CH-1

Finance is the function of acquiring and management of:

 financial resources CORRECT

Karl Marx Blank Correct Unavailable is known as the grandfather of communism - the first to describe
the principles of a communist society

Which of the following statements are true of a socialist economic system? (Select all that apply.)


 The government owns and operates basic industries such as postal and transportation.
CORRECT

 Individuals own most businesses. CORRECT

Reason: 

In socialist societies the opposite is true, taxes and unemployment tend to be higher.

In socialism, citizens often work in government-operated organizations.

The economic system in which the government owns and operates basic industries but individuals
own most businesses is called _____.
 socialism
A good or service with tangible and intangible characteristics that provide satisfaction and benefits to
customers is called a ________ Unavailable.

 Blank 1: product

If a company spends $1.00 to make a product, $1.00 to finance and promote a product, and can then
sell that product for $3.50, the profit on that product is:

 $1.50
Business activities help generate the profits that are essential not only to individual businesses and
local economies but also to the health of the

 global economy
_______ is the study of how resources are distributed for the production of goods and services within
a social system.

 Economics CORRECT

A central issue of economics is how to fulfill an unlimited demand for goods and services in a world
with a limited supply of resources.

 True
A central issue of economics is how to fulfill an unlimited demand for goods and services in a world with
a limited supply of resources.

Select from the list below the three basic economic systems.

 Communism
 Capitalism
 Socialism

_______ Unavailable, or free enterprise, is an economic system based on free markets, in which all or
most of the factors of production and distribution are privately owned and are operated for profit.
(Please use one word per blank.)

 Blank 1:  Capitalism

What is a free-market system?

 An economic system that has no government intervention and in which a market determines
what is produced, who gets what, and how the economy grows
 Another name for pure capitalism

Which of the following are true of mixed economies? (Check all that apply.)

 They are a mixture between capitalist, socialist, and communist economies.

 They exist when the distribution of resources involves elements from more than one economic
system.

Many communist and socialist countries, such as China and Russia, are applying more principles of
free ______ to their own economic systems.

 enterprise
The quantity of products that consumers are willing to buy at different prices at a specific time is
called:

 demand

Which of the following accurately defines a business?

 A business is an organization that seeks to provide goods and services to others while operating
at a profit

The difference between what it costs to make and sell a product and what a customer pays for it is
called ________ Unavailable.

 Blank 1: profit

A vital element of free enterprise is:

 competition

Economic ___ Unavailable occurs when an economy is growing and people are spending more money.
  Blank 1: expansion or growth

During an economic contraction, which of the following occur?

 Businesses lay off workers

 A decline in consumer spending
 Businesses reduce production levels

An economic system in which the market determines what products get produced, who gets them,
and how the economy grows is a ______ system.

 free-market

The sum of all goods and services produced in a country in a given year is called:

 GDP

Reason: GDP (gross domestic product) is the total value of goods and services produced within the
borders of a country, regardless of the nationality of those who produce them. GNP (gross national
product) is the total market value of goods and services produced by the residents of a country, even if
they’re living abroad.

Canada, the United States, Switzerland, Australia, and Norway have a high level of wealth and
material comfort. This means these countries have a _____ Unavailable standard of living.

 Blank 1: high or higher

The Canadian economy is one in which economic activities occur between the country and the
international community. The Canadian economy is

 an open economy

During the Industrial Revolution:

 factories brought materials, machines, and workers together

Evidence of the government's involvement in the Canadian economy can be seen through:

 regulations preserving competition

 consumer and employee protection legislation
 ownership of crown corporations

During an economic expansion the standard of living ______.

 rises because more people are employed and have money to spend

A slowdown in the economy characterized by a decline in spending, lower levels of business

production, and laying off of workers is called economic _______.

 Contraction

The Canadian economic system is considered a mixed economic system because:

 the government is active in the economic system through ownership of crown corporations
  entrepreneurs control many of the factors of production
 private citizens own the majority of business
One of the challenges of ______ is that the individual takes on the risk, investing both time and
money, with no guarantee of success.
 entrepreneurship
The standards and principles used by society to define appropriate or inappropriate conduct in the
workplace is called:
 business ethics
To be successful in business, you need knowledge, skills, experience, and good _____________
Unavailable.
 judgment or judgement

Hugo lives in a country where individuals (not the government) own and operate the majority of
businesses that provide goods and services. Hugo lives in a ______ country.
 capitalist
The ____________ Unavailable Revolution brought development of new technology and factories.
 Industrial

The term ____________ Unavailable refers to all activities concerned with obtaining money and using
is effectively.
 finance

How a particular society distributes its resources to produce goods and services describes an
economic ___________ Unavailable.
 system or systems

___________ economies are made up of elements from more than one economic system; for
example, where some allocation of resources is made by the market and some by the government.
 Mixed

___________ enterprise is the foundation of the economic system in many nations such as Canada,
the United States, and Japan.
 Free

Mark, the marketing manager for a large Canadian wine producer, realizes that Mexico has virtually
no supply of wine. He conducts a study to see what quantity of wine Mexican customers would be
able and willing to buy at different prices. Mark is analyzing Mexico's:
 demand for wine

An economic and political system in which the government makes all economic decisions and owns all
the major factors of production is a_______________ Unavailable economy.
 Blank 1: communist

An _____________ Unavailable is an individual who risks his or her wealth, time, and effort to develop
for profit an innovative product or way of doing something.
 Blank 1: Entrepreneur
The topics covered in this chapter and throughout this book provide some of the knowledge you need
to understand the world of business. The following tools are included to help you develop good
business judgment:
 boxes and examples within each chapter
 case at the end of each chapter with described experiences
 opening vignette at the beginning of each chapter
The rivalry among businesses for consumers' dollars is referred to as________ Unavailable.
 Blank 1: competition

Gross domestic product (GDP) measures only those goods and services made within a country.
 True

Reason: Gross domestic product (GDP) measures only those goods and services made within a country.

The level of wealth and material comfort that people have available to them is referred to as
 standard of living
Without profits, businesses find it difficult, if not impossible, to buy more raw materials, hire more
employees, attract more capital, and create additional products that in turn make more profits and
fuel the world economy.
 True

Reason: This is true. Without profits, businesses find it difficult, if not impossible, to buy more raw
materials, hire more employees, attract more capital, and create additional products that in turn
make more profits and fuel the world economy.

_________ economies are made up of elements from more than one economic system; for example,
where some allocation of resources is made by the market and some by the government.
 Blank 1: Mixed