END OF UNIT TEST 2

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

1. ________________ is referred to as government 6. The total market value of all the goods and services
actions concerning taxation and public expenditure produced in a country during a given period is called
A. Monetary policy ________________.
B. Economic policy A. gross domestic product
C. Fiscal policy B. balance of payments
D. Tax policy C. consumptions
D. demand decline
2. During a(n) ________________, the demand for
goods and services will decline and the economy will 7. ________________ is the economic theory that
begin to work below its potential. supports governmental intervention in the economy,
A. upturn to counteract the business cycle.
B. boom A. Keynesianism
C. downturn B. Monetarism
D. expansion C. Classical economic theory
D. Friedman theory
3. The fact that people start saving money and
consuming less leads to a ________________ in 8. The period during which radical innovations
demand, production, and employment. destroy established companies or industries is called
A. equilibrium ________________.
B. surplus A. creative destruction
C. rise B. technological invention
D. fall C. trough
D. endogenous
4. The company increased its production of the new
shoes after a recent advertising campaign made the 9. If the economy's turning down, it may make sense
________________ for the product increase rapidly. for governments to have ________________, and to
A. trough keep expenditure in the economy.
B. demand A. budget surplus
C. deficit B. budget deficit
D. surplus C. budget equilibrium
D. budget supply
5. The difference between the funds a country
receives and those it pays for all internal transactions 10. The upward and downward movement of
is called ________________. aggregate output produced in the economy is referred
A. balance of payments to as the ________________.
B. consumption decisions A. long-lasting recession
C. equilibrium B. negative growth
D. gross domestic product C. business cycle
D. monetary expansion

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11. Groups of people with a stake in or an interest in
or a claim on the firm are called ________________. 17. It is clearly shown that their products are designed
A. stockholders to ________________ profit rather than behave
B. shareholders according to consumer expectations.
C. bondholders A. provide
D. stakeholders B. maximize
C. optimize
12. Countries where taxes are low, where D. localize
multinational companies often set up their head
offices, are known as ________________. 18. Selling your company's secrets to a rival is called
A. tax launderers industrial ________________.
B. tax harbors A. fraud
C. tax havens B. espionage
D. tax evasion C. pollution
D. trading
13. The model where companies have an obligation
to maximize profits because shareholders expect the 19. ________________ means a country's ability to
maximum return on their investments is called produce particular goods more efficiently than some
________________. other countries.
A. stockholder model A. Absolute advantage
B. stakeholder model B. Comparative advantage
C. caveat emptor C. Relative advantage
D. classical theory D. Competitive advantage

14. The community or outside society can be referred 20. ________________ means restricting imports by
to as ________________ stakeholders. way of trade barriers such as tariffs and quotas.
A. interval A. Consumerism
B. internal B. Strategic industry
C. external C. Protectionism
D. extended D. Absolute advantage

15. The contract requires managers 21. ________________ is referred to as a maximum

________________ to high standards of personal quantity of goods of a specific kind that can be
ethics. imported into a country.
A. to eliminate A. A quota
B. to maximize B. An output
C. to provide C. A tariff
D. to conform D. A sales target

16. An economic system in which anyone can raise 22. ________________ helps to identify a product
capital, form a business, and offer goods or services made by a particular producer and cannot be legally
is called ________________. used by anyone else.
A. free society A. A generic
B. free expenditure B. A trademark
C. free enterprise C. A brand
D. free corporate D. A symbol
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 27. Unfettered free markets can ensure the long- term
23. A tax collected at each stage of production, optimal ________________ of resources and long-
excluding the already-taxed costs from previous term economic growth.
stages, is called a/an ________________. A. provision
A. added-value tax B. allocation
B. sales tax C. calculation
C. value-added tax D. collaboration
D. capital gains tax
28. He also maintained that increases in public
24. WTO policies allow rich countries to expenditure would lead to increased
________________ heavily subsidized industrially ________________ and higher unemployment.
produced food in poor countries, which damages A. intervention
local production. B. taxation
A. dump C. proportion
B. copy D. restriction
C. protect
D. deny 29. The business cycle or trade cycle is a
________________ feature of market economies:
25. ________________ is referred to as basic systems GDP alternately grows and contracts.
and services such as transport and power supplies. A. temporary
A. Facilities B. permanent
B. Infrastructure C. alternative
C. Superstructure D. expansive
D. Asset
30. During a(n) ________________, parts of the
26. ________________ penalizes all income- economy expand to the point where they are working
generating activity, which makes everyone poorer. at full capacity.
A. Value-added tax A. upturn
B. Income tax B. downturn
C. Inheritance tax C. consumption
D. Capital gains tax D. balance of 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.

designing protecting advanced committed

environment impact schedule related
economic business managed progression

Business and the environment

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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 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

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 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.
True False

42. Friedman believes both people and corporations can have responsibilities.
True False

43. Friedman describes social responsible actions of corporations as an undemocraticy.

True False

44. Friedman argues that the social responsibility of business is to solve social problems.
True False

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?
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)

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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)

Fill in each gap of these sentences with one suitable word from the text:
54. The new factory will ________________ employment for about a hundred local people.
55. According to the ________________ model, business managers have responsibilities to all the groups of people
with a stake in or an interest in or a claim on the firm.

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?

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

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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

41. T

42. F

43. T

44. F

45. B

46. B

47. Milton Friedman / Milton / Friedman 51. undermine

48. the corporate executive / corporate 52. harms

executive
53. ethical
49. conforming to
54. provide
50. discrimination
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 69. specialist people

67. job seekers / job seeker 70. human resources

68. unique opportunity