INTERNATIONAL BUSSINESS - CHPATER 3 REVIEWER

certain cash transactions are not recorded

A "shadow economy" would be present in a country where _____.

partly free

A country in which some restrictions are placed on political rights and civil liberties would be labeled _____.

removes legal restrictions to the free play of markets

A country is embracing deregulation when it _____.

good

A country's economic system and property rights regime are _____ predictors of economic prospects.

legal

A(n) ______ risk is the risk that arises from failure to follow statutory or regulatory obligations and, therefore, one that can impact a trading partner.

achieves sustained high economic growth rates.

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

market

Due to the economic freedom associated with it, the business environment that provides the strongest base for innovation and entrepreneurial activity is a _____ economy

middle

Emergence of prosperity in the _____ class has helped to push democratic reforms in many nations.

don't factor in the cost of living.

Gross national income (GNI) per person figures can be misunderstood because they

economic activity

Gross national income is used as a measure of a nation's _______.

controversial

Huntington's views on the global political system are considered _____.

many countries may be difficult places to do business in.

Huntington's views on the global political system with regards to business suggests that

Institutional weaknesses can subvert contract enforcement.

Identify the TRUE statement about legal systems in various countries throughout the world.

For privatization to work, it must also be accompanied by a more general deregulation and opening of the economy.

Identify the accurate statement regarding privatization.

China

If growth rates continue as they have in the past, _____ is predicted to surpass the United States and become the world's largest national economy within the next two decades.

A country with a free market system

In which type of country is the cost-benefit-risk trade-off likely to be MOST favorable?

diminish

Inadequately enforced property rights in a nation would tend to _____ entrepreneurial activity.

education

It has been asserted that the nations that invest more in ______ will have higher growth rates because a literate population is a more productive population.

handicaps

Late-mover disadvantages refer to the _____ that a company might incur.

innovation

Mallory's company was the first to introduce fresh-food meal kits in a box that are delivered directly to consumers who put the meal together at home. Since her company was the first to introduce this idea, it is an example of _____.

severe economic setbacks.

Many of the world's newer democratic states may struggle and fail especially if they are confronted with

life expectancy at birth.

One factor used to measure the Human Development Index iS

corruption

Political costs of doing business in a country would include _____.

present wealth of the consumers.

South Korea was considered an impoverished country in 1960. Yet in 2017, it was the world's fifth largest economy. This demonstrates how international businesses must consider future potential as well as the

Foreign investment regulations Trade policy Taxation rules Labor freedom

The Heritage Foundation index of economic freedom is based on ten indicators. What are four of those indicators?

market-based

The Heritage Foundation's index measures the degree of economic freedom in the nations -- in other words, the degree of shift to ______ economic systems.

purchasing power parity

The ______ adjustment helps to minimize misleading international comparisons of GNI.

innovation

The development of new products, new processes, new organizations, new management practices and new strategies is called ______.

collapse of communism.

The initial push of deregulation was in response to the

Great Britain in the 1980s with the sale of British Telecom.

The privatization movement started in

countries adopting market-based systems had more continuous economic growth than those adopting command economies. Reason: Mixed economies failed in delivering the sustained economic performance that was achieved by countries adopting market-based systems.

The rationale for economic transformation has been consistent throughout the world and is based on the idea that

China

There are still countries that have a high percentage of industries dominated by state ownership. Which of these countries has 40% of its GDP accounted for by state owned companies?

Risks Benefits Costs

To determine which country is attractive for potential investments, companies need to balance which three considerations?

False Reason: Economic risks are not independent of political risks.

True or False: Economic risks are independent of political risks.

True/ Reason: For privatization to work, it must also be accompanied by a more general deregulation and opening of the economy.

True or False: For privatization to work, it must be accompanied by a more general deregulation and opening of the economy.

False Reason: The base for the adjustment is the cost of living in the United States.

True or false: The base for the adjustment when applying purchasing power parity is the cost of living in the poorest economic sector.

He argued that liberal democracy has triumphed and will become the final form of human government

What is Francis Fukuyama's argument regarding the "new world order?"

The inability of property owners to establish legal title to their property

What is Hernando de Soto's main concern with regard to property rights?

Deregulation abolishes laws regulating the establishment and operation of private enterprises.

What is a characteristic of deregulation?

Development should focus on expanding the capabilities of and opportunities available to people.

What is an accurate depiction of Amartya Sen's arguments regarding development?

Totalitarian governments failed and were replaced by democratically elected governments usually supportive of free market capitalism.

What is an accurate depiction of the changes in the political systems of nations since the late 1980s?

Countries with free market economies in which property rights are protected tend to achieve greater economic growth rates than other economies.

What is an accurate depiction of the economic prospects in a country?

A multipolar world, controlled by a number of civilizations, could replace the bipolar world.

What is one of the risks associated with a change in the political economy?

undemocratic governments

What is one thing that the fastest-growing economies of China, South Korea, Taiwan, Singapore, and Hong Kong had in common at the start of their economic growth?

There is a strong correlation between favorable geography and the likelihood that a society may develop a market-based economic system. Reason: According to Sach's, geography is the trigger for economic development.

What is the assumption of Jeffrey Sachs's argument?

Social unrest can result in abrupt changes in government which tend to have negative economic implications.

What statement accurately describes the effects of social unrest on a country?

Advances in communication technology Increasing prosperity in the middle class Failure of totalitarian regimes to provide economic progress to the majority of their citizens

What three reasons are said to account for the spread of democracy?

political change

When Hugo Chavez took over power in Venezuela, he railed against American imperialism. Western enterprises doing business in that country were concerned how this would affect their interactions with Venezuela. This demonstrates how ______ can impact the economics of a country.

demographics

When assessing whether or not to invest in a production facility overseas, Hyberson Hydraulics immediately rejected those countries with aging populations because the company needed access to a larger labor pool. What is the company basing this decision on?

Violation of property rights

Which factor is a cause of legal risks?

Unrecorded cash transactions activity

Which situation can make measuring economic activity differences difficult?

It can be more costly to do business in a country where local laws and regulations set strict standards with regard to product safety. Reason: This might make it more expensive to do business because of the need to pay politically powerful entities in order to do business there.

Which statement BEST represents how legal factors determine the cost of business in a country?

It may be more expensive to do business in relatively undeveloped economies. Reason: In an undeveloped country, a firm might have to pay before the government allows them to do business there which adds to the cost.

Which statement BEST represents the cost of doing business in a country with regard to economic factors?

The battle between the ideologies of collectivism and individualism is less distinct.

Which statement characterizes the changes in the political and economic systems of the world?

low birthrates and an aging population

While Japan was considered one of the most dynamic economies in the world in the 1970s and 1980s, economic growth has been hindered since then. What is considered the reason for this downturn?

Hong Kong and Singapore

While they are listed as the top two states in the Heritage Foundation Index, _____ cannot be classified as politically free.

Entrepreneurs

_____ are those who first commercialize new products and processes.

Privatization

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

Political

______ risk is the possible risk that an investment's returns can suffer as a result of instability or changes in a country's governance.

global terrorism

according to Huntington, ______ is a conflict that results from the strong ideological boundaries separating civilizations from one another.

False/ Reason: Democracy may not always be the cause of initial economic progress.

true or False: Democracy is always considered to be the cause of initial economic progress.