IB Ch. 2

In the early twentieth century, the socialist ideology split into two broad camps: communists and social democrats.

T

Which of the following philosophies can be traced back to the ancient Greek philosopher Plato? Collectivism Nihilism Hedonism Socialism

Collectivism Advocacy of collectivism can be traced to the ancient Greek philosopher Plato (427-347 BC), who in "The Republic" argued that individual rights should be sacrificed for the good of the majority and that property should be owned in common.

Which of the following is a more attractive place to do business? A nation that lacks democratic institutions A nation where economic activity is regulated by the state A nation with a market-based economic system A nation where the rule of law does not take precedence over business

A nation with a market-based economic system Other things being equal, a nation with democratic political institutions, a market-based economic system, and strong legal system that protects property rights and limits corruption is clearly more attractive as a place in which to do business than a nation that lacks democratic institutions, where economic activity is heavily regulated by the state, and where corruption is rampant and the rule of law is not respected.

A common feature of many right-wing dictatorships is that they support socialist or communist ideas.

F

A civil law system tends to be more adversarial than a common law system.

F A civil law system tends to be less adversarial than a common law system, since the judges rely upon detailed legal codes rather than interpreting tradition, precedent, and custom.

Since the demise of communism in the late 1980s, the number of command economies has risen dramatically.

F In a command economy, the government plans the goods and services that a country produces and all businesses are state owned, the rationale being that the government can direct the businesses to make investments that are in the best interests of the nation as a whole. Since the demise of communism in the late 1980s, the number of command economies has fallen dramatically.

In a command economy, certain sectors of the economy are left to private ownership and free market mechanisms, while other sectors have significant state ownership and government planning.

F In a mixed economy, certain sectors of the economy are left to private ownership and free market mechanisms, while other sectors have significant state ownership and government planning.

Which of the following is a feature of right-wing totalitarianism? Monopoly of a group/party that represents the interests of a particular tribe. Governance by a single party, group, or individual based on religious principles. Provision of partial individual economic freedom along with restricted individual political freedom. Involvement of people in the government, exercised either directly or through elected representatives.

Provision of partial individual economic freedom along with restricted individual political freedom. Right-wing totalitarianism generally permits some individual economic freedom but restricts individual political freedom, frequently on the grounds that it would lead to the rise of communism.

In a market economy, a supply restriction occurs when a single firm monopolizes a market.

T In a market economy, production is determined by the interaction of supply and demand and signaled to producers through the price system. For a market to work in this manner, supply must not be restricted. A supply restriction occurs when a single firm monopolizes a market.

Which of the following statements is true about trademarks? Trademarks are designs and names by which businesses differentiate their products. Trademarks are the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit. Trademarks grant the inventor of a new product or process exclusive rights for a defined period to the manufacture, use, or sale of that invention. Trademarks are certain safety standards to which a product must adhere.

Trademarks are designs and names by which businesses differentiate their products. Trademarks are designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products (e.g., Christian Dior clothes).

In a pure command economy all businesses are owned by the state. there is free and fair competition between private producers. the goods and services that a country produces are not planned by anyone. prices are determined by market forces.

all businesses are owned by the state. In a pure command economy, the government plans the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold. In addition, in a pure command economy, all businesses are 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.

Historically, command economies were found in _____, where collectivist goals were given priority over individual goals. democratic countries communist countries libertarian countries free-market countries

communist Historically, command economies were found in communist countries where collectivist goals were given priority over individual goals. Since the demise of communism in the late 1980s, the number of command economies has fallen dramatically.

The role of the government in a market economy involves encouraging vigorous free and fair competition among private producers. mobilizing economic resources of the country for public good. determining the prices at which the goods and services will be sold. planning the types and quantities of goods and services to be produced.

encouraging vigorous free and fair competition among private producers. The role of government in a market economy is to encourage vigorous free and fair competition between private producers. Governments do this by outlawing restrictive business practices designed to monopolize a market (antitrust laws serve this function in the United States).

_____ refers to a philosophy that a person should have freedom in his or her economic and political pursuits. Collectivism Totalitarianism Socialism Individualism

individualism The opposite of collectivism, individualism refers to a philosophy that an individual should have freedom in his or her economic and political pursuits.

The common law system lacks the flexibility that other systems have. is based on tradition, precedent, and custom. gives judges the power only to apply the law. is based on a detailed set of laws organized into codes.

is based on tradition, precedent, and custom Common law is based on tradition, precedent, and custom. This gives a common law system a degree of flexibility that other systems lack.

The benefits, costs, and risks associated with doing business in a country are a function of that country's political system only. economic system only. legal system only. political, economic, and legal systems.

political, economic, and legal systems. The benefits, costs, and risks associated with doing business in a country are a function of that country's political, economic, and legal systems.

_____ is the extortion of income or resources of property holders by public officials such as politicians and government bureaucrats. Private action Corruptive action Civil action Public action

public action Public action to violate property rights occurs when public officials, such as politicians and government bureaucrats, extort income, resources, or the property itself from property holders.

The _____ committed themselves to achieving socialism without resorting to violent revolution and dictatorship. communists social democrats Maoists anarchists

social democrats The communists believed that socialism could be achieved only through violent revolution and totalitarian dictatorship, whereas the social democrats committed themselves to achieving socialism by democratic means, turning their backs on violent revolution and dictatorship.

A legal system based on religious teachings is called a _____. civil law system traditional law system theocratic law system common law system

theocratic A theocratic law system is one in which the law is based on religious teachings. Islamic law is the most widely practiced theocratic legal system in the modern world, although usage of both Hindu and Jewish law persisted into the twentieth century.

Contracts drafted under a common law framework tend to be very detailed with contingencies spelled out. very short and general in scope. inexpensive to draw up between two parties. inflexible and difficult to adjudicate.

very detailed with contingencies spelled out. Contracts drafted under a common law framework tend to be very detailed with all contingencies spelled out. In civil law systems, however, contracts tend to be much shorter and less specific because many of the issues are already covered in a civil code. Thus it is more expensive to draw up contracts in a common law jurisdiction, and resolving contract disputes can be very adversarial in common law systems. But common law systems have the advantage of greater flexibility and allow for judges to interpret a contract dispute in light of the prevailing situation.