END OF UNIT TEST 2 (70 MINUTES)

SECTION 1: Vocabulary and Structure (30 marks, 1 mark/answer)

1. ________________ is referred to as government actions concerning taxation and public expenditure
A. Monetary policy B. Economic policy C. Fiscal policy D. Tax policy

2. During a(n) ________________, the demand for goods and services will decline and the economy will begin to
work below its potential.
A. upturn B. boom C. downturn D. expansion

3. The fact that people start saving money and consuming less leads to a ________________ in demand,
production, and employment.
A. equilibrium B. surplus C. rise D. fall

4. The company increased its production of the new shoes after a recent advertising campaign made the
________________ for the product increase rapidly.
A. trough B. demand C. deficit D. surplus

5. The difference between the funds a country receives and those it pays for all internal transactions is
called ________________.
A. balance of payments C. equilibrium
B. consumption decisions D. gross domestic product

6. The total market value of all the goods and services produced in a country during a given period is called
________________.
A. gross domestic product C. consumptions
B. balance of payments D. demand decline

7. ________________ is the economic theory that supports governmental intervention in the economy, to
counteract the business cycle.
A. Keynesianism C. Classical economic theory
B. Monetarism D. Friedman theory

8. The period during which radical innovations destroy established companies or industries is called
________________.
A. creative destruction C. trough
B. technological invention D. endogenous

9. If the economy's turning down, it may make sense for governments to have ________________, and to keep
expenditure in the economy.
A. budget surplus B. budget deficit C. budget equilibrium D. budget supply
10. The upward and downward movement of aggregate output produced in the economy is referred to as the
________________.

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A. long-lasting recession C. business cycle
B. negative growth D. monetary expansion

11. Groups of people with a stake in or an interest in or a claim on the firm are called ________________.
A. stockholders B. shareholders C. bondholders D. stakeholders

12. Countries where taxes are low, where multinational companies often set up their head offices, are known
as ________________.
A. tax launderers C. tax havens
B. tax harbors D. tax evasion

13. The model where companies have an obligation to maximize profits because shareholders expect the
maximum return on their investments is called ________________.
A. stockholder model C. caveat emptor
B. stakeholder model D. classical theory

14. The community or outside society can be referred to as ________________ stakeholders.

A. interval B. internal C. external D. extended

15. The contract requires managers ________________ to high standards of personal ethics.
A. to eliminate B. to maximize C. to provide D. to conform

16. An economic system in which anyone can raise capital, form a business, and offer goods or services is
called ________________.
A. free society B. free expenditure C. free enterprise D. free corporate

17. It is clearly shown that their products are designed to ________________ profit rather than behave
according to consumer expectations.
A. provide B. maximize C. optimize D. localize

18. Selling your company's secrets to a rival is called industrial ________________.

A. fraud B. espionage C. pollution D. trading

19. ________________ means a country's ability to produce particular goods more efficiently than some other
countries.
A. Absolute advantage C. Relative advantage
B. Comparative advantage D. Competitive advantage

20. ________________ means restricting imports by way of trade barriers such as tariffs and quotas.
A. Consumerism C. Protectionism
B. Strategic industry D. Absolute advantage

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21. ________________ is referred to as a maximum quantity of goods of a specific kind that can be imported
into a country.
A. A quota B. An output C. A tariff D. A sales target

22. ________________ helps to identify a product made by a particular producer and cannot be legally used by
anyone else.
A. A generic B. A trademark C. A brand D. A symbol

23. A tax collected at each stage of production, excluding the already-taxed costs from previous stages, is
called a/an ________________.
A. added-value tax B. sales tax C. value-added tax D. capital gains tax

24. WTO policies allow rich countries to ________________ heavily subsidized industrially produced food in
poor countries, which damages local production.
A. dump B. copy C. protect D. deny

25. ________________ is referred to as basic systems and services such as transport and power supplies.
A. Facilities B. Infrastructure C. Superstructure D. Asset

26. ________________ penalizes all income-generating activity, which makes everyone poorer.
A. Value-added tax B. Income tax C. Inheritance tax D. Capital gains tax

27. Unfettered free markets can ensure the long- term optimal ________________ of resources and long- term
economic growth.
A. provision B. allocation C. calculation D. collaboration

28. He also maintained that increases in public expenditure would lead to increased ________________ and
higher unemployment.
A. intervention B. taxation C. proportion D. restriction

29. The business cycle or trade cycle is a ________________ feature of market economies: GDP alternately
grows and contracts.
A. temporary B. permanent C. alternative D. expansive

30. During a(n) ________________, parts of the economy expand to the point where they are working at full
capacity.
A. upturn C. consumption D. balance of
B. downturn payments

SECTION 2: Reading Cloze (20 marks, 2 marks/answer)

Fill in each blank with one suitable word/phrase. You don’t need to use all the words provided.

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 designing protecting advanced committed

environment impact schedule related

economic business managed progression

Business and the environment

These days in business, people have to face many challenging questions when (31) ________________ and
implementing new projects in undeveloped areas of the countryside. One issue which has to be faced is
whether it is possible to introduce new technology without destroying the local (32) ________________.

(33) ________________ development and environmental conservation are often seen as natural enemies. It is
unfortunate that in the past this has often been true, and it has been necessary to choose between running
the project or (34) ________________ the environment. However, by taking environmental considerations
seriously at an early stage in a project, companies can significantly reduce any (35) ________________ on local
plants and animals.

For example, in southern Africa, a company called CEL was asked to put up 410 km of a power transmission
line without disturbing the rare birds which inhabit that area. The project was carried out with minimal
disturbance last summer. What may surprise many (36) ________________ people is the fact that this
consideration for local wildlife did not in any way slow down the project. Indeed, the necessary advance
planning, combined with local knowledge and (37) ________________ technology, meant that the project was
actually completed ahead of (38) ________________. CEL was contracted to finish the job by October and (39)
________________ to do so two months earlier.

CEL is one of those companies which is (40) ________________ to the principle of environmental conservation.
Many other companies have yet to be convinced of the importance of balancing the needs of people with
those of the environment. However, it may be the only realistic way forward.

SECTION 3: Reading Comprehension (30 marks, 2 marks/answer)

Profits and social responsibility
1 Pure free market theorists argue that the function of a business is to make profits. Milton Friedman, for
example, argued that any corporate action inspired by “social responsibility”, rather than the attempt to
maximize profits, is “unbusinesslike”. In an article called “The social responsibility of business is to increase
its profits”, he argued that people who say that business has “responsibilities for providing employment,
eliminating discrimination, avoiding pollution”, and so on, are “undermining the basis of a free society”. For
Friedman, “only people can have responsibilities”, and not corporations:

2 In a free enterprise, private-property system, a corporate executive is an employee of the owners of the
business. He has direct responsibility to his employers. That responsibility is to conduct the business in
accordance with their desires, which generally will be to make as much money as possible, while of course

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 conforming to the basic rules of the society, both those embodied in law and those embodied in ethical
custom.

3 Therefore, “to say that the corporate executive has a “social responsibility” in his capacity as businessman”
is to say that “he is to act in some way that is not in the interest of his employers”. Because if an executive
makes “social” expenditures he is spending someone else’s money ... Insofar as his actions in accord with
his “social responsibility” reduce returns to stockholders, he is spending their money. Insofar as his actions
raise the price to customers, he is spending the customers’ money. Insofar as his actions lower the wages
of some employees, he is spending their money.

4 Furthermore, such actions are “undemocratic” as they involve corporations taking on responsibilities that
should be the government’s: taxation and expenditure, and solving social problems. If the elected
government is not taking certain actions, it is because the voters did not want it to do so. Any such action
“harms the foundations of a free society” and reveals an unfortunate “suicidal impulse” in businessmen.

5 Friedman does not seem to consider the possibility that stockholders might prefer to receive lower
dividends but live in a society with less pollution or less unemployment and fewer social problems.

6 An alternative view to the “stockholder model” exemplified by Friedman’s article is the stakeholder model.
According to this approach, business managers have responsibilities to all the groups of people with a
stake in or an interest in or a claim on the firm. These will include employees, suppliers, customers and the
local community, as well as the stockholders. Proponents of the stakeholder approach argue that all these
groups should be represented on a company’s board of directors.

Based on the information in the article, say whether the following statements are True (T), False (F).

41. Free market theorists think that people do business to make money.
42. Friedman believes both people and corporations can have responsibilities.
43. Friedman describes social responsible actions of corporations as an undemocraticy.
44. Friedman argues that the social responsibility of business is to solve social problems.

Choose the best answer.

45. According to Friedman, in what way are "social responsible" actions by businesses "undemocratic"?
A. Because this is generally what the owners of the business want, and what they employ executives to do.
B. Because they involve doing things that should be done by governments.
C. Because only people can have responsibilities, and not corporations.

46. According to the text, what other desires might stockholders have, apart from making as much money as
possible?

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A. Lower dividends, higher prices, or lower wages.
B. A society with less pollution or less unemployment and fewer social problems.
C. A government that takes on social responsibilities.

What does each of the underlined words refer to?

47 “… he argued that people who say that business has …” (Para. 1)
48 “… to say that he is to act in some way that is not …” (Para. 3)

Find words from the text which mean:

49. complying with or following (rules, etc.) (Para. 2)
50. treating some people in a worse way than you treat other people (Para. 1)
51. making something weaker (Para. 1)
52. causes damage to (Para. 4)
53. according to generally accepted beliefs based on morals (Para. 2)

SECTION 4: Listening (20 marks)

PART 1: Listen and fill in the gaps. (1mark/answer)

But let's think what happens there. I'm working in a cloth factory in a (56) ________________ country. We move
from going from no trade to (57) ________________. My country specializes just in computers. What's going to
happen, I'm going to (58) ________________ my job. OK. Now that may be a big (59) ________________,
governments may be concerned about workers losing jobs in certain sectors. Now we could argue in theory I
just need to (60) ________________ my job and become working in computing. It may be very (61)
________________ for me to do that. I may be in the wrong part of the country, I may not have the (62)
________________ and so on.
Basically what happens with free trade is that many many people (63) ________________ and a few people may
lose and they may lose big time, and if we’re concerned about those people we may want to have some (64)
________________ process, we may be concerned about (65) ________________ free trade.

PART 2: Listen and complete the summary (2 marks/answer)

Q: What recent changes have you noticed in the job market?

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A: The most unique change in the job market recently is the intervention of (66) ________________
________________ and websites. As a global business, we can recruit roles that are based wherever. Besides,
the candidate or (67) ________________ ________________ do have a large number of choice. For example, you
can go online at home to look for roles and jobs that are advertised worldwide. It’s an absolutely (68)
________________ ________________ for both candidates and employers. In terms of the recruitment market, there
has been an increasing need for interim and temporary employees. The fact is that many organizations will
continue to experience change, and quite often, (69) ________________ ________________ will need to be brought
in on project bases to handle specific projects in areas such as IT, (70) ________________ ________________ …
and people will keep looking for project management.

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 KEY
Section 1 (30 marks, 1 mark/answer)
1. C. Fiscal policy 16. C. free enterprise
2. C. downturn 17. B. maximize
3. D. fall 18. B. espionage
4. B. demand 19. B. Comparative advantage
5. A. balance of payments 20. C. Protectionism
6. A. gross domestic product 21. A. A quota
7. A. Keynesianism 22. B. A trademark
8. A. creative destruction 23. C. value-added tax
9. B. budget deficit 24. A. dump
10. C. business cycle 25. B. Infrastructure
11. D. stakeholders 26. B. Income tax
12. C. tax havens 27. B. allocation
13. A. stockholder model 28. B. taxation
14. C. external 29. B. permanent
15. D. to conform 30. A. upturn

Section 2 (20 marks, 2 marks/answer)

31. designing
32. environment 37. advanced
33. economic 38. schedule
34. protecting 39. manage
35. impact 40. committed
36. business

Section 3 (30 marks, 2marks/answer)

Reading comprehension

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41. T
42. F
43. T
44. F
45. B
46. B
47. Milton Friedman / Milton / Friedman
48. the corporate executive / corporate executive
49. conforming to
50. discrimination
51. undermine
52. harms
53. ethical
54. provide
55. stakeholder

Section 4
Part 1 (10 marks, 1 mark/answer)
56. business 61. profit
57. value 62. difference
58. shares 63. worth
59. account 64. loss
60. assets 65. measure.

Part 2 (10 marks, 2 marks/answer)

66. online recruitment
67. job seekers / job seeker
68. unique opportunity
69. specialist people
70. human resources

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