BUSI 1301 midterm Exam with Complete Solutions

When Ruben wanted to start a new online news service, he was skeptical about investing in it because of the financial crisis in his country. However, he was put at ease after learning about the government's policy of levying low federal taxes on startup businesses. In this context, which dimension of the business environment is affected the most? - ANSWER-The economic environment Digital natives only spend when a business offers them value. T/F - ANSWER-True Ricord Books, a publication house, faced huge losses after 2008. The majority of its readers were born during the late 1950s, whose population was rapidly declining. Most modern readers preferred using e-books rather than reading from hard copies. This resulted in a decrease in the sales of Ricord Books. Identify the dimension of the social environment that this scenario exemplifies. Ethical policy. - ANSWER-Aging population Capital, one of the factors of production, includes machines, tools, buildings, information, and technology. - ANSWER-True The Federal Trade Commission: - ANSWER-actively promotes fair competitive practices. In the context of the diversity in the American population, Caucasians continue to represent the largest chunk of the population at 63%. T/F - ANSWER-True In the United States, nonprofits employ about one in hundred workers, accounting for less paid workers than the entire construction industry and less than the finance, insurance, and real-estate sectors combined. T/F - ANSWER-False Online technology prevents leading-edge companies from offering customized products at prices that are comparable to standardized products. T/F - ANSWER-False Demographic factors include the milestones achieved during the developments in the field of computers, telecommunications, and other digital products. T/F - ANSWER-False People can create natural resources by growing and harvesting agricultural products. T/F - ANSWER-False Marina, a garments manufacturing company, signed a contract with Tertch Tex, a textile company, to receive 2 million pounds of yarn at a rate of $2 per pound. However, Tertch Tex hikes up the price to $5 per pound just before the day of delivery. Marina files a lawsuit against Tertch Tex for breaking an enforceable contract and receives $100 million in compensation. In this context, which dimension of the business environment is affected the most? - ANSWER-The economic environment In the context of your career choice, the broader economy will influence the level of your personal financial success. T/F - ANSWER-True The central banking system of the United States is the Federal Reserve. T/F - ANSWER-True Torino Mex, a men's fashion boutique, is renowned for creating designer clothes for Latino Americans. However, it introduced a new line of designer clothing that especially caters to young Hispanic Americans to widen its customer base. Which of the following dimensions of the social environment is highlighted in this scenario? - ANSWER-Diversity Which of the following statements is true of nonprofit organizations? - ANSWER-They employ people and take in revenue. In the context of the workforce advantage in the business environment, finding and holding the best talent will likely become a crucial competitive issue in the next decade as the baby boom generation begins to retire. However, job market contraction may not be an issue, because: - ANSWER-many baby boomers opt to postpone retirement in the face of inadequate financial resources. Speed-to-market is the rate at which a company's competitors copy its product innovations. T/F - ANSWER-False The physiological environment is a key dimension of the business environment. T/F - ANSWER-False The value of all natural resources tends to rise with low demand, high supply, or both. T/F - ANSWER-False Value is the relationship between the price of a good or a service and the benefits that it offers its customers. T/F - ANSWER-True In the context of the history of American business, which of the following was a result of rapid industrialization in America from the mid-1700s to the mid-1800s? - ANSWER-Unprecedented production efficiency Millennials outnumber digital natives by one million people. T/F - ANSWER-False In the context of the competitive environment of business, unlike leading-edge firms, bleeding-edge firms offer products just as the market becomes ready to embrace them. T/F - ANSWER-False Children's Campground is a summer program for school children. It advertises that there is one counselor for every four children and that several other highly-trained professionals are part of its staff. Children's Campground advertisements indicate that the program relies heavily on its _____ factor to provide its services. - ANSWER-human resources Which of the following is a difference between the millennial generation and Generation Z? - ANSWER-Unlike the millennial generation, Generation Z approaches adulthood planning to work for success. Fiscal strategies are closely tied to political philosophy. T/F - ANSWER-True The consumer market basket of goods and services, in which the consumer price index (CPI) measures the change in weighted-average price over time, is created by the U.S. Bureau of Labor Statistics. T/F - ANSWER-True In the context of monetary policy, when the Fed reduces the discount rate, banks will have to obtain funds at a higher cost. T/F - ANSWER-False The central banking system in the country of Darmos issues a notice to all its commercial banks stating that they must hold funds that are equal to 48% of the deposits held by their customers. In the given scenario, the central banking system's notice exemplifies _____. - ANSWER-the reserve requirement The Federal Trade Commission: - ANSWER-actively promotes fair competitive practices. The Board of Governors of the Federal Reserve holds a meeting to discuss its concern over the decreasing gross domestic product of the country. All members agree that the situation can be brought under control and the economy can be stimulated if they use the discount rate as a tool. In this scenario, the Fed is most likely to: - ANSWER-reduce the discount rate. Economists declare an official recession when gross domestic product decreases for six consecutive quarters. T/F - ANSWER-False In its role as a regulator, the Fed: - ANSWER-oversees mergers and acquisitions. Each year, the Federal Open Market Committee holds eight regularly scheduled meetings to make decisions about open market operations. T/F - ANSWER-True The government in the town of Rodenham has granted exclusive rights to a few telecommunications companies to operate in specific geographic areas. The companies have to provide their services in the areas allotted to them, and no company is allowed to extend its services to the areas allotted to its competitors. This system has been put in place because it would be inconvenient for each company to build its own infrastructure in all areas. The given scenario exemplifies: - ANSWER-a natural monopoly. During a period of grave financial crisis in the United States, Congress is pressurized to raise the limit on the maximum amount of money the government can borrow. Congress increases the limit on the condition that it will implement sharp tax hikes and across-the-board spending cuts to compensate for the raise and to ensure that the overall budget deficit decreases. In this scenario, the measures implemented by Congress will most likely create: - ANSWER-the fiscal cliff. Gross Domestic Product (GDP) measures the total value of all the imports and exports of a nation on a quarterly basis. T/F - ANSWER-False Gross Domestic Product (GDP) levels tend to be somewhat understated, since they don't include any illegal activities, which can represent a significant portion of some countries' production. T/F - ANSWER-True Disinflation is defined as a period of slowing average price increases across an economy. T/F - ANSWER-True In the context of monetary policy, which of the following is a result of an increase in the reserve requirement? - ANSWER-Interest rates begin to rise. Unfair business practices such as predatory pricing hinder capitalism from achieving its potential. - ANSWER-True Socialism is an economic system that encourages privatization and believes that all enterprises should be publicly owned. T/F - ANSWER-False The amount of input divided by the amount of output equals productivity. T/F - ANSWER-False Reserve requirement is a rule of the Fed which requires that all of its member banks hold funds which are more than the stated percentage of the deposits held by their customers. T/F - ANSWER-False Deflation refers to a period of falling average prices across an economy, which is a sign of economic trouble that goes hand-in-hand with very high unemployment. T/F - ANSWER-True The structure of the Board of Governors of the Federal Reserve is such that no single president can appoint all of the Board's members. T/F - ANSWER-True