D270 Final Exam Practice
3) Why should managers have an understanding of trade protectionism? A) Trade protectionism targets factor endowments, thus affecting the best country to locate production. B) Trade protectionism affects a company's ability to sell abroad and ability to compete at home. C) Trade protectionism affects the number of people permitted to practice a specific profession. D) Trade protectionism prevents companies' enactment of merger and acquisition agreements.
B
6) Assume a government places restrictions on a specific product from a specific foreign country. What would be the government's most likely concern about the foreign country's response? A) the foreign producers raising the prices of their exports B) the foreign country restricting its own imports C) the foreign country restricting its exports in that industry D) the foreign producers seeking other markets
B
9) Unemployed workers are most apt to form a pressure group to support ________. A) export restrictions B) import restrictions C) price limitations D) import subsidies
B
56) What is the primary reason that Anglo American PLC developed its ART program? A) comply with government standards B) maintain a healthy workforce C) abide by union demands D) reduce employee benefits
B) maintain a healthy workforce
21) A manager who refuses to bribe customs officials in a foreign country, even though it is morally acceptable in that country, is most likely to believe in which of the following perspectives on ethics? A) relativism B) normativism C) humanism D) existentialism
B) normativism
40) A government increases its internal debt for all of the following reasons EXCEPT which of the following reasons EXCEPT ________. A) The tax system is so poorly run that the government cannot collect all the revenues it expects. B) Government costs such as security and social programs exceed total tax revenues. C) The government borrows money from international financial institutions. D) State-owned enterprises run large deficits.
The government borrows money from international financial institutions.
12) All of the following are generally true about trade-displaced workers EXCEPT which one? A) They move abroad to take new jobs. B) They earn less in their new jobs than they earned in their old ones. C) They spend their unemployment benefits on living rather than retraining. D) They have difficulty finding new work because of educational deficiencies.
A
2) The term protectionism when applied to international trade refers to ________. A) governmental restrictions and competitive support actions to affect trade flows B) payments to dock workers to prevent pilferage of imported shipments C) border checks to prevent entry of illegal aliens D) methods used to prevent intellectual property theft
A
5) The government of Country X imposes import restrictions on steel to help the domestic steel industry in depressed areas. What is the most likely result of such restrictions? A) damaging other industries in Country X B) devaluing the currency of Country X C) lowering steel prices in Country X D) triggering boycotts in Country X
A
29) According to Transparency International, companies from which of the following countries are more likely to pay bribes? A) China B) Japan C) Singapore D) Belgium
A) China
3) Which of the following statements about GE and its "Green is Green" movement is true? A) GE is responding in part to the fact that it is operating in many countries which require compliance with higher environmental standards than exist in the United States. B) GE has decided to develop new products that are environmentally friendly rather than adopt internal policies to reduce greenhouse gas emissions. C) GE has moved aggressively to reduce greenhouse gas usage internally but has not been able to develop commercially viable "clean" technologies. D) GE considered joining the U.S. Climate Action Partnership but decided the group was too radical in its approach to reducing greenhouse gas emissions.
A) GE is responding in part to the fact that it is operating in many countries which require compliance with higher environmental standards than exist in the United States.
30) The United Nations' ________ measures life expectancy, educational attainment, and the standard of living in a given country. A) Human Development Index B) Emerging Economic Stability C) Genuine Progress Indicator D) Net National Product
A) Human Development Index
18) Ethical dilemmas tend to be ________ for MNE managers than for domestic managers. A) more complicated B) less controversial C) easier to decide D) less common
A) more complicated
40) How has the Kyoto Protocol affected U.S. companies operating in Europe? A) U.S. companies are changing the way they do business in order to comply with new emissions standards in Europe. B) The Kyoto Protocol has not affected U.S. companies with subsidiaries in Europe because the U.S. has not signed the Kyoto Protocol. C) Before U.S. companies can open any more European subsidiaries, the U.S. government must sign the Kyoto Protocol. D) Because the United States is not a party to the Kyoto Protocol, U.S. companies may not operate in European countries that have signed the Kyoto Protocol.
A) U.S. companies are changing the way they do business in order to comply with new emissions standards in Europe.
25) Which of the following is an example of extraterritoriality? A) a U.S. subsidiary operating in China that is forced to follow some U.S. laws, even though China has no comparable laws B) a U.S. sweatshop operating in Thailand that does not follow U.S. labor laws but allows children to work 60 hours a week C) an MNE manager who, after working in the host country, tries to implement foreign practices in the home-country office D) a British subsidiary operating in Indonesia that maintains the same health and safety standards for its foreign factories that are required in Great Britain, even though the British government does not require it to use those standards
A) a U.S. subsidiary operating in China that is forced to follow some U.S. laws, even though China has no comparable laws
19) A manager practicing relativism would most likely ________. A) adapt to local conditions instead of implementing home-country practices B) enforce home-country laws on host-country employees and suppliers C) refuse to change company policies and procedures to comply with local norms D) apply universal laws to each country despite local customs and traditions
A) adapt to local conditions instead of implementing home-country practices
51) A guideline for responsible action by a firm in its operations worldwide is a(n) ________. A) code of conduct B) corporate monitoring policy C) education program D) honor code
A) code of conduct
10) Which level of moral development involves an individual learning role-conformity from peers, parents, and laws? A) conventional B) principled C) autonomous D) preconventional
A) conventional
54) Which of the following is most important to the effectiveness of an internal code of conduct? A) ensuring that employees understand the code by requiring confirmation in writing B) paying bonuses to suppliers and distributors that agree to the code C) relying on nonprofit NGOs to develop guidelines D) adhering to industry standards and norms
A) ensuring that employees understand the code by requiring confirmation in writing
50) An economic system is the set of structures and processes that ________ in a country. A) guides the allocation of resources and shapes the conduct of business activities B) directs the movement of specific products to specific consumers C) sets the standards of competitive success for companies in the economy D) stipulates the roles and responsibilities of consumers
A) guides the allocation of resources and shapes the conduct of business activities
57) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions of its production to independent companies located in Bangladesh and India where child labor is common. Other clothing and footwear firms have recently faced criticism regarding the use of child labor, and Quantum executives want to avoid similar problems. Which of the following would be the best approach for Quantum? A) improving conditions at the subcontract facilities B) developing an external ethics code for foreign partners and letting them worry about compliance. C) requiring local governments to alter their labor policies D) leaving the market and focusing on domestic production
A) improving conditions at the subcontract facilities
13) Which of the following most likely complicates ethical behavior for firms that expand overseas? A) local laws and values B) expatriate management C) unstable financial settings D) international codes of conduct
A) local laws and values
52) Taylor Enterprises wants to expand its operations into Asia. Managers are focusing on countries with high degrees of economic freedom most likely because the firm is interested in a country with ________. A) minimal government intervention B) standardized minimum wages C) laws favoring sustainability D) state-run corporations
A) minimal government intervention
39) Firms that operate in countries that have adopted the Kyoto Protocol are required to either reduce emissions or ________. A) purchase carbon credits from other firms B) file petitions to appeal the requirement C) cease manufacturing operations D) pay fines to the U.N.
A) purchase carbon credits from other firms
1) According to the text, which of the following has resulted from GE's Ecomagination initiative? A) rising profitability for many GE products B) increasing doubt among GE's foreign partners C) reducing investments by GE due to poor returns D) improving pollution levels near GE plants in China
A) rising profitability for many GE products
32) Which of the following statements describes an inconsistency of the FCPA? A) Facilitation payments are classified as bribery. B) Facilitation payments are excluded from the FCPA's definition of bribery. C) Payments to officials who are not directly responsible for carrying out the law are legal. D) Payments to foreign officials who carry out the law are considered illegal by provisions of the FCPA.
B) Facilitation payments are excluded from the FCPA's definition of bribery.
33) A 1998 U.S. law that outlaws bribery payments by U.S. firms to foreign government officials is known as the ________. A) Anti-Bribery Act of 2004 B) Foreign Corrupt Practices Act C) Zero Tolerance Initiative D) Sarbanes-Oxley Act
B) Foreign Corrupt Practices Act
2) General Electric has focused on being more "green" in recent years most likely because ________. A) the industry has always looked to GE as a trend setter in green technology B) GE executives believe the firm can strategically align investor and environmental interests C) GE executives realize that the firm can save significant money through the use of solar technology D) the U.S. government has decided to use GE as a test case to see if the adoption of the Kyoto Protocol can actually work for a U.S. firm
B) GE executives believe the firm can strategically align investor and environmental interests
28) To determine whether the standard of living within a country is rising or falling, economists would most likely use which of the following measures? A) per capita GNI B) GNI growth rate C) purchasing power parity D) degree of human development
B) GNI growth rate
54) Presently, which of the following countries is best characterized as a pure example of a command economy? A) Russia B) Libya C) China D) Vietnam
B) Libya
50) Which of the following best explains Nike's quick response to criticism of unfair employment practices in developing countries? A) retaining employees B) improving public relations C) addressing product safety concerns D) cutting costs in order to improve profits
B) improving public relations
48) Which of the following best supports the idea that MNEs should remain in countries that allow child labor? A) MNEs have a positive influence on government employment policies in most foreign countries. B) Many MNEs have substantially improved the working conditions of their foreign plants. C) MNEs are required to pay child workers more than local companies. D) Most MNEs employ local managers to handle cultural differences.
B) Many MNEs have substantially improved the working conditions of their foreign plants.
36) Which of the following is a voluntary effort by 150 multinational construction and natural-resources companies to end bribery? A) Foreign Corrupt Practices Act B) Partnering Against Corruption Initiative C) OLAF (European Commission Anti-Fraud Office) D) Sarbanes-Oxley Act
B) Partnering Against Corruption Initiative
8) Monique has recently been hired as an accounts supervisor at Ballston Enterprises. She wants to understand Ballston's values and its expectations for employee behavior. Which of the following would most likely provide Monique with this information? A) mission statement B) code of conduct C) vision statement D) employee contract
B) code of conduct
4) Which of the following is NOT a key stakeholder group that a company must work to satisfy in order to survive in a global environment? A) employees B) competitors C) shareholders D) customers
B) competitors
12) According to the teleological approach, individuals base moral decisions on ________. A) personal and social responsibilities B) consequences of an action C) cultural value systems D) opinions of peers
B) consequences of an action
27) What is the primary argument against extraterritoriality? A) increases opportunities for corporate bribery B) contradicts demands for increased globalization C) requires oversight by nongovernmental organizations D) prohibits firms from expanding into foreign territories
B) contradicts demands for increased globalization
49) In a country's balance of payments, the ________ tracks all trade activity in merchandise. A) capital account B) current account C) payment account D) deficit account
B) current account
14) Which of the following is a primary business objective for pursuing ethical behavior? A) avoiding industrial sanctions B) developing competitive advantages C) developing creative advertisements D) discouraging false commitments to the firm
B) developing competitive advantages
28) The requirement by the U.S. government that its subsidiaries abroad comply with trade restrictions with Cuba is an example of ________. A) utilitarianism B) extraterritoriality C) absolute advantage D) relative advantage
B) extraterritoriality
58) Which of the following ideas calls for assessing a country's performance based on factors such as life expectancy, leisure time, and income equality? A) microeconomics B) happynomics C) macroeconomics D) green economics
B) happynomics
43) The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) ________. A) allows rich countries to produce generic versions of patented drugs without having to pay royalties to the patent holder B) permits developing countries to import generic products from other countries if they don't have the capacity to produce generic drugs C) requires pharmaceutical companies to provide low-cost vaccines and HIV/AIDS medications to developing countries D) requires tiered pricing for most essential drugs
B) permits developing countries to import generic products from other countries if they don't have the capacity to produce generic drugs
59) During a time of reflation, the government is most likely to ________. A) lower taxes B) print money C) reduce interest rates D) support infrastructure
B) print money
5) Which stakeholder group primarily wants additional sales and increased productivity? A) customers B) shareholders C) society at large D) government
B) shareholders
6) Which stakeholder group is most interested in trustworthy behavior by corporate executives and increased corporate taxes? A) shareholders B) society C) employees D) customers
B) society
42) Some countries reverse engineer pharmaceutical products ________. A) because they know that generic products are inherently better than branded products B) to lower the cost of certain drugs to the domestic market C) as a way to charge higher prices in domestic markets D) to comply with international patent laws
B) to lower the cost of certain drugs to the domestic market
46) The ________ view calls for companies to develop low-cost, high-powered, resource-minimizing innovations that can be marketed to the billions of people living on less than a few dollars a day. A) Base of the Pyramid B) Hierarchy of Needs C) Happy Planet Index D) Gini coefficient
Base of the Pyramid
1) Trade protectionism will most likely affect which aspect of a company's operations? A) selecting employees B) investing short-term capital C) acquiring foreign supplies D) relocating personnel overseas
C
10) Successful trade retaliation is most likely achieved ________. A) on agricultural products B) on manufactured products C) by a large trading country D) by a small trading country
C
8) What is the most likely reason that consumers rarely protest import restrictions that raise the prices they pay for a specific product? A) They reason that if the import restrictions are removed, the foreign producers will raise their prices to those of the domestic producers anyway. B) Many countries prohibit consumers to band together to influence political actions. C) Typically, although the added costs to consumers for a given product are high in aggregate, they are fairly trivial for most individual consumers. D) They reason that if they do something to hurt domestic employment for one product, the displaced workers will then do something that will hurt their own employment.
C
32) The ________ starts with the same accounting framework used to calculate GDP but then adjusts for values assigned to environmental quality, population health, livelihood security, equity, free time, and educational attainment. A) Gross National Index B) Net National Product C) Genuine Progress Indicator D) Human Development Index
C) Genuine Progress Indicator
22) Why is the argument that "anything legal is ethical" most likely insufficient? A) Everything that is unethical is also illegal. B) The law is an extremely efficient way to solve ethical dilemmas. C) Laws are frequently based on imprecisely defined moral concepts. D) Laws can never be changed; thus, rules for all possible ethical dilemmas are found in the law.
C) Laws are frequently based on imprecisely defined moral concepts.
51) Pender Pharmaceuticals is considering expanding overseas and is focusing primarily on the BRICs. Which of the following countries is one that Pender is considering? A) Indonesia B) Chile C) Russia D) Bangladesh
C) Russia
23) Which of the following is a reason for an MNE to base its standards for ethical behavior on a country's laws? A) The law embodies many of a country's moral beliefs but is an inadequate guide for proper conduct. B) The law contains unenforceable rules that are impossible for society to follow. C) The law represents a consensus derived from significant deliberation. D) The law is based on precisely defined moral concepts.
C) The law represents a consensus derived from significant deliberation.
35) The OECD Convention against bribery is an example of a(n) ________. A) bilateral agreement developed for the EU B) agreement that targets the demand side of bribery C) agreement that targets the supply side of bribery D) UN Convention dominated by developing countries
C) agreement that targets the supply side of bribery
58) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions of its production to independent companies located in Bangladesh and India where child labor is common. Other clothing and footwear firms have recently faced criticism regarding the use of child labor, and Quantum executives want to avoid similar problems. Which of the following guidelines enforced by Quantum would LEAST likely be supported by the International Labor Organization? A) establishing bridge schools B) monitoring workplace safety C) allowing children ages 10-15 to work a maximum of 4 hours per day D) prohibiting abusive labor conditions
C) allowing children ages 10-15 to work a maximum of 4 hours per day
15) Which of the following is a primary business objective for pursuing ethical behavior? A) replacing home-country technology with host-country technology B) minimizing federal investigations into corporate finances C) avoiding being perceived as a socially irresponsible firm D) imposing home-country behavior on the host country
C) avoiding being perceived as a socially irresponsible firm
47) Which of the following is a statement that summarizes all economic transactions between a country and the rest of the world during a given period of time? A) trade deficit B) Gini coefficient C) balance of payments D) purchasing power parity
C) balance of payments
24) An advocate of the legal-justification standard would most likely assert that the law ________. A) develops slowly in response to evolving societal dilemmas B) protects business activities that are unethical but not illegal C) contains enforceable rules that apply to everyone D) offers necessary moral flexibility for a society
C) contains enforceable rules that apply to everyone
56) According to the concept of green economics, measuring a country's economic performance should also take into account ________. A) market share B) population size C) ecological costs D) cost-of-living increases
C) ecological costs
53) Tatum Manufacturing recently opened a new facility in Hong Kong. The firm can most likely expect the Hong Kong government to ________. A) monitor market prices B) control natural resources C) ensure fair competition D) provide innovation incentives
C) ensure fair competition
52) The U.N. Global Compact is best described as a(n) ________. A) corruption mandate B) environmental initiative C) external code of conduct D) international trade guideline
C) external code of conduct
27) The measure of the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production is its________. A) net national product (NNP) B) gross national product (GNP) C) gross domestic product (GDP) D) gross national income (GNI)
C) gross domestic product (GDP)
16) Encouraging ethical behavior for the purpose of developing competitive advantages will most likely result in all of the following for a firm EXCEPT ________. A) strategic accomplishment B) consumer commitment C) industry resolutions D) financial success
C) industry resolutions
9) All of the following are levels of moral development EXCEPT the ________. A) preconventional level B) autonomous level C) internalized level D) conventional level
C) internalized level
30) What is the primary concern regarding anti-corruption measures in the EU? A) resistance to an official anti-fraud commission B) inability to adopt a corruption definition C) lack of uniform laws across nations D) failure to conduct internal auditing
C) lack of uniform laws across nations
47) According to the Ethical Trading Initiative (ETI), ________. A) child labor cannot be used unless there are no suitable alternatives B) employment need not be freely chosen in order to be acceptable C) no harsh or inhumane treatment of workers should be allowed D) MNEs are not responsible for establishing codes of conduct
C) no harsh or inhumane treatment of workers should be allowed
20) The belief that there are universal standards of behavior that all cultures should follow is called ________. A) humanism B) relativism C) normativism D) naturalism
C) normativism
44) Which of the following has been the primary reason for the recent growth of India's pharmaceutical industry? A) globalized supply chains B) tiered pricing guidelines C) patent-protection laws D) foreign investors
C) patent-protection laws
55) What is the primary problem associated with Anglo American PLC's ART program? (not on test) A) unknown side effects to drugs and treatment B) rising costs of medications and procedures C) poor treatment adherence by employees D) lack of sufficient insurance coverage
C) poor treatment adherence by employees
53) Which of the following is most important when designing an internal code of conduct? A) requesting U.N. oversight and intervention when necessary B) communicating the code of conduct only to employees C) reporting results to external stakeholders D) forming local polices for each subsidiary
C) reporting results to external stakeholders
37) Meeting the needs of the present without compromising the ability of future generations to meet their own needs is known as ________. A) competitive advantage B) the Kyoto Protocol C) sustainability D) externality
C) sustainability
38) The 1997 Kyoto Protocol is best described as an agreement that requires ________. A) all members of the United Nations to reduce their greenhouse gas emissions by 5.2 percent B) the United States and Japan to control greenhouse gas emissions by 8% below 1995 levels C) the signatory countries to cut greenhouse gas emissions to 5.2 percent below 1990 levels D) the signatory countries to reduce greenhouse gas emissions by 80% by 2050
C) the signatory countries to cut greenhouse gas emissions to 5.2 percent below 1990 levels
11) Imports can stimulate exports by ________. A) redistributing the work force B) curtailing domestic competition C) generating more tax revenue D) increasing foreign income
D
4) Managers should understand the effect of trade protectionism because ________. A) trade protectionism may limit the number of people permitted to practice a specific profession B) trade protectionism requires the payment of high insurance rates to transport goods internationally C) trade protectionism may prevent companies' enactment of merger and acquisition agreements D) trade protectionism may make it difficult for a company to buy what it needs from foreign suppliers
D
7) Assume a government is considering import restrictions on sugar because sugar imports are hurting the domestic industry. Which of the following groups is LEAST likely to speak out on the subject? A) politicians in areas that grow sugar B) employees of sugar companies C) sugar company owners D) sugar consumers
D
11) Which of the following statements is most likely true about the post-conventional level of moral development? A) Individuals learn what is moral but not why such behavior is moral. B) Individuals behave morally because they fear negative repercussions. C) Individuals learn how to conform to society's values through observation. D) Individuals behave morally because they believe such actions are right.
D) Individuals behave morally because they believe such actions are right.
17) Bantam Enterprises, a multi-national enterprise, makes significant efforts to avoid being perceived as socially irresponsible. What is the most likely reason for this? A) Social irresponsibility can lead to labor strikes by international unions. B) Socially irresponsible companies usually have fewer exports and more imports. C) Cultural barriers increase for companies that are socially irresponsible, which hinders expansion into additional countries. D) Social irresponsibility can lead to negative publicity from nongovernmental organizations, which could hurt a company's reputation.
D) Social irresponsibility can lead to negative publicity from nongovernmental organizations, which could hurt a company's reputation.
60) Which of the following governmental actions is LEAST likely to increase national debt? A) macroeconomic stimulus plans B) unemployment benefits C) corporate bailouts D) T-bond sales
D) T-bond sales
49) Which of the following is NOT a likely reason for companies to act more ethically? A) Consumer boycotts may result from unethical corporate behavior. B) Irresponsible and unethical actions may lead to legal problems for MNEs. C) Unethical or irresponsible behavior can negatively impact employee morale. D) The U.N. Global Compact enforces fines on global firms that fail to act ethically.
D) The U.N. Global Compact enforces fines on global firms that fail to act ethically.
7) Which of the following statements is most likely true regarding relationships between MNEs and stakeholders? A) An MNE typically serves all stakeholder groups equally at any given time. B) No individual stakeholder group is powerful enough to cause the demise of an MNE. C) All stakeholders of an MNE have the same short-term and long-term goals and interests. D) The inability to adequately meet the long-term needs of all stakeholders increases the probability of an MNE failing.
D) The inability to adequately meet the long-term needs of all stakeholders increases the probability of an MNE failing.
34) Which of the following is permitted by the Foreign Corrupt Practices Act? A) a bribe paid by foreign firms operating in U.S. territories B) a bribe paid by U.S. firms operating in a foreign country that permits bribes to be paid C) a payment to a foreign government official to influence a customs official D) a payment to a customs official to clear legitimate merchandise
D) a payment to a customs official to clear legitimate merchandise
45) Which of the labor issues identified by the Ethical Trading Initiative (ETI) receives the most attention? A) safe and hygienic working conditions B) reasonable living wages C) inhumane treatment D) child labor
D) child labor
48) The two main categories in the balance of payments are the ________. A) merchandise exchange account and the services account B) external debt and the unilateral transfers account C) merchandise trade account and the capital account D) current account and the capital account
D) current account and the capital account
46) The Ethical Trading Initiative (ETI)is primarily focused on ________. A) fair trade laws for undeveloped countries B) tiered pricing by pharmaceutical firms C) greenhouse gas emission reduction D) employment practices of MNEs
D) employment practices of MNEs
26) A government that enforces its own laws on foreign subsidiaries of its domestic companies practices ________. A) civil law B) relativism C) externality D) extraterritoriality
D) extraterritoriality
31) Which of the following is NOT affected by the Foreign Corrupt Practices Act? A) companies registered in the U.S. B) foreign firms operating in U.S. territory C) foreign firms quoted on a U.S. stock exchange D) foreign companies managed by U.S. expatriates
D) foreign companies managed by U.S. expatriates
25) Gross national income (GNI), the broadest measure of economic activity for a country, is defined as the ________. A) total of all consumption and investment that takes place in a national economy B) income generated in one country, regardless of who owns the productive assets C) total of all economic activity in one country less services, such as government administration, health services, and education D) income generated by both total domestic production and the international production activities of national companies
D) income generated by both total domestic production and the international production activities of national companies
55) A firm with operations in Denmark can most likely expect all of the following EXCEPT ________. A) high taxes B) significant regulation C) tough job-protection laws D) minimal monetary policies
D) minimal monetary policies
57) Which of the following calls for economic activity that meets present needs without hindering the future needs of society? A) privatization B) state capitalism C) economic freedom D) sustainable development
D) sustainable development
41) Medco Pharmaceuticals charges a market price for heart medication to distributors in Italy and a discounted price for the same medication to distributors in Bangladesh. Medco is most likely using ________. A) discounted pricing B) skimmed pricing C) penetrated pricing D) tiered pricing
D) tiered pricing
43) Which of the following is most likely a FALSE statement about income inequality? A) The richest 1% of the world's population claims as much income as the bottom 57%. B) GNI is the most effective tool for estimating the relative wealth of a nation's citizens. C) Among industrialized nations, the U.S. has the largest inequality gap between rich and poor. D) Income inequality between metropolitan and rural areas threatens a country's social stability.
GNI is the most effective tool for estimating the relative wealth of a nation's citizens.
41) Country X has a significant amount of external debt. Which of the following is the most likely cause? A) The government of Country X borrowed money from local banks. B) The government of Country X borrowed money from other governments. C) The government of Country X spent more than it collected in revenues. D) The government of Country X received short-term credits from selling bonds.
The government of Country X borrowed money from other governments
34) What is the most likely reason that a universal scheme for assessing the performance and potential of a country's economic environment does NOT exist? A) difficulties of identifying a definitive set of predictive economic indicators B) a lack of reliable economic data from most developed economies C) the isolation of most markets from each other D) static nature of the marketplace
difficulties of identifying a definitive set of predictive economic indicators
35) A worrisome outcome of chronic inflation is that it tends to ________. A) erode confidence in a country's currency B) give central banking officials excessive flexibility to manage monetary policy C) increase the real income of people, thereby inflating their spending and borrowing levels D) lower consumer demand for foreign goods, which triggers lower prices and eventually lower employment
erode confidence in a country's currency
42) Uneven income distribution ________. A) exists in almost every country B) is largely a problem for poorer nations C) primarily affects people in urban settings D) is limited to a small share of the world population
exists in almost every country
45) The Gini coefficient estimates a country's ________. A) gross national product B) economic development C) political and legal risk D) income inequality
income inequality
39) The so-called "misery index" is the sum of a country's ________. A) foreign and national debt B) inflation and unemployment rates C) unemployment level and total debt D) trade deficit and long-term inflation rate
inflation and unemployment rates
38) In the U.S., the unemployment rate indicates the ________. A) percentage of the labor force that wants to work full-time but can only find part-time employment B) number of people who have stopped looking for work because full-time jobs are unavailable C) percentage of unemployed workers seeking paid work relative to the total labor force D) number of workers eligible for government services and unemployment benefits
percentage of unemployed workers seeking paid work relative to the total labor force
36) In most cases, governments ________ in order to regulate inflation. A) lower interest rates B) increase taxes C) raise interest rates D) decrease taxes
raise interest rates
