Test 1 Review

Question 1

An accountant makes more money than a bookkeeper because the account has more ——.

Answer 1

human capital

Question 2

Small business

Answer 2

independent from any corporation and has less than 500 employees

Question 3

Corporations

Answer 3

firms that meet certain legal requirements and whose owners are separate from the firm

Question 4

A —– is a form of business organization in which the owner maintains complete control over the business and is personally liable for any debts of the firm.

Answer 4

sole proprietorship

Question 5

Ethics definitions

Answer 5

a set of moral principles, values, and behavior that demonstrates how we treat each other personally and how business is conducted

Question 6

Ponzi schemes are legal

Answer 6

false

Question 7

Economics definition

Answer 7

a social science that examines human behavior and decision-making in the presence of scarcity

Question 8

absolute advantage

Answer 8

the ability to produce a specific product more efficiently than any other nation

Question 9

competitive advantage

Answer 9

the ability to produce a specific product more efficiently than any other product

Question 10

exporting

Answer 10

selling and shipping raw materials or products to other nations

Question 11

importing

Answer 11

purchasing raw materials or products in other nations and bringing them into one’s own country

Question 12

balance of trade

Answer 12

the total value of a nation’s exports minus the total value of imports over a period of time

Question 13

a country’s balance of trade is negative when

Answer 13

a country imports more than it exports

Question 14

trade deficit

Answer 14

a negative balance of trade

Question 15

balance of payments

Answer 15

the total flow of money into a country minus the total flow of money out of that country over some period of time

Question 16

licensing

Answer 16

a contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty

Question 17

letter of credit

Answer 17

issued by a bank to an importer stating that the bank will pay an amount of money to a stated beneficiary

Question 18

bill of lading

Answer 18

document issued by a transport carrier to an exporter to prove that merchandise has been shipped

Question 19

draft

Answer 19

issued by the exporter’s bank, ordering the importer’s bank to pay for the merchandise, guarantees payment once accepted by the importer’s bank

Question 20

joint venture

Answer 20

a partnership formed to achieve a specific goal or to operate for a specific period of time

Question 21

strategic alliance

Answer 21

a partnership formed to create competitive advantage on a worldwide basis

Question 22

trading company

Answer 22

provides a link between buyers and sellers in different countries

Question 23

countertrade

Answer 23

an international barter transaction

Question 24

multinational enterprise

Answer 24

a firm that operates on a worldwide scale without ties to any specific nation or region

Question 25

steps in entering international markets

Answer 25

1) identify exportable products 2) identify key foreign markets for the products 3) analyze how to sell in each priority market 4) set export prices and payment terms, methods, and techniques

Question 26

import duty/tariff

Answer 26

a tax levied on a particular foreign product entering the country

Question 27

dumping

Answer 27

the exportation of large quantities of a product at a price lower than that of the same product in the home market

Question 28

nontariff barier

Answer 28

a nontax measure imposed by a government to favor domestic over foreign suppliers

Question 29

import quota

Answer 29

a limit on the amount of a particular good that may be imported into a country during a given period of time

Question 30

foreign-exchange control

Answer 30

a restriction on the amount of a particular foreign currency that can be purchased or sold

Question 31

currency devaluation

Answer 31

the reduction of the value of a nation's currency relative to the currencies of other countries

Question 32

General Agreement on Tariffs and Trade (GATT)

Answer 32

international association of 160 nations dedicated to reducing or eliminating tariffs and other barriers to world trade

Question 33

World Trade Organization (WTO)

Answer 33

powerful successor to GATT that incorporates trade in goods, services, and ideas

Question 34

economic community

Answer 34

an organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies

Question 35

Export-Import Bank of the United States

Answer 35

an independent agency of the US government whose function is to assist in financing the exports of American firms

Question 36

Recovery

Answer 36

uphill from trough

Question 37

Prosperity

Answer 37

moving beyond old peak

Question 38

Recession

Answer 38

a trough that lasts 2 consecutive quarters or longer

Question 39

Depression

Answer 39

high unemployment, low productivity

Question 40

Labor force participation rates

Answer 40

the percentage of the US adult population (16+) that are able to work and are either working or actively seeking work

Question 41

Officially Unemployed

Answer 41

have looked in the last 2 weeks but have not found employment

Question 42

Unemployment Rate

Answer 42

U/(U+E) = U/LF

Question 43

Inflation

Answer 43

sustained increase in average prices in an economy and deflation