Unformatted text preview: BUSN115 Midterm Study Guide
The BUSN115 midterm exam is 2 pages long. It is a timed exam worth 140 points that
you may enter only once. You have 2 hours to complete the exam. It consists of 20
multiple choice questions worth 5 points each. There are 2 essay questions worth 20
points each. Be sure to save and save often while you are working on the exam, but do
not submit your exam until you are finished with both pages!
To earn full credit for the essay questions, your response to each question should
answer the question completely in approximately 2 ± 3 paragraphs. The exam reflects
the following course objectives and possible topics:
TCO 1: Given a description of a typical business, demonstrate how that business acts
within our economic system to achieve its goals as well as those of society, along with
an understanding of how the future may impact these goals.
y Know how government regulation affects the economy. y Show the relationship of supply and demand as illustrated on supply and demand
curves. PG 36
y Define elements of productivity and how it can be increased. The elements of productivity include:
y Physical capital:human made resources such as tools, buildings, machines
Human capital:labour force that possesses skills, education, training
Technology:the technical means for the production of goods and services. It is the most
important driver of productivity according to some economists. It involves not only major
inventions but thousands of small innovations. Productivity may be increased by increasing the physical capital, human capital or technology.
Note that there is a term called Diminishing Returns to Physical Capital- which means
successive increases in physical capital lead to smaller increases in productivity Read more:
y Define ³quality of life´. y
y Know the similarities and differences between for profit and not-for-profit
Know the role of the US Federal Reserve and what tools they use to implement
Know what a free market economy is and its relationship to the distribution of
wealth. Define a socialist economic system.
Know how profit is determined for a business.
Know who the stakeholders are of a business.
Know what constitutes US fiscal policy and how is it used to manage the
economy. Define gross domestic product (GDP).
Know and explain the ³rights of capitalism´. TCO 2: Given the importance of ethics in business, be able to understand and address
ethical dilemmas that may occur in workplace activities and offer suggestions to prevent
y Be able to define ethics.
Know how compliance is related to ethics.
W hat some ethical concerns are as described in the text? y
y List and explain the steps to be considered when determining the ethics of an
Know the relationship of ethics and leadership. TCO 3: Given the need to increase profits through cost reductions, describe the use of
globalization strategies to accomplish this initiative, along with a discussion of the pros
and cons of this approach.
y Define and apply tariffs, import quotas and subsidies as applied to foreign trade.
Know what trade protectionism is.
Define a favorable and unfavorable balance of trade.
Define exchange rate, and explain floating, pegged and fixed exchange rates.
Know what the General Agreement on Tariffs and Trade (GATT) is and its
Know the meaning of currency devaluation.
Know what is meant by ³balance of payments´ as related to foreign trade.
Explain the advantages of free trade.
Define what creditor and debtor nations are. TCO 4: Given understanding of entrepreneurship, be able to describe the major
elements necessary for success, along with an understanding of the potential risks
associated with starting a business venture.
y Describe the forms of business ownership, know how they are used and the
advantages and disadvantages of each one.
Describe a franchise and know its advantages and disadvantages.
Define a business merger.
Know the purpose of a limited liability company.
Know what advantages a small business may have when entering a foreign
Know why women as a group are successful in franchises.
Define a farm cooperative.
Know what is the difference between a privately and publicly-owned business.
Know reasons why some people become entrepreneurs.
Know some of the reasons for the success and failure of small businesses.
Know the steps that should be taken in the buying of a franchise.
Know about the Small Business Microloan program. What is a Microloan?
The Microloan Program provides small, short-term loans to small business concerns and certain types of not-for-profit child-care
centers. The SBA makes funds available to specially designated intermediary lenders, which are nonprofit community-based
organizations with experience in lending as well as management and technical assistance. These intermediaries make loans to
eligible borrowers. The maximum loan amount is $50,000, but the average microloan is about $13,000. How Microloan Funds May Be Used
Microloans may be used for the following purposes: y Working capital y The purchase of inventory or supplies y The purchase of furniture or fixtures y The purchase of machinery or equipment. Proceeds from a microloan cannot be used to pay existing debts or to purchase real estate. Technical Assistance
Each intermediary (lender) is required to provide business training and technical assistance to its micro-borrowers. If you apply for
microloan financing, you may be required to fulfill training and/or planning requirements before your loan application is considered.
This business training can be helpful to you as you launch or expand your small business. Terms, Interest Rates, and Fees
Loan terms vary according to: y The size of the loan y The planned use of funds y The requirements of the intermediary lender y The needs of the small business borrower The maximum term allowed for a microloan is six years. Interest rates vary, depending on the intermediary lender and costs to the
intermediary from the U.S. Treasury. Generally, these rates will be between 8 and 13 percent. Collateral
Each intermediary lender has its own lending and credit requirements. Generally, intermediaries require some type of collateral as
well as the personal guarantee of the business owner. Contact Your Local Microloan Intermediary
Small businesses interested in applying for a microloan should contact an intermediary in their area, since all credit decisions are
made on the local level. The Microloan Program is available in selected locations in most states. For more information contact your
local SBA District Office or review the attached file for a list of participating intermediaries by state. y
y Know which business sector offers the most opportunity for profit for an
Know what SCORE is.
Know what is considered ³a self-nurturing business person´.
Know what the aspects of a limited liability company are. ...
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This note was uploaded on 12/13/2011 for the course BIS 155 taught by Professor Mitchell during the Spring '11 term at DeVry Addison.
- Spring '11