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66 terms

Business Test 2

Chap 4-6
STUDY
PLAY
exporting refers to selling domestically produced goods and services in foreign countries.
true
less developed countries do not represent as lucrative a market for US firms because of their lower per capita incomes.
false
a country that can produce goods for less than any other country has an absolute advantage
true
Due to low labor costs China has a comparative advantage in producing airplanes.
false
An unfavorable balance of trade is known as a trade surplus.
False
A trade deficit exists when a nations imports exceed its exports
True
Exchange rates are set by the various national governments
false
National governments sometimes take deliberate action to devalue their currencies as a way to increase exports and stimulate foreign investment
True
Since exchange rates are volatile, US companies do not consider them when establishing prices for their products overseas.
false
Compared with the US, Europeans value employee benefits more than low unemployment and business efficiency
true
A US company operating in the European Union is not required to adhere to European regulations, such as mandatory vacation time
False
The Foreign Corrupt Practices Act regulates the payment of bribes by US firms to officials in foreign countries where such practices are customary.
False
If a country that produces wine decides to enact a tariff on imported wine to match the countrys domestic price, this would be an example of protective tariff
True
If the price of an imported product sells for less in the US than it does in the producing, the producing country could be accused of dumping
true
Exchange controls affect both exporters and importers
True
The government of a less-developed country wants to build several new healthcare facilities in rural areas and improve port facilities to promote exports. The world bank might lend money to help the country finance these construction projects.
True
the International Monetary Fund was created to promote trade through financial cooperation
True
All members of the European Union have adopted the euro as their currency
False
A firm in the Czech Republic buys US agricultural products paying for the products with crude oil. This is an example of countertrade.
True
One advantage of using foreign subcontractors is that forms have almost total control over the business practices of their subcontractors
False
Retailers and service firms with annual sales of less than $6 million are considered to be small businesses.
True
Any firm with fewer than 1,000 employees is considered a small business
False
Small businesses are more likely than large firms to employ the oldest workers, but not the youngest ones.
False
Outsourcing from a large corporation has a negative effect on small businesses.
False
Small businesses are more likely than larger businesses to outsource such functions as accounting and legal services.
True
Small businesses rely more heavily on debt financing than do larger firms
False
Most small business owners realize that personal credit cards carry excessive interest rates and they will avoid using them to finance their business.
False
Excessive government paperwork can cause some smal businesses to close down
True
Small businesses are required to pay state and local taxes but not workers compensation and Social Security
False
Financial forecasts are almost impossible to determine for new businesses and therefore omitted from the initial business plan.
False
The Small business Administration is the major lending source for small businesses needing additional funds
False
Another form of small business assistance is a set-aside program, whereby a percentage of government contracts must be designated to qualifying small businesses
True
A small business owner who sells the goods or services of the supplier is known as the franchisor
False
Although franchises are more likely than independent businesses to succeed, many franchises go out of business
True
Owners or corporations may owe personal income taxes on dividends, which are paid from after-tax corporate profits. This is an example of double taxation.
True
Not for profit corporations do not issue stock certificates and are exempt from paying income taxes
True
A vertical merger occurs between firms at different levels in the distribution channel.
True
Horizontal mergers are formed to ensure adequate supplies of raw materials.
False
A joint venture is a partnership between companies formed for a specific purpose. The companies share the investment, the risk, and the rewards.
True
Certain functions, such as municipal water supply, are considered to be so important to public welfare they are not entrusted to private ownership.
True
Owning a business by definition means that you are an entrepreneur
False
Classic entrepreneurs identify business opportunities and allocate available resources to tap into those markets.
True
Desire for self managment is the motivation that drives many entrepreneurs
True
Entrepreneurs are wealth creators
True
Entrepreneurs enjoy guaranteed job security because no one can fire them
False
Isaac started his own business because he was tired of worrying about corporate downsizing despite his highly positive annual reviews. This is a common motivation for becoming an entrepreneur.
true
Quality of life is rarely a motivation for becoming an entrepreneur since they work long hours
False
Compared with other countries the US has a relatively low level of entrepreneurship activity
False
There is very little government can do to encourage entrepreneurship
False
The aging of the US population has made it more difficult for entrepreneurs to find opportunities.
False
Generally entrepreneurs do not have a high energy level
False
Successful entrepreneurs have a high need to achieve
True
As a rule entrepreneurs believe in their ability to succeed
True
Some entrepreneurs have such confidence that they see what they want to see and while this can be an asset it can also be a limitation
True
Often entrepreneurs are not afraid of failure because there is little chance that they will fail
False
Entrepreneurs are not easily discouraged from a setback or failure
True
Entrepreneurs generally arent very creative people, just hard working and focused on specific problems
False
Entrepreneurs can tolerate the uncertainties associated with starting a new business
True
People should not attempt to convert their hobbies into a business since something that makes a person happy rarely turns into a successful business
false
Obtaining financing for an existing business is easier than it is for most start-up companies
True
The franchising concept eliminates risk for a new entrepreneur
False
A large percentage of start ups raise seed capital through banks
False
Banks cannot research an entrepreneurs' personal credit history when making lending decisions.
false
A new popular trend for debt financing of new ventures is called credit cards and lines of credit
true
Venture capitalists rarely take an equity stake in businesses in which they invest their funds
False
Entrepreneurial environments created within companies can help firms retain valuable employees who might otherwise leave to start their own businesses.
True