Chapter 3

Within the Human Development Index, for a country to have "medium" human development it must score

.5-.8

Privatization became a worldwide practice starting in the

1980s

Identify the CORRECT statement from the following

A country's investment in education and subsequent growth rates result in a more productive population

What risk is associated with a change in the political economy?

A multipolar world, controlled by a number of civilizations, could replace the bipolar world.

Based on market potential, _____ has the ability to have a larger market than the United States, the European Union, and Japan combined.

China

Which statement accurately describes the economic prospects in a country?

Countries with free market economies in which property rights are protected tend to achieve greater economic growth rates than other economies.

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

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

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

Creation of a legal system to safeguard property rights, regulation markets

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

Deregulation

Which of these statements would Amartya Sen agree with?

Development requires the removal of social deprivation.

are those individuals who first commercialize a concept, service, or product.

Entrepreneurs

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

False

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

False

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

Gross national income

measures the total annual income received by residents of a country.

Gross national income

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

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

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

Market economies

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

Privatization

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

Privatization

The GNI per capita of a country is $5,000, but the PPP per capita is $8,000. Which of the following can be inferred from the given data?

The cost of living is lower in that country than the United States.

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

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

What is an example of a transaction that would take place in the shadow economy of a country?

To avoid paying the federal gift tax, the broker advised his client to transfer the funds without declaring them as a gift.

The Chinese government passed a law that provided private property owners with the same protections granted to the state. Hernando de Soto would be in favor of this law.

True

Economic progress often leads to

adoption of a democratic government.

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

all property had previously been held by the state.

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

deregulation

Gross national income (GNI) per person figures can provide an incomplete picture because they

don't factor in the cost of living.

When comparing early and late entrants into a market, it can be said that

early entrants build brand loyalty and gain experience in a country's business practices.

Sachs would agree that _____ helps explain why Malaysia and Singapore have been able to overcome issues with their topical geography and achieve economic growth faster than some tropical nations in Africa.

education

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

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

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

geography

According to Huntington, ______ is a conflict that results from the strong ideological boundaries separating civilizations from one another.

global terrorism

A country's economic system and property rights regime are _____ predictors of economic prospects.

good

One positive aspect of innovation is that it

increases the economic activity

As defined in the text, _____ includes a company's new products, new processes, new organization, new management practices and new strategies.

innovation

When assessing the legal factors that determine the cost of doing business in a country, it's important to know that

it can be more costly to do business in a country where local laws and regulations set strict standards with regard to product safety.

for the government to expropriate profits from innovation through excessive taxation.

legal

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

less

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

liberal democracy has triumphed and will become the final form of human government.

Hernando de Soto's arguments to improve property rights protection stemmed from the fact that

many property owners in poor countries can't establish legal title to property they own.

The Heritage Foundation's index measures the degree of economic freedom in the nations -- in other words, the degree of shift to ______ economic systems

market-based

Property rights are only truly secure when a _____ exists.

mature democratic state

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

middle

It would probably be _____ costly to do business in a relatively underdeveloped economy

more

The process of privatization fails to perform as expected when

newly privatized firms are protected from foreign competition.

Refer to Map 3.6 in the text. This map shows that Singapore ranks in the top two states in terms of economic freedom. Yet in terms of political freedom, Singapore is ranked as _____ on the Freedom House's index.

partly free

One thing the Human Development Index does not assess but which Amartya Sen believes should be included to determine development is

political freedoms

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

privatization

The ______ adjustment helps provide a more direct comparison of the living standards found in different countries.

purchasing power parity

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

regulation

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

risk of expropriation of profits.

One factor that could topple democracy in a newer democratic state is

severe economic setback.

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

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

When discussing economic development, Amartya Sen said that development should be measured by

the capabilities and opportunities people enjoy.

The base used to make the purchasing power parity adjustment is

the cost of living in the United States.

According to Samuel Huntington's thesis, global terrorism is

the result of a clash of value systems.

In some countries, barter agreements take the place of cash transactions and this skews the "official" economic activity figures. This is referred to as

the shadow economy

In some countries, barter agreements take the place of cash transactions and this skews the "official" economic activity figures. This is referred to as _____.

the shadow economy

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

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

True or False: For privatization to work, it must be accompanied by a more general deregulation and opening of the economy.

true

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

undemocratic governments