C201 Business Acumen Exam Questions with
correct answers
Why would management insert control mechanisms into its organizational structure? - ✅✅To assess
the success of the planning function
What are two powers of the U.S. Securities and Exchange Commission (SEC) that impact the conduct of a
firm's U.S. business operations? - ✅✅Protecting investors in public securities transactions and
Pursuing civil actions against businesses for securities law violations
An investor is concerned that the U.S. government may apply increased regulatory action on banks; in
particular, that the reserve rate for bank deposits may rise and that this rise will hurt bank profitability.
Which federal agency implements this regulation? - ✅✅Federal Reserve System (Fed)
Which funding option would a business seek in order to cover one month's operations costs? -
✅✅Opening a line of credit from the bank
Why should a multinational business use International Financial Reporting Standards (IFRS)? - ✅✅To
provide a more accurate picture of the real value of the fixed assets
How should a business protect the privacy and confidentiality of customer data? - ✅✅Enact data
system security standards
How did the Dodd-Frank Wall Street Reform and Consumer Protection Act impact retailers?
A. It capped the liability of consumers for credit card fraud at $100.
B. It enabled retailers to seek reimbursement for fraudulent credit card charges.
C. It capped the debit card swipe fee at 21 cents.
D. It allowed banks to levy the debit card swipe fee on cardholders. - ✅✅C. It capped the debit card
swipe fee at 21 cents.
Which two activities are prohibited by insider trading laws and should be avoided by a firm's
employees? Choose 2 answers.
,A. Unloading company stock because the employee has observed the company's lax quality control
process
B. Buying stock in the public company for which the employee works based on a conversation the
employee overheard at a cocktail party between two of the company's executives
C. Selling company stock because a co-worker told the employee the company's new drug is failing in a
clinical trial
D. Buying stock in a public company based on a Fortune article mentioning a possible hostile takeover
bid by its largest competitor - ✅✅B. Buying stock in the public company for which the employee
works based on a conversation the employee overheard at a cocktail party between two of the
company's executives
C. Selling company stock because a co-worker told the employee the company's new drug is failing in
clinical trial
In general, as price of a good or service increases, the quantity demanded:
A. first increases and then decreases irrespective of the product type.
B. declines.
C. increases.
D. remains the same irrespective of the product type - ✅✅B. declines.
A graph showing the amount of a product that buyers will purchase at different prices is the _____
curve.
A. utility
B. production possibility
C. supply
D. demand - ✅✅D. demand
Incentives to motivate employees to perform at their highest level are strongest in _____ systems.
A. capitalist
B. communist
C. socialist
D. collectivist - ✅✅A. capitalist
,Flora Cult Inc., an exporter of flowers across the globe, operates in an industry where there are many
sellers and buyers. This makes it difficult for any one single seller or buyer to infuence the market price
of the fowers. Also, it is difcult for sellers or exporters to differentiate their products from each other.
What type of market structure does this illustrate?
A. Oligopoly
B. Monopoly
C. Monopolistic competition
D. Pure competition - ✅✅D. Pure competition
Consumers can choose from hundreds of different kinds and producers of cheese, each with a slightly
different favor and texture. This type of market structure is known as _____.
A. pure competition
B. a monopoly
C. monopolistic competition
D. an oligopoly - ✅✅C. monopolistic competition
Before the patent on its allergy medicine expired, Renova Pharma Inc. was able to set its own market
price for the drug. From which type of market structure did the company benefit?
A. Monopolistic competition
B. Monopoly
C. Oligopoly
D. Pure competition - ✅✅B. Monopoly
United Narva is a nation in which industries like steel, communications, electricity, railways, education,
and health care are owned by the government. The leaders of the nation believe that it is detrimental to
the public's interest to allow such core industries to be owned by private frms. However, private
ownership is encouraged in industries like restaurants, entertainment, and retail shops, which have a
lower impact on social welfare. Which of the following economic systems has United Narva adopted?
A. Communism
B. Capitalism
C. Socialism
, D. Individualism - ✅✅C. Socialism
A country has a strong private sector, along with publicly-owned enterprises. Entrepreneurs and private-
sector investors are entitled to profts after paying taxes, and even state-owned enterprises are expected
to generate returns. What type of economic system does this country have?
A. Socialism
B. Mixed economy
C. Self-managed economy
D. Communism - ✅✅B. Mixed economy
Assume that the number of people wanting to buy houses in your locality increases sharply. This will
cause the price of houses to increase, which is an example of _____.
A. demand-pull inflation
B. credit deflation
C. cost-push inflation
D. supply-side deflation - ✅✅A. demand-pull inflation
Farm laborers are out of work for some months after they have harvested and sold their produce. This is
an example of _____.
A. seasonal unemployment
B. cyclical unemployment
C. structural unemployment
D. frictional unemployment - ✅✅A. seasonal unemployment
Tom has been unemployed for a long time because he has not been able to find a job in which he can
apply his specialized knowledge about the Robostic Data System (RDS), a computer system that is now
obsolete. What type of unemployment is Tom facing?
A. Seasonal unemployment
B. Structural unemployment
C. Frictional unemployment
D. Cyclical unemployment - ✅✅B. Structural unemployment
correct answers
Why would management insert control mechanisms into its organizational structure? - ✅✅To assess
the success of the planning function
What are two powers of the U.S. Securities and Exchange Commission (SEC) that impact the conduct of a
firm's U.S. business operations? - ✅✅Protecting investors in public securities transactions and
Pursuing civil actions against businesses for securities law violations
An investor is concerned that the U.S. government may apply increased regulatory action on banks; in
particular, that the reserve rate for bank deposits may rise and that this rise will hurt bank profitability.
Which federal agency implements this regulation? - ✅✅Federal Reserve System (Fed)
Which funding option would a business seek in order to cover one month's operations costs? -
✅✅Opening a line of credit from the bank
Why should a multinational business use International Financial Reporting Standards (IFRS)? - ✅✅To
provide a more accurate picture of the real value of the fixed assets
How should a business protect the privacy and confidentiality of customer data? - ✅✅Enact data
system security standards
How did the Dodd-Frank Wall Street Reform and Consumer Protection Act impact retailers?
A. It capped the liability of consumers for credit card fraud at $100.
B. It enabled retailers to seek reimbursement for fraudulent credit card charges.
C. It capped the debit card swipe fee at 21 cents.
D. It allowed banks to levy the debit card swipe fee on cardholders. - ✅✅C. It capped the debit card
swipe fee at 21 cents.
Which two activities are prohibited by insider trading laws and should be avoided by a firm's
employees? Choose 2 answers.
,A. Unloading company stock because the employee has observed the company's lax quality control
process
B. Buying stock in the public company for which the employee works based on a conversation the
employee overheard at a cocktail party between two of the company's executives
C. Selling company stock because a co-worker told the employee the company's new drug is failing in a
clinical trial
D. Buying stock in a public company based on a Fortune article mentioning a possible hostile takeover
bid by its largest competitor - ✅✅B. Buying stock in the public company for which the employee
works based on a conversation the employee overheard at a cocktail party between two of the
company's executives
C. Selling company stock because a co-worker told the employee the company's new drug is failing in
clinical trial
In general, as price of a good or service increases, the quantity demanded:
A. first increases and then decreases irrespective of the product type.
B. declines.
C. increases.
D. remains the same irrespective of the product type - ✅✅B. declines.
A graph showing the amount of a product that buyers will purchase at different prices is the _____
curve.
A. utility
B. production possibility
C. supply
D. demand - ✅✅D. demand
Incentives to motivate employees to perform at their highest level are strongest in _____ systems.
A. capitalist
B. communist
C. socialist
D. collectivist - ✅✅A. capitalist
,Flora Cult Inc., an exporter of flowers across the globe, operates in an industry where there are many
sellers and buyers. This makes it difficult for any one single seller or buyer to infuence the market price
of the fowers. Also, it is difcult for sellers or exporters to differentiate their products from each other.
What type of market structure does this illustrate?
A. Oligopoly
B. Monopoly
C. Monopolistic competition
D. Pure competition - ✅✅D. Pure competition
Consumers can choose from hundreds of different kinds and producers of cheese, each with a slightly
different favor and texture. This type of market structure is known as _____.
A. pure competition
B. a monopoly
C. monopolistic competition
D. an oligopoly - ✅✅C. monopolistic competition
Before the patent on its allergy medicine expired, Renova Pharma Inc. was able to set its own market
price for the drug. From which type of market structure did the company benefit?
A. Monopolistic competition
B. Monopoly
C. Oligopoly
D. Pure competition - ✅✅B. Monopoly
United Narva is a nation in which industries like steel, communications, electricity, railways, education,
and health care are owned by the government. The leaders of the nation believe that it is detrimental to
the public's interest to allow such core industries to be owned by private frms. However, private
ownership is encouraged in industries like restaurants, entertainment, and retail shops, which have a
lower impact on social welfare. Which of the following economic systems has United Narva adopted?
A. Communism
B. Capitalism
C. Socialism
, D. Individualism - ✅✅C. Socialism
A country has a strong private sector, along with publicly-owned enterprises. Entrepreneurs and private-
sector investors are entitled to profts after paying taxes, and even state-owned enterprises are expected
to generate returns. What type of economic system does this country have?
A. Socialism
B. Mixed economy
C. Self-managed economy
D. Communism - ✅✅B. Mixed economy
Assume that the number of people wanting to buy houses in your locality increases sharply. This will
cause the price of houses to increase, which is an example of _____.
A. demand-pull inflation
B. credit deflation
C. cost-push inflation
D. supply-side deflation - ✅✅A. demand-pull inflation
Farm laborers are out of work for some months after they have harvested and sold their produce. This is
an example of _____.
A. seasonal unemployment
B. cyclical unemployment
C. structural unemployment
D. frictional unemployment - ✅✅A. seasonal unemployment
Tom has been unemployed for a long time because he has not been able to find a job in which he can
apply his specialized knowledge about the Robostic Data System (RDS), a computer system that is now
obsolete. What type of unemployment is Tom facing?
A. Seasonal unemployment
B. Structural unemployment
C. Frictional unemployment
D. Cyclical unemployment - ✅✅B. Structural unemployment
