Business Management 101 Final Exam ACTUAL UPDATED QUESTIONS AND
CORRECT ANSWERS
Economic System A description of how a particular society distributes its resources to produce
goods and services
Communism First described by Karl Marx as a society in which the people, without regard to
class, own all the nation's resources
On paper it appears efficient, but in practice, these economies suffer from:
low standards of living
critical shortages of consumer goods
high prices
corruption and little freedom
Socialism An economic system in which the government owns and operates basic industries
but individuals own most businesses
Most socialist countries are democratic and recognize individual freedoms
The socialist system may allow a higher standard of living and is more stable; but
taxes and unemployment are generally higher in socialist countries
Capitalism/ Free Enterprise An economic system in which individuals own and operate the majority of
businesses that provide goods and services
Pure capitalism or free-market system happens when all economic decisions are
made without government intervention; also called laissez-faire capitalism
Modified capitalism differs from pure capitalism as the government intervenes
and regulates business to some extent
Supply The number of products businesses are willing to sell at different prices at a
specific time
, Demand The number of products consumers are willing to buy at different prices at a
specific time
Equilibrium Price the price at which the number of products supplied equals the amount of
products consumers are willing to buy at a specific time
Pure Competition The market structure that exists when there are many small businesses selling one
standardized product
Monopolistic Competition Fewer businesses than in a pure competition and the differences among the
goods they sell are small
Oligopoly The market structure that exists when there are very few businesses selling a
product
Monopoly The market structure that exists when there is only one business providing a
product in a given market
Gross Domestic Product (GDP) The sum of all goods and services produced in a country during a year
Does not include profits from companies' overseas operations
Budget Defecit The condition in which a nation spends more than it takes in from taxes
U.S. budget deficit has recently grown to record levels; remedies include raising
taxes or reduce spending
Business Ethics Principles and standards that determine acceptable conduct in business
Social Responsibility A business's obligation to maximize its positive impact and minimize its negative
impact on society
a voluntary action taken on by companies to varying degrees and it characterized
by actions showing concern for all stakeholders such as employees, consumers,
the environment and the community
Sarbanes-Oxley Act Criminalized securities fraud and stiffened penalties for corporate fraud
Enacted after the accounting scandals in the early 2000's
Dodd-Frank Act Passed to reform the financial industry and offer consumers protection against
complex and/or deceptive financial products
Enacted after the most recent recession
Ethical Issue An identifiable problem, situation, or opportunity that requires a person to choose
from among several actions that may be evaluated as right or wrong, ethical or
unethical
Greenwashing (1) When a company claims they are green because they have a few green
practices such as recycling but not water or energy conservation
(2) When a company puts a façade on their products/services that looks and
claims to be green, when in fact there is nothing green about it
CORRECT ANSWERS
Economic System A description of how a particular society distributes its resources to produce
goods and services
Communism First described by Karl Marx as a society in which the people, without regard to
class, own all the nation's resources
On paper it appears efficient, but in practice, these economies suffer from:
low standards of living
critical shortages of consumer goods
high prices
corruption and little freedom
Socialism An economic system in which the government owns and operates basic industries
but individuals own most businesses
Most socialist countries are democratic and recognize individual freedoms
The socialist system may allow a higher standard of living and is more stable; but
taxes and unemployment are generally higher in socialist countries
Capitalism/ Free Enterprise An economic system in which individuals own and operate the majority of
businesses that provide goods and services
Pure capitalism or free-market system happens when all economic decisions are
made without government intervention; also called laissez-faire capitalism
Modified capitalism differs from pure capitalism as the government intervenes
and regulates business to some extent
Supply The number of products businesses are willing to sell at different prices at a
specific time
, Demand The number of products consumers are willing to buy at different prices at a
specific time
Equilibrium Price the price at which the number of products supplied equals the amount of
products consumers are willing to buy at a specific time
Pure Competition The market structure that exists when there are many small businesses selling one
standardized product
Monopolistic Competition Fewer businesses than in a pure competition and the differences among the
goods they sell are small
Oligopoly The market structure that exists when there are very few businesses selling a
product
Monopoly The market structure that exists when there is only one business providing a
product in a given market
Gross Domestic Product (GDP) The sum of all goods and services produced in a country during a year
Does not include profits from companies' overseas operations
Budget Defecit The condition in which a nation spends more than it takes in from taxes
U.S. budget deficit has recently grown to record levels; remedies include raising
taxes or reduce spending
Business Ethics Principles and standards that determine acceptable conduct in business
Social Responsibility A business's obligation to maximize its positive impact and minimize its negative
impact on society
a voluntary action taken on by companies to varying degrees and it characterized
by actions showing concern for all stakeholders such as employees, consumers,
the environment and the community
Sarbanes-Oxley Act Criminalized securities fraud and stiffened penalties for corporate fraud
Enacted after the accounting scandals in the early 2000's
Dodd-Frank Act Passed to reform the financial industry and offer consumers protection against
complex and/or deceptive financial products
Enacted after the most recent recession
Ethical Issue An identifiable problem, situation, or opportunity that requires a person to choose
from among several actions that may be evaluated as right or wrong, ethical or
unethical
Greenwashing (1) When a company claims they are green because they have a few green
practices such as recycling but not water or energy conservation
(2) When a company puts a façade on their products/services that looks and
claims to be green, when in fact there is nothing green about it
