Understanding Gross Domestic Product (GDP), Exams of Business Research Methods for Managers

Download Understanding Gross Domestic Product (GDP) and more Exams Business Research Methods for Managers in PDF only on Docsity! ScholarStock. 1 Test-Bank-for-Business-Eighth-Canadian-Edition-8-E- 8th-Edition-133354261-Canada. Chapter 02: Understanding the Environments of Business Chapter 02 Multiple Choice Questions 1. In terms of organizational boundaries and environments, which is correct? a. Large business firms are heavily influenced by events in the external environment, but small business firms are much less influenced. b. No single firm can control the environment. c. Most organizations have a single environment, but some have multiple environments they must cope with. d. The major elements of the external environment are marketing, finance, production, and human resources. e. The most important features of the external environment are the political and social aspects. Difficulty: 2 Page- Reference: 38 Question ID: 02-1-01 Skill : Knowledg e Objective: 2.1 Answer : b.No single firm can control the environment. 2. Distributors who are in a grocery store restocking shelves are normally considered part of the rather than the . a. environment; culture b. organization; environment c. culture; store d. environment; organization e. none of these are correct Difficulty: 2 Page- 38 Reference: Question ID: 02-1-02 Skill: Comprehension Objective: 2.1 Answer : d.environment; organization 3. Which of the following is true with respect to the elements in the external environment? a. The socio-cultural environment has become less important in recent years because of the increa diversity of the population in Canada. b. The political-legal environment is something that cannot be influenced by Canadian business firm c. The economic environment will affect the performance of almost every business. d. The boundary between a company and the political-legal environment is more porous than the boundary between a company and the socio-cultural environment. e. All of these are true. Difficulty: 2 Page- 39 Reference: ScholarStock. 2 Question ID: 02-1-03 Skill: Comprehension ScholarStock. 5 9. Which of the following best defines the term business cycle? a. The conditions of the economic system in which an organization operates b. The pattern of short-term ups and downs in an economy c. The total quantity of goods and services produced by an economic system during a given period d. The measure of economic growth that compares how much a system produces with the resource needed to produce it e. The total quantity and quality of goods and services that a country's citizens can purchase with t currency used in their economic system Difficulty: 2 Page- Reference: 40 Question ID: 02-1-09 Skill : Knowledg e Objective: 2.2 Answer: b.The pattern of short-term ups and downs in an economy 10. Sales had been low at Stephen's Home Office Supplies for several months, but then business starting picking up again. Stephen's business probably went through which two phases of the business cycle? a. Recession and trough b. Peak and recession c. Trough and recovery d. Recovery and peak e. Any of these answers could be correct Difficulty: 2 Page- 40 Reference: Question ID: 02-1-10 Skill: Comprehension Objective: 2.2 Answer : c.Trough and recovery 11. Which of the following would not likely be a consequence of a recession? a. Aggregate output declines b. Producers will hire more employees c. Unemployment will increase d. Less labour will be needed to produce products e. GDP will decrease Difficulty: 2 Page- 40 Reference: Question ID: 02-1-11 Skill: Comprehension Objective: 2.2 Answer : b.Producers will hire more employees ScholarStock. 6 12. The pattern of short-term ups and downs in the economy is known as a. a recession. b. the business cycle. c. aggregate output. d. gross domestic product. e. economic growth. Difficulty: 1 Page- 40 Reference: Question ID:02-1-12 Skill: Knowledge Objective: 2.2 Answer : b.the business cycle. 13. Which statement is true with regard to the standard of living? a. It is dependent on the size of the city in which one lives. b. It is comparable for every citizen in every country. c. It is the amount and quality of goods and services that people can buy with their money. d. It is improved when high-end stores stock expensive merchandise. e. It is unaffected by business productivity. Difficulty: 2 Page- 41 Reference: Question ID: 02-1-13 Skill: Applicatio n Objective: 2.2 Answer : c.It is the amount and quality of goods and services that people can buy with their money. 14. The main measure of growth in an economic system is a. the business cycle. b. standard of living. c. gross national product. d. gross domestic product. e. aggregate output. Difficulty: 1 Page- Referenc e: 41-42 Question ID:02-1-14 Skill: Knowledge Objective: 2.2 Answer : e.aggregate output. ScholarStock. 7 15. Which of the following best describes the term standard of living? a. Total quantity of goods and services produced by an economic system b. Total value of all goods and services produced by a national economy within a given period, regardless of where the factors of production are located c. Total value of all goods and services produced within a given period by a national economy thro domestic factors of production d. Conditions of the economic system in which an organization operates e. Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system Difficulty: 2 Page- 41 Reference: Question ID: 02-1-15 Skill: Comprehension Objective: 2.2 Answer : e.Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system 16. Which of the following best describes real GDP? a. Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system b. Total quantity of goods and services produced by an economic system c. Total value of all goods and services produced within a given period by a national economy thro domestic and international factors of production d. Total value of all goods and services produced within a given period by a national economy, thr domestic factors of production measured in current dollars, or with all components valued at cu prices e. Total value of all goods and services produced by a national economy within a given period, calculated to account for changes in currency values and price changes Difficulty: 3 Page- 43 Reference: Question ID: 02-1-16 Skill: Comprehensi on Objective: 2.2 Answer : e.Total value of all goods and services produced by a national economy within a given period, calculated to account for changes in currency values and price changes ScholarStock. 10 Answer : d.The total quantity of goods and services produced by an economic system during a given period 23. Canada's GDP in 2010 was about a. $575 billion. b. $1 trillion. c. $1.6 trillion. d. $2.7 trillion. e. $8.7 trillion. Difficulty: 2 Page- 41 Reference: Question ID:02-1-23 Skill: Knowledge Objective: 2.2 Answer : c.$1.6 trillion. 24. Which country has the highest GDP per capita? a. United States b. Singapore c. Luxembourg d. Canada e. Japan Difficulty: 2 Page- 43 Reference: Question ID:02-1-24 Skill: Knowledge Objective: 2.2 Answer : c.Luxembourg 25. Peter is a Canadian citizen who owns a manufacturing plant located in Brazil. The profits earned by his company will be reflected in in Canada. a. productivity b. GDP c. GNP d. balance of trade e. GPI Difficulty: 3 Page- 42 Reference: Question ID: 02-1-25 Skill: Comprehension Objective: 2.2 Answer : c.GNP ScholarStock. 11 26. Paul owns a Canadian shipping company that generates profits as a result of business activities in Brazil. These profits are included in in Brazil. a. GDP b. national employment c. productivity d. GNP e. GPI Difficulty: 3 Page- 42 Reference: Question ID: 02-1-26 Skill: Comprehensi on Objective: Answer : 2.2 a.GD P 27. The total value of all goods and services produced by a country in a 12- month period regardless of where the factors of production are located is known as a. Net National Product. b. Net National Income. c. Net National Profit. d. Gross National Product. e. Gross Domestic Product. Difficulty: 1 Page- Reference: 42 Question ID: 02-1-27 Skill: Knowledg e Objective: Answer : 2.2 d.Gross National Product. 28. Canada's GDP per capita is approximately a. $15,000. b. $35,000. c. $38,000. d. $46,000. e. $56,000. Difficulty: 2 Page- 43 Reference: Question ID:02-1-28 Objective: 2.2 Answer : d.$46,000. Skill: Knowledg e ScholarStock. 12 29. Which of the following statements is correct? a. GNP refers to the total value of all goods and services produced by a national economy. b. GDP refers to the total value of all goods and services produced by a national economy regardl where the factors of production are located. c. Growth depends on output increasing at a faster rate than population. d. Per capita GDP is calculated by dividing purchasing power parity by the rate of inflation. e. Real GDP compares how much a system produces with the resources needed to produce it. Difficulty: 3 Page- 42 Reference: Question ID: 02-1-29 Skill: Comprehensi on Objective: 2.2 Answer : c.Growth depends on output increasing at a faster rate than population. 30. The principle of states that exchange rates are set so that the prices of similar products in different countries are about the same. a. nominal GDP b. gross national product c. consumer price index d. equal prices e. purchasing power parity Difficulty: 1 Page- 43 Reference: Question ID:02-1-30 Skill: Knowledge Objective: 2.2 Answer : e.purchasing power parity 31. Which of the following is correct regarding purchasing power parity? a. It gives us a better idea of what people can actually buy with the financial resources they have. b. It reflects the principle that exchange rates are set so that prices of similar products in differen countries are unequal. c. It does not really give a good sense of the standards of living around the world. d. It reflects the principle that capitalism is a better system than communism. e. None of these statements are accurate. Difficulty: 2 Page- 43 Reference: Question ID: 02-1-31 Skill: Comprehensi on Objective: 2.2 Answer : a.It gives us a better idea of what people can actually buy with the financial resources they have. ScholarStock. 15 38. The difference between a country's exports and its imports is known as its a. balance of trade. b. national debt. c. net national income. d. balance of payments. e. net national profit. Difficulty: 1 Page- 43 Reference: Question ID:02-1-38 Skill: Knowledge Objective: 2.2 Answer : a.balance of trade. 39. Because Canada's exports its imports, Canada has a trade balance. a. are greater than; negative balance of trade b. are less than; negative balance of trade c. are greater than; positive balance of trade d. are less than; positive balance of trade e. none of the above Difficulty: 2 Page- Referenc e: 43-44 Question ID: 02-1-39 Skill: Comprehension Objective: 2.2 Answer : c.are greater than; positive balance of trade 40. A balance of trade results when a country exports more than it imports. a. depressed b. negative c. real d. nominal e. positive Difficulty: 1 Page- Referenc e: 43-44 Question ID:02-1-40 Skill: Knowledge Objective: 2.2 Answer : e.positive ScholarStock. 16 41. Which of the following is the best description of the balance of trade? a. The total of a nation's revenues from income taxes minus its expenditures on goods and servic b. Changes in currency values and price changes c. The profitability of business firms that are exporting goods and services d. The total of a nation's exports minus its imports e. The total value of all services provided to foreigners during a one-year time period Difficulty: 2 Page- 43 Reference: Question ID: 02-1-41 Skill: Comprehension Objective: 2.2 Answer : d.The total of a nation's exports minus its imports 42. Canada usually has a balance of trade. It is therefore a nation rather than a nation. a. positive; creditor; debtor b. negative; debtor; creditor c. positive; debtor; creditor d. negative; creditor; debtor e. none of the above Difficulty: 3 Page- 43 Reference: Question ID: 02-1-42 Skill: Comprehension Objective: 2.2 Answer : a.positive; creditor; debtor 43. Taiwan has a positive balance of trade. This means that a. money is flowing into the country to pay for imported goods. b. the total amount of exported goods has increased from the previous year. c. the total amount of imported goods has decreased from the previous year. d. the nation is exporting more than it imports from other nations. e. all of these are correct. Difficulty: 2 Page- Referenc e: 43-44 Question ID: 02-1-43 Skill: Comprehension Objective: 2.2 Answer : d.the nation is exporting more than it imports from other nations. ScholarStock. 17 44. The national debt refers to a. the total amount of money that Canada owes to its creditors. b. the ratio of Canada's exports to its imports. c. the result of government spending more in a year than the value of GDP. d. the excess amount of taxes over what the government spends in one year. e. the amount of taxes the government collects in one year. Difficulty: 1 Page- 44 Reference: Question ID:02-1-44 Skill: Knowledge Objective: 2.2 Answer : a.the total amount of money that Canada owes to its creditors. 45. Which of the following is correct with regard to budget deficits and the national debt? a. A country's national debt is the amount of money its government owes the United States. b. A budget deficit occurs when income tax revenue is less than interest payments on the nationa c. Canada is the only industrialized country in the world that has a budget surplus. d. Until recently, Canada was the only industrialized country that had an annual budget surplus. e. All of these statements are correct. Difficulty: 3 Page- 44 Reference: Question ID: 02-1-45 Skill: Comprehensi on Objective: 2.2 Answer : d.Until recently, Canada was the only industrialized country that had an annual budget surplus. 46. With regard to the concepts of budget deficits and the national debt, it is correct to say that a. these two concepts are essentially identical. b. budget deficits are measured on an annual basis, while the national debt is cumulative over a s years. c. Canada is the only major industrialized country that has a budget surplus each year. d. budget deficits measure the amount of money that Canada owes its foreign investors. e. budget deficits are more important than the national debt. Difficulty: 3 Page- 44 Reference: Question ID: 02-1-46 Skill: Comprehensi on Objective: 2.2 Answer : b.budget deficits are measured on an annual basis, while the national debt is cumulative over a span of years. ScholarStock. 20 53. With respect to inflation and deflation, which is correct? a. Inflation is caused when consumers buy too many luxury goods. b. When inflation occurs, people have more money to spend, and there will be an increased quant goods for sale. c. When inflation occurs, purchasing power decreases. d. Deflation is evident when the amount of money injected into the economic system increases fa than actual output. e. All of these statements are correct. Difficulty: 3 Page- 45-46 Reference: Question ID: 02-1-53 Skill: Comprehensi on Objective: 2.2 Answer : c.When inflation occurs, purchasing power decreases. 54. Assume that Statistics Canada reports that inflation is becoming a problem. What should the government do in order to reduce inflation? a. Lower taxes. b. Raise taxes. c. Increase government spending. d. Encourage consumers to increase spending. e. The government should increase spending and lower taxes. Difficulty: 3 Page- 48 Reference: Question ID: 02-1-54 Skill: Applicatio n Objective: Answer : 2.2 b.Raise taxes. 55. The economy in Palau has been stagnant for some time. The national bank thinks that increasing the money supply will encourage investment within the country, but some economists oppose this idea, arguing that it will cause inflation. Which of the following would support the argument that increasing the money supply will cause inflation? a. Jobs will be created. b. Banks will lower interest rates. c. Wages will decrease. d. Foreign investment will be discouraged. e. Only low-technology sectors will benefit. Difficulty: 3 Page- 48 Reference: Question ID:02-1-55 Skill: Analysis Objective: 2.2 Answer : b.Banks will lower interest rates. ScholarStock. 21 56. The consumer price index a. measures inflation by measuring price increases. b. measures price increases but not changes in consumer purchasing patterns. c. is not able to measure deflation. d. continues to include the same items in the typical "basket of goods" so that price increases in previous years can be compared to price increases in the current year. e. is no longer accepted as a good measure of price increases. Difficulty: 3 Page- 46 Reference: Question ID: 02-1-56 Skill: Comprehensi on Objective: 2.2 Answer : a.measures inflation by measuring price increases. 57. Deflation a. is a period of stagnant prices. b. results when the Bank of Canada lowers interest rates. c. may occur when prices fall as a result of increased industrial productivity. d. cannot happen in a modern industrialized economy. e. is always bad because it means that the economy is not doing well. Difficulty: 3 Page- Reference: 46 Question ID: 02-1-57 Skill : Knowledg e Objective: 2.2 Answer : c.may occur when prices fall as a result of increased industrial productivity. 58. John is experiencing unemployment because he is out of work temporarily while looking for a new job, while Sally is experiencing unemployment because she is out work because of a downturn in the business cycle. a. seasonal; structural b. structural; seasonal c. frictional; cyclical d. cyclical; frictional e. seasonal; cyclical Difficulty: 3 Page- 47 Reference: Question ID: 02-1-58 Skill: Comprehensi on Objective: Answer : 2.2 c.frictional; cyclical ScholarStock. 22 59. Ben is unemployed, but he is currently in a training program designed to increase the skills he needs to perform the kinds of jobs that are available. Ben is experiencing unemployment. a. frictional b. seasonal c. cyclical d. structural e. none of these Difficulty: 2 Page- 47 Reference: Question ID: 02-1-59 Skill: Comprehension Objective: 2.2 Answer : d.structural 60. A computer programmer who has just quit her job, but who will find a new one soon, is an example of unemployment. a. seasonal b. frictional c. cyclical d. structural e. none of these Difficulty: 2 Page- 47 Reference: Question ID: 02-1-60 Skill: Comprehension Objective: 2.2 Answer : b.frictional 61. Sam, an audiologist, lost his job two years ago and still hasn't found work because there is just no market for audiologists at this time. Sam is experiencing a. structural unemployment. b. full unemployment. c. cyclical unemployment. d. bad luck. e. frictional unemployment. Difficulty: 2 Page- 47 Reference: Question ID: 02-1-61 Skill: Comprehension Objective: 2.2 Answer : a.structural unemployment. ScholarStock. 25 68. What effect do higher interest rates have on consumer spending? a. Consumer spending increases as people try to quickly buy goods before rates go even higher. b. Consumer spending decreases immediately, but then rises sharply after consumers get used to new higher interest rates. c. Consumer spending is not impacted by changes in interest rates. d. Consumer spending decreases. e. It is not possible to tell from the information given. Difficulty: 1 Page- 48 Reference: Question ID: 02-1-68 Skill: Comprehensi on Objective: 2.2 Answer : d.Consumer spending decreases. 69. refers to all the ways firms create value for their constituents. a. Marketing b. Outsourcing c. Processing d. Production e. Technology Difficulty: 2 Page- 49 Reference: Question ID:02-1-69 Skill: Knowledge Objective: 2.3 Answer : e.Technology 70. The advent of the iPod saw an increase in the downloading of music from the internet. Music artists are noticing a decrease in the sales of their CDs, which is an effect of which dimension of the external environment? a. Technological b. Economic c. Socio-cultural d. Political e. Global Difficulty: 2 Page- 48 Reference: Question ID: 02-1-70 Skill: Comprehensi on Objective: Answer : 2.3 a.Technological ScholarStock. 26 71. Technology includes a. human knowledge. b. work methods. c. equipment. d. electronics and telecommunications. e. all of these. Difficulty: 2 Page- 49 Reference: Question ID:02-1-71 Skill: Knowledge Objective: 2.3 Answer : e.all of these. 72. includes human knowledge, work methods, physical equipment, electronics and telecommunications, and various processing systems that are used in performing business activities. a. The technological environment b. The social environment c. The political-legal environment d. The competitive environment e. The economic environment Difficulty: 1 Page- 49 Reference: Question ID:02-1-72 Skill: Knowledge Objective: 2.3 Answer : a.The technological environment 73. Research and development (R&D) includes activities that are necessary to provide new products, services, and processes. Two types of R&D include a. deflationary and inflationary. b. public and economical. c. college and university. d. pure and theoretical. e. basic and applied. Difficulty: 2 Page- Reference: 49 Question ID: 02-1-73 Skill: Knowledg e Objective: Answer : 2.3 e.basic and applied. ScholarStock. 27 74. Basic research and development describes a. focusing specifically on how a technological innovation can be put to use in the making of a pro or service that can be sold in the marketplace. b. those activities that do not create value for the firm. c. the process involved in getting a new technology out of the lab and into the marketplace. d. improving knowledge in an area without a primary focus on whether any discoveries that migh are immediately marketable. e. those activities that increase a company's revenues. Difficulty: 2 Page- 49 Reference: Question ID: 02-1-74 Skill: Comprehensi on Objective: 2.3 Answer : d.improving knowledge in an area without a primary focus on whether any discoveries that might occur are immediately marketable. 75. R&D spending in Canada in 2010 totalled about billion. a. $2 b. $6 c. $10 d. $15 e. $22 Difficulty: 2 Page- 49 Reference: Question ID: 02-1-75 Skill: Knowledg e Objective: Answer : 2.3 d. $15 76. In 2010, the Canadian private sector accounted for about percent of R&D spending, while the government accounted for about percent. a. 25; 10 b. 10; 40 c. 55; 10 d. 25; 30 e. 78; 2 Difficulty: 3 Page- 49 Reference: Question ID:02-1-76 Objective: 2.3 Answer : c.55; 10 Skill: Knowledg e ScholarStock. 30 83. systems integrate human resource, data analysis, sales and marketing, customer service, supply chain, accounting and finance, and manufacturing systems. a. Enterprise resource planning b. Vertical integration c. Decision support d. Expert e. Organizational integration Difficulty: 2 Page- Reference: 52 Question ID: 02-1-83 Skill : Knowledg e Objective: 2.3 Answer : a.Enterprise resource planning 84. The political-legal environment describes a. the relationship between business and government. b. the customs, values, attitudes, and demographic characteristics of the society in which an organization functions. c. the intensity of the competition in an industry. d. the relationship between international and domestic corporations. e. the relationship between government and unions. Difficulty: 2 Page- 54 Reference: Question ID: 02-1-84 Skill: Comprehension Objective: 2.4 Answer : a.the relationship between business and government. 85. The Canadian government has so far blocked bank mergers because a. shareholders oppose the idea. b. there is fear that competition would be reduced and customers would be harmed. c. the Prime Minister does not like any mergers. d. the banks are not yet profitable enough to merge. e. none of the statements are accurate. Difficulty: 2 Page- 54 Reference: Question ID: 02-1-85 Skill: Comprehensi on Objective: 2.4 Answer : b.there is fear that competition would be reduced and customers would be harmed. ScholarStock. 31 86. The socio-cultural environment describes a. the relationship between government and unions. b. the relationship between business and government. c. the relationship between international and domestic corporations. d. the customs, values, attitudes, and demographic characteristics of the society in which an organization functions. e. the intensity of the competition in an industry. Difficulty: 2 Page- 56 Reference: Question ID: 02-1-86 Skill: Comprehensi on Objective: 2.5 Answer : d.the customs, values, attitudes, and demographic characteristics of the society in which an organization functions. 87. Which of the following is not an example of a factor in the socio-cultural environment? a. Prepackaged chili is more popular in southwestern U.S. states than in the U.S. northeast. b. Consumers in China perceive bicycles primarily as a mode of transportation, while consumers i Canada perceive bicycles as recreational items. c. Companies are more likely to set up foreign operations in countries with stable political and eco systems. d. McDonald's has added salads and other low-fat foods to its menu. e. Many people in the Middle East are unwilling to work in food service operations. Difficulty: 3 Page- 56 Reference: Question ID: 02-1-87 Skill: Comprehension Objective: 2.5 Answer : c.Companies are more likely to set up foreign operations in countries with stable political and economic systems. 88. Ethical conduct and social responsibility are critical elements of which environment? a. Global b. Political-legal c. Industry d. Socio-cultural e. Economic Difficulty: 2 Page- 56 Reference: Question ID: 02-1-88 Skill: Comprehension Objective: 2.5 Answer : d.Socio-cultural ScholarStock. 32 89. If casinos notice an increase in business due to the fact that many people no longer regard gambling as wrong, this demonstrates a change in the dimension of the external environment. a. socio-cultural b. technological c. global d. political-legal e. economic Difficulty: 2 Page- Referenc e: 56-57 Question ID: 02-1-89 Skill: Comprehension Objective: 2.5 Answer : a.socio-cultural 90. The major cigarette companies have been experiencing a decline in sales due to the overall decrease in smoking across Canada in recent years. These companies are being affected by which dimension of their external environment? a. Technological b. Global c. Business d. Socio-cultural e. Economic Difficulty: 2 Page- 56-57 Reference: Question ID: 02-1-90 Skill: Comprehensi on Objective: Answer : 2.5 d.Socio-cultural 91. Which of the following is correct with respect to Porter's Five Forces model? a. Rivalry among existing firms is the most important element in the model. b. When there are many substitute products available, the industry is less competitive. c. When there are only a few suppliers in an industry, buyers have less power. d. When substitute products are available, suppliers have more power. e. All of these statements are correct. Difficulty: 2 Page- 59 Reference: Question ID: 02-1-91 Skill: Comprehension Objective: 2.5 Answer : c.When there are only a few suppliers in an industry, buyers have less power. ScholarStock. 35 98. Many firms use to provide cafeteria operations for their customers. a. enterprise management b. disruption management c. outsourcing d. core competencies e. vertical integration Difficulty: 2 Page- 60 Reference: Question ID:02-1-98 Skill: Knowledge Objective: 2.6 Answer : c.outsourcing 99. Martin, the CEO of a Canadian company that emphasizes social responsibility, observes that there are disadvantages associated with the company's planned increase in globalizing its production. What disadvantage is Martin most likely thinking about? a. Large job losses in Canada. b. Greater disparities in living standards. c. Reducing trade barriers between countries. d. Job losses in developing markets. e. Increased foreign competition. Difficulty: 2 Page- 60 Reference: Question ID:02-1-99 Skill: Analysis Objective: 2.6 Answer : a.Large job losses in Canada. 100. Which of the following best describes viral marketing? a. The strategy of paying suppliers and distributors to perform certain business processes or to needed materials and resources b. An approach by which firms move away from department-oriented organization and toward p oriented team structures that cut across old departmental boundaries c. The strategy of owning the means by which an organization produces goods or services d. Any activity that adds value to some input by transforming it into an output for an internal or customer e. The strategy of using the internet and word-of-mouth marketing to spread product informatio Difficulty: 2 Page- 61 Reference: Question ID: 02-1-100 Skill: Comprehensi on Objective: 2.6 Answer : e.The strategy of using the internet and word-of-mouth marketing to spread product information ScholarStock. 36 101. uses games, contests, chat rooms, and bulletin boards to encourage potential customers to try out products and tell other people about them. a. Relationship marketing b. Business process management c. Enterprise planning d. Vertical integration e. Viral marketing Difficulty: 2 Page- 61 Reference: Question ID: 02-1-101 Skill: Comprehension Objective: 2.6 Answer : e.Viral marketing 102. Which of the following best describes business process management? a. An approach by which firms move away from department-oriented organization and toward p oriented team structures that cut across old departmental boundaries b. The strategy of paying suppliers and distributors to perform certain business processes or to needed materials and resources c. Any activity that adds value to some input by transforming it into an output for an internal or customer d. The strategy of using the internet and word-of-mouth marketing to spread product informatio e. The strategy of owning the means by which an organization produces goods or services Difficulty: 2 Page- 61 Reference: Question ID: 02-1-102 Skill: Comprehensi on Objective: 2.6 Answer : a.An approach by which firms move away from department-oriented organization and toward process-oriented team structures that cut across old departmental boundaries 103. The most successful firms are getting leaner by focusing on their core competencies, but these new business models call for . a. environmental management b. unprecedented coordination c. new corporate boundaries d. unprecedented funds e. none of these are correct Difficulty: 1 Page- 60 Reference: Question ID:02-1-103 Skill: Knowledge Objective: 2.6 ScholarStock. 37 Answer : b.unprecedented coordination 104. The Organic Trade Association partnered with Free Range Graphics to produce a 5-minute on-line spoof of the latest Star Wars movie. The film was then passed around the internet by consumers who favour organic foods. This is an example of a. a strategic alliance. b. viral marketing. c. outsourcing. d. business process management. e. none of these. Difficulty: 1 Page- 61 Reference: Question ID: 02-1-104 Skill: Comprehension Objective: 2.6 Answer : b.viral marketing. 105. is the approach by which firms move away from department- oriented organizations and toward process-oriented team structures. a. Business process management b. Team management c. Viral marketing d. Departmentalization e. None of these Difficulty: 2 Page- 61 Reference: Question ID:02-1-105 Skill: Knowledge Objective: 2.6 Answer : a.Business process management 106. Which of the following is the best definition of vertical merger? a. A strategy in which one of the companies in the merger is a supplier or customer of the other b. An approach by which firms move away from department-oriented organization and toward p oriented team structures that cut across old departmental boundaries c. The strategy of using the internet and word-of-mouth marketing to spread product informatio d. Any activity that adds value to some input by transforming it into an output for an internal or customer e. The strategy of paying suppliers and distributors to perform certain business processes or to needed materials and resources Difficulty: 2 Page- 62 Reference: Question ID: 02-1-106 Skill: Comprehensi on ScholarStock. 40 110. When one company sells part of its existing business operations to another company, this is called a. outsourcing. b. intense competition. c. a spinoff. d. a divestiture. e. a strategic alliance. Difficulty: 2 Page- Reference: 63 Question ID: 02-1-110 Skill: Knowledg e Objective: Answer : 2.7 d.a divestiture. 111. When Kraft Foods bought Cadbury, this was an example of , but when Molson combined with Adolph Coors, this was an example of . a. a hostile takeover; friendly takeover b. an acquisition; a horizontal merger c. a merger; an acquisition d. a poison pill; a divestiture e. a spinoff; a divestiture Difficulty: 3 Page- Referenc e: 61-62 Question ID: 02-1-111 Skill: Comprehension Objective: 2.7 Answer : b.an acquisition; a horizontal merger 112. If Shirley's Subs Inc. purchased Tony's Car Repair Inc., this would be an example of a. a horizontal merger. b. a conglomerate merger. c. a spinoff. d. a vertical merger. e. a divestiture. Difficulty: 1 Page- 62 Reference: Question ID: 02-1-112 Skill: Comprehension Objective: 2.7 Answer : b.a conglomerate merger. ScholarStock. 41 113. If Toyota Motors purchased Ruscombe Muffler, a small retail muffler business, the purchase would be a. a horizontal merger. b. a conglomerate merger. c. a spinoff. d. a vertical merger. e. a divestiture. Difficulty: 2 Page- 62 Reference: Question ID: 02-1-113 Skill: Comprehension Objective: 2.7 Answer : d.a vertical merger. 114. Company A and Company F have been in direct competition for years selling four-ply tissue paper. Recently, an announcement was made of a merger between the two companies. This would be a . a. reverse merger b. joint venture c. vertical merger d. friendly takeover e. horizontal merger Difficulty: 2 Page- 62 Reference: Question ID: 02-1-114 Skill: Comprehension Objective: 2.7 Answer : e.horizontal merger 115. Stone Inc. has just been through a friendly takeover. This means that a. two firms in completely unrelated businesses merge. b. two firms agree to join together. c. the acquired company welcomes the acquisition because it may need cash or other benefits believes will be available from the other firm. d. the organization will buy back their own stock from an investor who threatened a hostile take e. the two firms were direct competitors before the merger and now will not compete with each after the merger. Difficulty: 2 Page- 63 Reference: Question ID: 02-1-115 Skill: Comprehensi on Objective: 2.7 Answer : c.the acquired company welcomes the acquisition because it may need cash or other benefits which it believes will be available from the other firm. ScholarStock. 42 116. BSX Inc. gave shareholders the right to purchase company stock at a 50 percent discount if a group without approval of BSX's board of directors acquired more than 20 percent of the company's shares. This is an example of a. a stock buyback. b. a conglomerate merger. c. greenmail. d. a poison pill. e. a vertical merger. Difficulty: 1 Page- 63 Reference: Question ID: 02-1-116 Skill: Comprehension Objective: 2.7 Answer : d.a poison pill. 117. PepsiCo created a new corporation called Tricon Global Restaurants (now called Yum! Brands Inc.) which included Pizza Hut, KFC, and Taco Bell. This is an example of a(n) a. hostile takeover. b. acquisition. c. spinoff. d. merger. e. divestiture. Difficulty: 2 Page- 63 Reference: Question ID: 02-1-117 Skill: Comprehension Objective: 2.7 Answer : c.spinoff. 118. The primary objective of an ESOP is to a. keep management from making bad decisions. b. protect against takeovers. c. prevent worker strikes. d. provide workers with financial security. e. motivate workers to work harder. Difficulty: 2 Page- 63 Reference: Question ID: 02-1-118 Skill: Comprehensi on Objective: 2.7 Answer : e.motivate workers to work harder. ScholarStock. 45 Question ID: 02-2-122 Skill: Knowledg e Objective: 2.1 Answer : a.True 4. Prevailing economic conditions will affect the performance of almost every business. a. True b. False Difficulty: 1 Page- 39 Reference: Question ID: 02-2-123 Skill: Comprehensi on Objective: Answer : 2.2 a.Tru e 5. With proper management by government, the ups and downs in the business cycle can be avoided. a. True b. False Difficulty: 1 Page- 40 Reference: Question ID: 02-2-124 Skill: Comprehensi on Objective: Answer : 2.2 b.Fals e 6. Today, approximately 10 percent of the Canadian population works in agriculture. a. True b. False Difficulty: 2 Page- 39 Reference: Question ID: 02-2-125 Skill: Knowledg e Objective: Answer : 2.2 b.Fals e 7. An increase in aggregate output will typically result in a recession. ScholarStock. 46 a. True b. False Difficulty: 2 Page- 41 Reference: ScholarStock. 47 Question ID: 02-2-126 Skill: Comprehensi on Objective: 2.2 Answer : b.False 8. Profits from a Canadian-owned automobile factory in Brazil are included Brazil's GNP, but not its GDP. a. True b. False Difficulty: 2 Page- Referenc e: 41-42 Question ID: 02-2-127 Skill: Comprehension Objective: 2.2 Answer : b.False 9. Bellan Corp. is a Canadian-owned company that has a manufacturing plant in Germany. Bellan's profits are included in Canadian GNP, but not GDP. a. True b. Fals e Difficulty: 2 Page- 41-42 Reference: Question ID: 02-2-128 Skill: Comprehensi on Objective: Answer : 2.2 a.Tru e 10. GDP includes the total value of goods and services produced within a given period by a national economy through domestic factors of production. a. True b. False Difficulty: 1 Page- Reference: 41 Question ID: 02-2-129 Skill : Knowledg e Objective: Answer : 2.2 a.Tru e 11. GNP is the total value of all goods and services produced by a national economy within a given period, regardless of where the factors of production are located. ScholarStock. 50 Question ID: 02-2-134 Skill: Applicatio n Objective: 2.2 Answer : a.True 16. Canada's per capita GDP is less than that of several countries, including the U.S., Luxembourg, Norway, Switzerland, and Denmark. a. True b. False Difficulty: 2 Page- 43 Reference: Question ID:02-2-135 Skill: Knowledge Objective: 2.2 Answer : a.True 17. Nominal GDP is more important than real GDP. a. True b. False Difficulty: 1 Page- 43 Reference: Question ID: 02-2-136 Skill: Comprehension Objective: 2.2 Answer : b.False 18. Low inflation will allow a company like McDonald's to increase the prices it charges consumers. a. True b. False Difficulty: 2 Page- 45 Reference: Question ID: 02-2-137 Skill: Comprehension Objective: 2.2 Answer : b.False 19. Purchasing power parity is a principle that states exchange rates are set so that the prices of similar products in different countries are about the same. a. True b. False Difficulty: 1 Page- 43 Reference: ScholarStock. 51 Question ID: 02-2-138 Skill: Knowledg e Objective: 2.2 Answer : a.True 20. The purchasing power parity idea gives us a better sense of the standards of living across the globe. a. True b. False Difficulty: 2 Page- 43 Reference: Question ID: 02-2-139 Skill: Comprehension Objective: 2.2 Answer : a.True 21. The purchasing power parity concept is interesting, but it doesn't give us much of an idea about what people can actually buy with the financial resources allocated to them by their economic system. a. True b. False Difficulty: 2 Page- Reference: 43 Question ID: 02-2-140 Skill : Applicatio n Objective: Answer : 2.2 b.Fals e 22. If productivity increases, prices to consumers will tend to increase as well. a. True b. False Difficulty: 2 Page- 43 Reference: Question ID: 02-2-141 Skill: Comprehension Objective: 2.2 Answer : b.False 23. The standard of living in a country improves mainly through increases in the money supply. a. True b. False Difficulty: 1 Page- 41 Reference: Full file at http://AplusTestbank.eu/Test-Bank-for-Business-Eighth-Canadian-Edition-8-E-8th-Edition-133354261- Canada Question ID: 02-2- 142 Skill : Comprehensi on ScholarStock. 52 Objective: 2.2 Answer : b.False 24. If France's exports exceed its imports, France has a positive balance of trade. a. True b. False Difficulty: 2 Page- Referenc e: 43-44 Question ID: 02-2-143 Skill: Comprehension Objective: 2.2 Answer : a.True 25. Canada's annual deficits during the past few years have been in the $100 billion range. a. True b. False Difficulty: 2 Page- 44 Reference: Question ID:02-2-144 Skill: Knowledge Objective: 2.2 Answer : a.True 26. The three primary factors that threaten stability are inflation, deflation, and unemployment. a. True b. False Difficulty: 2 Page- Reference: 45 Question ID: 02-2-145 Skill : Knowledg e Objective: Answer : 2.2 a.Tru e 27. Inflation occurs when there are increased goods and services for sale. a. True b. False Difficulty: 1 Page- 45 Reference: Full file at http://AplusTestbank.eu/Test-Bank-for-Business-Eighth-Canadian-Edition-8-E-8th-Edition-133354261- Canada Question ID: 02-2- 150 Skill : Knowledg e Objectiv e: Answer : 2.2 a.Tru e ScholarStock. 55 32. Unemployment reflects the joblessness level of the adult population in an economic system, whether or not they are actively seeking work. a. True b. False Difficulty: 1 Page- 47 Reference: Question ID: 02-2-151 Skill: Comprehension Objective: 2.2 Answer : b.False 33. When unemployment is low, businesses tend to raise the wages that they are willing to pay. a. True b. False Difficulty: 2 Page- 47 Reference: Question ID:02-2-152 Skill: Application Objective: 2.2 Answer : a.True 34. Levi is temporarily unemployed while he looks for a new job. Levi is experiencing frictional unemployment. a. True b. False Difficulty: 2 Page- 47 Reference: Question ID: 02-2-153 Skill: Comprehensi on Objective: Answer : 2.2 a.Tru e 35. Cyclical unemployment occurs as a result of a downturn in the business cycle. a. True b. False Difficulty: 2 Page- 47 Reference: Question ID: 02-2- 154 Skill : Comprehensi on Objectiv e: Answer : 2.2 a.Tru e ScholarStock. 56 36. Ted has not worked in 5 years and has given up finding a job. He is counted in the ranks of the unemployed. a. True b. False Difficulty: 2 Page- 47 Reference: Question ID: 02-2-155 Skill: Comprehension Objective: 2.2 Answer : b.False 37. Full employment is impossible. a. True b. False Difficulty: 2 Page- 47 Reference: Question ID: 02-2-156 Skill: Comprehension Objective: 2.2 Answer : a.True 38. In order to achieve full employment, government economists require that each business establish that as a goal. a. True b. False Difficulty: 2 Page- 47 Reference: Question ID: 02-2-157 Skill: Comprehension Objective: 2.2 Answer : b.False 39. Full employment means that everyone who wants to work has an opportunity to do so. a. True b. False Difficulty: 1 Page- 47 Reference: Full file at http://AplusTestbank.eu/Test-Bank-for-Business-Eighth-Canadian-Edition-8-E-8th-Edition-133354261- Canada Question ID: 02-2- 158 Skill : Knowledg e Objectiv e: Answer : 2.2 a.Tru e ScholarStock. 57 40. Sharon is unemployed while she gets training for a new job. Sharon is experiencing cyclical unemployment. a. True b. False Difficulty: 2 Page- 47 Reference: Question ID: 02-2-159 Skill: Comprehension Objective: 2.2 Answer : b.False 41. Agricultural efficiency in Canada has shown only slight improvement in the last century because only a small percentage of the population works in agriculture. a. True b. False Difficulty: 2 Page- 39 Reference: Question ID: 02-2-160 Skill: Comprehension Objective: 2.2 Answer : b.False 42. Stability, as an economic goal, is a condition in which there is a balance between money available and goods produced. a. True b. False Difficulty: 2 Page- 48 Reference: Question ID: 02-2-161 Skill: Comprehensi on Objective: Answer : 2.2 a.Tru e 43. Generally speaking, fiscal policy is more effective than monetary policy. a. True b. False Difficulty: 2 Page- 48 Reference: Test-Bank-for-Business-Eighth-Canadian- Edition-8-E-8th-Edition-133354261-Canada. ScholarStock. 60 51. Canada's R&D expenditures (as a percent of GDP) lag behind those of the U.S. because many Canadian businesses are subsidiaries of large U.S. companies, and those companies carry out their R&D in the United States. a. True b. False Difficulty: 2 Page- 49 Reference: Question ID: 02-2-170 Skill: Comprehension Objective: 2.3 Answer : a.True 52. Canada's R&D expenditures are much smaller than those of the U.S. in total dollar terms, but when measured as a percent of GDP, Canada's R&D expenditures exceed those in the U.S. a. True b. False Difficulty: 2 Page- 49 Reference: Question ID: 02-2-171 Skill: Comprehension Objective: 2.3 Answer : b.False 53. Enterprise Resource Planning is an example of a process technology. a. True b. False Difficulty: 1 Page- 52 Reference: Question ID: 02-2-172 Skill: Comprehension Objective: 2.3 Answer : a.True 54. Company-wide processes, such as materials management, production planning, order management, and financial reporting, can all be managed by enterprise resource planning. a. True b. False Difficulty: 2 Page- 52 Reference: Question ID: 02-2-173 Skill: Knowledg e Objective: 2.3 Test-Bank-for-Business-Eighth-Canadian- Edition-8-E-8th-Edition-133354261-Canada. ScholarStock. 61 Answer : a.True 55. R&D intensity refers to R&D spending as a percentage of a company's sales revenue. a. True b. False Difficulty: 2 Page- 51 Reference: Question ID:02-2-174 Skill: Knowledge Objective: 2.3 Answer : a.True 56. Political stability is an important factor in international firms because no business wants to set up shop in another country unless trade relationships with that country are well defined and stable. a. True b. False Difficulty: 1 Page- 54 Reference: Question ID: 02-2-175 Skill: Comprehension Objective: 2.4 Answer : a.True 57. A product such as bicycles can be marketed in much the same way in Canada and China. a. True b. False Difficulty: 2 Page- 56 Reference: Question ID:02-2-176 Skill: Application Objective: 2.5 Answer : b.False 58. Customer preferences must be taken into consideration across national boundaries, but not generally within the same country. a. True b. False Difficulty: 2 Page- Reference: 56 Question ID: 02-2-177 Skill : Applicatio n Objective: 2.5 Test-Bank-for-Business-Eighth-Canadian- Edition-8-E-8th-Edition-133354261-Canada. ScholarStock. 62 Answer : b.False 59. Whiskey, vodka, gin, and cigarettes are less commonly used today than they were just a few years ago. a. True b. False Difficulty: 1 Page- Reference: 56 Question ID: 02-2-178 Skill : Knowledg e Objective: Answer : 2.5 a.Tru e 60. Socio-cultural factors influence the way workers in a society feel about their jobs; the job can have meaningful social significance or it can simply be a means to an end. a. True b. False Difficulty: 2 Page- 56 Reference: Question ID: 02-2-179 Skill: Comprehension Objective: 2.5 Answer : a.True 61. Product life cycles are somewhat longer than they were 20 years ago because products have become more complex. a. True b. False Difficulty: 1 Page- 57 Reference: Question ID: 02-2-180 Skill: Comprehension Objective: 2.6 Answer : b.False 62. Viral marketing uses word of mouth to spread information from customer to customer. a. True b. False Difficulty: 2 Page- 61 Reference: Question ID: 02-2-181 Skill: Knowledg e Objective: 2.6 Test-Bank-for-Business-Eighth-Canadian- Edition-8-E-8th-Edition-133354261-Canada. ScholarStock. 65 Answer : economic, technological, political-legal, socio-cultural, and business environments 3. What is the main measure of growth in the business cycle? Difficulty: 2 Page- Reference: 41 Question ID: 02-3-190 Skill : Knowledg e Objective: 2.2 Answer : The main measure of growth in the business cycle is aggregate output. 4. How is GDP per capita calculated? Difficulty: 2 Page- Reference: 43 Question ID: 02-3-191 Skill : Applicatio n Objective: 2.2 Answer : GDP per capita is calculated by dividing the total GDP by the total population of a country. 5. List the three key goals of the Canadian economic system. Difficulty: 1 Page- Reference: 39 Question ID: 02-3-192 Skill : Knowledg e Objective: 2.2 Answer : economic growth, economic stability, and full employment 6. Under what circumstances can inflation be a positive factor? Difficulty: 2 Page- 45 Reference: Question ID: 02-3-193 Skill: Comprehensi on Objective: 2.2 Answer : As a sign of economic growth, more product sold, more workers hired, more investment in new products Test-Bank-for-Business-Eighth-Canadian- Edition-8-E-8th-Edition-133354261-Canada. ScholarStock. 66 7. What is the national debt? Difficulty: 1 Page- 44 Reference: Question ID: 02-3-194 Skill: Comprehensi on Objective: 2.2 Answer : The national debt is the amount of money a country owes its creditors. 8. What are the three primary factors that threaten economic stability? Difficulty: 1 Page- 45 Reference: Question ID:02-3-195 Skill: Knowledge Objective: 2.2 Answer : Inflation, deflation, and unemployment are the three primary factors that threaten economic stability. 9. What is measured by the consumer price index (CPI)? Difficulty: 1 Page- 46 Reference: Question ID: 02-3-196 Skill: Comprehensi on Objective: 2.2 Answer : The consumer price index measures the changes in the cost of a "basket" of goods and services that typical family might buy. 10. What is reflected in the real GDP? Difficulty: 2 Page- 43 Reference: Question ID: 02-3-197 Skill: Comprehension Objective: 2.2 Answer : The real GDP is calculated to account for changes in currency values and price changes. 11. What is the national debt? Difficulty: 2 Page- 44 Reference: Question ID: 02-3-198 Skill: Comprehensi on Objective: 2.2 Test-Bank-for-Business-Eighth-Canadian- Edition-8-E-8th-Edition-133354261-Canada. ScholarStock. 67 Answer : The national debt is the amount of money a country owes its creditors. 12. Define the term unemployment. Difficulty: 2 Page- Reference: 47 Question ID: 02-3-199 Skill : Knowledg e Objective: 2.2 Answer : Unemployment is the joblessness of people actively seeking work in an economic system. 13. What is cyclical unemployment? Difficulty: 2 Page- Reference: 47 Question ID: 02-3-200 Skill : Knowledg e Objective: 2.2 Answer : Cyclical unemployment is unemployment that results from a downturn in the business cycle. 14. What is a recession? Difficulty: 2 Page- Reference: 40 Question ID: 02-3-201 Skill : Knowledg e Objective: 2.2 Answer : A recession is a period during which aggregate output declines. 15. What is R&D intensity? Difficulty: 1 Page- 51 Reference: Question ID:02-3-202 Skill: Knowledge Objective: 2.3 Answer : R&D spending as a percentage of the company's sales revenue. 16. Why are customer preferences and tastes important to business? Difficulty: 1 Page- 56 Reference: Question ID: 02-3-203 Skill: Comprehensi on Objective: 2.4 Test-Bank-for-Business-Eighth-Canadian- Edition-8-E-8th-Edition-133354261-Canada. ScholarStock. 70 Question ID:02-3-208 Skill: Knowledge Objective: 2.7 Answer : A vertical merger occurs when one of the companies involved in the merger is a supplier or customer of the other. Chapter 02 Essay Questions 1. How might moderate unemployment and low inflation affect a McDonald's restaurant? Difficulty: 3 Page- Referenc e: 45-47 Question ID:02-4-209 Skill: Application Objective: 2.2 Answer : Moderate unemployment will result in most people being able to afford to eat out, but it also means that McDonald's must pay higher wages to attract employees. Low inflation will result in McDonald's paying relatively constant prices for its supplies, but it also means that McDonald's will be constrained from increasing the prices it charges. 2. How does GNP differ from GDP? Give an example of a product that would be included in Canada's GNP, but not its GDP. Difficulty: 3 Page- 41-42 Reference: Question ID: 02-4-210 Skill: Comprehensi on Objective: 2.2 Answer : A nation's gross national product (GNP) measures the total value of all goods and services produced by its economy within a given period of time, regardless of where the factors of production are located. A nation's gross domestic product (GDP) measures the total value of all goods and services produced within a given period by a national economy through domestic factors of production. As such, the profits earned by a Canadian-owned automobile plant operating in Brazil would be included in the Canadian GNP, but not Canadian GDP. 3. How does the national debt affect economic growth? Difficulty: 3 Page- 44 Reference: Question ID: 02-4-211 Skill: Comprehensi on Objective: 2.2 Test-Bank-for-Business-Eighth-Canadian- Edition-8-E-8th-Edition-133354261-Canada. ScholarStock. 71 Answer : A country's national debt is the amount of money that the government owes its creditors. The government raises money through taxes and the sale of bonds. By selling bonds, the government competes with other potential borrowers for the available supply of loanable money. The more the government borrows, the less money is available for the private borrowing and investment that increases productivity. 4. What is inflation and how does it threaten economic stability? Difficulty: 3 Page- 45-46 Reference: Question ID: 02-4-212 Skill: Comprehensi on Objective: 2.2 Answer : Inflation occurs when there are widespread price increases throughout an economic system. During periods of inflation, the amount of money injected into an economy outstrips the increase in actual output. When this happens, people will have more money to spend, but there will still be the same quantity of products available for them to buy. As they compete with one another to buy available products, prices go up. Higher prices erase the increase in the amount of money injected into the economy and purchasing power declines. 5. What is unemployment? How does low unemployment threaten economic stability? Difficulty: 3 Page- 47 Reference: Question ID: 02-4-213 Skill: Comprehensi on Objective: 2.2 Answer : Unemployment is the joblessness of people actively seeking work in an economic system. While low unemployment might seem to be positive, it can threaten economic stability. When unemployment is low, there is a shortage of labour available for businesses to hire. As businesses compete with one another for the available supply of labour, businesses raise the wages that they are willing to pay. Because higher wages cut into profit margins, companies raise the prices of their products. While the increase in pay results in consumers having more money to spend, high prices offset any gain and purchasing power declines. 6. What are some of the solutions to Canada's low productivity growth rate problem? Difficulty: 3 Page- Reference: 50 Question ID: 02-4-214 Skill : Applicatio n Objective: 2.2 Test-Bank-for-Business-Eighth-Canadian- Edition-8-E-8th-Edition-133354261-Canada. ScholarStock. 72 Answer : The following actions have been suggested: - Develop more partnerships between business and academic institutions - Stop subsidizing uncompetitive industries like shipbuilding - Invest in upgrading workforce skills - Create greater incentives to rejoin the workforce for those on welfare - Levy training costs on businesses like some European countries do 7. How is the effectiveness of the government's attempts to manage Canada's economy measured? Briefly explain each tool. Difficulty: 2 Page- 41-45 Reference: Question ID: 02-4-215 Skill: Comprehensi on Objective: 2.2 Answer : - GDP: value of all goods and services produced in a country - GNP: value of all goods and services produced by a country - Productivity: a measure of efficiency - Standard of living: a measure of a society's economic well-being - Balance of trade: exports minus imports. 8. Draw a model of the business cycle that depicts each of its four phases. Difficulty: 2 Page- Reference: 42 Question ID: 02-4-216 Skill : Knowledg e Objective: Answer : 2.2 See Figure 2.2. 9. What are the pros and cons of prolonged economic stability? Difficulty: 2 Page- 48 Reference: Question ID: 02-4-217 Skill: Comprehensi on Objective: 2.2 Answer : pros: balance, wages constant, low inflation, predictability, stable interest rates cons: possible stagnation, less innovation, decreasing efficiency, job loss, slowed economy, high unemployment 10. List and describe the three factors that threaten stability. Difficulty: 1 Page- Referenc e: 45-47 Question ID:02-4-218 Skill: Knowledge