The University of Winnipeg Intro

Document Sample
The University of Winnipeg Intro Powered By Docstoc
					                                   The University of Winnipeg
                                     Introduction to Business
                                    Bus:1201 February 1, 2010
                                   Instructor: Keith Tomasson

Student Name: ___________________ Student ID: _____________________

This test has a total maximum score of 100 marks. Please answer the multiple choice questions on the
test paper by circling the one best answer to each question. Please answer the short answer and
paragraph questions in the test booklet provided. You must hand in both the test booklet and exam

    1. John complained to his buddy, Frank, that the prices of all the goods he and his family
       buy have increased a lot over the past year. Frank disagreed, saying that the prices of
       some goods have gone up a bit, but other prices have declined. Frank feels that the
       average price of consumer goods hasn't changed very much. In order to resolve their
       disagreement, John and Frank should look at recent figures for the:
       A) GDP
       B) CPI
       C) PPI
       D) MEW

    2. Which of the following statements most accurately identifies a serious limitation of the
       free-market economic system?
       A) Free-market economies offer little opportunity for the poor to work their way out
            of poverty.
       B) Free-market economies have been unable to create wealth as rapidly as other types
            of economic systems.
       C) Free-market economies often are plagued by shortages of needed consumer goods.
       D) Free-market economies result in a very unequal distribution of wealth.

    3. Provincial governments are responsible for the following area:
       A) taxation
       B) criminal law
       C) labour law
       D) fisheries

    4. A(n) _________ warranty requires a seller to replace or repair a product at no charge if
       the product is defective.
       A) express
       B) implied
       C) limited
       D) full

                                                    Page 1
5. Which of the following government policies would be least likely to encourage
   A) Passage of laws that enable businesspeople to write enforceable contracts.
   B) Establishment of a currency that is tradable in world markets.
   C) Establishment of strict regulations to protect the natural environment and ensure
        safe products.
   D) Passage of laws that eliminate corruption in government and business.

6. Adam's Apple Corporation ships all of the apples from its orchards in British Columbia
   to a single buyer in Japan. The firm's entire profits are derived from this international
   transaction. Adam's Apple Corporation:
   A) is an example of a multinational corporation.
   B) is not a multinational corporation.
   C) is contributing to the Canadian balance of trade deficit.
   D) will benefit greatly from the establishment of NAFTA.

7. Ntercon is an Internet-based company that provides online support services for
   businesses that need help in setting up and maintaining their websites. Ntercon is an
   example of a company that is engaged in:
   A) B2C e-commerce.
   B) N2Y e-commerce.
   C) Y2K e-commerce.
   D) B2B e-commerce.

8. Which of the following statements would a follower of Adam Smith be most likely to
   A) The federal government should use its ability to spend and tax to guide the
       decisions of businesses and consumers.
   B) Market economies are flawed because they put too much emphasis on economic
       growth and not enough on environmental problems.
   C) Overpopulation is the main danger confronting modern economies.
   D) If people are given the freedom to follow their own interests, they will end up
       promoting economic growth that benefits society as a whole.

9. The rise and fall of the economy and the stock market is the concept of:
   A) depression
   B) recession
   C) business cycles
   D) recovery

                                                 Page 2
10. For many years, member of parliament Reggie Lader has called for more government
    regulation of business. "After all," the MP said recently, "businesspeople are out to
    make a profit, not to create jobs or serve their customers. The government must pass
    more laws to require businesses to take the interests of consumers and workers into
    account." From these comments, it is clear that MP Lader:
    A) agrees with the ideas of Adam Smith.
    B) does not accept the philosophy behind Adam Smith's invisible hand.
    C) is unaware of the fact that most businesses in Canada are actually owned by the
    D) does not realize that government regulation is already the main determinant of
         business decisions in capitalist economies.

11. All of the following are objectives of the North American Free Trade Agreement
    (NAFTA) except:
    A) eliminate trade barriers between member nations.
    B) increase investment opportunities in each of the member nations.
    C) create a single currency to compete with the euro.
    D) provide protection for intellectual property rights.

12. One of the most serious types of unemployment is __________. It occurs because of a
    recession or a similar downturn in the business cycle.
    A) seasonal
    B) frictional
    C) structural
    D) cyclical

13. One of the most significant problems faced by communist economies is:
    A) a great inequality in the distribution of wealth and income.
    B) severe inflationary pressures due to rapid economic growth.
    C) too little government regulation of economic activity.
    D) persistent shortages of basic goods such as food and clothing.

14. Climate and terrain in several South American countries are conducive to growing
    coffee efficiently. While other countries can grow coffee, they are not as productive or
    efficient. This fact would lead you to believe that the South American countries have
    a(n) _________________ advantage in the production of coffee.
    A) comparative
    B) absolute
    C) unprotected
    D) progressive

                                                  Page 3
15. Monique's Unique Tile Boutique offers decorative tile from around the world. The
    owner regularly travels overseas to locate the best and most unusual tile that foreign
    producers have to offer. Monique practices:
    A) importing.
    B) licensing.
    C) dumping.
    D) exporting.

16. Kisa is a production manager at Western Widgets, Inc., a manufacturing corporation
    that sells its products world wide. Thanks in part to Kisa's efforts, Western Widgets has
    dramatically improved the quality of its products. Kisa believes that the high quality of
    its output will give Western Widgets a competitive edge. Kisa's view is:
    A) correct. Producing high quality goods is the key to success in the competitive
    B) not wrong, but it is too limited. Consumers demand high quality goods, along with
          competitive prices and outstanding service.
    C) incorrect. The typical consumer is more interested in price than quality.
    D) not exactly correct. The best strategy for market success is to develop new products
          quickly and get them to the market before the competition, even if quality suffers a

17. Which of the following statements about government deficit spending is most accurate?
    A) The federal government violates the law by running deficits because the Canadian
        Constitution requires the government to balance its budget each year.
    B) Although the government used to run big deficits, it has consistently run surpluses
        since the late 1980s.
    C) The government has used deficit spending to lower the national debt.
    D) One reason the government has a hard time reducing deficits is that there is a great
        deal of pressure on the government to expand its spending each year.

18. Crown corporations were set up for several reasons. Which of the following is not a
    valid reason?
    A) Bail out a major industry in trouble.
    B) Supply and demand.
    C) Provide services that are not being provided by businesses.
    D) Provide some special service that could not otherwise be made available.

19. One of the consequences of significant increases in sin taxes is,
    A) consumers will more aggressively look for alternative supplies of these products,
        that circumvent the paying of these taxes all together.
    B) consumption of the products subject to the sin taxes will rise as a means of defying
        the intent of imposing the increased tax.
    C) governments have less money to provide their services.
    D) significantly increase the first time use of a product liable to this increased tax.

                                                  Page 4
20. Federal and provincial governments use their enormous purchasing power to:
    A) favour Canadian companies
    B) favour foreign suppliers
    C) reduce taxes
    D) force private firms to comply with the laws

21. James advertises in the newspaper to sell his used car for $6,000. Eric test drove the car
    and then offered James $5,400 for the car. In this case:
    A) the two parties have created a legally enforceable contract.
    B) Eric's offer represents an acceptance of the original terms.
    C) there is no agreement and no contract.
    D) there is no agreement, but there is a valid contract.

22. The Dabble Corporation is a medium-sized firm that has decided to begin exporting its
    products. The company needs advice about how to get started as well as trade-finance
    support. The federal government has established _____________ to help companies in
    Dabble's position.
    A) the World Trade Commission
    B) Export Development Canada
    C) export trading companies
    D) Federal Reserve Banks

23. Which of the following is the most accurate statement about the impact of business on
    A) When businesses earn a profit for their owners, they usually do so at the expense of
         the rest of society.
    B) While businesses often improve the standard of living within a society, they can do
         little to improve the quality of life.
    C) Businesses often improve the quality of life, but can do little to improve the
         standard of living of most people.
    D) Businesses can have a significant and positive impact on both the standard of living
         and the quality of life within a society.

24. Which of the following people would tend to favour a socialist economy?
    A) John wants to live in a country with low marginal tax rates.
    B) Robin wants to live in a country that encourages rapid economic growth.
    C) Liz wants to live in a country with limited government regulation.
    D) Fred prefers to live in a country that promotes social equality.

                                                  Page 5
25. Both the federal and provincial governments have provided incentives for Toyota to
    locate a new manufacturing facility in Woodstock Ontario because,
    A) Toyota makes significant political contributions.
    B) Canada is trying to establish an auto industry.
    C) this new facility will export all of its output to Japan.
    D) the auto industry is critical to the Canadian economy.

26. A comprehensive and co-ordinated government plan to guide and revitalize the
    Canadian economy is called:
    A) revitalization.
    B) an industrial policy.
    C) the crown corporations plan.
    D) privatization.

27. Last year, the nation of Kwansai reported that it had a favourable balance of trade even
    though it imported $11 billion worth of goods. This indicates that Kwansai:
    A) exported $11 billion worth of goods.
    B) exported more than $11 billion worth of goods.
    C) overpriced the value of its exports.
    D) exported less than $11 billion worth of goods.

28. The market price of apples is currently rising. In a free-market economy, the most likely
    explanation of this price change is that:
    A) the government has decided to set a higher price so that the firms in the market
         make an adequate profit.
    B) there is a shortage in the market for apples.
    C) the supply of money has decreased.
    D) the equilibrium price is lower than the market price.

29. Francine is a bright and talented woman. She recently quit her job at a major corporation
    because she and her boss didn't get along and she saw little chance for advancement.
    Francine has not yet found another job, but the economy appears healthy and lots of
    firms are hiring people with her qualifications. Thus, Francine is confident that she will
    find a job in the near future. Which of the following statements about Francine's current
    situation is most accurate? Francine is:
    A) not considered unemployed because she voluntarily quit her job.
    B) an example of cyclical unemployment.
    C) an example of frictional unemployment.
    D) most likely to find employment quickly if she seeks training in a different field.

                                                  Page 6
  30. The __________ branch interprets and applies the laws when there is a dispute.
      A) legislative
      B) executive
      C) judicial
      D) all of the above

Please answer any 3 of the following 5 short answer questions in the test
booklet provided (point form is acceptable) (15 marks each, total 45 marks)
             1. Describe 5 changes in the social and demographic environment and briefly describe how
                each one might affect businesses in Canada.

             2. Describe 5 characteristics that define socialism.

             3. While the global trend is towards international freer trade, many countries still practice
                trade protectionism. Identify and briefly describe four ways that countries may restrict
                trade. What are some of the reasons that countries practice protectionism?

             4. List 5 arguments in favour of government regulation in Canada.

             5. Discuss 3 remedies for Breach of Contract in Canada.

Please answer one of the following 2 essay questions in the test booklet
provided: (25 marks) (PROPER ESSAY FORMAT PLEASE)
   1. What is demography? What demographic trends have impacted businesses in Canada?

   2. Explain the difference between fiscal policy and monetary policy. Discuss how each of these
      approaches can be used to influence the state of the economy.

                                                  End of Test

                                                   Page 7
Answer Key
             1.   B
             2.   D
             3.   C
             4.   D
             5.   C
             6.   B
             7.   D
             8.   D
             9.   C
            10.   B
            11.   C
            12.   D
            13.   D
            14.   A
            15.   A
            16.   B
            17.   D
            18.   B
            19.   A
            20.   A
            21.   C
            22.   B
            23.   D
            24.   D
            25.   D
            26.   B
            27.   B
            28.   B
            29.   C
            30.   C

                                          Short Answer Questions:
   1. Students should list 5 changes in the demographic or social environment in Canada,:
         a) Aging population creates need for healthcare or products and services suited to seniors0
         b) Increasing diversity-need to manage diversity in workplace, new products/marketing, etc
         c) Two income families-more disposable income, more leisure products, etc.
         d) Single parent families-flexible working conditions, benefits
         e) More women in workforce-flexible work conditions, parental leave, creates need for convience
            products, etc.

   2.    a) Some free market and some government allocation
        b)High degree of government planning
        c)Some government ownership of land and capital resources
        d)High taxes for extensive coverage of social services
        e)Little private ownership and profit, mainly in industries less vital to common welfare
        3 MARKS FOR EACH
                                                     Page 8
           3. Trade Protectionism:
                  a) Tariffs(2 MARKS)
                  b) Import quotas(2 MARKS)
                  c) Embargos(2 MARKS)
                  d) Non-tarrif barriers to trade (2 MARKS)
                  e) Dumping(2 MARKS)
                       (students must list, and provide a brief description of 4 barriers to trade) (MAX 10 MARKS)
              Reasons: Look for 4 valid reasons, including: loss of jobs, protect new industries, national security,
              protect culture, political reasons, generate revenues for the government, loss of service and white collar
              jobs if jobs move overseas, etc (2MARKS FOR EACH REASON, MAXIMUM 5 )

              4) Arguments in favour of government regulation might include:
              a) protect jobs
              b) ensure safety of Canadians
              c) Ensure access of all Canadians to basic services
              d) redistribution of wealth
              e) promote competition or in some cases reduce competition
              f) protect consumers from powers of oligopolies or monopolies
              g) generate revenues for the government (taxes and sin taxes)
              3 marks each, look for 5 reasonable arguments

              5) Discuss 3 remedies for Breach of Contract in Canada.
              a) Specific Performance-may be forced by the courts to satisfy the conditions of the contract
              b) Payment of Damages-monetary settlement awarded by the courts to the person injured by breach of
              c) Discharge of Obligation-if one party fails to live up to their end of the contract, you do not have to
              live up to your end of the agreement either.

                                                       Essay Questions:

Essay Question One:
    1. Demography is the statistical study of populations to learn about their size, density and
       characteristics.(5 marks) Canada is experiencing several demographic trends that will have important
       impacts on how and where we live, what we buy and how we spend our time:

       One major trend is the increase of minorities as a percent of the population. The percentage of Asians
       in our population is projected to increase dramatically. By the year 2050, Caucasians will be a slim
       majority of the Canadian population. Companies will need to respond to this diverse customer base by
       hiring a more diverse workforce to serve them. Businesses will need to be sensitive to these cultural
       changes and find ways to optimize the contributions of people from different ethnic and cultural
       backgrounds. If handled correctly, this diversity can be a source of strength for Canadian businesses. (5
                                                     Page 9

        A second trend is the large increase in the number of older Canadians that will occur over the next few
        decades. This is the result of the aging baby-boom generation. As Canada ages, the market for products
        that appeal to middle-aged and elderly consumers will grow. Thus, there should be a boom in the
        demand for medicine, retirement homes, home health care, and a variety of recreational goods. (5

        As boomers [those people born between 1946 and 1964] age, they will find themselves working
        alongside Generation Xers [those born between 1965 and 1980], and baby-boom echoes [born between
        1980 and 1995].

        Another major demographic trend that is likely to continue is the large proportion of households in
        which both the husband and wife work. The high cost of housing and the desire for a more comfortable
        lifestyle have made it very difficult for many households to survive on just one income. As more
        families have both spouses working, the demand for day care, pregnancy benefits, flexible work
        schedules and elder care will grow. Businesses will have to find ways to meet the needs of workers in
        two-income families without alienating other workers. The text mentions the rise in the use of part time
        workers and telecommuting as ways businesses can give this group more flexibility to meet their
        parental and other responsibilities. (5 marks)

        One final trend has been the rapid growth in the number of single-parent households. Single parents
        have encouraged businesses to offer programs such as flexible work schedules and family leave that
        will allow the parent to remain home with sick children(5 marks)

Essay Question Two:
Fiscal policy refers to changes in the level of government spending (2.5 marks) and/or taxation(2.5 marks) that
are intended to help keep the economy more stable. For example, during a recession, the government might try
to stimulate the economy by encouraging additional spending. One way to do this would be to cut taxes on
individuals or businesses, thus giving them more income to spend. (2 marks) The government can also try to
stimulate the housing and construction industry by offering various tax concessions. (2 marks) These industries
have a multiplier effect on many allied fields. Fiscal policy can also be used to try to improve investment, and
therefore employment, in those regions of Canada that are depressed. Another approach would be for the
government to increase its own level of spending on social programs, defence programs or in other areas. (2
marks) On the other hand, when the economy is overheated and experiencing inflationary pressures, the
government might try to use fiscal policies to reduce the overall demand for goods and services. (2 marks) This
could be done by increasing taxes or by cutting government spending on social programs, defence programs or
in other areas.(2 marks)

Monetary policy refers to actions by the Bank of Canada to control the supply of money and interest rates. (5
marks) When the level of economic activity is declining, the Bank of Canada normally will reduce interest
rates, thus making it more attractive for businesses and households to borrow. (This will encourage more
spending on goods and services, thus stimulating the economy. When the economy is growing too rapidly (and
thus creating inflationary pressures) the Bank of Canada often will pursue policies designed to increase interest
rates, thus reducing borrowing and reducing the demand for goods and services. This should help curb
inflationary pressures. (5 marks)
                                                     Page 10

Shared By: