Chapter 3: National Differences in Economic Development

GNI per person figures can be misleading because they don't consider differences in the cost of living.

True

In the case of command economies, deregulation involves _____. -removing price controls -detailed state planning -exercising tight control over foreign trade -encouraging state ownership of enterprises

removing price controls

Which of the following exemplifies privatization? -A country reduces trade barriers, allowing individuals to engage in export and import. -A country sells its postal services to a consortium of companies that runs it as a profit making venture without any state funding. -A country enlists the services of SomersConsultancy, a global management consulting firm, to improve the profitability of the state-owned airlines company. -A country allows state-owned coal companies to sell coal to private parties.

A country sells its postal services to a consortium of companies that runs it as a profit making venture without any state funding.

Which of the following is true about the economic risks of doing business in a country? -Countries with weaker property laws tend to have higher economic growth, and involve less risk. -Economic risks are independent of political risks. -It is less costly to do business in relatively primitive or undeveloped economies. -The inflation rate in a country is an indicator of the economic risks of doing business in a country.

The inflation rate in a country is an indicator of the economic risks of doing business in a country.

Many of the national markets of Eastern Europe, Latin America, Africa, and Asia may still be underdeveloped, but they are potentially enormous. Which of the following is a risk to businesses moving into these regions? -Businesses in emerging markets are frequently taken over by the states. -These regions are likely to have consistent domestic economic growth and not be open to foreign investment. -It is likely that communist dictatorships will return to these regions. -There is no guarantee that democracy will thrive in many of the world's newer democratic states.

There is no guarantee that democracy will thrive in many of the world's newer democratic states.

Which of the following is a reason for the spread of democracy? -Totalitarian regimes failing to deliver economic progress to the vast bulk of their populations -The unchallenged pressure of entrepreneurs and other business leaders for less accountable and closed governments -The economic advances of the past quarter century leading to increasingly poorer middle and working classes -New information and communication technologies increasing the state's ability to control access to uncensored information

Totalitarian regimes failing to deliver economic progress to the vast bulk of their populations

It may be more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses.

True

Amazon.com was the earliest, major online bookstore, which allowed it to generate brand awareness and have a significant presence in the market. Amazon.com had a head start on later entrants to the online bookstore market. In this example, Amazon.com has _____. -vertical integration advantages -first-mover advantages -free rider advantages -horizontal integration advantages

first-mover advantages

Countries with free market economies in which property rights are protected tend to have _____ than command economies or economies where property rights are poorly protected. -higher gross national incomes -greater economic growth rates -lower gross national incomes -slower economic growth rates

greater economic growth rates

During the late 1980s and early 1990s, totalitarian governments collapsed and were replaced by democratically elected governments that were typically _____ than their predecessors had been. -more committed to free market capitalism -more committed to a planned economy -less committed to free market capitalism -less committed to privatization

more committed to free market capitalism

"Not free" countries are characterized by some restrictions on political rights and civil liberties, often in the context of corruption, weak rule of law, ethnic strife, or civil war.

False

In calculating GNI data in some countries, the o

False

It can be more costly to do business in a country where there are no laws and regulations with regard to product safety.

False

Which of the following is true about planned economies? -In a planned economy, the state owns all means of production. -In a planned economy, entrepreneurs have economic incentives that encourage innovation. -In a planned economy, market regulations reduce the risk of economic stagnation. -In a planned economy, individuals benefit more from innovations than the state does.

In a planned economy, the state owns all means of production.

Deregulation involves the establishment and operation of private enterprises.

True

During the late 1980s and early 1990s, a wave of democratic revolutions swept the world.

True

In Samuel Huntington's thesis, global terrorism is a product of the _____. -advances in communication technology -low level of education and literacy -unequal distribution of income in developing nations -clash of value systems and ideology

clash of value systems and ideology

Innovation and entrepreneurial activity help increase economic activity by... -providing more authority to government officials. -creating new products and markets. -eliminating state-run enterprises. -strengthening business infrastructure.

creating new products and markets.

United Nations has developed the Human Development Index (HDI) to measure the... -relative access to education of males and females. -total income in different nations. -quality of human life in different nations. -level of political and economic freedom available to citizens.

quality of human life in different nations.

Newly privatized entities often have little incentive to restructure their operations to become more efficient when... -they are faced with intense foreign competition. -they continue to receive subsidies from the state. -foreign investment is permitted by the state. -prices are set by the forces of demand and supply.

they continue to receive subsidies from the state.