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Chapter 1-3 Business

True or False: Things that are required in order to live are known as wants.
True or False: Goods and services are purchased by businesses as well as by individuals
True or False: Buildings, equipment, and supplies are examples of natural resources.
True or False: All economic resources have a limited supply
True or False: The basic economic problem results from not having enough resources to satisfy every need
True or False: The final step in the decision-making process is to select the best choice from among the alternatives.
True or False: Although all nations differ in the type and amount of economic resources they have, they all have the same economic needs
True or False: Communism refers to the private ownership of resources by individuals, rather than by the government
True or False: A person who buys and uses goods and services is called a consumer
True or False: Generally, a lack of competition will result in lower prices for goods and services
True or False: Economic growth refers to a steady increase in the production of goods and services in an economic system
True or False: One component of gross domestic product is the value of a country’s exports plus the value of the imports into the country
True or False: The more goods and services produced, the healthier an economy is considered to be
True or False: Molly is a 14-year old student. She would not be considered a part of the labor force in the US
True or False: In the US, all people over the age of 21 who do not have a full-time, paying job are considered “unemployed”
True or False: An ability to produce more goods and services makes it possible to reduce the number of hours in a workweek
True or False: Stan receives a monthly social security check from the US government. This would not be counted when measuring Stan’s personal income.
True or False: Business cycles are the recurring ups and does of gross national product
True or False: During periods of deflation, prices drop so demand increases greatly
True or False: The money for capital projects comes from two main sources: stock investments and bonds
True or False: Most business activities occur within a country’s own borders
True or False: A country can have an absolute advantage in only one area
True or False: Without foreign trade, all of the items you buy would cost less, because they would not need to be shipped here from other lands
True or False: A nation with a trade surplus is said to have a favorable trade position
True or False: It is possible for the US to have a trade surplus with one country and a trade deficit with another
True or False: Some countries limit the amount of money their citizens can take out of the country when they travel
True or False: Because of international trade, all nations of the world use the same banking system
True or False: When a country has a favorable balance of payments, the value of its currency is usually constantly rising
True or False: Countries that devote most of their economies to agriculture usually provide more and better goods and services for their citizens
True or False: A joint venture is an agreement between two or more countries to remove duties and trade barriers on products traded among them
What is an example of an economic need?
What are things you can see and touch?
What country is the largest producer of goods and services in the world?
People producing goods and services are called _________
Human resources
If everybody had an unlimited supply of economic resources, what would not exist?
Jonah had $25 to spend. He decided to buy a new shirt instead of going to the park with his friends. Jonah has
made an economic trade-off
What is the first step in the decision making process?
Define the problem
What is the final step of the decision making process?
Review your decision
In every nation on Earth,
people must deal with the problem of scarcity
All nations must decide
all of the above
The government of Erewhon owns and controls all economic resources. This is a type of _______________.
Command economy
Who owns the economic resources in a market economy?
the people of the country
Which type of economy is usually centered mainly on meeting people’s basic needs?
traditional economy
Another name for the economic system in the US is
all of the above
Which of the following is NOT an especially important principle of the US economic system?
In the US, 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
the right of private property
The rivalry among businesses to sell their goods and services is known
Generally, as the price of a product increases
businesses will be willing to supply larger quantities of the product
Which of the following scenarios will probably cause prices to drop?
Many companies begin producing a product in relatively high demand
Which of the following is probably a competitor to Mary’s CD Shop?
B Flat Records and Tapes
GDP measures a country’s economic output during
one year
GDP does not include
the value of the work you do for yourself
Which of these items would be counted when measuring GDP
a fully assembled washing machine
Dividing GDP by the total population of a country results in that country’s
GDP per capita
All of the following people are part of the labor force EXCEPT
Lindsay, a stay at home mom with two children
If wages increase faster than gains in productivity, prices will rise. Why?
Because the cost of producing goods increases
In the early 1890s, the average employee in the US worked about how many hours per week
Which of the following probably would result in a DECREASE in worker productivity?
A company pays for raises for top management by laying off 60 percent of its employees
Retail sales
indicate general consumer spending patterns in the economy
At the peak of the business cycles is
Which of the following is NOT a characteristic of a depression?
a high demand for goods and services
If GDP growth slows for at least _____ quarters in a calendar year, the economy is probably in a recession
A recession often affects some groups of workers in related businesses. The drop in related businesses is called
the ripple effect
is most harmful to people living on fixed incomes
Suppose wages are going up faster than prices. What is the most likely effect?
Unemployment will worsen because businesses will tend to hire fewer workers.
The interest rate banks charge their best businesses customers is the
prime rate
The major influence on the level of interest rates is
the supply and demand for money
Which of the following is an example of a capital project?
A small business purchases two new pickup trucks
If you purchase a corporate or government bond, you are a
The money people deposit in banks and other financial institutions
is lent to businesses to fund capital projects
The making, buying, and selling of goods and services within a country is called
domestic business
The US conducts trade with over ___ countries
Which of the following countries has an absolute advantage in coffee production?
Goods and services sold to other countries are called
About how many US jobs depend on international business
1 out of 6
The difference between a country’s total exports and total imports is called the
balance of trade
The difference between the amount of money that comes into a country and the amount that goes out of it is called the
balance of payments
Which of the following scenarios is likely to cause the value of a country’s currency to rise
increased demand for the nation’s products and currency
Which of the following is NOT a cultural/social factor that affects international business?
The key effects on a country’s level of economic development are
literacy level, technology, and agricultural dependency
A tax that a government places on certain imported products is called a
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
What is a free-trade zone?
A selected area which products can be imported duty-free and then stored, assembled, or used in manufacturing
Common market members
have a common external duty on products being imported from nonmember countries
A country in which an MNC places business activities is called
host economy
Selling the right to use some intangible property for a free or royalty is called
Which of the following is NOT a goal of the World Trade Organization
strengthening import quotas
has a low financial investment, so the potential financial return is often low
This international trade organization was created in 1944 to provide loans for rebuilding after WWII
World Bank

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