalistic nation?

Most or all of the factors of production and distribution are privately owned and operated for a profit.

The nation-state owns most of the factors of production and distribution, and makes central decisions with respect to the distribution of resources.

The nation-state practices state capitalism. It prefers to maintain ownership of certain industries.

The political system endorses several hundred entitlement programs. Business taxes support these programs that are restricted to the unemployed.


11 Charlie Hayes owns his own landscaping business, including all the land on which they grow their plants, and all the equipment. Charlie’s son Josh has just graduated from college with an architectural landscaping degree. Charlie hopes to retire in a few years and turn the business over to Josh, and Josh will inherit the business when Charlie dies. This is an example of the ______________ in a capitalist system.

right to have a job

right to private property

right to compete

right to freedom of choice


12 In order for the value of goods and services to be counted as part of a nation’s gross domestic product, the goods and services must be ___________.

produced by a company that was first established in that particular nation

those that are purchased with disposable income

produced within the physical boundaries of a particular nation

purchased by the government or citizens of that particular nation, as opposed to other governments and people of other nations



13 You studied for two hours each day, for an entire week, before your first marketing exam. When you turned in the test, you felt confident that your effort would pay off. At the next class meeting, your instructor said she was considering curving the grades because the class average was lower than she had anticipated. All of a sudden, your 98% score did not have the same impact that it did when you first saw it! Now the guy next to you that got an 84% is likely to have an “A” grade too. As you analyze this situation, you realize that it parallels an economic system such as ________________, where even if you work harder than another person, you are likely to realize the same benefit.






14 Jason’s mom specifically asked for a CIP cast iron pan for her birthday. As Jason scanned the stock in two department stores, he found ten different brands, none of which were CIP. When he found CIP in a kitchen specialty shop, he was challenged to tell the difference between his mom’s choice and the others. In his business class, he learned about ______________, where many sellers may be offering very similar products. Through various means, each seller differentiates his product from the competition.

perfect competition

oligopolistic competition

limited competition

monopolistic competition


15 The way in which a country’s resources are utilized to produce goods and services and the way those goods and services are distributed among those who desire to have them depends upon the ______________.

stage of development of those resources

economic system under which the country operates

number of documented economically disadvantaged persons in the nation

availability of tangible versus intangible resources


16 At Six City Wellness Center, Greg operates a new state-of-the-art MRI scanner that serves approximately 10 patients during his 8-hour shift. Patients are scheduled for various lengths of time, depending on which part(s) of their body requires scanning. The image quality is significantly superior to what it was on previous scanners, but the number of patients served per day remains the same. This situation attests to the fact that ____________.

technological advancements have increased productivity in the service sector

productivity has increased because it is calculated by combining quantity produced plus quality produced

hospitals and health clinics are part of the service sector. Productivity is not a concern in this sector

the service sector has seen improvement in quality of service, but productivity remains about the same


17 Imagine the following: New sources of energy have become marketable and the industries involved have hired thousands to operate the emergence of new businesses. Construction companies cannot build homes fast enough for workers in the energy industry. Due to increasing salaries in several other industries that partner with energy companies, the demand for everything from food to entertainment to travel has increased. High demand has brought about shortages in some product categories. To help manage the situation in the short term, ___________.

the Fed will likely increase interest rates

Congress will likely decrease taxes

the Fed will likely decrease interest rates

Congress will likely enact monetary policy


18 At a young age, Eliza’s coaches were confident she had the potential to be a world-class swimmer. They encouraged her parents to do as much as they could to further develop her skills, because a future in Olympic swimming could set her up for life, including promotional endorsements and coaching positions when her competitive days were over. After four years on an athletic scholarship and Olympic experience under her belt, she chose a different path. With her savings and personal connections, she rented a corner building in a bustling San Francisco neighborhood and pursued her dream: a surf shop business. After several successful years, Eliza was certain that Adam Smith would smile because ______________.

he laid the foundation for her success: she had freedom of choice

Eliza deliberately set out to help others

Eliza chose a career where there was very little competition

unlike most business owners, owning private property was not her concern


19 The American Society of Civil Engineers published a report card for America’s interstates. It was reported that road repairs cost the American taxpayers $67 billion per year. Through the enactment of ___________, the U.S. government collects tax dollars and then spends some of these funds to maintain the infrastructure of the nation. Increasing taxes has the effect of drawing money away from the private sector.

monetary policy

congressional policy

fiscal policy

deficit policy


20___________________are economic systems where some allocation of resources is made by the market and some by the government.

Free-market economies

Command economies

Mixed economies

Socialist economies


21 What’s going on here? As soon as Dewey Cheatum and Howe Motors increase the prices on their SUVs, then so does their only competitor, You Betcha Motors! Their prices are basically the same for similar vehicles, although their advertising says their products are really very different. What kind competition exists here?

Perfect competition

Monopolistic competition

Oligopolistic competition

Limited competition


22 For the last several years, the country of Amerensia has been moving from a communist country to a more mixed economic system. Which of the following most likely would not occur in Amerensia?

An increase in the level of government involvement in trade.

Private ownership of business.

An increase in the rate at which jobs are created.

More incentives for workers to work harder.


23 The CPI (consumer price index) measures ________________ and ________________.

inflation and deflation; excludes energy and food as part of the market basket of goods and services that it measures

inflation; excludes apparel, health care, and education

rising and falling prices of goods, but not services; provides a 10-year comparison

inflation and deflation; includes energy and food as part of the market basket of goods and services that it measures


24 Socialist systems tend to:

encourage innovation.

keep up with countries like the U.S. in the areas of job and wealth creation.

discourage the best from working as hard as they can.

have relatively low tax rates.


25 When President Obama was elected, the U.S. economy was in trouble, and had slid into a recession. Consumer spending was low and getting worse. In an effort to stop the decline, President Obama proposed an economic stimulus package which included government spending on roads, bridges, and schools, among other things, and a tax cut that each U.S. worker would see in her or his paycheck. Apparently, President Obama was a proponent of:

Malthusian economics

monetary policy

Keynesian economic theory

communist economic theory





1 ______________ is the world’s largest exporter.

The United States





2 Because of the high volume of bicycles as a common form of transportation in Beijing and Shanghai, Charles wants to sell his bicycle horns to these markets. In this case, the exchange rate is $1 U.S. dollar = 6.42 Chinese yuan. Economically speaking, how are his prospects?

Pretty good because the U.S. dollar is down against the Chinese yuan.

Good because the yuan has strength against the dollar. The Chinese have 6.42 yuan to spend compared to $1 U.S. dollar.

It depends on the value of the Chinese yuan in relation to the dollar.

Not good. The Chinese would not see value in a horn because they are accustomed to just yell at each other in traffic.


3 The EU is an example of a trading bloc, or a______________, which has a common external tariff, no internal tariffs and the coordination of laws to facilitate trade between member countries.

strategic alliance

common market

joint venture

multinational export assistance center


4 According to Geert Hofstede, who has spent a lifetime studying differences in cultures, the Chinese have a long-term orientation, meaning they are patient savers and are willing to forgo things today, for a better future. Americans typically have a short-term orientation. They prefer more instant gratification and are not as willing to save for the future. This difference in values between the Chinese and Americans is a _____________ attribute that may represent a challenge in future global trade.




legal and regulator


5_______________ is a cost-effective way that many companies outsource the production of goods, such as clothing, shoes, and cell phones. The domestic firm contracts with a foreign company to produce and private-label the goods, because the price is much cheaper than the domestic firm could produce in its' home market.

Foreign direct investment



Contract manufacturing


6 The Republic of South Africa exports edible fruits and nuts into the common market known as the European Union, and imports from the European Union other products which South Africa could produce but at a higher cost than what it costs the Europeans to produce. This practice follows the premise of _________________.

The Theory of Absolute Advantage

The Theory of Malthus

The Theory of Competitive Positioning

The Theory of Comparative Advantage


7 There are those who hope that ______ is a stepping-stone to the creation of a Free Trade Area of the Americas. This agreement today is between the United States, Canada, and Mexico.






8 The strategic alliance between Coca-Cola and Nestlé has spanned a period of over 20 years due to the fact that both companies benefit from this arrangement. As a global marketing strategy, an important characteristic of a strategic alliance is _____________.

the complete immersion of employees assigned to the alliance, eventually forming a separate company

separation of company policies, procedures, and production, but unified financial accountability

it must be a long-term venture of 10 or more years

participant companies do not share costs or profits


9 All of the following are reasons for countries to participate in foreign trade except:

it is just as easy to start a business overseas as it is in the U.S.

no nation can produce all of the products its people want and need.

even if a country were self-sufficient, other nations would seek to trade with that country in order to meet the needs of its own people.

some nations have resources, but not technological know-how; while others have know-how, but lack resources.


10 Recently, two nations experienced a trade dispute over copyright issues. Country “A” accused Country “B” of violating international copyright laws. Since both were members of ______________, they appealed to this organization to mediate the dispute.

GACT (General Agreement on Copyrights and Trademark)

a common market

the WTO (World Trade Organization)

IMF (International Monetary Fund)


11 When the value of exports from a country exceeds the value of imports into that country, there is a _______________.

trade deficit

balance of payments

favorable balance of trade

unfavorable balance of trade


12 During the past five years, the nation of Andolvia began a massive undertaking: teaching farmers how to successfully grow and harvest peanuts. The government subsidized the building of peanut processing plants, where private businesses are now producing peanut butter and other products of nutritional value. Although the Andolvia government has not completely banned the importation of peanuts, it has placed ________________ on the number of peanut products that the nation can import each year, in order to protect Andolvia’s young peanut industry.



import quotas

counter measures


13 Using government regulations to limit the import of goods and services is called:


regulating the balance of trade

global marketing

trade protectionism


14 The law that specifically prohibits “questionable” or “dubious” payments to foreign officials in an effort to secure business contracts is called the:

North American Free Trade Agreement.

General Agreement on Tariffs and Trade.

Securities and Exchange Act.

Foreign Corrupt Practices Act.


15 Even though the nation faces political instability, the island of Frollik with its wide, expansive beaches is a destination hub for cruise lines. Recently, a large theme park company showed strong interest in buying land in Frollik with the intent of building a park targeted toward families. The company wants to make a commitment to Frollik, including the hiring of several hundred local employees. They’re using a global marketing strategy called ____________.

joint venture

foreign direct investment

licensing agreement

strategic alliance



16 Sovereign wealth funds (SWFs) are a fast-growing form of foreign direct investment. The size of these funds and the fact that they are investments from government coffers of other nations might be a cause for concern. More specifically, some fear __________.

SWFs that did not get to invest in multinational corporations will retaliate with embargoes

these funds will go bankrupt if spread too thin

the governments who offer these funds may obtain sensitive technologies or gain control of strategic resources

these investments are strictly a trend that can be pulled away from large corporations without any repercussion at any time


17 Buying products produced in another country is known as:


trade protectionism

comparative advantage



18 The makers of Whirlpool washers and other electrical appliance manufacturers need to be concerned about the kind and availability of electricity in the global marketplace. If there were a compatibility problem, it would be the result of a _____________difference.






19 We refer to the BRIC nations as four global economic powers that will likely be important forces in world trade by 2030. It is predicted that the two nations that will supply the world with most of the world’s raw materials are ___________.

Bolivia and Romania

Russia and Bosnia

Ireland and China

Brazil and Russia


20 Besides the shift of jobs to foreign countries, outsourcing has other drawbacks such as __________.

questionable safety and quality issues with finished products

lack of low-cost technical talent to produce products

inadequate supply of labor for the number of products that need to be produced

inadequate supply of natural resources close to factories


21 As a strategy for reaching global markets, licensing provides the licensor with several advantages. One advantage is _____________.

licensing helps avoid patent infringement.

the cost of producing and marketing the product in a foreign market is significantly reduced.

there are very few contractual agreements between the two parties, so the licensee is free to sell proprietary technologies originally owned by the licensor at its discretion.

once the licensing agreement is signed, the licensor has no obligation to customers for the quality of the product they receive.

22 Americans are often accused of ethnocentricity. This means that:

Americans feel their culture is superior to others.

Americans welcome diversity in their workforce.

U.S. firms are actively seeking international markets.

U.S. businesses are pursuing a policy of multiculturalism.


23 In global trade, the term “dumping” refers to:

a situation that exists when a country exports more than it imports.

the buying of permanent property and businesses in foreign nations.

the practice of selling products in a foreign country at lower prices than those charged in the producing country.

a foreign company’s production of private-label goods to which a domestic company attaches its own brand name.


24 The difference between money coming into a country from exports and money leaving a country due to imports, plus money flows from other factors, is known as the:

balance of trade

balance of payments

free trade

trade deficit


25 The nation of Andulasia exports $50 million worth of products and services and imports $44 million worth of products and services. Andulasia has a(n) _____________.

trade surplus

unfavorable balance of trade

trade deficit

trade embargo




1 If your supervisor directed you to enter false information into a sales order book and told you if you refused that you would lose your opportunity for promotion, you would probably consider this situation to be a(n) ________.

important act of self-interest

ethical dilemma

win-win situation

corporate accountability issue


2 When an F5 (category 5) tornado hit a town in southern Missouri, the people that lived there needed the basics: food, water, and shelter. The owners of Boccardi’s Ristorante in St. Louis drove several hours with a van of employees, equipment, and food to donate what they could to help the storm victims. The business term we use to describe this philanthropic action is ___________________, where a company donates what it does best to help make a situation better.

corporate social initiative

corporate inclusion policy

corporate beneficial management

social impact program


3 Which of the following statements reflects upon the difficulty companies face when requiring international suppliers to follow environmental and human rights standards set by U.S. firms?

Multinational corporations are committed to operating within the legal limits of U.S. law. U.S. law does not require U.S. firms to comply because of competitive advantage concerns.

It’s the age-old reality: “Out-of-sight, out-of-mind.” U.S. companies tend to overlook and forget human rights abuses abroad.

U.S. companies follow the lead of consumers, and at this time, there is no evidence of a trend toward concern for better human rights and environmental standards.

Both economics and culture enter into the discussion of fairness concerning international suppliers who do business with U.S. firms.


4 The first day on the job waiting tables at a popular restaurant, Ashley noticed that when one member of the wait staff was serving a very large party, the other waiters would help with carrying food to the tables and even checking to make sure water glasses were filled. Although these actions were not part of the mandatory wait staff training, Ashley perceived that wait staff members who were not attentive in helping out were not viewed as team players by the majority of employees. Ashley was observing an example of the ___________ followed at this organization.

integrity-based ethics

social order ethics

compliance-based ethics

actual ethics


5 Ethics are the standards of right and wrong set for us by society, whereas the law is __________.

a higher calling where society acknowledges that we must take a higher level of action against what may be perceived as a wrongful act

the specific and certain way of solving right and wrong that goes beyond what we consider good ethical behavior

the minimum protection a society enacts toward behavior that is harmful to many

obeyed strictly out of compliance, whereas ethical behavior is in compliance


6 A few months ago, Pedro’s Pizza House, a large nationwide chain of restaurants, purchased one of its competitors, Italian Stallion Pizza Stations, for $800 million. Italian Stallion stockholders got a very fair deal for their stock they owned in the company. However, the purchase was not without its problems. An issue arose when it was disclosed that somehow a member of Pedro’s management team mentioned the deal to a person he sat next to on a flight from LA to Seattle. That person called five of his relatives and several friends. They quickly bought shares of Italian Stallion and purchased the stock before the acquisition became public. These actions are called _________.

moral impropriety

insider trading

acquisition stalking

pro-current procurement



7 The most basic question in an ethics-based management system is asking the question:

Is it legal?

Who will know?

Is it balanced?

Has it been done before?


8 American businesses are:

demanding socially responsible behavior from international suppliers, particularly in the areas of environmental standards and human rights issues.

holding international suppliers to different standards than American companies must adhere to in the United States.

not concerned with the ethical or socially responsible behavior of their international suppliers.

demanding that international suppliers adhere to higher, more costly standards than their American counterparts.


9 Proponents of corporate social responsibility strongly believe in benevolence; however, they still want their businesses to be profitable. In the long run, they believe ______________.

benevolence can lead to a vote of no confidence by company stakeholders

CSR can lead to even more profits

firms should take added caution not to support government programs that protect the environment

the fastest way to demoralize your stakeholders is to spend too much money supporting social issues, such as having employees assist in community efforts


10 Jake served on a committee of employees who were charged with selecting three co-workers to honor at the holiday banquet. One employee whose name was at the top of everybody’s list was instrumental in helping another employee who failed to wear his protective headgear to avoid suffering a serious head injury. Although this was a noble act, Jake knew that the hero was frequently negligent about wearing his own headgear. Jake knew that several other employees followed strict company policy every day and always wore their headgear; yet, they were not being acknowledged for their compliance. According to Norman Vincent Peale, which of the following questions should Jake refer to as he proceeds to make an ethical decision?

Does the action I am about to take follow universal business practices?

Is the action I am proposing to take something the boss would like to promote among workers?

How does the action I am proposing to take make me feel about myself?

How can my decision help elevate my own status within the firm?


11 Which of these actions is least likely to restore the trust of the American public in the free-market system?

Passing stricter accounting and financial reporting laws.

Punishing those who have broken the law.

Define the concept of ethics more narrowly, and make the definition closer to the definition of legality.

Passing new laws making business, religious and government leaders more accountable for their actions.



12 Progressive companies today use __________ to communicate their CSR efforts with the public. Toyota, for example, ran a contest where it donated 100 cars to nonprofit organizations, voted on by Facebook™ and Twitter™ participants.

free magazine, newspaper, and TV ads

government-supported direct mail campaigns

employees and internal public relations

social media


13 A legal provision known as the _______________ now provides an award for whistleblowers whose actions result in a legal conviction. The monetary award may total as high as 30% of the amount collected for violations, above the first $1 million.

Sarbanes-Oxley Ruling

Sherman Act

Internal Audit Company Protection Act

Dodd-Frank Wall Street Reform and Consumer Protection Act



14 Encouraged by the new Sarbanes-Oxley law, individuals who report unethical or illegal behavior within an organization are referred to as ____________.

corporate raiders



compliance polic


15 Which of the following is the best reason for a business to be managed ethically?

Business leaders don’t want to get caught behaving unethically.

An ethically managed business helps to reduce employee turnover.

If the company is engaged in a lawsuit, the ethics code can be used as a legal defense.

So that government regulators will not be able to complain about the ethical behavior of the company.


16 According to the text, ethical behavior begins with:

top corporate leaders.

government regulations and laws.

religious and community leaders.




17 Besides environmental groups, unions, and investors, a relatively new type of watchdog organization that reports on corporate social responsibility efforts is _____________.

internal search and occupy organizations

corporate raider divisions

socially conscious research organizations

secondary market companies


18 When it comes to ethical behavior:

many Americans decide what’s ethical based upon the situation in which they find themselves.

most Americans give a considerable amount of time to helping their communities.

employees rarely violate safety standards or “goof off” at work.

most Americans have an absolute sense of what is moral.


19 Which of the following is not a part of an integrity-based ethics code?

Stresses shared accountability

Emphasizes strong penalties for wrong-doers

Supports ethically sound behavior

Defines an organization’s guiding principles


20 Which of the following is not included as one of the questions we must ask when faced with an ethical dilemma?

Is it legal?

Is it balanced?

How will it make me feel about myself?

Is it acceptable if everyone else is doing it?



21 U.S. companies that operate abroad, particularly those who contract with foreign companies, are now ________ human rights and environmental standards followed by U.S. law.

free from the concern of

asking suppliers to lower their standards to be in compliance with

requiring suppliers to be evaluated monthly concerning

separating themselves from suppliers who violate


22 The last recession changed the way many companies offer support to people and communities in need. Many companies ______________.

increased their financial donations because they understood how badly society needed a helping hand

increased financial donations to local areas but pulled away from national and global contributions

decreased financial donations and eliminated support in almost every way

decreased financial donations but encouraged their employees to volunteer their time to corporate social initiatives and projects


23 Organizational ethics begins:

at the top levels of management.

only with full-time employees.

with the labor unions and employee groups.

with mid-level and supervisory managers.


24 The Pak-It-Your-Way Company makes custom packaging of all kinds. The firm has evolved into a big business due to quality and innovative work. Recently, top management asked company departments to list and evaluate the kinds of socially responsible efforts conducted internally and externally in the business and also to list negative occurrences that supervisors observed. Top management is essentially conducting a(n)_____________.

internal investigation

social audit

aggregate independent appraisal




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