International chap 3

A free market economy in which property rights are protected leads to subsequent economic growth, which often leads to the establishment of: A. a democratic regime. B. a planned economy. C. government owned enterprises. D. a socialist economy.

A

According to Amartya Sen, development should be: A. seen as a process of expanding the real freedoms that people experience. B. seen as a non-political concept that focuses on the net income of a country. C. viewed as a purely economic process. D. assessed by material output measures such as GNI per capita.

A

By identifying and investing early in a potential future economic star, international firms can _____ and gain experience in that country's business practices. A. build brand loyalty B. learn which government officials need to receive kickbacks C. begin to stockpile that country's currency D. build infrastructure

A

GNI and PPP data are useful because they provide a _____ of economic development. A. dynamic analysis B. cross-sectional view C. static analysis D. global view

A

One visible indicator of _____ tends to be a country's inflation rate. A. economic mismanagement B. high GNI C. political risks D. low HDI

A

Political scientist Samuel Huntington argues that modernization in non-Western societies can result in a retreat toward the traditional. This is exemplified by the _____. A. Islamic resurgence B. popularization of modern gadgets C. adoption of Western culture D. higher levels of literacy and education

A

Political scientist _____ predicts that there will be a world that is split into different civilizations, each of which has its own value systems and ideology. A. Samuel Huntington B. Amartya Sen C. Francis Fukuyama D. Hernando de Soto

A

Some _____ have fostered a market economy and strong property rights protection and have experienced rapid economic growth. A. totalitarian regimes B. command economies C. dictatorships D. centrally planned systems

A

Stagnation can occur in planned economies because: A. entrepreneurial individuals have few economic incentives for innovation. B. private ownership of means of production leads to exploitation of workers. C. prices of goods and services are fixed by market forces of demand and supply. D. lack of barriers to trade results in increased competition for domestic producers.

A

The benefits of doing business in a country are a function of which of the following? A. The size of the market. B. Its past wealth. C. Its past growth. D. Its future plans for infrastructure development.

A

The political economy of many of the world's nation-states has changed radically since the late 1980s. Which of the following is a trend that has been evident? A. a wave of democratic revolutions has swept the world. B. totalitarian governments have arisen, replacing democratically elected governments. C. there has been a strong move toward centrally planned economies and away from free market economic models. D. mixed economies are fast replacing market economies.

A

Which of the following are more conducive to economic growth? A. Democratic regimes B. Totalitarian regimes C. Dictatorships D. Benevolent monarchies

A

Which of the following helps in adjusting GNI such that it accounts for the differences in the cost of living? A. Purchasing power parity (PPP) adjustment B. Human Development Index C. Debt to GNI ratio D. Consumer Price Index

A

Which of the following is a first-mover advantage? A. International firms may gain experience in that country's business practices. B. An international firm can reap the rewards of growth in a new market without incurring the risks. C. A firm may have the opportunity to be the first to introduce generic brands to a market. D. A firm can gauge how well their product will do in the market without taking the risk of investing their.

A

Which of the following is one of the measures that HDI is based on? A. Life expectancy at birth. B. Political freedom. C. Attainment of housing. D. Whether the lowest incomes are sufficient to meet the basic needs of life.

A

Which of the following is one of the three main reasons for the spread of democracy? A. New information and communication technologies have broken down the ability of the state to control access to uncensored information. B. Totalitarian regimes delivered economic progress to the bulk of their populations but not enough to the power brokers. C. Democratic regimes failed to deliver economic progress to the vast bulk of their populations. D. Economic advances in the past quarter-century have led to the emergence of a class of ruling elite.

A

Which of the following statements pertaining to innovation and entrepreneurship is true? A. They are the engines of growth. B. They require strong legal systems. C. They require state ownership of means of production. D. They require a mixed economy.

A

_____ involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate. A. Deregulation B. Trade certification C. A product law D. A liability law

A

A change in political regime in a country can result in laws that _____ to international businesses. A. are more favorable B. are less favorable C. provide less incentives D. provide more incentives

B

A market economy encourages innovation because: A. state ownership of enterprises reduces risks of innovation. B. economic freedom leads to greater incentives for innovation. C. government-owned and funded research centers become hubs of innovation. D. the prices of goods and services, including new products, are fixed by government.

B

According to political scientist's thesis is global terrorism a product of the tension between civilizations and the clash of value systems and ideology? A. Amartya Sen B. Samuel Huntington C. Francis Fukuyama D. Hernando de Soto

B

In a _____, the state owns all means of production. A. mixed economy B. planned economy C. market economy D. totalitarian state

B

Several of the fastest-growing Asian economies adopted more _____ governments during the past three decades, including South Korea and Taiwan. A. totalitarian B. democratic C. dictatorial D. socialists

B

Since the 1980s, there has been a transformation from _____ economies to _____ economies. A. mixed; market-based B. centrally planned command; market-based C. centrally planned command; mixed D. market-based; centrally planned command

B

Since the late 1980s, there has been a spread of democracy. This is because: A. a state's ability to control access to uncensored information has increased. B. the socialist model failed to deliver economic progress to the vast bulk of their populations. C. in many countries the middle and working classes have become less powerful. D. in many countries state-ownership of firms has encouraged innovation and entrepreneurship.

B

The likelihood that a trading partner will opportunistically break a contract or expropriate property rights is called a(n) _____. A. economic risk B. legal risk C. cultural risk D. political risk

B

The overall attractiveness of a country as a potential market or investment site for an international business depends on: A. if the country has a high gross national income. B. balancing the benefits, costs, and risks associated with doing business in that country. C. whether the company can be the first mover in the market. D. whether the government can be greased.

B

The sale of state assets through an auction is most likely to lead to _____. A. trade certification B. privatization C. nationalization D. market regulation

B

The state can expropriate the profits from innovation through legal means, such as _____. A. bureaucratic kickbacks B. excessive taxation C. black market transactions D. privatization

B

Which of the following is a measure that is developed by the United Nations to measure the quality of life in different nations? A. Gross national income B. Human Development Index C. Purchasing power parity D. Gross domestic product

B

Which of the following statements is true about Samuel Huntington? A. Samuel Huntington argues that there is a universal civilization based on widespread acceptance of Western democratic ideals. B. Samuel Huntington argues that the rise of Islamic fundamentalism is a response to the alienation produced by modernization. C. Samuel Huntington argues that global terrorism is a product of the static nature of traditional values and religious systems. D. Samuel Huntington argues that many societies, by adopting the material paraphernalia of the modern world, are becoming more Western.

B

_____ are the advantages gained by early entrants into a market. A. Early investor advantages B. First-mover advantages C. First-to-market advantages D. Late-mover advantages

B

_____ are the handicaps that late entrants to a market might suffer. A. Government regulations B. Late-mover disadvantages C. Black economy D. Purchasing power disparity

B

_____ is required for a business environment to be conducive to innovation and entrepreneurial activity. A. State ownership of means of production B. Strong legal protection of property rights C. Barriers to foreign trade and investment D. Government regulation of the market

B

_____ per person figures can be misleading because they don't consider differences in the cost of living. A. Gross domestic product (GDP) B. Gross national income (GNI) C. Purchasing power parity (PPP) D. Human Development Index (HDI)

B

According to Hernando de Soto, which of the following factors is essential for the developing world to be able to reap the benefits of innovation and entrepreneurship? A. Detailed state planning B. Restricting direct investment by foreign enterprises C. Strong property rights D. Market regulation

C

According to political scientist Samuel Huntington, the rise of Islamic fundamentalism is a response to the: A. corruption prevalent in planned economies. B. restricted access to formal education. C. alienation produced by modernization. D. restrictions associated with totalitarian regimes.

C

Anecdotal comparisons suggest that the assertion that nations that invest more in _____ will have higher growth rates is true. A. infrastructure B. centralized urban centers C. education D. manufacturing

C

Countries with _____ economies in which property rights are protected tend to achieve greater economic growth rates than other economies where property rights are poorly protected. A. mixed B. market C. free market D. command

C

Economic growth appears to be a function of a country's capacity for growth and its _____. A. previous economic success B. political environment C. free market system D. mixed economy

C

GNI per capita can be adjusted by _____ to account for differences in the cost of living. A. gross domestic product B. gross values added C. purchasing power D. the total value of goods and services produced

C

GNI per person figures can be misleading because ____. A. they also include barter agreements B. they provide a dynamic picture of development C. they don't consider differences in the cost of living D. they don't consider exchange rate

C

Google launched Google Plus to gain a foothold in the social media market. However, given that there are numerous social networking platforms and Facebook is already a leader in social media, Google Plus found it challenging to generate brand loyalty and establish itself in the market. This was because of _____. A. incumbent disadvantage B. disintermediation disadvantage C. late-mover disadvantage D. horizontal integration disadvantage

C

In a _____, any individual who has an innovative idea is free to try to make money out of that idea by starting a business (by engaging in entrepreneurial activity). A. command economy B. planned economy C. market economy D. mixed economy

C

In many countries entrepreneurs and other business leaders, eager to protect their property rights and ensure the dispassionate enforcement of contracts, had pushed for _____. This contributed to a wave of democratic revolutions during the late 1980s and early 1990s. A. state ownership of productive resources B. regulated markets C. democratic reforms D. planned economies

C

Many states in Asia, Latin America, and Western Europe have shifted away from a mixed economy to a market-based economy. Which of the following measures is most likely to be promoted by such states? A. State-ownership of enterprises B. Fixing of prices by the government C. Deregulation of the economy D. Lowering competition

C

Studies of privatization in central Europe have shown that the process often fails to deliver predicted benefits if the newly privatized firms: A. stop receiving subsidies from the government. B. are completely owned by private individuals. C. are sheltered from foreign competition. D. are allowed to restructure their operations.

C

The costs of doing business in a country tend to be greater if: A. political payoffs are not required to gain market access. B. supporting infrastructure is sponsored by government. C. local laws set strict standards with regard to environmental pollution. D. there is limits or caps on damage awards.

C

The economic freedom associated with a _____ creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy. A. mixed economy B. planned economy C. market economy D. command economy

C

The influential Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism until they: A. have political stability. B. invest in infrastructural development. C. have better defined and secure property rights. D. have adequate market regulation.

C

Which of the following is a characteristic of a command economy? A. Promotion of foreign direct investment B. Allowing prices to be set by the interplay between demand and supply C. Limited international trade D. Restricted state-ownership of means of production

C

Which of the following is a step involved in the deregulation of a command economy? A. Adding price controls B. Temporarily restricting international trade C. Abolishing laws regulating the establishment and operation of private enterprises D. Increasing restrictions on direct investment by foreign enterprises

C

_____ involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate. A. Privatization B. Developing command economies C. Deregulation D. Globalization

C

For privatization to work, it must also be accompanied by: A. an increase in trade barriers and tariffs. B. an increase in government subsidies. C. stronger barriers to foreign competition. D. a general deregulation of the economy.

D

In some countries, the official GNI per capita measured at PPP data does not reflect the actual the total annual income because: A. it doesn't consider differences in the cost of living. B. it gives a static picture of development. C. it fails to include income earned from other countries in the form of dividends. D. large amounts of economic activity may be in the form of barter agreements.

D

It may be more costly to do business in relatively primitive or undeveloped economies because of: A. international trade restrictions. B. the lack of governmental support. C. difficulty obtaining workers. D. the lack of infrastructure and supporting businesses.

D

Jeffrey Sachs argues that by virtue of _____, certain societies are more likely to engage in trade than others and are thus more likely to be open to and develop market-based economic systems, which in turn promotes faster economic growth. A. friendly political systems B. favorable economic conditions C. high gross national incomes D. favorable geography

D

One of the reasons for the spread of democracy is the emergence of _____ who have pushed for democratic reforms. A. a more vocal working poor B. better educated lower classes C. a desperate urban poor D. increasingly prosperous middle and working classes

D

Paralleling the spread of democracy, since the 1980s there has been the transformation from: A. free-market economies to socialist economies. B. mixed economies to collectivist economies. C. open economies to closed economies. D. command economies to market-based economies.

D

Sony was a pioneer in the portable music market segment. Sony's Walkman was an innovative product which created a new category altogether and made Sony a technological leader. This gave the company an edge over other consumer electronics brands that introduced portable music players for a very long time. In this example, Sony had the: A. vertical integration advantage. B. purchasing power parity advantage. C. free-rider advantage. D. first-mover advantage.

D

The _____ adjustment allows for a more direct comparison of living standards in different countries. A. gross domestic product B. value added C. gross national income (GNI) D. purchasing power parity (PPP)

D

The finance minister of a country considers several large, state-owned iron manufacturing units to be inefficient and a source of corruption. To generate resources for public expenditure and promote economic growth, the government decides to auction an entire iron manufacturing plant to sell it to a strategic investor. This process exemplifies _____. A. nationalization B. industrialization C. liberalization D. privatization

D

To account for differences in the cost of living, one can adjust GNI per capita by _____, which allows for a more direct comparison of living standards in different countries. A. gross domestic product B. Human Development Index C. living standards rate D. purchasing power

D

Which of the following factors is likely to make a country a more attractive location for international business? A. Totalitarian regimes B. Planned economies C. Government ownership of production methods D. Market-based economic policies

D

Which of the following is a legal means by which the state can expropriate the profits from innovation? A. Demands for money to grant a license B. Expropriation C. Enforcing property rights D. Excessive taxation

D

Which of the following is a step in the shift toward a market-based economic system? A. Increasing trade barriers B. Increasing price controls C. Nationalization D. Creation of a legal system to safeguard property rights

D

Which of the following is an example of deregulation? A. A country that implements a simplified income tax filing system B. A country that takes over a leading private bank to prevent it from filing for bankruptcy C. A country that provides agricultural subsidies to farmers D. A country that encourages foreign direct investment

D

Without a strong legal systems in a market economy: A. the incentive to engage in economic activity can be increased substantially. B. private-sector entrepreneurs can expropriate the profits generated by the efforts of private and public entities. C. mechanisms for contract enforcement fall to private and corporate lawyers. D. private and public entities can expropriate the profits generated by the efforts of private-sector entrepreneurs.

D

_____ is seen as a way to stimulate gains in economic efficiency by giving owners a powerful incentive—the reward of greater profits—to search for increases in productivity, to enter new markets, and to exit losing ones. A. Globalization B. Economic transformation C. Deregulation D. Privatization

D

_____, a Nobel Prize-winning economist, has argued that development is not just an economic process, but it is a political one as well. A. Hernando de Soto B. Karl Marx C. Samuel Huntington D. Amartya Sen

D