INB CH. 2-3 Questions

Which of the following two factors would make a country desirable to do business with?

- Democratic political institutions - A market-based economy

Which statement BEST describes a totalitarian system?

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 economic system is MOST conductive to innovation and entrepreneurial activity?

Market economies

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

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

Privatization

_____ set certain safety standards which a commodity must meet

Product safety laws

_______ rights determine how a resource or economic good is owned and used

Property

A country that bases its laws on the traditions within the country's legal history operates under a ____ law legal system

common

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

contract

Political systems that emphasize individualism tend to promote ______

democracy

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

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

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

When analyzing the process of innovation, it can be said that it

goes hand-in-hand with entrepreneurship

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

innovation

Jenner is obtaining a patent for the new diet drink formulation he created. He hopes that Coca Cola and other companies will be interested in licensing his formula. Jenner is protecting his _____ property with the patent.

intellectual

It is _______ for the government to expropriate profits from innovation through excessive taxation

legal

The ______ system of a country refers to the rules, or laws that regulate behavior along with the system that enforces them

legal

The political economy of a country refers to the interaction of the political, economic, and _______ systems of a country

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

The Human Development Index is based on

life expectancy at birth

In a pure _____ economy, all productive activities are owned privately -- not by the state

market

Innovators and entrepreneurs flourish most in a ______ because _______

market economy; it grants existing businesses and entrepreneurs the freedom to improve their operations through innovation

Property rights are only truly secure when a _____ exists

mature democratic state

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?

mixed

In a ______ economy, both private enterprise and state ownership co-exist

mixed

The system of government in a nation is called the ______ system

political

The term ______ refers to the interconnection of the political, economic, and legal systems of a country

political economy

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

privatization

Several years ago, a customer brought a lawsuit against McDonald's because the coffee she purchased at the drive-thru window was hot when she spilled it on herself in her car. This lawsuit was based on

product liability

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

Collectivism refers to a political system that

restricts an individual's right to do something on the grounds that it runs counter to the "good of society"

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

Even though there are many state-owned businesses in China, many Western businesses feel that they should still invest in the country because

the nation is moving toward a market-based system

In a command economy, businesses are owned by

the state

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

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

What is the objective of a pure command economy

Allotment of resources for the overall good of society

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

______ property refers to property that is the product of any innovative activity, such as a screenplay, a music score, or the chemical formula for a new drug

Intellectual

What three factors are assessed to determine the Human Development Index of a country?

- educational attainment - life expectancy at birth -average incomes

The Heritage Foundation index of economic freedom is based on ten indicators. Which four are included

- labor freedom - taxation rules - foreign investment regulations -trade policy

What are two ways in which property rights can be violated?

-Through private action -Through public action

Select the accurate description of a common law system

A common law system has a degree of flexibility that other legal systems lack

_______ refers to a political system that values the needs of society over that of an individual

Collectivism

_______ law is the body of law that governs oral and written agreements associated with the exchange of goods, services, money, and property

Contract

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

Political systems that emphasize individualism tend to promote

Democracy

_______ refers to a political system in which the citizens exercise power directly or elect representatives to form a governing body.

Democracy

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

Deregulation

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

False

True or False: Unlike the economic system of a country, the legal system is NOT influenced by the prevailing political system

False

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

False

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

The production of goods in a pure market economy are determined by

Supply and demand

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

The middle class

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

An international firm, entering a country's market early, may achieve a significant payback if that country

achieves sustained high economic growth rates

Economic progress often leads to

adoption of a democractic 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