Question

5) Who among all stakeholders is at greatest risk in case the business fails or does not make a profit? ____________________________________________________________________________________

6) Who among all stakeholders will be badly affected by ethical violations in a business? ____________________________________________________________________________________

7) A personal financial benefit to a corporate manager who makes the business decisions and a financial loss to owners of the company is an example of ____________________________________________________________________________________

8) When _____________________ from a country are more than its imports, it is referred to as a __________________ balance of trade.

9) According to the textbook, what is included in the balance of payments of a country ____________________________________________________________________________________

10) When Sandy flies from Canada to France on an French airline, stays in a Paris hotel, and buys designer dresses from Paris to bring home, she is contributing negatively to the Canadian balance of ____________________________________

Time Allowed: 2 Hours

  

11) When more cash is leaving the country than is flowing in is referred to as a trade____________ 12) When a country devalues its currency, it creates favourable effect on balance of_____________

13) Justin is a pratner in Bob & Associates. Bob is one of the senior general partners in the company who must temporarily leave the company to attend to some personal matters. Bob has asked Justin to temporarily perform his managerial duties while he is gone. However, Justin reminds Bob that he cannot participate in the management of the partnership. Bob has what kind of partnership in the company? ______________________________________________________________________

14) People can be involved in a corporation without risking their personal assets because a corporation is a separate _______________________ entity from the owners.

15) A country is said to have ______________________________ in production of good if it can produce it at a lower opportunity cost.

Answer 1

5) In case of a business failure or loss, the investors would be at greatest risk among all stakeholders because the amount of investment they have made will have no return. This is will make the investors worse off and decrease their investment confidence; causing a welfare loss. [The firm's owner is also included among the investors.]

6) In case of an ethical violation, the customers/users of the product will suffer the consequences.
For instance, if we consider a flight travelling from part A to B in a particular country during the pandemic and the pilot finds a breach in the safety precautions to be taken but does not say anything and let it happen the way it is. In this scenario, the passengers of the flight are unaware of the security breach and the pilot also wants to keep his job and informs no one, and hence, due to this ethical violation the passengers safety is at high risk.

7) A personal financial benefit to a corporate manager who makes the business decisions and a financial loss to owners of the company is an example of Agency cost.
In this case, the agent is the manager who works for the owner of the company. The financial loss incurred by the manager is the fee to the owners for hiring him to act on his behalf.

8)  When exports from a country are more than its imports, it is referred to as a positive balance of trade.
When the values of the export of a country is more than the value of its imports, there is a trade surpuls.
Trade surplus is the difference between the exports and the imports.