IB Exam 1

Common

A country that bases its laws on the traditions within the country's legal history operates under a _____ law legal system. A) common B) civil

share in company profits

A mudarabah contract allows an Islamic bank to _____ in exchange for a loan. A) share in company profits B) declare dividends C) own shares of stock D) charge compounded interest

Culture

A system of values and norms that are shared among a group of people and that when taken together constitute a design for living is called __________

contract

A(n) ______ is a document that specifies the conditions under which an exchange is to occur, detailing the rights and obligations of the involved parties. A) subpoena B) contract C) invoice D) bill of lading

multinational enterprise

A(n) ______ is any entity that conducts business in at least two countries. A) transnational union B) conglomerate C) intrastate corporation D) multinational enterprise

high

According to Hofstede, societies with stiff codes of behavior, rules, and laws score ________ on the uncertainty avoidance index.

broadened the gap between the rich and poor nations

According to critics of globalization, increased free trade and investment over the past few decades have A) broadened the gap between the rich and poor nations. B) reduced job opportunities in developing nations. C) prevented countries from being interdependent on one another. D) decreased the selection of goods and services available to consumers.

admission to paradise

According to the tenets of Islam, the objective of life is to fulfill the dictates of God in hopes of achieving A) a healthy heir. B) worldly gain. C) admission to paradise. D) peace and harmony.

Strata

All societies are divided on a hierarchical basis into social categories called social _____. A) mobility B) identification C) strata D) folkways

private

An energy company based in Houston often deals with piracy issues when exporting fuel in tankers to parts of Africa. This piracy is a form of _____ action. A) public B) private

more intertwined

As international trade expands, the economies of the world's nation-states are becoming ______. A) more intertwined B) less intertwined C) less interdependent D) more independent

mixed

Companies wishing to pursue business opportunities in Sweden would find that while some industries are privately owned, others are state-controlled. What type of economy does this represent? A) pure command B) mixed C) free D) pure market

Open

Economies that are _________ to trade grow at a faster rate than other economies.

democracy

Former communist nations present opportunities to Western international business as these nations show continued commitment to _____. A) plutocracy B) democracy C) monarchy D) tyranny

comparative advantage

Heckscher and Ohlin identified differences in national factor endowments as the root of ______. A) entrepreneurship B) comparative advantage C) absolute advantage D) deregulation

dharma

Hindus believe in ______, the behaviors and responsibilities governing individual conduct. A) karma B) reincarnation C) after-life D) dharma

send them to the "right" school

Historically, one way in which a British citizen could ensure that his or her children were accepted into a higher class was to A) send them to the "right" school. B) dress them in nicer clothes. C) send them to work at an early age. D) pay bribes to the upper class.

culture

Hofstede studied how ______ relates to values in the workplace.

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

How does Samuel Huntington's argument about the new world order differ from the view of Fukuyama? A) Huntington believed the world would be split into different civilizations with their own ideology. B) Huntington believed in a harmonious world that emphasized free market capitalism. C) Huntington believed that a universal liberal democracy would occur. D) Huntington believed in the triumph of Westernized thought.

It has emphasized the idea of an extended social group

How has social media affected group life? A) It has emphasized the idea of an extended social group. B) It fosters face-to-face group activity. C) It has not identified the group but focuses on the individual. D) It de-emphasizes group interaction.

value

In Westernized societies, freedom to choose is considered everyone's right. The idea of what is good and right is an example of a(n) _____. A) folkway B) value C) norm D) attitude

importance is attached to honesty

In a Confucian society, expensive lawyers would not be needed to resolve contract disputes because A) importance is attached to honesty. B) the government is not considered a neutral third party. C) disagreements are to be settled face-to-face. D) there is a lack of reciprocal obligations.

masculine

In a ________________ culture, sex roles are sharply differentiated

basic civil liberties are denied to citizens

In a country governed by a totalitarian system, you would find that A) state bureaucracy is not influenced by politics. B) the country has a nonpolitical armed service. C) free and fair elections are conducted regularly. D) basic civil liberties are denied to citizens

market

In a pure ______ economy, all productive activities are owned privately -- not by the state. A) planned B) command C) market D) mixed

Privatization

In the last half of the twentieth century, Britain's Conservative Party sold state-owned enterprises to individual investors in order to create a free market economy. What process was Britain using to create this economy? A) totalitarianism B) federalism C) isolationism D) privatization

Pure command

In what type of economy are all businesses state-owned, the rationale being that the government can then direct them to make investments that are in the best interests of the nation as a whole rather than in the interests of private individuals? A) free market B) deregulated C) mixed D) pure command E) laissez-faire

Socialist

Karl Marx promoted the idea of a(n) ________ society in which the state owned the means of production, distribution, and exchange. A) monarchist B) feudalist C) individualist D) socialist E) capitalist

capitalists take the value created by workers for their own use

Karl Marx would agree that A) state-owned enterprises pay workers lower wages. B) in a capitalist society, many people benefit at the expense of a few. C) individual capitalists rather than state-owned enterprises benefit the society as a whole. D) capitalists take the value created by workers for their own use.

Public

Levying excessive taxes or requiring expensive permits from property holders are both examples of ______ action. A) private B) public

Legal

MedPlus Incorporated, based in the United States, hesitates to enter into a joint venture with Azpak Limited, a Sri Lankan company, due to inadequate protection of intellectual property rights. MedPlus is trying to avoid what type of risk? A) ethical B) political C) ethnographic D) economic E) legal

computer power will approximately double ever 18 months

Moore's Law predicts that A) computer power will approximately double every 18 months. B) software is surpassing hardware in terms of speed and efficiency. C) software is getting slower more rapidly than hardware becomes faster. D) costs for production of microprocessors doubles continually

Both 1 and 2

New Trade theory states that: (1) nations may benefit from trade even when they do not differ in resource endowments or technology (2) specialization allows for scale economies and lower production costs A) 1 B) 2 C) Both 1 and 2 D) Neither 1 nor 2

in certain industries the world can only support a limited number of firms

New trade theory states that some countries specialize in the production and export of a particular product because A) domestic demand is lower than international demand. B) location economies support their industrial advantage. C) in certain industries the world can only support a limited number of firms. D) other countries do not possess the same factor endowments.

nonverbal

One of the most powerful types of communication is ______________, such as personal distance and hand gestures

influence of western ideas and culture

One reason for the rise of Islamic fundamentalism is the A) influence of Western ideas and culture. B) strict rules of Christian ideology. C) movement towards an agricultural-based economy. D) need for advanced educational opportunities.

The globalization of production

Paragon Corp., based in Ohio, sources goods from Southeast Asia to take advantage of labor cost savings. This company is benefiting from _____. A) a franchise operation B) domestic production C) the globalization of production D) intrastate investment

democracy

Political systems that emphasize individualism tend to promote _____. A) a planned economy B) totalitarianism C) state-run business D) democracy

export cloth and import wine from Portugal

Portugal can produce wine and cloth with less labor than England. But, given all factors of production, England can produce cloth relatively better than Portugal. According to Ricardo's theory of comparative advantage, it make sense for England to A) export both cloth and wine to Portugal. B) export cloth and import wine from Portugal. C) import both cloth and wine from Portugal. D) import cloth from Portugal, but export wine.

Mature democratic state

Property rights are only truly secure when a _____ exists. A) demand economy B) planned economy C) totalitarian regime D) mature democratic state

Specialization

Reflecting the theories of Smith, Ricardo, and Heckscher-Ohlin, free trade permits ______, which allows a country to manufacture and export in those areas where they have a comparative advantage. A) quality control B) specialization C) embargoes D) quotas

Globalization of Markets

Renata is traveling across Europe and is surprised to find Starbucks, McDonald's, and Coca-Cola in nearly every city she visits. This shows a convergence of consumer tastes which creates a _____. A) stock of FDI B) mini-multinational C) globalization of production D) globalization of markets

free trade

Ricardo's theory encourages ______ because it suggests that trade is a positive-sum game where all participating countries realize economic gains. A) isolationism B) a planned economy C) restricted trade D) free trade

Constant

Ricardo's theory of comparative advantage assumes ______ returns to scale. A) increasing B) evolving C) decreasing D) constant

1,3,5,6

Select the four facts that describe the demographics of the global economy up until the 1960s. (Check all that apply.) 1) US dominance in the world economy and world trade 2) US retraction of all global agreements 3) Roughly half of the globe was off-limits to Western international business 4) US dominance in underdeveloped third-world countries 5) Dominance of large, multinational US firms in international business scene 6) US dominance in world foreign direct investment (Separate numbers by comma)

mores

Social norms that address the customs and conventions of a society and are central to the functioning of the society are called _____. A) norms B) mores C) values D) opinions

Education Policy

The Heritage Foundation index of economic freedom is based on ten indicators. Which of these is not included? A) Labor freedom B) Education policy C) Foreign investment regulations D) Trade policy E) Taxation rules

Individualism versus collectivism

The Hofstede dimension that is focused on the degree to which people in a society are integrated into groups is A) power distance. B) uncertainty avoidance. C) individualism versus collectivism. D) masculinity versus femininity.

global institutions

The International Monetary Fund and the World Bank are both examples of _____ that help govern the global business system. A) foreign markets B) mini-multinationals C) federal mandates D) global institutions

Dynamic

The US economy is considered _____ because it is impacted by the philosophy of individualism. A) static B) dynamic C) stagnant D) regressive

Bribery

The United States passed the Foreign Corrupt Practices Act in response to _______ issues between US companies and foreign countries. A) bribery B) manufacturing C) treaty D) marketing

lowering the trade barriers between various national markets

The Uruguay Round negotiations resulted in: A) lowering the trade barriers between various national markets B) reducing protections for IP C) restricted GATT from covering services D) Establishing the G20 for policing international trade

GATT

The World Trade Organization (WTO) is the successor to ______. A) the IMF B) the UN C) G20 D) GATT

charging interest

The economic principles of Islam prohibit a bank from _____. A) investing assets B) making loans C) maintaining reserves D) charging interest

Africa

The majority of Christians live in Europe and the Americas. However, Christianity is rapidly growing in ______. A) China B) India C) Southeast Asia D) Africa

caste

The most rigid form of social stratification is the _____ system.

legal

The political economy of a country refers to the interaction of the political, economic, and _____ systems of a country. A) education B) legal C) social D) business

economies of scale

The reductions in the cost of a single unit that result from large scale output of that product are called A) mass customization. B) economies of scale. C) purchasing parity. D) the product life-cycle.

folkways

The routine conventions of living, thinking and acting in a group are called ______. A) attitudes B) folkways C) values D) norms

Human Development Index

The three measures of the ________ are life expectancy at birth, educational attainment, and average incomes based on PPP estimates.

Gross national product

The total annual income received by residents of a single nation is reflected in which official measure? A) Human development index B) Purchasing power parity C) Gross national income D) Gross national product

social mobility

This is how difficult or easy it is for an individual to move out of the social strata into which they are born

True

True of False: As the guiding principle of Islam, the Koran promotes free enterprise and supports earning legitimate profits through commercial efforts.

False

True or False: According to Adam Smith, a country should produce all goods at home that it can, even if it could buy those goods at a lower cost from other countries.

False

True or False: Confucianism is a guiding religion, devoted to pleasing a superior being for an afterlife.

True

True or false: Containerization made the process of moving goods from one country to another less labor intensive.

True

True or false: The benefits from free trade are not evenly distributed throughout an economy.

indulgence

Under Hofstede's proposed sixth dimension, _____ refers to a society that promotes enjoying life and having fun. A) tolerance B) indulgence C) restraint D) ambiguity

communist

Until recently, what was the most common form of totalitarianism in the world? A) theocratic B) right-wing C) communist D) tribal

1,2

What are two reasons diminishing returns to specialization occur? 1) Not all resources are of the same quality. 2) Different goods use resources in different proportions. 3) Production might draw on marginal resources whose productivity is more than resources initially used. (PUT NUMBERS SEPARATED BY COMMAS.

Deregulation

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? A) isolationism B) purchasing parity C) privatization D) deregulation

A Trademark

What should Stephen, the CEO of an athletic clothing company, obtain to prevent competitors from copying the company logo? A) A trademark B) An abridgment C) A copyright D) A patent

1,3,5

What three factors are assessed to determine the Human Development Index of a country? 1) life expectancy at birth 2) democratic state 3) educational attainment 4) religious affiliation 5) average incomes (Separate numbers by comma)

absolute

When a country is more efficient at producing a product than any other country, the country has a(n) ______ advantage in the production of that product. A) social B) comparative C) absolute D) political

goes hand-in-hand with entrepreneurship

When analyzing the process of innovation, it can be said that it A) goes hand-in-hand with entrepreneurship. B) is counter-intuitive to creative thinking. C) typically increases the inefficiency of labor and capital. D) is the primary cause of economic stagnation.

subjected to various forms of protection from country to country

When describing intellectual property rights, it can be said that they are A) difficult to enforce legally. B) subjected to various forms of protection from country to country. C) the same from country to country. D) protected and governed by uniform regulations around the world.

Market Economy and Democratic

Which combination is favorable for business operations? A) Command Economy and Communist B) Market Economy and Democratic

Market economies

Which economic system is MOST conducive to innovation and entrepreneurial activity? A) Mixed economies B) Market economies C) Planned economies D) Command economies

Removal of price controls

Which of the following is most likely to be implemented by a country as a part of deregulation? A) prohibition of private enterprises from operating in certain sectors B) increased restrictions on foreign direct investment C) centrally planned economic system D) commitment toward communism E) removal of price controls

The retail sector in Serbia has been opened for FDI

Which of the following is most likely to indicate that the nation of Erbia has adopted deregulation? A) The Erbian government has been criticized for its inability to introduce a legal system to safeguard property rights. B) Erbia ranks the lowest among the countries that grant both political and economic freedoms to its citizens. C) The establishment of private enterprises in steel industry is prohibited by the Erbian government. D) The retail sector in Erbia has been opened for FDI E) The Erbian government exercises tight control over the prices of food grains.

The government of a country defines the legal framework within which firms do business

Which of the following is true about legal systems? A) Collectivist-inclined totalitarian states tend to enact laws that are pro-private enterprise. B) Unlike the economic system of a country, the legal system is independent of the country's political system. C) The attractiveness of a country as an investment site or market is unaffected by its legal system. D) All countries have the same, uniform legal environment. E) The government of a country defines the legal framework within which firms do business.

A nation that has a totalitarian political system

Which of the following nations is most likely to be unappealing as a place for doing business? A) a nation that has a totalitarian political system B) a nation that enforces strong property rights C) a nation that has a strong legal system D) a nation that has a market-based economic system E) a nation that has a democratic political institution

inversely proportional

Which of the following terms best defines the relationship between the level of corruption and economic growth rate in a country? A) zero correlation B) directly proportional C) inversely proportional D) positive correlation E) independent

Unnecessary focus on personal achievement

Which of these is NOT an example of the "hidden curriculum" of education? A) Respect for others B) Obedience to authority C) Unnecessary focus on personal achievement D) Dealing with competition

Country A

Which of these situations relates to Sachs's view on a country's economic development? A) Country B has implemented a policy in which all children receive a paid college education. B) Country A has the benefit of nutrient-rich soil which provides a competitive advantage for the country's tobacco industry. C) Country D denies civil liberties to its citizens and controls all business production. D) Country C decides to stop production of computer technology after another country steals its intellectual property. (PUT COUNTRY NAME ONLY)

World Trade Organization

Which organization verifies that nation-states comply to the rules associated with trade treaties signed by member states? A) World Trade Organization B) United Nations C) World Bank D) International Monetary

It is a form of government in which the state recognizes no limits to its authority and strives to regulate all aspects of public and private life

Which statement BEST describes a totalitarian system? A) It is a form of government that typically aims to achieve socialism by democratic means rather than violent revolution or dictatorship. B) It refers to a political system in which government is by the people, exercised either directly or through elected representatives. C) It is a form of government in which the state recognizes no limits to its authority and strives to regulate all aspects of public and private life. D) It refers to a political system that typically asserts the primacy of individual economic and political freedom over societal goals

New Trade

Which theory states that for products where economies of scale are significant and that control a substantial amount of world demand, the first movers in an industry can gain a scale-based cost advantage NOT available to late entrants? A) Mercantilism B) New trade C) Product life-cycle D) Ricardo

Diminishing

Which type of returns to specialization happen when additional units of resources are required to produce each additional unit? A) Diminishing B) Constant C) Comparative D) Increasing

product life-cycle

While not as relevant today, the trade theory that was useful in explaining the pattern of trade when the US dominated the global market is the ______ theory. A) Samuelson B) Friedman C) Heckscher-Ohlin D) product life-cycle

To lower their overall cost structure

Why would a company engage in the globalization of production? A) To foster government intervention B) To increase the barriers to cross-border trade C) To move closer to their competition D) To lower their overall cost structure

Privatization

______ is seen as a transfer of ownership of a business, property or enterprise from the public sector to the private sector. A) Privatization B) Entrepreneurship C) Licensing D) Urbanization

Mercantilism

______ is the first theory of trade that advocated that a country should export more than it imports and should accumulate gold and silver to make up the difference and maintain a trade surplus. A) New Trade B) Planned economy C) Isolationism D) Mercantilism

Leontief

______ raised questions about the Heckscher-Ohlin theory. A) Leontief B) Vernon C) Sachs D) Welch

Collectivism

______ refers to a political system that values the needs of society over that of an individual. A) Plutocracy B) Collectivism C) Individualism D) Monarchy

Globalization

______ refers to the shift toward economic international integration: A) Transnationalism B) Nationalism C) Globalization D) Repatriation

Property

______ rights determine how a resource or economic good is owned and used. A) Theocratic B) Intellectual C) Property D) Common law