Chap 1
Which statement characterizes how stagnation can occur in planned economies? A) In planned economies, entrepreneurial individuals have few economic incentives for innovation. B) Planned economies encourage private ownership of the means of production which can lead to the exploitation of workers. C) The prices of goods and services are fixed by market forces of supply and demand in a planned economy. D) In planned economies, the lack of barriers to trade results in increased competition for domestic producers.
A) In planned economies, entrepreneurial individuals have few economic incentives for innovation.
Which statement represents a first-mover advantage? A) International firms may gain experience in that country's business practices. B) An international firm can reap the rewards of growth in a new market without incurring the risks. C) A firm may have the opportunity to be the first to introduce generic brands to a market. D) A firm can gauge how well their product will do in the market without taking the risk of investing there.
A) International firms may gain experience in that country's business practices
__________ occurs when a firm exports goods or services to consumers in another country. A) International trade B) Foreign direct investment C) Inward investment D) Outsourcing
A) International trade
Max Weber theorized that there was a relationship between Protestantism and the emergence of modern capitalism because A) Protestant ethics emphasize the importance of hard work and wealth creation and frugality. B) Protestantism promotes the hierarchical domination of religious and social life. C) Protestantism states that spiritual growth is more important than material wealth. D) Protestantism promotes blind loyalty to employers.
A) Protestant ethics emphasize the importance of hard work and wealth creation and frugality.
Political scientist __________ predicts that there will be a world that is split into different civilizations, each of which has its own value systems and ideology. A) Samuel Huntington B) Amartya Sen C) Francis Fukuyama D) Hernando de Soto
A) Samuel Huntington
__________ are typically defined on the basis of characteristics such as family background, occupation, and income. A) Social strata B) Norms C) Social structure D) Groups
A) Social strata
Although many countries have stringent intellectual property regulations on their books, the enforcement of these regulations has often been lax. This has been the case even among many of the 185 countries that are now members of the __________, all of which have signed international treaties designed to protect intellectual property. A) World Intellectual Property Organization B) General Agreement on Tariffs and Trade C) Business Software Alliance D) Trade-Related Aspects of Intellectual Property Rights (TRIPS)
A) World Intellectual Property Organization
The __________ is a research project spanning more than 100 countries that explores people's values and norms, how they change over time, and what impact they have in society and business. A) World Values Survey B) Global Leadership and Organization Behavior Effectiveness Instrument C) Indulgence Versus Restraints Survey D) Chinese Value Survey
A) World Values Survey
One visible indicator of __________ tends to be a country's inflation rate. A) economic mismanagement B) high GNI C) political risks D) low HDI
A) economic mismanagement
When Bella visits her mother, she takes great pains to watch her language and use good manners because that is what her mother expects of her. This demonstrates the concept of A) folkways. B) mores. C) rites. D) beliefs.
A) folkways.
Based on several studies, the data suggest that real wages A) for unskilled workers have decreased while real wages for skilled workers have increased. B) for both skilled and unskilled labor have decreased. C) for both skilled and unskilled labor have increased. D) for unskilled workers have increased while real wages for skilled worker have decreased.
A) for unskilled workers have decreased while real wages for skilled workers have increased.
Supporters of globalization maintain that the apparent decline in real wage rates of unskilled workers A) is due to technological changes and automation that create greater demand for skilled workers. B) is due to the migration of low-wage manufacturing jobs offshore. C) can be checked by increasing government ownership of enterprises. D) can be checked by limiting free trade and foreign investment.
A) is due to technological changes and automation that create greater demand for skilled workers.
Sal has been in trouble his whole life. He stole from the local hardware store when he was 12, and as an adult he didn't feel the need to be faithful to his wife. Sal is guilty of violating A) mores. B) folkways. C) ethics. D) values.
A) mores.
The term __________ stresses that the political, economic, and legal systems of a country are interdependent. A) political economy B) common law C) socialism D) collectivism
A) political economy
The __________ dimension of Hofstede's study explores how a society deals with the fact that people are unequal in physical and intellectual capabilities. A) power distance B) individualism versus collectivism C) uncertainty avoidance D) masculinity versus femininity
A) power distance
The World Trade Organization has estimated that the developed nations of the world can raise global economic welfare by $128 billion by A) removing subsidies given to their agricultural producers. B) increasing tariff barriers to trade in agriculture. C) increasing outsourcing of manufacturing processes. D) reducing defense expenditure.
A) removing subsidies given to their agricultural producers.
According to Amartya Sen, development should be A) seen as a process of expanding the real freedoms that people experience. B) seen as a nonpolitical concept that focuses on the net income of a country. C) viewed as a purely economic process. D) assessed by material output measures such as GNI per capita.
A) seen as a process of expanding the real freedoms that people experience.
Mores are A) the norms that are seen as central to the functioning of a society and its social life. B) the routine conventions of everyday life. C) abstract ideas about what a group believes to be right, good, and desirable. D) the social rules and guidelines that prescribe appropriate behavior in particular situations.
A) the norms that are seen as central to the functioning of a society and its social life.
The benefits of doing business in a country are a function of Version 1 18 A) the size and purchasing power of the market. B) its past wealth. C) its past growth. D) its future plans for infrastructure development.
A) the size and purchasing power of the market.
To be classified as an MNE, a company must have productive activities in at least ____________ countries. A) two B) three C) ten D) twenty
A) two
__________ predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months. A) Keynes's Law B) Say's Law C) Moore's Law D) Sullivan Principle
C) Moore's Law
Which statement is true of "highly indebted poorer countries" (HIPCs)? A) About 100 nations fall in this category. B) The average debt burden has never been more than 75 percent of the value of the HIPC's economy. C) Servicing heavy debt leaves HIPCs with little left to invest in public infrastructure. D) The annual cost of serving debt consumes about 30 percent of HIPC export earnings.
C) Servicing heavy debt leaves HIPCs with little left to invest in public infrastructure.
Why has little progress has been made toward the ambitious goals set at the 1992 Earth Summit in Rio de Janeiro? A) China has shown a strong appetite to adopt tighter pollution controls. B) Political cooperation in the U.S. Congress promotes domestic action. C) There is a culture of denial in the United States. D) Trade liberalization efforts have not been rolled back.
C) There is a culture of denial in the United States.
The __________ establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers that have their places of business in different nations. A) Trade-Related Aspects of Intellectual Property Rights (TRIPS) B) Paris Convention for the Protection of Industrial Property C) United Nations Convention on Contracts for the International Sale of Goods (CISG) D) World Trade Organization (WTO)
C) United Nations Convention on Contracts for the International Sale of Goods (CISG)
What safeguard do representative democracies use to ensure their elected officials are held responsible for their actions? A) unlimited terms for elected representatives B) a court system that is integrated with the political system C) an individual's right to freedom of expression, opinion, and organization D) a political police force and armed service
C) an individual's right to freedom of expression, opinion, and organization
Supporters of debt relief for HIPCs Version 1 19 A) argue that free trade alone is sufficient to bring HIPCs out of poverty. B) argue that new democratic governments should be forced to honor debts incurred by previous corrupt predecessors. C) are energized by high-profile endorsements from Bono, the Dalai Lama, and Jeffrey Sachs. D) are working against the policies of the IMF and World Bank.
C) are energized by high-profile endorsements from Bono, the Dalai Lama, and Jeffrey Sachs.
The influential Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism until they Version 1 10 A) have political stability. B) invest in infrastructural development. C) better define and secure property rights. D) have adequate market regulation.
C) better define and secure property rights.
The G20 was originally established to A) preserve peace through international cooperation and collective security. B) maintain order in the international monetary system. C) formulate a coordinated policy response to financial crises in developing nations. D) manage, regulate, and police the global marketplace.
C) formulate a coordinated policy response to financial crises in developing nations.
Economic growth appears to be a function of a country's capacity for growth and its A) previous economic success. B) political environment. C) free market system. D) mixed economy.
C) free market system.
The social organization of Western society tends to emphasize on A) a group orientation. B) collectivist values. C) individual achievement. D) work groups.
C) individual achievement.
What sixth dimension has been proposed to be added to Hofstede's original dimensions of culture? Version 1 19 A) acceptance versus denial B) tradition versus modernism C) indulgence versus restraint D) contribution versus accumulation
C) indulgence versus restraint
What is a characteristic of a command economy? A) promotion of foreign direct investment B) allowing prices to be set by the interplay between demand and supply C) limited international trade D) restricted state ownership of means of production
C) limited international trade
The costs of doing business in a country tend to be greater if A) political payoffs are not required to gain market access. B) supporting infrastructure is sponsored by government. C) local laws set strict standards with regard to environmental pollution. D) there are limits or caps on damage awards.
C) local laws set strict standards with regard to environmental pollution.
Hassan lives in Saudi Arabia. If he is caught consuming alcohol, he will be accused of violating his country's ______ and may face imprisonment. A) norms B) folkways C) mores D) values
C) mores
Those who are proponents of totalitarianism believe that Version 1 10 A) government is by the people, exercised either directly or through elected representatives. B) citizens should have total control and be directly involved in decision making. C) one person or political party should exercise absolute control over all spheres of human life. D) the welfare of society is best served by letting people pursue their own economic self- interests.
C) one person or political party should exercise absolute control over all spheres of human life.
Globalization is criticized because it increases the power of A) governments to own enterprises. B) unskilled labor to form labor unions. C) supranational organizations over nation-states. D) nation-states to regulate markets and reduce competition.
C) supranational organizations over nation-states.
Which institution focuses on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments? A) the WTO B) the GATT C) the World Bank D) the IMF
C) the World Bank
During the past two decades, change in Latin America has been characterized by A) an increase in debt. B) hyperinflation. C) the sale of state-owned enterprises to private investors. D) protests against foreign investment.
C) the sale of state-owned enterprises to private investors.
__________, a Nobel Prize-winning economist, has argued that development is not just an economic process, but it is a political one as well. A) Hernando de Soto B) Karl Marx C) Samuel Huntington D) Amartya Sen
D) Amartya Sen
Which statement is true regarding an international business? A) An international business needs to invest directly in operations in other countries. B) An international business needs to have homogenous practices across countries. C) An international business can be managed in the same way that a domestic business is managed. D) An international business must find ways to work within the limits imposed by government intervention.
D) An international business must find ways to work within the limits imposed by government intervention.
__________ argued that individual diversity and private ownership are desirable. A) Karl Marx B) Plato C) John Stuart Smith D) Aristotle
D) Aristotle
Which statement best characterizes the concept of individualism? A) Individualism promotes state ownership of the basic means of production, distribution, and exchange. B) Individualism promotes globalization. C) Individualism creates an antibusiness environment. D) Individualism and democracy go hand in hand.
D) Individualism and democracy go hand in hand.
Which statement is true of the International Monetary Fund (IMF)? A) It is often seen as the lender of first choice to nation-states whose economies are in turmoil. B) Its loans come with no strings attached. C) It is the less controversial of the two sister institutions, the IMF and the World Bank. D) It has emerged as a significant player in the global economy.
D) It has emerged as a significant player in the global economy.
__________ is seen as a way to stimulate gains in economic efficiency by giving owners a powerful incentive—the reward of greater profits—to search for increases in productivity, to enter new markets, and to exit losing ones. Version 1 15 A) Globalization B) Economic transformation C) Deregulation D) Privatization
D) Privatization
How do folkways and mores differ? A) Folkways exclude rituals and symbolic behavior that are included in mores. B) Folkways are codified into laws, mores are not. C) Unlike folkways, mores do not carry much significance. D) Unlike folkways, mores can bring serious retribution.
D) Unlike folkways, mores can bring serious retribution.
Under the __________ system, cases are judged with reference to three characteristics: tradition, precedent, and custom. A) theocratic law B) civil law C) contract law D) common law
D) common law
The system of values and norms that are shared among a group of people and that when taken together constitute a design for living best defines A) society. B) value systems. C) principles. D) culture.
D) culture.
Plato __________; he believed that society should be stratified into classes, with those best suited to rule administering society for the benefit of all. Version 1 6 A) equated individualism with equality B) equated collectivism with equality C) promoted representative democracy D) did not equate collectivism with equality
D) did not equate collectivism with equality
What legal means can be used by the state to expropriate the profits from business innovation? A) demands for money to grant a license B) expropriation C) enforcing property rights D) excessive taxation
D) excessive taxation
A __________ is an association of two or more individuals who have a shared sense of identity and who interact with each other in structured ways on the basis of a common set of expectations about each other's behavior. A) society B) collective C) social strata D) group
D) group
There are three values central to the Confucian system of ethics that have very important economic implications. What is one of these values? A) filial piety B) rule-based law C) humaneness D) honesty in dealings with others
D) honesty in dealings with others
One of the reasons for the spread of democracy is the emergence of __________ who have pushed for democratic reforms. A) a more vocal working poor B) better educated lower classes C) a desperate urban poor D) increasingly prosperous middle and working classes
D) increasingly prosperous middle and working classes
Exotic Collectibles is an international business. As such, it A) needs to have manufacturing units in at least two foreign nations. B) needs to manufacture products or provide services that target a global market. C) need not customize its products to the requirements of national markets. D) invests in international trade or investment.
D) invests in international trade or investment.
An international business, unlike a multinational enterprise, A) needs to have manufacturing units in at least two foreign nations. B) needs to manufacture products or provide services that target a global market. C) need not customize its products to the requirements of national markets. D) need not invest directly in operations in other countries.
D) need not invest directly in operations in other countries.
What term is used to describe a state in which authoritarian elements have captured some or much of the machinery of state and use this in an attempt to deny basic political and civil liberties? A) authoritarian dictatorship B) right-wing democracies C) representative totalitarianism D) pseudo-democracies
D) pseudo-democracies
To account for differences in the cost of living, one can adjust GNI per capita by __________, which allows for a more direct comparison of living standards in different countries. A) gross domestic product B) the Human Development Index C) living standards rate D) purchasing power
D) purchasing power
Since the 1960s, what has been a notable trend in the demographics of the multinational enterprise? A) the decline of multinational companies in the manufacturing sector B) the growth of government-owned multinational enterprises C) the decline of non-U.S. multinationals D) the growth of mini-multinationals
D) the growth of mini-multinationals
Throughout the 1990s, the amount of foreign direct investment directed at both developed and developing nations increased dramatically. This trend reflects A) a slowdown in global economic activity. B) the increasing share of the United States in the total FDI stock. C) the decline in cross-border flows of foreign direct investment. D) the increasing internationalization of business corporations.
D) the increasing internationalization of business corporations.
The Foreign Corrupt Practices Act does not allow for grease payments. ⊚ true ⊚ false
false
According to globalization critics, the decline in unskilled wage rates is due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers. ⊚ true ⊚ false
⊚ True
A market with a large number of consumers with low living standards will have a relatively large market when measured in economic terms. ⊚ true ⊚ false
⊚ false
According to critics of globalization, today's interdependent global economy places more economic power in the hands of national governments. ⊚ true ⊚ false
⊚ false
Contracts under a civil law system tend to be very detailed with all contingencies spelled out. ⊚ true ⊚ false
⊚ false
One of the UN's central mandates is to make sure nation-states adhere to the rules laid down in trade treaties signed by member states. ⊚ true ⊚ false
⊚ false
Political freedom is one of the measures used by the Human Development Index (HDI) to measure the quality of human life in different nations. ⊚ true ⊚ false
⊚ false
Product liability sets certain safety standards to which a product must adhere. ⊚ true ⊚ false
⊚ false
The World Bank has focused on policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties. ⊚ true ⊚ false
⊚ false
The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based. ⊚ true ⊚ false
⊚ false
The state of West Virginia was having budget difficulties, so it hired several private management consultancy firms to manage some state-owned enterprises. This is an example of privatization. ⊚ true ⊚ false
⊚ false
The value of foreign direct investment has steadily declined over the past few decades due in part to increased barriers placed on companies wanting to invest overseas. ⊚ true ⊚ false
⊚ false
To facilitate international business, property rights are defined in a consistent way across countries. ⊚ true ⊚ false
⊚ false
World events such as the COVID-19 global pandemic have forced companies to open operations in many parts of the world rather than invest in local production to try to offset disruptions in global supply chains. ⊚ true ⊚ false
⊚ false
"Beggar thy neighbor" retaliatory trade policies involved countries progressively increasing trade barriers against each other, which contributed to the Great Depression of the 1930s. ⊚ true ⊚ false
⊚ true
In mixed economies, in certain sectors the state sets prices, owns businesses, limits private enterprise, restricts investment by foreigners, and restricts international trade. ⊚ true ⊚ false
⊚ true
Intelli-Toys manufactured a new line of educational toys for toddlers. If a child is injured while using these toys, Intelli-Toys' product liability will be greater if the company did not conform to required safety standards. ⊚ true ⊚ false
⊚ true
Manufacturers of industrial goods and materials are more likely to participate in global markets than producers of consumer products. ⊚ true ⊚ false
⊚ true
Peruvian development economist Hernando de Soto has argued that the chronic inability of property owners to establish legal title to the property they own is a key problem for innovation and entrepreneurial activity in developing nations. ⊚ true ⊚ false
⊚ true
Some of the world's important trading nations, including India and the United Kingdom, have not ratified the United Nations Convention on Contracts for the International Sale of Goods (CISG). ⊚ true ⊚ false
⊚ true
The long-run monetary benefits of doing business in a country are a function of the size of the market, the present wealth of consumers in that market, and the likely future wealth of consumers. ⊚ true ⊚ false
⊚ true
Thera-sure Inc., a U.S.-based manufacturer of temperature regulators, sets up a production unit in Korea to take advantage of the lower labor costs there. This is an example of foreign direct investment. ⊚ true ⊚ false
⊚ true
When Victoria returned home from vacation, she found her store had been robbed and her most valuable merchandise was gone. This violation of property rights is considered private action. ⊚ true ⊚ false
⊚ true
An act as simple as shaking hands when meeting new people is an example of Version 1 8 A) values. B) symbolic behavior. C) mores. D) social stratification.
B) symbolic behavior.
What might the presence of a black (or shadow) economy in a country mean to that country's economy? A) A black economy indicates the overall level of corruption in that country is high and potential business investors will be wary of entering that country's market leading to a reduction in the country's GDP. B) A black economy may indicate that large amounts of economic activity have been unrecorded signaling that the country's economic figures may be unreliable. C) A shadow economy indicates that the country operates two markets—one for the domestic market, the other for the international market. Having two markets raises the country's overall economic performance. D) A shadow economy indicates that the country is not willing to be forthright in its business dealings—it "hides" any potential untapped markets to protect its domestic producers. This will have a negative effect on its economy.
B) A black economy may indicate that large amounts of economic activity have been unrecorded signaling that the country's economic figures may be unreliable.
Who was the author of The Wealth of Nations in which he stated that "an individual who intends his own gain is led by an invisible hand to promote an end that was no part of his intention..."? A) David Hume B) Adam Smith C) Karl Marx D) John Stuart Mill
B) Adam Smith
__________ are the advantages gained by early entrants into a market. A) Early-investor advantages B) First-mover advantages C) First-to-market advantages D) Late-mover advantages
B) First-mover advantages
Which sociologist made a connection between Protestant ethics and "the spirit of capitalism"? A) Karl Marx B) Max Weber C) Amartya Sen D) Adam Smith
B) Max Weber
__________ rights refer to the legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource. A) Trade B) Property C) Positive D) Common
B) Property
According to which political scientist's thesis is global terrorism a product of the tension between civilizations and the clash of value systems and ideology? A) Amartya Sen B) Samuel Huntington C) Francis Fukuyama D) Hernando de Soto
B) Samuel Huntington
__________ is best defined as shared assumptions about how things ought to be. A) Norms B) Values C) Ethics D) Culture
B) Values
A number of econometric studies have found consistent evidence of a hump-shaped relationship between income levels and pollution levels. According to this, as an economy grows and income levels rise Version 1 16 A) initially pollution levels remain low. B) after a while, pollution levels decrease. C) pollution levels also rise in proportion to the economic growth. D) there is increasing industrialization, which leads to greater pollution.
B) after a while, pollution levels decrease.
Throughout the world, the rationale for economic transformation can be attributed to the fact that ______ economies failed to deliver the sustained economic performance of ______ economies. A) market-based; command and mixed B) command and mixed; market-based C) centrally planned command; mixed D) market-based; centrally planned command
B) command and mixed; market-based
What is a risk associated with globalization? A) restrictions on competition B) global financial contagion C) excessive market regulation D) differentiation of markets
B) global financial contagion
Which philosophy can be traced back to the ancient Greek philosopher Aristotle? A) socialism B) individualism C) collectivism D) anarchism
B) individualism
A nation wanting to fuel long-term economic growth will focus on which two factors? A) state ownership of enterprises and control of trade activities B) innovation and entrepreneurial activity C) education and tax relief. D) strong infrastructure and business incentives to growth
B) innovation and entrepreneurial activity
Countries with __________ economies in which property rights are protected tend to achieve greater economic growth rates than other economies where property rights are poorly protected. A) mixed B) market C) centralized D) command
B) market
In a __________, if demand for a product exceeds supply, prices will rise, signaling to producers to produce more. A) mixed economy B) market economy C) collectivist economy D) command economy
B) market economy
77) In the 1970s, the United States __________, which requires all publicly traded companies, whether or not they are involved in international trade, to keep detailed records that would reveal whether a violation of the act has occurred. A) adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions policy B) passed the Foreign Corrupt Practices Act C) joined Transparency International D) joined the Organisation for Economic Co-operation and Development (OECD)
B) passed the Foreign Corrupt Practices Act
In a __________, the state owns all means of production. A) mixed economy B) planned economy C) market economy D) privatized economy
B) planned economy
Which system of government generally permits some individual economic freedom but restricts individual political freedom, frequently on the grounds that it would lead to the rise of communism? Version 1 11 A) tribal totalitarianism B) right-wing totalitarianism C) democratic totalitarianism D) theocratic totalitarianism
B) right-wing totalitarianism
The term __________ refers to a group of people sharing a common set of values and norms. A) mores B) society C) culture D) cohort
B) society
