Study Guide

Field 168: Business and Marketing

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Sample Selected-Response Questions

Competency 0001 
Business Management, Entrepreneurship, and Ownership

1. A United States-based automobile manufacturing firm is entering into the market of a country overseas where automobile manufacturing firms already operate. The United States-based firm and a local firm in the other country contract with each other to create a joint venture. One of the key features of the joint venture is that the two firms will:

  1. be chartered as a limited partnership.
  2. employ a workforce from both countries.
  3. be subject to international legal codes.
  4. share governance, returns, and risks.
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Correct Response: D. This question requires the examinees to identify forms of business ownership, entrepreneurial opportunities, and strategies used by businesses. A joint venture is an agreement between firms to combine their resources to achieve a common business goal. There are many different examples of joint ventures, and all involve some agreed-upon distribution of decision-making power, profits, and investment between the firms.

Competency 0001 
Business Management, Entrepreneurship, and Ownership

2. In contrast to a leader characterized by an autocratic style of business leadership, a leader using a democratic style is most likely to place a greater emphasis on:

  1. planning for long-term goals rather than short-term targets.
  2. investing in employees' skills rather than cultivating their talents.
  3. expanding in one market niche rather than growing into new niches.
  4. inspiring employees to create rather than incentivizing them to perform.
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Correct Response: D. This question requires examinees to analyze management styles and factors that influence individual and group behavior, team building, and employee motivation and morale. A democratic leadership style focuses on employee participation, empowerment, and morale rather than attempting to incentivize performance through rewards and punishments. The goal of the democratic style of leadership is to inspire greater creativity and motivation in the workforce by impressing upon employees that their roles are vital to the organization's success.

Competency 0001 
Business Management, Entrepreneurship, and Ownership

3. In a matrix organizational structure, cross-functional teams from different parts of a firm work together on various projects. One significant advantage of this type of structure is that it provides:

  1. strategies and metrics for evaluating job performances of staff.
  2. a clear division of labor where all staff know their roles and responsibilities.
  3. increased flexibility that allows more effective responses to change.
  4. a clear chain of command for making and communicating decisions.
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Correct Response: C. This question requires examinees to apply knowledge of business organizational structures. In a matrix organizational structure, a business's employees work with different colleagues on a number of different teams. Employees are exposed to colleagues with a wide array of perspectives and areas of expertise, and each manager works with a large number of employees and becomes familiar with their respective strengths. When new challenges arise, a matrix structure gives the organization flexible and efficient options to assign the tasks to the team that is best equipped to deal effectively with the challenges.

Competency 0002 
Business Law, Ethics, and Social Responsibility

4. Federal laws governing discrimination based on disabilities allow an employer to engage in which practice?

  1. asking job applicants whether they can perform the job and how they would perform the job
  2. making medical records of employees available to insurance companies and other interested parties
  3. asking job applicants to take a medical exam before extending a job offer
  4. offering a different package of fringe benefits to employees with and without disabilities
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Correct Response: A. This question requires examinees to demonstrate knowledge of employment law. Federal law prohibits employers from treating employees and job applicants differently from one another on the basis of several categories, one of which is disability. The Americans with Disabilities Act (ADA) prohibits intentional discrimination and practices that have a discriminatory effect regardless of intention. Additionally, the ADA requires that employers make reasonable accommodations for employees and applicants with disabilities. Therefore, an employer can ask applicants about their ability to perform the tasks required for a job in order to determine what accommodations, if any, may be necessary for an applicant who is hired.

Competency 0002 
Business Law, Ethics, and Social Responsibility

5. Most bankruptcy events in the United States occur under either Chapter 7 or Chapter 11 of the federal Bankruptcy Code. What is a situational distinction between these two forms of bankruptcy?

  1. Chapter 7 governs the liquidation of the business; Chapter 11 allows for reorganization of the business.
  2. Chapter 7 prioritizes creditors based on the size of the debt; Chapter 11 prioritizes based on the date of the debt.
  3. Chapter 7 is overseen by a federal court; Chapter 11 is conducted through arbitration and mediation.
  4. Chapter 7 applies to corporations and partnerships; Chapter 11 applies to sole proprietorships and individuals.
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Correct Response: A. This question requires examinees to demonstrate knowledge of negotiable instruments, credit, and bankruptcy. Bankruptcy law establishes several processes by which a person or organization pays off debts and liabilities when they are no longer financially solvent. For example, Chapter 7 bankruptcy requires that assets be liquidated to pay outstanding debts. In contrast, Chapter 11 bankruptcy creates a legal structure for negotiating and restructuring debt that allows for a business to remain solvent and continue operation.

Competency 0002 
Business Law, Ethics, and Social Responsibility

6. According to United States copyright law, material that appears on the Internet:

  1. can be copyrighted only if the URL for the website in which it is found ends in .com.
  2. is only protected if it is found within a website that is listed with a registered domain name.
  3. enjoys the same copyright protection as equivalent material that appears in print or other media.
  4. is not protected by copyright unless it meets the criteria for a registered trademark.
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Correct Response: C. This question requires examinees to interpret and apply property, patent, cyber, and trademark laws, including copyright and other laws related to intellectual property. United States copyright law exists to protect intellectual property rights. Copyright is granted to the author of an original piece of work regardless of the medium in which the work is created. This includes not only print books, audio recordings, and films, but also any material published on the Internet.

Competency 0003 
Financial Management, Accounting, and Business and Marketing Mathematics

7. Which step in the accounting cycle ends with the preparation of a trial balance and the careful correction of any mistakes revealed in the process?

  1. examining source documents
  2. recording transactions
  3. posting to the ledger
  4. creating financial statements
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Correct Response: C. This question requires examinees to apply basic accounting principles and the accounting cycle. Posting to the ledger is the process in which all journal entries are transferred to the ledger. After the posting process concludes, a trial balance shows a summary of all the company's accounts. If the total debits and credits cannot be reconciled, then errors from the posting process must be identified and corrected.

Competency 0003 
Financial Management, Accounting, and Business and Marketing Mathematics

8. Which expression can be used to calculate the amount (N) of money in an account at the end of 4 years, beginning with 1000 dollars and growing at a rate of 5percent compounded annually?

  1. N equals open parenthesis 1000 times 1 point 5 end parenthesis to the fourth power
  2. N equals 1000 plus open parenthesis 100 point 05 times 4 end parenthesis
  3. N equals open parenthesis 1000 times 5 end parenthesis times 4
  4. N equals 1000 times open parenthesis 1.05 end parenthesis to the fourth power
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Correct Response: D. This question requires examinees to apply basic computational skills and algebra to solve problems in business contexts. A 5percent increase must be interpreted as a change resulting in 105percent of the original amount. The answer can be calculated by multiplying the original amount, 1000, by 105percent as a decimal, 1.05, for each time the interest is applied. If the interest is compounded annually, the interest rate is applied once a year. Applying the 5percent interest rate once a year for 4 years results in the product 1000 times 1.05 times 1.05 times 1.05 times 1.05, or 1.05 to the fourth power multiplied by 1000.

Competency 0003 
Financial Management, Accounting, and Business and Marketing Mathematics

9. How do taxes under the Federal Insurance Contributions Act (F I C A) differ from federal and state income taxes?

  1. All employees must pay the F I C A taxes, but many employees are exempt from federal and state income taxes.
  2. Individuals who are receiving Medicare and/or social security do not have to pay F I C A taxes regardless of how many hours they work.
  3. The amount of F I C A taxes individuals owe is calculated on their after-tax income rather than their gross income.
  4. F I C A taxes are paid by each employee and by the employer, but only employees pay personal income taxes.
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Correct Response: D. This question requires examinees to apply knowledge of managerial accounting, compliance with payroll and financial reporting laws, and risk management. Federal Insurance Contributions Act (F I C A) contributions are a set of payroll taxes that fund both the Social Security and Medicare programs. They are paid in roughly equal share by employers and employees. Federal and state income taxes are paid only by people receiving income, such as employees, and are not matched by employers.

Competency 0004 
Communication and Information Technology

10. A wiki-based website created and continually modified by a large number of users is most likely to contain reliable and accurate information on topics that involve:

  1. highly specialized technical subjects.
  2. highly divisive controversies.
  3. matters of longstanding general interest.
  4. unexpected breaking news.
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Correct Response: C. This question requires examinees to apply procedures for accessing and navigating the Internet and retrieving, synthesizing, and evaluating information. Because wiki-based websites are editable by end users without validation by an editor or publisher, they are not reliable sources for researching controversial issues or highly specialized subjects. However, research has shown that wiki-based encyclopedias are comparable to traditional encyclopedias regarding information on longstanding, settled issues of fact. The large number of users serving as editors has the effect of reducing the possibility of any one user introducing erroneous information into a wiki-based website.

Competency 0004 
Communication and Information Technology

11. A United States business is beginning a dialogue with a business in a foreign country about a partnership, and a senior manager in the United States business is leading a team to the foreign country for preliminary talks. The senior manager has been advised that cultural norms in that country emphasize personal relationships in business, and that a primary goal of the meeting is for the two companies' managers to establish a courteous working relationship. To best help achieve this goal, the senior manager should take which step before the preliminary talks?

  1. arranging for a consultant familiar with the customs of the foreign country to present information about the country's culture, etiquette, and manners to team members
  2. reminding team members that these are preliminary meetings and that they should take care not to discuss details of company operations with their counterparts
  3. discussing perceptions of other cultures with each team member to screen out individuals who are prone to stereotyping or have ethnocentric attitudes
  4. providing team members with a list of words and phrases in the primary language of the foreign country and their English translations for use in conversations with their counterparts
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Correct Response: A. This question requires examinees to apply knowledge of human relations, interpersonal skills, cultural diversity, and cross-cultural communication. When building a courteous personal relationship with potential business partners in another country, attention to cultural competency is vital. If the team members are not trained about the cultural norms of the host country, they may inadvertently offend the potential business partners. By working with a consultant who is familiar with the host country, the United States managers can ensure that their team members will show respect for their counterparts’ culture, etiquette, and manners during preliminary talks.

Competency 0004 
Communication and Information Technology

12. Which piece of technology can perform as both an input device and an output device?

  1. microphone
  2. external speaker
  3. scanner
  4. flash drive
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Correct Response: D. This question requires examinees to identify characteristics of hardware and peripherals while demonstrating knowledge of input and output systems. A flash drive is a small, portable hard drive that plugs into a USB port on a computer. A flash drive functions as an input device when a user moves data from the flash drive to a computer's hard drive. It functions as an output device when the user moves data from the computer onto the flash drive.

Competency 0005 
E-Commerce and International Business

13. A worker uses a company-issued laptop computer for business purposes. Recently, the worker deleted all cookies from the Internet browser. The worker can expect that this change could affect the next visit to a familiar Web page in which way?

  1. The worker may be required to enter the Web page login information.
  2. The Web page may be more likely to display an error message.
  3. The worker may see different images load on the Web page.
  4. The Web page may be missing from the browser history.
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Correct Response: A. This question requires examinees to demonstrate knowledge of strategies for maintaining security, ensuring privacy, and managing risk when using information technology and the Internet. Cookies allow a web page to remember a user's browsing history, login credentials, and other information. With a cookie operating, fillable fields such as log ins can auto-populate, which streamlines a user's experience.

Competency 0005 
E-Commerce and International Business

14. Read the passage below; then answer the question that follows.

United States firms involved in the growth and production of sugar, and representatives of their workers have successfully lobbied Congress to impose tariff-rate quotas on imported sugar and sugar products. Under this regulation, a limited quantity of sugar can enter the United States under a low tariff, with higher import quantities subject to a higher, over-quota tariff. The tariffs have raised the price of raw sugar in the U.S. substantially above the worldwide price. The sugar industry's lobby asserts that the higher prices have helped to sustain the employment and elevate the income of over 140,000 workers.

Which consideration not included in the passage forms the strongest economic argument against the tariff-rate quota?

  1. The higher price of sugar has caused inflation that has destabilized the monetary system.
  2. Millions of U.S. workers are employed in industries that depend on sugar as an input.
  3. Public support for protectionist policies has been trending downward in recent decades.
  4. The jobs linked to the sugar industry tend to pay low incomes and require few skills.
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Correct Response: B. This item requires the candidate to demonstrate knowledge of the role of trade, protectionism, and other factors that affect global trade. People participate in the economy both as producers who benefit from higher prices and as consumers who benefit from lower prices. Among the consumers of sugar are United States food processors and other firms that use sugar as an input in their production process. These firms employ many more United States workers than are employed as producers of sugar. To evaluate the net economic effects in the United States of a tariff that raises the price of sugar, the costs borne by those firms must be added to the costs borne by household consumers of sugar and weighed against the benefits conferred on the producers of sugar.

Competency 0005 
E-Commerce and International Business

15. An entrepreneur is starting an online business that will offer a course in Internet skills. Customers will expand their knowledge of Internet search and safety strategies and learn how to evaluate Internet sites and acquire and use apps. When designing a website for the business, the entrepreneur should emphasize:

  1. the use of colorful graphics and animation to capture the attention of potential customers.
  2. a sophisticated layout for the website to demonstrate the business owner's computer skills.
  3. a simple design for the website to ensure that it is easy to use and does not intimidate potential customers.
  4. an interactive design that allows customers to ask questions and leave comments for the business owner.
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Correct Response: C. This question requires examinees to apply knowledge of web design and of strategies and procedures for creating online businesses. People who would benefit from a course in Internet skills may be overwhelmed by interactive web design featuring flash, Java, or advanced HTML code. In an effort cater to these customers, the entrepreneur should create a website that is easy to access.

Competency 0006 
Economics and Personal Finance

16. Use the information below to answer the question that follows.

blank Year 1 Year 2
Rate of Inflation 2.1percent 0.7percent
Rate of Unemployment 3.8percent 5.4percent
Short-term Interest Rates 3.5percent 2.0percent

Changes in the state of the economy from Year 1 to Year 2 can best be summarized by which statement?

  1. The economy showed signs of slipping into a recession, and the Federal Reserve responded with a monetary stimulus.
  2. The falling rate of inflation and lower borrowing costs helped consumers balance their household budgets.
  3. High interest rates raised the cost of doing business, and employers responded with layoffs and higher prices.
  4. Fluctuations in the business cycle led to a decrease in productivity and an expansionary fiscal policy.
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Correct Response: A. This item requires the candidate to analyze factors that influence economic growth and fluctuations in the United States and the use of economic indicators to assess the state of the economy. The table shows a reduction in the rate of inflation from year 1 to year 2 and a rise in unemployment during the same period, indicators that signal a slowing or contracting economy. In the event of a projected or actual recession, the Federal Reserve typically pursues full employment by using the tools of monetary policy to reduce short-term interest rates. The intent of this action is to stimulate the economy by encouraging businesses and households to borrow and invest or spend more money, which should result in higher employment.

Competency 0006 
Economics and Personal Finance

17. People selecting a life insurance policy would most likely prefer whole life insurance to term life insurance, if they prioritize which of these features?

  1. the option to change the designated beneficiary from one person to another
  2. an annuity that provides a fixed benefit amount for the duration of the contract
  3. premiums that will not fluctuate over a predetermined and guaranteed period of time
  4. a death benefit combined with an investment component that accumulates a cash value
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Correct Response: B. This item requires the candidate to demonstrate knowledge of strategies for assessing and selecting insurance for individuals and families. Both term and whole life insurance provide a death benefit, but whole life insurance also provides the policyholder with an annuity, or regular payment, starting at a specified age and continuing for the remainder of the policyholder's life. People with greater financial means often use whole life insurance as an investment vehicle while protecting their dependents in the event of their death.

Competency 0006 
Economics and Personal Finance

18. Many financial advisors believe that the practice of "pay yourself first" is helpful for managing personal finances. This practice is generally thought to involve:

  1. renting an apartment for many years until savings allow for a large down payment on a purchased home.
  2. receiving as much income as possible in the form of cash to increase budgeting flexibility.
  3. enjoying some affordable luxuries and indulgences to enhance the quality of life.
  4. depositing savings into a retirement account as a permanent part of the monthly budget.
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Correct Response: D. This question requires examinees to demonstrate the ability to apply financial decision-making processes. "Pay yourself first" is a personal finance strategy that emphasizes prioritizing savings and retirement contributions as an important component of a long-term financial plan. The goal of this strategy is to ensure regular contributions to savings or retirement accounts, e.g., I R A or 4 oh 1 k, before budgeting for living expenses and discretionary purchases.

Competency 0007 
Marketing

19. A regulatory agency is making rules about the ability of Internet Service Providers to collect sensitive data from customers and use the data for ad-targeting purposes. If the agency changes the rule from opt-out consent to opt-in consent, what effect would this have on the customers?

  1. Customers should expect to be exposed to an overall lower volume of advertising.
  2. Customers will have a greater chance to control the types of advertisements that they see.
  3. Customers will likely see more advertising related to their specific browsing histories.
  4. Customers will have fewer enforceable legal rights against unwanted marketing.
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Correct Response: B. This question requires examinees to demonstrate knowledge of legal and ethical issues in marketing. Under an opt-out rule, an Internet Service Provider (I S P) is permitted to collect sensitive data on each customer by default, and each customer must actively decline ad-targeting services if they want to protect their data. Changing to an opt-in consent rule would require the I S P to obtain customers’ affirmative consent to data collection. An increased percentage of customers would be expected to maintain the default of data privacy and not be subjected to ad-targeting services, while other customers who see a benefit in having their demographic information, location, and browsing history used to match advertisements and other offerings can opt in to this service.

Competency 0007 
Marketing

20. In which situation would an informational advertising campaign be most appropriate and effective?

  1. An electronics store is advertising a new "smart watch" that will be priced the same as competitors but will have more features.
  2. A newspaper publisher is advertising a free subscription for the first 30 days to its online version of daily news stories.
  3. A supermarket is advertising a 20-percent price discount to reduce overstock of a particular brand of shampoo and other personal care products.
  4. A restaurant is advertising reduced-priced appetizers during a two-hour "happy hour" period during the late afternoon on weekdays.
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Correct Response: A. This question requires examinees to demonstrate knowledge of strategies used in the marketing process. Informational advertising relies on factual information rather than persuasive rhetorical appeals to convince customers to buy products. In the case of a product with new features, a retailer would use an informational advertising campaign to educate consumers about the new capabilities of the product. While the product has the same price as the competing products, consumers are likely to see it as having greater value because it has more features. However, consumers need to be informed of the improvement in order to be persuaded that the new product is the one that they should buy.

Competency 0007 
Marketing

21. A salesperson in the electronics department of a large department store approaches a potential customer and engages in conversation. After exchanging pleasantries, the salesperson continues to talk to the customer and determines that the customer is thinking of buying a laptop computer. Which step in the selling process should the salesperson take next?

  1. closing the sale by asking if the customer is willing to purchase one of the laptops for sale
  2. continuing the conversation and attempting to ascertain the customer's specific needs
  3. providing information about specifications, warranties, and prices for a variety of laptops
  4. anticipating and providing specific answers to any objections the customer might have
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Correct Response: B. This question requires examinees to demonstrate knowledge of the selling process, consumer behavior and motivation, and customer relations. The selling process is a multi-step process designed to optimize sales performance. During the prior "approach" step, the salesperson interacted with the potential customer by exchanging pleasantries and learning the potential customer was planning to buy a laptop computer. At this point in the process, the salesperson should continue the conversation and listen to the potential customer's needs. The next step would be the "presentation" step and the demonstration of a laptop that meets those needs.

Competency 0008 
Career Development

22. A student is beginning to think about a future career. This stage of the career development process will be most shaped by the student's answers to which question?

  1. What roles do I see myself playing in my local community?
  2. How will I be able to accumulate enough wealth to afford retirement?
  3. Which activities and interests give me the most satisfaction?
  4. Will I need higher education in order to be credentialed for a good job?
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Correct Response: C. This question requires examinees to apply knowledge of methods for assessing skills, abilities, aptitudes, interests, and personal strengths and weaknesses as they relate to career exploration. When beginning the process of career development, students should assess their own interests and existing skills before taking other steps toward deciding on a career path. Research has shown that employees who have prior knowledge and interest in their field are more likely to have productive careers.

Competency 0008 
Career Development

23. Read the following passage; then answer the question that follows.

Each employee in an office of 30 people works on several different projects in the course of a typical week, involving the work of different small teams. The projects are deadline-driven, with each task needing to be done before the next team can perform the next task.

In these circumstances, the success of the enterprise requires that new employees become particularly attentive to which workplace expectation?

  1. pursuing individual development goals that are specific and measurable, and revisiting them regularly
  2. asking colleagues or managers for assistance when there is a possibility of falling behind in the work
  3. receiving feedback from colleagues graciously, and giving feedback that is direct and actionable
  4. identifying personal strengths and weaknesses when monitoring progress toward improvement
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Correct Response: B. This question requires examinees to demonstrate knowledge of expectations in the workplace. In the workplace described, the workflow between teams requires coordination and attention to deadlines, making time management and self-advocacy critically important expectations. New employees need to be ready to speak up when necessary and ask for assistance in completing their work. When employees take this action, managers have the chance to reallocate resources to assist with the task and keep the workflow from team to team continuing as free from delay as possible.

Competency 0008 
Career Development

24. Which pair of characteristics of goal setting is likely to be most difficult to balance?

  1. Goals should be simple and timely.
  2. Goals should be challenging and attainable.
  3. Goals should be specific and measurable.
  4. Goals should be clear and realistic.
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Correct Response: B. This question requires examinees to apply knowledge of career strategies that include a comprehensive set of short- and long-term goals. Goal setting promotes visualization of future personal and professional growth while creating benchmarks to measure the attainment of those goals. Goals must be challenging in order to encourage growth and development. However, it is also important to ensure goals are attainable. If a goal is unrealistic or unattainable, the person setting the goal might not be highly motivated to overcome the challenges associated with meeting it.