1
, Test Bank
Introduction to Business published by OpenStax
Each component of the comprehensive supplements package has been carefully crafted by
outstanding teachers, with guidance from the textbook authors, to ensure this course is a
rewarding experience for instructors and students. The supplements package includes excellent
time-tested teaching tools as well as new supplements designed for the electronic classroom.
Instructor’s Resources
Comprehensive Instructor’s Manual. At the core of the integrated learning system for
Introduction to Business is this instructor’s manual. Developed in response to numerous
suggestions from instructors teaching this course, each chapter is designed to provide maximum
guidance for delivering the content in an interesting and dynamic manner.
Each chapter of the Instructor’s Manual includes the following:
1. Annotated learning outcomes.
2. Lecture outline interspersed with lecture tidbits and class discussion questions.
3. Suggested solutions to the ethics activities
4. Suggested solutions to the creative thinking cases
5. Suggested solutions and teaching guide for selected online video
Test Bank. To ensure your total confidence in the accuracy of the test bank, it has been
reviewed for accuracy. The comprehensive test bank is organized by learning outcome to
support the integrated learning system. With true/false, multiple-choice, fill-in-the-blank, and
short answer questions, tests can be customized to support a variety of course objectives. The
test bank is available in Word format.
PowerPoint Slides Lecture. The PowerPoint Lecture System includes hundreds of slides that
illustrate key chapter concepts and explain business vocabulary. As part of the integrated
2
,learning system, each slide is identified by the appropriate learning goal. These professionally
designed slides help improve lecture organization and reduce classroom preparation time.
SAMPLE SYLLABI
Course Title – Course Number
I. Course Information
A. Instructor’s Name
B. Office Location
C. E-Mail Address
D. Telephone Number
E. Office Hours
II. Textbook and Course Materials
Introduction to Business, by OpenStax.
III. Course Description
This business course provides an introduction to the basic functions of business. It includes a
discussion of the business environment, forms of business ownership, business ethics,
management, human resources and labor-management issues, cultural diversity, marketing,
technology, and finance.
IV. Course Objectives
Upon successful completion of this course, you will:
1. Describe the dynamic business environment in which we live and work
2. Explain economic concepts of supply and demand
3. Identify ethical and socially responsible behavior in the business world
4. Discuss the importance of global trade
5. Evaluate different forms of business ownership
6. Assess the contributions of small business to our economy
7. Identify management skills necessary for success
8. Explain the impact of organizational structure on achieving organizational goals
9. Display an appreciation for cultural diversity
10. Analyze theories of motivation
11. Discuss the role of labor unions in business
12. Provide examples of technology in operations management
13. Develop a marketing strategy for a new product or service
14. Apply principles of sound financial management
15. Develop a personal investment plan
16. Demonstrate proficiency with business vocabulary
17. Develop a career plan for your career in business
V. Course Outline
10-Week Term:
Week 1 Chapter 1
Week 2 Chapters 2 and 3
Week 3 Chapters 4 and 5
3
, Week 4 Test #1, Chapters 6 and 7
Week 5 Chapters 8 and 9
Week 6 Chapters 10, Test #2, Chapter 11
Week 7 Chapters 12, Chapter 13
Week 8 Chapters 14, Test #3
Week 9 Chapters 15-16
Week 10 Review; Test #4
15-Week Term:
Week 1 Chapters 1 and 2
Week 2 Chapters 3
Week 3 Chapter 4
Week 4 Chapter 5, Test #1,
Week 5 Chapters 6
Week 6 Chapters 7
Week 7 Chapter 8
Week 8 Chapter 9
Week 9 Chapter 10; Test #2
Week 10 Chapter 11
Week 11 Chapter 12;
Week 12 Chapter 13 and 14
Week 13 Test #3; Chapter 15
Week 14 Chapter 16
Week 15 Review; Test #4
4
,This OpenStax ancillary resource is © Rice University under a CC BY 4.0 International license; it may be reproduced or modified but must be
attributed to OpenStax, Rice University and any changes must be noted.
Chapter 1 UNDERSTANDING ECONOMIC SYSTEMS AND BUSINESS
TRUE-FALSE QUESTIONS
Title: ANSWER: T REFERENCE: The Nature of Business LEARNING OUTCOME: 1
1. A business is an organization that strives for a profit by providing goods and services desired by its
customers.
a. True
b. False
Title: ANSWER: F REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: The major
difference is tangibility
2. The major difference between a good and a service is how the producer uses the factors of production
to create each.
a. True
b. False
Title: ANSWER: F REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Not-for-profit
organizations exist to achieve some goal other than profit.
3. Not-for-profit organizations have the same goals as for-profit organizations.
a. True
b. False
Title: ANSWER: T REFERENCE: The Nature of Business LEARNING OUTCOME: 1
4. Factors of production are common to all productive activities, regardless of the economic system.
a. True
b. False
Title: ANSWER: F REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Labor is the
economic contribution of the people.
5. Labor, as a factor of production, relates only to the production of manufactured goods; services are not
included.
a. True
b. False
Title: ANSWER: F REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Capital is all the
inputs used to produce goods and services and get them to the customer.
6. As a factor of production, capital includes money.
a. True
b. False
Title: ANSWER: T REFERENCE: The Nature of Business LEARNING OUTCOME: 1
7. People who combine natural resources, labor, and capital in a profitable venture are called
entrepreneurs.
a. True
b. False
Title: ANSWER: T REFERENCE: The Nature of Business LEARNING OUTCOME: 1
8. Many people consider knowledge to be a fifth factor of production.
,a. True
b. False
Title: ANSWER: T REFERENCE: Understanding the Business Environment LEARNING OUTCOME: 2
9. Business owners and managers have a great deal of control over the internal environment of business,
which covers the day-to-day business decisions.
a. True
b. False
Title: ANSWER: F REFERENCE: Understanding the Business Environment LEARNING OUTCOME: 2
RATIONALE: No one business is large enough or powerful enough to create major changes in the external
environment.
10. Some global corporations are large enough to create major changes in the external environment.
a. True
b. False
Title: ANSWER: F REFERENCE: Demographic Factors LEARNING OUTCOME: 2 RATIONALE: Demography is
the study of people's vital statistics.
11. Demography is the study of how people use their free time, how people integrate their hobbies and
their vocations, and how people make their purchase decisions.
a. True
b. False
Title: ANSWER: T REFERENCE: Demographic Factors LEARNING OUTCOME: 2
12. The term Generation X refers to people born between 1965 and 1980.
a. True
b. False
Title: ANSWER: T REFERENCE: Demographic Factors LEARNING OUTCOME: 2 RATIONALE: Baby boomers
are Americans that are retiring or near-retirement age. Most are vital contributors to the U.S.'s economy.
13. Baby boomers are Americans that are retiring or near-retirement age.
a. True
b. False
Title: ANSWER: T REFERENCE: Social Factors LEARNING OUTCOME: 2
14. Social factors influence what, how, where, and when to purchase products or services.
a. True
b. False
Title: ANSWER: F REFERENCE: How Business and Economies Work LEARNING OUTCOME: 3 RATIONALE:
Economics is the study of how a society uses scarce resources to produce and distribute goods and
services.
15. Economics is the study of a society’s financial institutions.
a. True
b. False
Title: ANSWER: F REFERENCE: Microeconomics and Macroeconomics LEARNING OUTCOME: 3
RATIONALE: Microeconomics focuses on individual parts of the economy.
October 22, 2018 2
,16. When Raoul Welsh is evaluating the construction industry in terms of interest rates, employment
cycles, and the rate of new home building nationwide, he is looking at microeconomics.
a. True
b. False
Title: ANSWER: F REFERENCE: Striving for Economic Growth LEARNING OUTCOME: 4 RATIONALE: A decline
in GDP that lasts for at least two consecutive quarters is a recession.
17. It takes four consecutive quarters of decline in the GDP for economists to consider the economy to be
in a recession.
a. True
b. False
Title: ANSWER: T REFERENCE: Keeping People on the Job LEARNING OUTCOME: 4
18. Full employment means 94-96 percent of the working force is employed.
a. True
b. False
Title: ANSWER: F REFERENCE: Types of Unemployment LEARNING OUTCOME: 4 RATIONALE: Lewis is
frictionally unemployed.
19. Tyron Lewis has recently quit his job in the administrative offices at the nearby hospital and is currently
seeking a retail management position. He would be described as structurally unemployed.
a. True
b. False
Title: ANSWER: T REFERENCE: Types of Unemployment LEARNING OUTCOME: 4
20. Freida Bida lost her job as a result of a recession and would be described as experiencing cyclical
unemployment.
a. True
b. False
Title: ANSWER: T REFERENCE: Types of Unemployment LEARNING OUTCOME: 4
21. Belinda Asher works in a vegetable processing plant and is out of work about six months a year due to
the periodic harvest times. She can be described as seasonally unemployed.
a. True
b. False
Title: ANSWER: T REFERENCE: Keeping Prices Steady LEARNING OUTCOME: 4
22. The situation in which the average of all prices of products is rising is called inflation.
a. True
b. False
Title: ANSWER: T REFERENCE: Types of Inflation LEARNING OUTCOME: 4
23. An increase in the price of crude oil could trigger cost-push inflation.
a. True
b. False
Title: ANSWER: F REFERENCE: Monetary Policy LEARNING OUTCOME: 5 RATIONALE: Monetary policy
controls the amount of money in circulation.
October 22, 2018 3
,24. Monetary policy deals with tax revenues and expenditures at the national level.
a. True
b. False
Title: ANSWER: F REFERENCE: Monetary Policy LEARNING OUTCOME: 5 RATIONALE: The Federal Reserve is
the central banking unit of the U.S.
25. The Federal Reserve System can print money and raise taxes.
a. True
b. False
Title: ANSWER: T REFERENCE: Fiscal Policy LEARNING OUTCOME: 5
26. When Congress passes a law to raise individual tax rates, it is creating fiscal policy.
a. True
b. False
Title: ANSWER: T REFERENCE: Fiscal Policy LEARNING OUTCOME: 5
27. The national debt is the accumulation of deficits that have occurred in the past as a result of
expenditures exceeding tax revenues.
a. True
b. False
Title: ANSWER: F REFERENCE: Microeconomics: Zeroing on Business and Consumers LEARNING OUTCOME:
6 RATIONALE: Typically, the higher the price, the lower demand is.
28. The higher the price of a good or service, the greater the quantity demanded.
a. True
b. False
Title: ANSWER: T REFERENCE: Microeconomics: Zeroing on Business and Consumers LEARNING OUTCOME:
6
29. The higher the price of a good or service, the greater the amount a producer is willing to supply.
a. True
b. False
Title: ANSWER: T REFERENCE: Microeconomics: Zeroing on Business and Consumers LEARNING OUTCOME:
6
30. At the equilibrium point, quantity demanded equals quantity supplied.
a. True
b. False
Title: ANSWER: F REFERENCE: Competing in a Free Market LEARNING OUTCOME: 7 RATIONALE: This would
be an example of pure competition.
31. A farmer’s market where sixty farmers come weekly to sell the produce they grow in their gardens is an
example of monopolistic competition.
a. True
b. False
Title: ANSWER: F REFERENCE: Competing in a Free Market LEARNING OUTCOME: 7 RATIONALE: Public
utilities are examples of pure monopolies.
October 22, 2018 4
,32. No true examples of a pure monopoly exist today.
a. True
b. False
Title: ANSWER: T REFERENCE: Competing in a Free Market LEARNING OUTCOME: 7
33. Monopolistic competition is a market structure in which entry is easy.
a. True
b. False
Title: ANSWER: F REFERENCE: Competing in a Free Market LEARNING OUTCOME: 7 RATIONALE: These
challenges arise in oligopolies.
34. Legal challenges arising from laws designed to control anticompetitive behavior occur in monopolistic
competition.
a. True
b. False
Title: ANSWER: T REFERENCE: Trends in Economics and Competition LEARNING OUTCOME: 8
35. A strategic alliance is a cooperative agreement between business firms.
a. True
b. False
MULTIPLE-CHOICE QUESTIONS
Title: ANSWER: E REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: A business is an
organization that strives for a profit by providing goods and services desired by customers.
1. Which of the following is an example of a business?
A. Jack & Jill, a specialty clothing store for young children
B. Wal-Mart
C. Ford Motor Company
D. Lawson & Tyler law offices
E. all of the above
Title: ANSWER: A REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: A service is an
intangible offering of a business.
2. Which of the following is the best example of a service?
A. the pleasure you derive from seeing a good play
B. the license tags you purchased for your car
C. the hamburger you bought for lunch
D. the gallon of milk you purchased at the convenience store
E. the grill on which you cook steak
Title: ANSWER: B REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Goods are
tangible items manufactured by businesses.
3. Which of the following is the best example of a good?
A. the physical examination you received from your doctor
B. the birthday candles you purchased to go on your sister's birthday cake
C. the airplane flight you took to attend a funeral
D. the driving lessons you took
October 22, 2018 5
, E. the life guarding class you took last summer
Title: ANSWER: E REFERENCE: The Nature of Business and Global Economic System LEARNING OUTCOME: 1
RATIONALE: A service is an intangible offering of a business.
4. Which of the following businesses provides its customers with a service?
A. a pecan grower
B. a wheat farmer
C. a mattress manufacturer
D. a used book store
E. a law office
Title: ANSWER: E REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Goods are
tangible items manufactured by businesses.
5. Which of the following businesses provides its customers with a good?
A. hotel
B. hair salon
C. accounting firm
D. movie theater
E. bicycle manufacturer
Title: ANSWER: C REFERENCE: The Nature of Business LEARNING OUTCOME: 1
6. Which of the following is NOT an example of a good that would be sold in a department store?
A. wedding dress
B. white linen table clothes
C. the advice of a wedding planner
D. silk flower bouquets
E. book on wedding etiquette
Title: ANSWER: C REFERENCE: The Nature of Business LEARNING OUTCOME: 1
7. What is the primary difference between a good and a service?
A. A good costs more to produce than a service.
B. A service is tangible, and a good is intangible.
C. A good is tangible, and a service is intangible.
D. A good costs more to market than a service
E. The development costs for a service is higher than for a product.
Title: ANSWER: A REFERENCE: The Nature of Business LEARNING OUTCOME: 1
8. The _____ of any country is measured by the output of goods and services people can buy with the
money they have.
A. standard of living
B. consumer productivity
C. input per person
D. quality of life
E. total consumption rate
Title: ANSWER: B REFERENCE: The Nature of Business LEARNING OUTCOME: 1
9. Which of the following countries has a high standard of living?
A. Malaysia
October 22, 2018 6
, Test Bank
Introduction to Business published by OpenStax
Each component of the comprehensive supplements package has been carefully crafted by
outstanding teachers, with guidance from the textbook authors, to ensure this course is a
rewarding experience for instructors and students. The supplements package includes excellent
time-tested teaching tools as well as new supplements designed for the electronic classroom.
Instructor’s Resources
Comprehensive Instructor’s Manual. At the core of the integrated learning system for
Introduction to Business is this instructor’s manual. Developed in response to numerous
suggestions from instructors teaching this course, each chapter is designed to provide maximum
guidance for delivering the content in an interesting and dynamic manner.
Each chapter of the Instructor’s Manual includes the following:
1. Annotated learning outcomes.
2. Lecture outline interspersed with lecture tidbits and class discussion questions.
3. Suggested solutions to the ethics activities
4. Suggested solutions to the creative thinking cases
5. Suggested solutions and teaching guide for selected online video
Test Bank. To ensure your total confidence in the accuracy of the test bank, it has been
reviewed for accuracy. The comprehensive test bank is organized by learning outcome to
support the integrated learning system. With true/false, multiple-choice, fill-in-the-blank, and
short answer questions, tests can be customized to support a variety of course objectives. The
test bank is available in Word format.
PowerPoint Slides Lecture. The PowerPoint Lecture System includes hundreds of slides that
illustrate key chapter concepts and explain business vocabulary. As part of the integrated
2
,learning system, each slide is identified by the appropriate learning goal. These professionally
designed slides help improve lecture organization and reduce classroom preparation time.
SAMPLE SYLLABI
Course Title – Course Number
I. Course Information
A. Instructor’s Name
B. Office Location
C. E-Mail Address
D. Telephone Number
E. Office Hours
II. Textbook and Course Materials
Introduction to Business, by OpenStax.
III. Course Description
This business course provides an introduction to the basic functions of business. It includes a
discussion of the business environment, forms of business ownership, business ethics,
management, human resources and labor-management issues, cultural diversity, marketing,
technology, and finance.
IV. Course Objectives
Upon successful completion of this course, you will:
1. Describe the dynamic business environment in which we live and work
2. Explain economic concepts of supply and demand
3. Identify ethical and socially responsible behavior in the business world
4. Discuss the importance of global trade
5. Evaluate different forms of business ownership
6. Assess the contributions of small business to our economy
7. Identify management skills necessary for success
8. Explain the impact of organizational structure on achieving organizational goals
9. Display an appreciation for cultural diversity
10. Analyze theories of motivation
11. Discuss the role of labor unions in business
12. Provide examples of technology in operations management
13. Develop a marketing strategy for a new product or service
14. Apply principles of sound financial management
15. Develop a personal investment plan
16. Demonstrate proficiency with business vocabulary
17. Develop a career plan for your career in business
V. Course Outline
10-Week Term:
Week 1 Chapter 1
Week 2 Chapters 2 and 3
Week 3 Chapters 4 and 5
3
, Week 4 Test #1, Chapters 6 and 7
Week 5 Chapters 8 and 9
Week 6 Chapters 10, Test #2, Chapter 11
Week 7 Chapters 12, Chapter 13
Week 8 Chapters 14, Test #3
Week 9 Chapters 15-16
Week 10 Review; Test #4
15-Week Term:
Week 1 Chapters 1 and 2
Week 2 Chapters 3
Week 3 Chapter 4
Week 4 Chapter 5, Test #1,
Week 5 Chapters 6
Week 6 Chapters 7
Week 7 Chapter 8
Week 8 Chapter 9
Week 9 Chapter 10; Test #2
Week 10 Chapter 11
Week 11 Chapter 12;
Week 12 Chapter 13 and 14
Week 13 Test #3; Chapter 15
Week 14 Chapter 16
Week 15 Review; Test #4
4
,This OpenStax ancillary resource is © Rice University under a CC BY 4.0 International license; it may be reproduced or modified but must be
attributed to OpenStax, Rice University and any changes must be noted.
Chapter 1 UNDERSTANDING ECONOMIC SYSTEMS AND BUSINESS
TRUE-FALSE QUESTIONS
Title: ANSWER: T REFERENCE: The Nature of Business LEARNING OUTCOME: 1
1. A business is an organization that strives for a profit by providing goods and services desired by its
customers.
a. True
b. False
Title: ANSWER: F REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: The major
difference is tangibility
2. The major difference between a good and a service is how the producer uses the factors of production
to create each.
a. True
b. False
Title: ANSWER: F REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Not-for-profit
organizations exist to achieve some goal other than profit.
3. Not-for-profit organizations have the same goals as for-profit organizations.
a. True
b. False
Title: ANSWER: T REFERENCE: The Nature of Business LEARNING OUTCOME: 1
4. Factors of production are common to all productive activities, regardless of the economic system.
a. True
b. False
Title: ANSWER: F REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Labor is the
economic contribution of the people.
5. Labor, as a factor of production, relates only to the production of manufactured goods; services are not
included.
a. True
b. False
Title: ANSWER: F REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Capital is all the
inputs used to produce goods and services and get them to the customer.
6. As a factor of production, capital includes money.
a. True
b. False
Title: ANSWER: T REFERENCE: The Nature of Business LEARNING OUTCOME: 1
7. People who combine natural resources, labor, and capital in a profitable venture are called
entrepreneurs.
a. True
b. False
Title: ANSWER: T REFERENCE: The Nature of Business LEARNING OUTCOME: 1
8. Many people consider knowledge to be a fifth factor of production.
,a. True
b. False
Title: ANSWER: T REFERENCE: Understanding the Business Environment LEARNING OUTCOME: 2
9. Business owners and managers have a great deal of control over the internal environment of business,
which covers the day-to-day business decisions.
a. True
b. False
Title: ANSWER: F REFERENCE: Understanding the Business Environment LEARNING OUTCOME: 2
RATIONALE: No one business is large enough or powerful enough to create major changes in the external
environment.
10. Some global corporations are large enough to create major changes in the external environment.
a. True
b. False
Title: ANSWER: F REFERENCE: Demographic Factors LEARNING OUTCOME: 2 RATIONALE: Demography is
the study of people's vital statistics.
11. Demography is the study of how people use their free time, how people integrate their hobbies and
their vocations, and how people make their purchase decisions.
a. True
b. False
Title: ANSWER: T REFERENCE: Demographic Factors LEARNING OUTCOME: 2
12. The term Generation X refers to people born between 1965 and 1980.
a. True
b. False
Title: ANSWER: T REFERENCE: Demographic Factors LEARNING OUTCOME: 2 RATIONALE: Baby boomers
are Americans that are retiring or near-retirement age. Most are vital contributors to the U.S.'s economy.
13. Baby boomers are Americans that are retiring or near-retirement age.
a. True
b. False
Title: ANSWER: T REFERENCE: Social Factors LEARNING OUTCOME: 2
14. Social factors influence what, how, where, and when to purchase products or services.
a. True
b. False
Title: ANSWER: F REFERENCE: How Business and Economies Work LEARNING OUTCOME: 3 RATIONALE:
Economics is the study of how a society uses scarce resources to produce and distribute goods and
services.
15. Economics is the study of a society’s financial institutions.
a. True
b. False
Title: ANSWER: F REFERENCE: Microeconomics and Macroeconomics LEARNING OUTCOME: 3
RATIONALE: Microeconomics focuses on individual parts of the economy.
October 22, 2018 2
,16. When Raoul Welsh is evaluating the construction industry in terms of interest rates, employment
cycles, and the rate of new home building nationwide, he is looking at microeconomics.
a. True
b. False
Title: ANSWER: F REFERENCE: Striving for Economic Growth LEARNING OUTCOME: 4 RATIONALE: A decline
in GDP that lasts for at least two consecutive quarters is a recession.
17. It takes four consecutive quarters of decline in the GDP for economists to consider the economy to be
in a recession.
a. True
b. False
Title: ANSWER: T REFERENCE: Keeping People on the Job LEARNING OUTCOME: 4
18. Full employment means 94-96 percent of the working force is employed.
a. True
b. False
Title: ANSWER: F REFERENCE: Types of Unemployment LEARNING OUTCOME: 4 RATIONALE: Lewis is
frictionally unemployed.
19. Tyron Lewis has recently quit his job in the administrative offices at the nearby hospital and is currently
seeking a retail management position. He would be described as structurally unemployed.
a. True
b. False
Title: ANSWER: T REFERENCE: Types of Unemployment LEARNING OUTCOME: 4
20. Freida Bida lost her job as a result of a recession and would be described as experiencing cyclical
unemployment.
a. True
b. False
Title: ANSWER: T REFERENCE: Types of Unemployment LEARNING OUTCOME: 4
21. Belinda Asher works in a vegetable processing plant and is out of work about six months a year due to
the periodic harvest times. She can be described as seasonally unemployed.
a. True
b. False
Title: ANSWER: T REFERENCE: Keeping Prices Steady LEARNING OUTCOME: 4
22. The situation in which the average of all prices of products is rising is called inflation.
a. True
b. False
Title: ANSWER: T REFERENCE: Types of Inflation LEARNING OUTCOME: 4
23. An increase in the price of crude oil could trigger cost-push inflation.
a. True
b. False
Title: ANSWER: F REFERENCE: Monetary Policy LEARNING OUTCOME: 5 RATIONALE: Monetary policy
controls the amount of money in circulation.
October 22, 2018 3
,24. Monetary policy deals with tax revenues and expenditures at the national level.
a. True
b. False
Title: ANSWER: F REFERENCE: Monetary Policy LEARNING OUTCOME: 5 RATIONALE: The Federal Reserve is
the central banking unit of the U.S.
25. The Federal Reserve System can print money and raise taxes.
a. True
b. False
Title: ANSWER: T REFERENCE: Fiscal Policy LEARNING OUTCOME: 5
26. When Congress passes a law to raise individual tax rates, it is creating fiscal policy.
a. True
b. False
Title: ANSWER: T REFERENCE: Fiscal Policy LEARNING OUTCOME: 5
27. The national debt is the accumulation of deficits that have occurred in the past as a result of
expenditures exceeding tax revenues.
a. True
b. False
Title: ANSWER: F REFERENCE: Microeconomics: Zeroing on Business and Consumers LEARNING OUTCOME:
6 RATIONALE: Typically, the higher the price, the lower demand is.
28. The higher the price of a good or service, the greater the quantity demanded.
a. True
b. False
Title: ANSWER: T REFERENCE: Microeconomics: Zeroing on Business and Consumers LEARNING OUTCOME:
6
29. The higher the price of a good or service, the greater the amount a producer is willing to supply.
a. True
b. False
Title: ANSWER: T REFERENCE: Microeconomics: Zeroing on Business and Consumers LEARNING OUTCOME:
6
30. At the equilibrium point, quantity demanded equals quantity supplied.
a. True
b. False
Title: ANSWER: F REFERENCE: Competing in a Free Market LEARNING OUTCOME: 7 RATIONALE: This would
be an example of pure competition.
31. A farmer’s market where sixty farmers come weekly to sell the produce they grow in their gardens is an
example of monopolistic competition.
a. True
b. False
Title: ANSWER: F REFERENCE: Competing in a Free Market LEARNING OUTCOME: 7 RATIONALE: Public
utilities are examples of pure monopolies.
October 22, 2018 4
,32. No true examples of a pure monopoly exist today.
a. True
b. False
Title: ANSWER: T REFERENCE: Competing in a Free Market LEARNING OUTCOME: 7
33. Monopolistic competition is a market structure in which entry is easy.
a. True
b. False
Title: ANSWER: F REFERENCE: Competing in a Free Market LEARNING OUTCOME: 7 RATIONALE: These
challenges arise in oligopolies.
34. Legal challenges arising from laws designed to control anticompetitive behavior occur in monopolistic
competition.
a. True
b. False
Title: ANSWER: T REFERENCE: Trends in Economics and Competition LEARNING OUTCOME: 8
35. A strategic alliance is a cooperative agreement between business firms.
a. True
b. False
MULTIPLE-CHOICE QUESTIONS
Title: ANSWER: E REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: A business is an
organization that strives for a profit by providing goods and services desired by customers.
1. Which of the following is an example of a business?
A. Jack & Jill, a specialty clothing store for young children
B. Wal-Mart
C. Ford Motor Company
D. Lawson & Tyler law offices
E. all of the above
Title: ANSWER: A REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: A service is an
intangible offering of a business.
2. Which of the following is the best example of a service?
A. the pleasure you derive from seeing a good play
B. the license tags you purchased for your car
C. the hamburger you bought for lunch
D. the gallon of milk you purchased at the convenience store
E. the grill on which you cook steak
Title: ANSWER: B REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Goods are
tangible items manufactured by businesses.
3. Which of the following is the best example of a good?
A. the physical examination you received from your doctor
B. the birthday candles you purchased to go on your sister's birthday cake
C. the airplane flight you took to attend a funeral
D. the driving lessons you took
October 22, 2018 5
, E. the life guarding class you took last summer
Title: ANSWER: E REFERENCE: The Nature of Business and Global Economic System LEARNING OUTCOME: 1
RATIONALE: A service is an intangible offering of a business.
4. Which of the following businesses provides its customers with a service?
A. a pecan grower
B. a wheat farmer
C. a mattress manufacturer
D. a used book store
E. a law office
Title: ANSWER: E REFERENCE: The Nature of Business LEARNING OUTCOME: 1 RATIONALE: Goods are
tangible items manufactured by businesses.
5. Which of the following businesses provides its customers with a good?
A. hotel
B. hair salon
C. accounting firm
D. movie theater
E. bicycle manufacturer
Title: ANSWER: C REFERENCE: The Nature of Business LEARNING OUTCOME: 1
6. Which of the following is NOT an example of a good that would be sold in a department store?
A. wedding dress
B. white linen table clothes
C. the advice of a wedding planner
D. silk flower bouquets
E. book on wedding etiquette
Title: ANSWER: C REFERENCE: The Nature of Business LEARNING OUTCOME: 1
7. What is the primary difference between a good and a service?
A. A good costs more to produce than a service.
B. A service is tangible, and a good is intangible.
C. A good is tangible, and a service is intangible.
D. A good costs more to market than a service
E. The development costs for a service is higher than for a product.
Title: ANSWER: A REFERENCE: The Nature of Business LEARNING OUTCOME: 1
8. The _____ of any country is measured by the output of goods and services people can buy with the
money they have.
A. standard of living
B. consumer productivity
C. input per person
D. quality of life
E. total consumption rate
Title: ANSWER: B REFERENCE: The Nature of Business LEARNING OUTCOME: 1
9. Which of the following countries has a high standard of living?
A. Malaysia
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