GLOBAL ENVIRONMENT OF BUSINESS chapter 1-2

Which country has seen their share of world output increase the most from 1960 to today?

China

Which of these companies exemplifies the globalization of markets?

Back Love Mattresses, a U.S.-based mattress company, sells the same mattresses worldwide.

In which of these situations is Mercury Fiber Inc. using a grease payment?

Mercury Fiber Inc. made a small payment of $35 to speed up some paperwork related to tax returns in a less-developed country.

What is implied by the fact that in today's marketplace, the volume of world trade has been growing faster than world GDP?

The economies of the world's nation-states are becoming more intertwined.

What occurs according to Moore's law?

The power of microprocessor technology doubles and its cost of production falls in half every 18 months.

A nation that has __________ would be unappealing as a place for doing business.

a totalitarian political system

A __________ economy follows the principles of collectivism as resources are allocated based on "the common good."

command

Which term best represents the relationship between the level of corruption and economic growth rate in a country?

inversely proportional

A boom in product liability suits and awards in the United States resulted in a dramatic increase in the cost of liability insurance. Many business executives argue that this

makes American businesses less competitive in the global marketplace.

A group calling itself the "Change Brotherhood" sought to convert a socialist country by democratic means. The "Change Brotherhood" is an example of

social democrats.

When considering globalization, what is thought to be the single most important innovation since World War II?

the microprocessor

What is an accurate depiction of the current state of communism?

Communism is in decline worldwide.

Solar Solutions, a U.S.-based company, is planning to expand operations to a foreign country. Considering the factors that make a country attractive as a place in which to do business, which country should Solar Solutions consider for entry?

Country D, which has democratic institutions and a market-based economic system

What is an accurate characterization of the role of international business investments in Latin America today?

Debt and inflation are down and foreign investment is welcomed.

Under common law, __________ refers to the ways in which laws are applied in specific situations.

custom

A country that has lax intellectual property laws will find that

firms will be reluctant to enter into such a country.

Daveed is the warehouse supply manager for a privately owned auto parts distributor. It is his job to take inventory of the products the company has available and place orders for parts when supplies run low. This supply and demand form of production is an example of a __________ economy.

market

Econometric studies show a hump-shaped relationship between income levels and pollution levels. Which of these statements reflects that relationship?

As an economy grows and income levels rise, initially pollution levels also rise.

All of the books in a library have a __________, which shows the exclusive legal rights of the author of the book.

copyright

What is an example of a factor of production?

labor

The __________ system of a country encompasses the process through which redress for grievances is obtained.

legal

The main goal of GATT was to

reduce trade barriers.

Growing income inequality between the skilled and unskilled workers in advanced nations, such as the United States, is a result of the

wages for skilled workers being bid up by the labor market and the wages for unskilled workers being discounted.

The North American Free Trade Agreement (NAFTA) was formed in 1994 among

Canada, Mexico, and the United States.

According to globalization supporters, what is an advantage of globalization?

Globalization helps create jobs in all countries that participate in the global trading system.

According to globalization opponents, what is a disadvantage of globalization?

Globalization results in companies "exporting jobs" to low-wage nations.

Which global institution do nation-states whose economies are in turmoil turn to as the lender of last resort?

International Monetary Fund

Which statement reflects a general implication of globalization?

The COVID-19 pandemic called into question the wisdom of relying on globally dispersed production systems.

Which statement accurately portrays the effect of the share of national income on skilled and unskilled labor?

The share of national income by skilled labor has increased.

What country has seen a relative decline in its share of world output between 1960 and 2018?

United States

Of the two organizations created at Bretton Woods in 1944, which is considered the less controversial?

World Bank

Which institution was established as a result of the Uruguay Round of GATT?

World Trade Organization

Hillson Incorporated, a multinational giant, runs a number of diversified businesses. The intellectual property of the firm would include

all computer software for budgeting designed by employees.

Under a civil law system, it is the responsibility of a judge only to __________ the law.

apply

Which scenario is an example of private action?

business owners in the interactive video industry stealing their competitors' trade secrets and intellectual properties

Grossman and Krueger's study revealed the relationship between pollution levels and income. Which pollutant was the exception to their study?

carbon dioxide

As a judge in Germany, William is not allowed to interpret the law but relies on a strict set of codes to determine the outcome of a case. Which type of law is in place in Germany?

civil law system

An individual's right to do something may be restricted on the grounds that it runs counter to "the good of society" when the political system emphasizes

collectivism

On an island nation, citizens are restricted in how much land they can own if it creates opposition to the rule of the "common good." What is the political system of the island based on?

collectivism

Historically, communist countries focused on collectivist goals. The government planned production, fixed commodity prices, and also directed investments to ensure they benefitted the nation as a whole and not only a few individuals. What type of economy did this represent?

command

Deirdre works as the executive manager of an international business, while Tomas is the executive manager of a purely domestic business. Which of these responsibilities apply to both Deirdre and Tomas?

dealing with business attacks from competitors

What was the motivation for non-U.S. firms to begin investing across national borders in the 1970s?

desire to disperse production activities to optimal locations

According to the UN Charter, one of the four purposes of the UN is to

develop friendly relations among nations.

Due to the changing economic geography, many of tomorrow's economic opportunities are most likely to be found in the

developing nations of the world such as China, India, and Brazil.

One result of the Uruguay Round was

enhanced protection for patents, trademarks, and copyrights.

The minimum that a firm has to do to engage in international business is to

export or import products from other countries.

Texas-based Cowboy Food Groups has invested resources in business activities in Mexico. What type of business activity does this represent?

foreign direct investment

Economist Robert Reich advocates that the outsourcing of productive activities to different suppliers results in the creation of

global products.

One cost-cutting measure used by E-Z Out Garage Door Co. is sourcing the parts it uses from companies in Germany, Brazil, and Mexico that are more economical than home-country sources. The choice to use these sources is an example of the

globalization of production.

The merging of national markets that have historically been distinct and separate is the process of

globalization.

In a pure command economy, the prices at which goods and services are sold are planned by the

government

A payment made to expedite or to secure the performance of a routine governmental action is called a

grease payment.

When comparing the three broad types of economic systems, it can be said that

in a command economy, state-owned enterprises have little incentive to control costs and be efficient.

Which concept laid the groundwork for the concepts expressed in the Declaration of Independence?

individualism

In the United States, citizens have the freedom to pursue the economic and political activities that interest them. This is an example of the philosophy of

individualism.

Canadian company Nature's Yogurt exports a number of products to consumers in Brazil, Chile, and Argentina. According to this information, Nature's Yogurt is most likely involved in

international trade.

Monique, a French fashion designer, sells her merchandise by exporting it to retail stores in the United States, United Kingdom, and Brazil. According to this information, Monique is participating in

international trade.

Free trade alone, some argue, is a necessary but not sufficient prerequisite to help "highly indebted poorer countries" (HIPCs) bootstrap themselves out of poverty. They also recommend implementing

large-scale debt relief.

A country's __________ system is a part of the political economy.

legal

Sun and Fun is a U.S.-based company that specializes in protective clothing to be worn at the beach or pool. The company recently opened a production facility in Brazil and another in Europe. What type of enterprise is Sun and Fun?

multinational

Tomorrow's Tech Inc., a U.S.-based company, has productive activities in more than two countries. Tomorrow's Tech is what type of enterprise?

multinational

Wise Eyes Corporation has developed a new oral supplement to prevent macular degeneration. Which type of legal protection grants Wise Eyes Corporation exclusive rights for a defined period to the manufacture, use, or sale of this new supplement?

patent

After the collapse of communism in Russia, successful business owners often had to pay "protection money" to the mafia or face violent retribution. In the context of property rights, the behavior of the mafia is an example of

private action.

Racquel has dry patches on the back of her hands after using a psoriasis serum manufactured by LMC Pharmaceutical. She learned that the serum's steroid levels were beyond the standard levels permitted by the government and the damage caused is irreversible. Which standards will address Racquel's grievances?

product liability laws

Josef told the management team that the company would have to find a new way to produce the Walk-A-Lot Doll because the government had recently banned "exposed component parts in toys" and the doll's walking mechanism was visible on her back. The standard set by the government is a type of

product safety law.

The state senator was found guilty of __________ when she tried to overcharge for licenses and permits from an international business that wanted to open a manufacturing plant in her state.

public action

The change in the United States' position as a dominant industrial power is characterized as a relative decline because it

reflects the faster economic growth of several other economies.

In the United States, citizens have the right to elect officials who make decisions on behalf of the public. This practice is the reason the United States is a

representative democracy.

The United Nations Convention on Contracts for the International Sale of Goods (CISG) was introduced to

resolve disputes that arise in international trade regarding which country's laws to apply.

Fast food chain restaurants promote different menu choices in different countries depending on a range of factors such as demographics, local taste, income levels, and cultural values. This demonstrates that

significant differences still exist among national markets.

While the lowering of trade barriers made globalization of markets and production a theoretical possibility, what has made it a tangible reality?

the advances in communication, information processing, and transportation technologies

Collectivist-inclined totalitarian states tend to enact laws that severely restrict private enterprises, while laws enacted by governments in democratic states, where individualism is the dominant political philosophy, tend to be pro-private enterprise and pro-consumer. This indicates that the

the legal framework of a country reflects the rulers' dominant political ideology.

The outward stock of foreign direct investment refers to

the total cumulative value of foreign investments by firms domiciled in a nation outside of that nation's borders.

A form of government in which political power is monopolized by a party, group, or individual that governs according to religious principles is called what type of totalitarianism?

theocratic

Nations that limit the freedom of religious expression with laws based on religious principles follow the political system of

theocratic totalitarianism.

Why was the World Trade Organization established?

to police the international trading system

Communists believed that socialism could only be achieved through

totalitarian dictatorship

Which form of government involves one person or political party that exercises absolute control over all spheres of human life and prohibits opposing political parties?

totalitarianism

Fenton Incorporated plans to do business with a company located in the Leone Republic, a common law country. The companies have agreed to draft the business contract in the Leone Republic. Since the contract will be drafted under a common law framework, it will be

very detailed with all contingencies spelled out.