GEB Module 7

A measure of an economy's size based on the market value of goods and services produced within a nation in a year is A. netnationalincome. B. gross domestic product. C. grossnationalproduct. D. grossnationalincome. E. the Gini coefficient.

B

A measure of the degree to which family income within a country is distributed equally is A. grossnationalincome. B. the Gini index. C. grossdomesticproduct. D. theAtlasconversionfactor. E. purchasing power parity.

B

According to the text, which of the following is not one of the rationales for why most seasoned managers supplement their analyses by looking at economic growth rates as well as measures of an economy's absolute size? A. Emerginganddevelopingeconomiesgrewmorethanthreetimesfasterin2012and2013 than did developed economies. B. GNI forecasts on their own are of no value to managers conducting economic analyses. C. Forecastssuggestedthatemerginganddevelopingeconomieswouldgrowatmorethan double the rate of developed economies in 2014 and 2015. D. Data such as overall GNI or GNI per capita can provide a snapshot of the size of an economy, but they fail to inform a manager about whether and how fast an economy is growing, or perhaps even shrinking. E. Rapid and rising economic growth rates suggest consumer demand, which often indicates that trade and foreign direct investment are likely to increase as well.

B

Generally, because of higher birth rates, A. developednationshavemoreyouthfulpopulationsthandodevelopingnations. B. developing nations have more youthful populations than do developed nations. C. thereisanincreasingdemandindevelopednationsforproductsusedinschoolsandfor products used by children. D. the developed nations provide growing markets for transportation systems, fertilizer, and appliances. E. the developed nations will have increased demand for medical care and related products.

B

The ________ includes the interactions between domestic and foreign environmental forces, or between sets of foreign environmental forces when an affiliate in one country does business with customers in another. A. foreignenvironment B. international environment C. host country environment D. globalenvironment E. alien environment

B

The after-tax personal income of consumers is known as A. personalsavings. B. discretionary income. C. personalincome. D. disposable income. E. free cash flow.

B

The amount of income left after paying taxes and making essential purchases is known as A. personalsavings. B. discretionary income. C. personalincome. D. disposable income. E. free cash flow.

B

The highest rates of urbanization are occurring in A. high-incomecountries. B. low- and middle-income nations. C. heavilypopulatednations. D. thinly populated nations. E. post-industrial nations.

B

The ________ includes all the uncontrollable forces originating outside the home country that surround and influence the firm. A. foreignenvironment B. international environment C. host country environment D. globalenvironment E. alien environment

A

According to the text, the highest percentage of population in urban areas by the year 2030 will be in A. moredevelopedregions. B. less developed regions. C. emergingmarkets. D. least developed countries. E. more agrarian societies.

A

Generally, because of higher birth and fertility rates, developing countries have more _________ populations than industrial countries. A. youthful B. mature C. healthy D. unhealthy E. ethnically diverse

A

Japan is mentioned in the age distribution section because A. itisthefastest-grayingnationintheindustrialworld. B. in the future it may have almost as many retirees as children. C. itsdecliningpopulationmeansthatthecountry'swealthwillbespreadamongasmaller number of people, increasing its overall prosperity. D. its declining population means that the country's social security funds will last a longer amount of time. E. its increasing fertility rate will allow it to compensate for an increased number of aged people.

A

Most developed nations share the following characteristic(s): A. technologicaldualism. B. high productivity and incomes in some regions and little economic development in others. C. unequaldistributionofincome. D. alargeanddominantshareoftotaloutputcomingfrommanufacturing. E. a substantial middle class.

A

Most developing nations share the following characteristic(s): A. unequal distribution of income, with a very small middle class. B. a broad range of products for export, usually based on basic manufacturing. C. highsavingsrates. D. a productive agricultural sector that supports much of the population. E. political stability based on a nondemocratically elected government.

A

When measuring the value produced in an economy, most international organizations prefer to use A. GNI. B. GDP. C. GNP. D. PPP. E. Gini.

A

Where GNI increases faster than the population A. thereprobablyisanexpandingmarket. B. the market is probably contracting. C. thecountrywherethisoccursmaybesubjecttopoliticalunrest. D. themarketisbecominglessattractiveforbusiness. E. there is probably a surplus of technical and university graduates.

A

__________ is/are straining the social security systems of Japan and other industrialized nations. A. Earlyretirements B. The fact that retirees are working longer C. Thefactthatthebirthrateisincreasing D. The growing number of people in the workforce E. Decreasing lifespans

A

The percentage of the population living in urban areas is A. increasinginhigh-incomenations,butdecreasinginlow-andmiddle-incomenations. B. increasing everywhere. C. increasinginlow-andmiddle-incomenations,butdecreasinginhigh-incomenations. D. becomingyoungerbecauseolderpeopleretiretourbanareas. E. increasing in low- and high-income nations, but stable in middle-income nations.

B

The percentages of household expenditures spent on consumer durables by residents of industrialized nations are _______________ the percentages spent by residents of developing nations. A. half B. twice C. equalto D. triple E. two-thirds

B

The rate of growth of GNI/capita may be more important to marketers than just GNI/capita because A. astablerateindicateslowriskforentry. B. a high rate indicates a fast-growing market. C. ahighrateindicateseconomicinstability. D. lowratesindicatepoliticalstability. E. it indicates how much investment will be needed for entry.

B

Which of the following is not true about India, according to the text? A. Indiahas300millionpeople20to34yearsofage. B. India has a total population of 1.27 billion people, the third largest in the world. C. Indiahas150to200millionpeoplewhoarecompletelyfluentinspokenEnglish. D. India has 6.1 students in college, versus only 3.4 million college students in China. E. India generates 13 percent of its GDP from the manufacturing sector, versus 30 percent for China.

B

A measure of how a nation's income is apportioned among its people is A. grossnationalincome. B. gross domestic product. C. incomedistribution. D. theAtlasconversionfactor. E. purchasing power parity.

C

Because ____________ consumer expenditures eliminate differences in relative prices, marketers use these data to analyze how the composition of consumption changes with the level of development. A. normalized B. inflation-free C. PPP-based D. historical-cost E. growth adjusted

C

GNI/capita, a crude estimate of purchasing power, must be further refined by A. anexaminationoftheamountofincometaxpaid. B. a census to determine the total population. C. incorporatingdataonhowthenationalincomeisactuallydistributed. D. determiningtheamountofdiscretionaryincome. E. calculating the amount of tax avoidance by individuals and corporations.

C

If a nation's GNI is small, but a small percentage of its population receives a large percentage of that income A. itmaybeagoodmarketforhigh-pricedindustrialproducts. B. it may be a good market for high-volume, high-priced consumer products. C. it may be a good market for low-volume, high-priced luxury products. D. itisunlikelytobeapromisingmarket. E. then there will be good growth in the future.

C

The increase in the number of working women is significant because it may result in a greater market for convenience goods.

T

_______ refers to the total value of all income generated by the residents of a nation, including both the domestic production of goods and services and income from abroad. A. Grossdomesticproduct B. Gross domestic income C. Grossnationalincome D. Netnationalproduct E. Goods and services income

C

The percentage of household expenditures spent on consumer durables by households in developing nations is half the percentage spent by consumers in developed nations.

T

The quantity and mix of energy consumed per capita constitutes a rough indicator of a country's level of development.

T

According to the text, the part of a nation's income that, because of unreporting or underreporting, is not measured by official statistics is known as the A. hiddeneconomy. B. gray market. C. bartersystem. D. underground economy. E. shadow market.

D

An important phenomenon that is changing the population distribution everywhere is the A. move to rural areas for simpler, safer living. B. urban-to-rural shift. C. increaseinhousingcosts. D. rural-to-urban shift. E. rise in single parent families.

D

As a general rule, the underground economy in a country will be bigger when A. taxratesarelower. B. drug use is higher. C. incomelevelsarelow. D. governmentredtapeisoppressive. E. economic growth is slow.

D

Economies with per capita incomes in the low to middle range that are in a transition toward developed status are known as A. undevelopedeconomies. B. socialist economies. C. high-incomeeconomies. D. emergingmarketeconomies. E. less-developed economies.

D

Generally, we can assume that the higher the GNI/capita value A. thelowerthetaxrate. B. the smaller the population. C. thelargerthepopulation. D. the more advanced the economy. E. the higher the growth rate.

D

To compare the purchasing power of nations, managers need to know how many people gross national income (GNI) is divided among.

T

Most developed nations share the following characteristic(s): A. disguisedunemploymentorunderemployment. B. access to health care and a wide range of health problems. C. vigorous international trade, especially in agriculture and manufacturing. D. a large base of productive capital. E. plentiful educational opportunities and illiteracy.

D

The World Bank categories countries based on GNI per capita, using the following categories: A. undevelopedeconomies,developingeconomies,developedeconomies. B. developed economies, industrializing economies, developing economies. C. developingeconomies,newlyindustrializingeconomies,developedeconomies. D. high-incomeeconomies,middle-incomeeconomies,low-incomeeconomies. E. less developed economies, more developed economies.

D

The percentages of household expenditures spent on transportation, communication, and health care by residents of industrialized nations are _______________ the percentages spent by residents of developing nations. A. half B. two-thirds C. equalto D. twice E. triple

D

Which of the following is not true about China, compared to India? A. Chinahas1.12millionmillionairesversus182,000inIndiaasofthebeginningof2014. B. China is ranked third in the world in sales of luxury goods, ahead of India. C. China has a larger population, at 1.37 billion people, than does India. D. China attracted five times more foreign direct investment from 2000 to 2013 than did India. E. China has a higher level of manufacturing productivity than does India.

D

Which of the following is not true regarding the underground economy? A. On average, for the 2000 to 2012 time period, it is estimated that the underground economy accounted for between 16 and 17 percent of GDP in OECD countries. B. On average, for the 2000 to 2012 time period, it is estimated that the underground economy accounted for between 30 and 50 percent of GDP in emerging economies. C. The underground economy is estimated to have exceeded 60 percent in Bolivia, Panama, and Zimbabwe. D. TheundergroundeconomyintheUnitedStatesdecreasedfrom8percentofGDPin1970to less than 4 percent in 2003. E. Large underground economies can create problems for public policy makers.

D

To estimate market potential, managers require data on the size and the rates of change of economic and socioeconomic factors.

T

When an international manager is considering where to do business, one of the first considerations is the size of the economy.

T

re frequently characterized as those industrialized, or postindustrial, service-based nations that are economically advanced, with established infrastructures—roads, bridges, utilities, power supplies, communications, and other structural elements needed for the smooth operation of a society—and that have achieved high incomes per capita that support a high living standard.

Developed economies

Marketers are interested in knowing the trend of women entering the workforce because this may A. resultinlargerfamilyincome. B. provide a smaller market for consumer durables. C. beresponsibleforababyboom. D. increase the proportion of elderly in the population. E. reduce the rate of rural-to-urban shift.

E

When an international manager is considering where to do business, one of the first considerations is A. whetherthecountryhasademocraticallyelectedgovernment. B. the dominant religion in the country. C. thesizeofthecountry. D. whetherthecountryhasamanufacturingsector. E. the size of the economy.

E

Analysts know that a country with a large population is always a better market than a country with fewer people.

F

Developed is the term given to nations that have achieved high income per capita.

F

Newspapers in China refer to young people with good jobs as "zippies."

F

The rural-to-urban shift is occurring primarily in the developed countries.

F

A problem with gross national income estimates that, to compare them, the GNIs in local currency must be converted to a common currency by using an official exchange rate, and that may not accurately reflect domestic purchasing powers of currencies.

T

A simple calculation based on GDP, total population, and income distribution may indicate that a country is not an adequate market.

T

Countries with slower-rising unit labor costs are investment prospects for companies striving to lower production costs.

T

Differences in GNI/capita tell us something about the relative wealth of a nation's inhabitants, but we also need to know how the GNI is distributed.

T

Discretionary income is the amount left after paying taxes.

T

Economies with per capita incomes in the low to middle range that are in a transition toward developed status are referred to as emerging market economies.

T

Generally, it can be assumed, the higher the GNI/capita value, the more advanced the nation's economy.

T

If a major part of the foreign exchange a nation earns cannot be used to import components used in local products, then either local industries must manufacture them or the companies that import them must stop production.

T

In terms of economic development and competencies, India's strength so far has been in services whereas China's has been in manufacturing.

T

Income distribution studies confirm the belief that income is more evenly distributed in the richer nations.

T

India's average manufacturing labor cost per hour in 2014 was about one-quarter as high as China's.

T

Purchasing power parity refers to the number of units of a currency required to buy the same amounts of goods and services in the domestic market that one dollar would buy in the United States.

T

Economies with per capita incomes in the low to middle range that are in a transition toward developed status are referred to as

emerging market economies