Chapter 3

Which of these situations relates to Sachs's view on a country's economic development?

Country A has the benefit of nutrient-rich soil which provides a competitive advantage for the country's tobacco industry.

What is one of the steps that pave the way for a shift toward a market-based economic system?

Creation of a legal system to safeguard property rights

______ involves removing or reducing government regulations, typically in the economic sphere.

Deregulation

True or false: Market-based economic systems have failed to produce the same high level of economic performance that command and mixed economies have.

False,

True or False: The recent fast-paced economic growth in some Asian economies can be attributed to their adoption of more totalitarian forms of government.

False, they adopted more democratic governments

The Heritage Foundation index of economic freedom is based on ten indicators. Which of these four are included in that index? (Check all that apply.)

Foreign investment regulations, Taxation rules, Labor freedom, Trade policy

The total annual income received by residents of a single nation is reflected in which official measure?

Gross national income

How does Samuel Huntington's argument about the new world order differ from the view of Fukuyama?

Huntington believed the world would be split into different civilizations with their own ideology.

Which economic system is MOST conducive to innovation and entrepreneurial activity?

Market economies

______ is one of the steps necessary for a country to shift toward a market-based economic system.

Privatization

______ is seen as a transfer of ownership of a business, property or enterprise from the public sector to the private sector.

Privatization

Which trend has been seen in the political systems of nations since the late 1980s?

There is more emphasis on the free market economy approach and less on centrally planned and mixed economic models.

Economic progress often leads to

adoption of a democratic government.

With the collapse of communism in eastern Europe, many countries didn't have a legal structure in place to protect property rights because

all property had previously been held by the state.

What economic tactic was used when former communist countries removed price controls and allowed prices to be set as the result of supply and demand?

deregulation

One reason for the spread of democracy across the globe is the

failure of totalitarian regimes to provide economic progress to the majority of their citizens

Jeffrey Sachs argued that the ______ of a nation can have an impact on economic development.

geography

When analyzing the process of innovation, it can be said that it

goes hand-in-hand with entrepreneurship.

It is legal (legal or illegal?) for the government to expropriate profits from innovation through excessive taxation.

legal

Without a legal system that protects property rights, and the machinery that enforces those rights, there is substantially _____ incentive to engage in economic activity.

less

Innovators and entrepreneurs flourish most in a _____ because _____.

market economy; it grants existing businesses and entrepreneurs the freedom to improve their operations through innovation

Property rights are only truly secure when a _____ exists.

mature democratic state

n many nations, which social class has benefited from economic advances and seen the emergence of prosperity?

middle class

The government of a foreign nation had controlled the oil and gas industry for many years but recently transferred the business into the hands of several small businesses. These companies are now motivated to increase productivity and enter new markets to achieve greater profits. What tactic did this nation use to help it move toward a market-based economic system?

privatization

A lack of _____ has been blamed by many as the cause of the problems that led to the global financial crisis of 2008-2009.

regulation

To foster innovation in the business environment, it is important that strong legal protection of property rights is in place. Inadequately enforced property rights can lead to an increase in the

risk of expropriation of profits.

When discussing the changes in the political and economic systems of the world, it can be said that

the battle between the ideologies of collectivism and individualism is less distinct today.

Francis Fukuyama's argument regarding the new world order was that

the war of ideas" will continue and democracy will be limited to the few.

One change in the political systems of nations since the late 1980s is that

totalitarian governments failed and were replaced by democratically elected governments usually supportive of free market capitalism.

In the past 40 years, China, South Korea, Taiwan, Singapore, and Hong Kong had the fastest-growing economies. These nations also had ______ in place.

undemocratic governments