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Chapter 2

Chapter Quiz

Multiple Choice Questions

Multiple Choice Questions

This activity contains 28 questions.

	Which one of the following is NOT part of the economic environment?   The prime interest rate at the Bank of Canada. A new, faster accounting software program. National Unemployment rate. A competitor’s price cut. A change in the minimum wage.

	Regarding aggregate output, which of the following is NOT true?   When economic activity exceeds population growth, it usually means a higher standard of living. During a recession it is called aggregate input. It only includes paid labour, not volunteer work. It is the measure of goods in a period, but not services. It always increases in proportion to population growth.

	The difference between GDP and GNP is:   GDP includes services, GNP doesn’t. GDP is metric and GNP is the old imperial measure. GDP is a local measure; GNP is national. GNP accounts for environmental damage. GDP does not include the overseas profit of Canadian companies.

	Which of the following is NOT part of the business cycle?   Trough Peak Recession Recovery Maturity

	One informal measure that economists use is the “Big Mac Standard.” It compares the number of hours the average worker in a country has to work in order to buy a Big Mac in that country. This is an example of a(n):   purchasing power parity. starvation wage. economist with too much time on her hands. national productivity difference. affordability index.

	If it takes $10 in labour and $25 in material to make a truck tire in Canada, and $5 in labour and $35 in materials to make a truck tire in Australia, then:   Australian tires are just bigger. Australia is more productive. Canada would never import tires from Australia because they don’t have any snow there. Canada and Australia are equally productive. Canada is more productive.

	Which of the following is true of a country like the USA with a negative balance of trade?   They are buying more foreign-made goods than they are selling domestically-made goods in foreign markets. Their economy must be in recession. This will help the economy grow. They export more than they import. They are required by international law to have a strong military.

	In a period of high inflation:   People always lose purchasing power. Prices fall for most goods. The supply of goods falls. Prices rise for most goods. Unemployment decreases.

	The most credible threat to the Canadian economy in 2004 is:   economic instability. deflation. increasing deficits. racing inflation. high unemployment.

	High unemployment affects business because:   managers must pay higher wages to attract the best workers. decreasing unemployment will likely trigger a recession. overall purchasing power increases. consumer spending decreases. aggregate production increases to keep up with demand.

	A depression occurs when:   two-thirds of surveyed economists categorize the unemployment as “very bad” or “extremely bad”. real GDP declines for more than nine months. the rate of bankruptcy is double that of a previous period. inflation exceeds eight percent. business-related suicides increase for three straight months.

	Shaun Tozer was hired at Bluenotes to help with the Christmas rush. On January 1st he was laid off. Shaun’s unemployment is:   OK, because he will just move back home, live with mom and dad and wait for the weather to warm up before looking for a better job. Who’s Oprah got on today? avoidable. cyclical. frictional. seasonal.

	Dean Clark was working at Coca-Cola as an assistant product manager for Minute Maid Orange Juice. He has accepted an offer from Kraft Canada to work as a brand manager for Kraft Dinner. After he resigns from Coca-Cola, but before he starts at Kraft, Dean travels to Europe for 3 weeks. Dean’s unemployment is called:   seasonal hedonistic. frictional. cyclical. structural.

	The Government of Canada uses these two policies to manage the economy:   fiscal and monetary. political and monetary. economic and political. economic and monetary. banking and fiducial.

	A decision to print more money is part of the government’s:   paper policy. monetary policy. M3 strategy Laffer’s analysis. re-election strategy.

	In order to keep economic growth steady and prevent big swings in unemployment, the government:   sets a stabilization policy. keeps the money supply constant. will call an election when unemployment gets too high. will increase taxes to pay for more make-work projects. organizes foreign trade missions to sell more Canadian-made products.

	The technological environment includes all BUT which of the following?   A microwave oven in the staff lounge. Accountants knowledge of income statements. The recipe for Dutchies at Tim Horton’s Doughnuts. The sales manager’s Blackberry wireless email transceiver. Processing systems used by WestJet to sort baggage.

	Which one of these statements about research and development is true?   Most R+D is paid for by government. By law, every firm must spend at least fifteen percent of its total profits before tax on R+D. In 2002, total Canadian R+D spending was about $12 billion. Most R+D happens in small firms. R+D spending in Quebec, British Columbia, and Alberta accounted for over one-half of the total R+D spending in Canada.

	Many firms opt to be technological followers because:   followers generally have higher market share in the short term. following is less risky. leaders have high R+D intensity. technology transfers are usually not worth the trouble. followers get more opportunity for high profit.

	The first step in developing an ERP system is:   locating sources of government funding for the process. listing the key selling points. developing job inventories to avoid duplication. identifying the processes that require critical attention. identifying the need.

	Intel may have trouble following Moore’s law because:   Intel stopped its investment in R+D in 1995. software can’t utilize today’s advanced processors. of a lack of technology breakthroughs. David Moore died in 2003. The US Supreme court held that Moore’s law was unconstitutional.

	A new regulation requiring businesses to recycle all office paper is an example of what type of environmental influence?   political-legal socio-cultural economic natural financial

	Differences in consumer tastes across time or in different geographic areas are part of which environment?   socio-cultural technological socio-political psychographical natural

	Which one of these statements about the business environment is false?   Workers want flexible hours and telecommuting. The market is not as willing to wait for products to arrive. Customers are always looking for higher quality products. The product life cycle is often accelerated. Shareholders demand that profits come before ethics.

	Which one of the following actions is a symptom of an intensely competitive industry?   Gus Brown Chevrolet in Whitby, ON hires a new assistant to the service manager. Black and Decker adds a new shift to make more lawnmowers. Pizza Hut in Winnipeg, MB sends flyers to every household advertising their new promotional price deal. Irving Oil in Saint John, NB hires McKinsey Company to re-engineer their accounts payable process. TD Canada Trust negotiates a low price on the purchase of 1200 laptops from Dell Computer.

	Because cleaning the floor at Jubilee Ford in Saskatoon, SK is not a core competency, the cleaning task is:   done by customers who want a bigger discount on their new car purchase. performed by the person with the least seniority on duty that day. outsourced to another company. automated. left undone.

	Which of these tasks is most likely considered as a core competency for Zellers?   Employee recruitment and selection Cashiers /Checkout Store security Accounts payable Website design and maintenance

	Top managers at web-based retailer eBAY recently met to plan for the possibility that a terrorist attack could shut down the internet indefinitely. This is an example of:   Core competency protection. Forward thinking. Contingency planning. Disruption Management. Porter’s 5 Forces Model.

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