MGMT 425 Ch 4 Quiz

________ is the process by which a nation changes its fundamental economic organization and creates new free-market institutions. A) Central planning B) Economic transition C) Industrialization D) Economic liberalism

B) Economic transition

Who among the following popularized the idea of central economic planning in the nineteenth century? A) Frederick Taylor B) Karl Marx C) Peter Drucker D) Henry Fayol

B) Karl Marx

The ________ system of a country consists of the structure and processes it uses to allocate its resources and to conduct its commercial activities. A) political B) economic C) social D) cultural

B) economic

Which of the following is a major obstacle to economic transition? A) lack of government support B) environmental degradation C) privatization D) black markets

B) environmental degradation

A market economy is rooted in the belief that ________. A) all the economic resources should be owned by the government B) individual concerns should be placed above group concerns C) every individual's business goals must be set by the government D) government concerns matter the most in a country's economy

B) individual concerns should be placed above group concerns

Which of the following is the main goal of privatization? A) to ensure that the government specifies production goals B) to increase economic efficiency C) to increase subsidies to companies D) to increase government's control on the market

B) to increase economic efficiency

An investor wants to invest in a country that has a high gross national income (GNI). Which of the following countries would most likely qualify as a prospect? A) Nepal B) India C) Japan D) Vietnam

C) Japan

________ is the value of goods and services that can be purchased with one unit of a country's currency. A) Potential output B) Gross national product C) Purchasing power D) Gross domestic product

C) Purchasing power

Which of the following terms is used to refer to the exchange of goods and services for other goods and services instead of money? A) fiat money B) letter of credit C) barter D) guanxi

C) barter

In most centrally planned economies that failed, ________. A) market conditions had determined who would produce goods B) prices of products were seen as a function of supply and demand C) central planning agencies had specified the production goals D) central planners had paid attention to efficiency improvement

C) central planning agencies had specified the production goals

Businesspeople who accept the risks and opportunities involved in creating and operating new business ventures are called ________. A) managers B) supervisors C) entrepreneurs D) angel investors

C) entrepreneurs

Which of the following terms refers to the broadest measure of economic development of a country? A) gross domestic product (GDP) B) purchasing power parity (PPP) C) gross national product (GNP) D) human development index (HDI)

C) gross national product (GNP)

Which of the following measures the extent to which a government equitably provides its people with a long and healthy life, an education, and a decent standard of living? A) category development index B) gross national product index C) human development index D) purchasing power index

C) human development index

Which of the following statements is true of a centrally planned economy? A) Individual concerns are as important as the government's concerns. B) Consumers determine the prices of products and labor. C) Factories are privately owned. D) The government sets the production goals.

D) The government sets the production goals.

Which of the following countries has a contemporary market economy? A) France B) Sweden C) India D) United States

D) United States

Nations having the poorest infrastructures and lowest personal incomes are called ________. A) developed countries B) newly industrialized countries C) emerging markets D) developing countries

D) developing countries

In a market economy, access to alternative purchase options is known as ________. A) price-sensitivity B) economic transition C) laissez-faire D) free choice

D) free choice

The relative ability of two countries' currencies to buy the same basket of goods in those two countries is called ________. A) gross national product B) gross domestic product C) purchasing power D) purchasing power parity

D) purchasing power parity

A centrally planned economy gives individuals access to alternative purchase options.

False

The Chinese term "guanxi" means government ownership.

False

The concept of purchasing power parity (PPP) must be applied to understand the true value of a currency in its home country.

False

The government makes nearly all economy-related decisions in a market economy.

False

The human development index (HDI) demonstrates that high national income alone guarantees human progress.

False

The ultimate goal of a market economy is to ensure that the government takes complete control over the distribution of a nation's resources.

False

Volunteer work and unpaid household work are included in GNP.

False

As supply and demand change for a good or service, so does its selling price.

True

Barter is an alternative for buyers who lack money needed to pay for imports.

True

Central planning is rooted in the ideology that the welfare of a group is more important than individual well-being

True

Central planning led to little economic growth and consistently low standards of living.

True

China relies on its cheap labor for economic development and India on the brainpower of its people.

True

Entrepreneurs are businesspeople who accept the risks and opportunities involved in operating new business ventures.

True

In a mixed economy, the government tends to control the economic sectors that are important for national security

True

Interfering with the price mechanism is a violation of a fundamental principle of the market economy.

True

Nations with the poorest infrastructures and lowest personal incomes are called developing countries.

True

No nation has a completely individualist or completely collectivist cultural orientation.

True

One of the key obstacles faced by countries in economic transition is the lack of managerial expertise.

True

One of the reasons for the decline of central planning was its failure to create economic value for customers.

True

Which of the following disagrees with the concept of centrally planned economies? A) At the time of their collapse, standards of living in most centrally planned economies were at or above those of market economies. B) Basic necessities were often not provided to citizens in centrally planned economies. C) Underground economies for goods and services thrived in most centrally planned economies. D) Prices on the black market were much higher than the official prices set by governments.

A) At the time of their collapse, standards of living in most centrally planned economies were at or above those of market economies.

Which of the following control inflation through policies regarding taxation and government spending in a market economy? A) fiscal policies B) monetary policies C) social policies D) trade policies

A) fiscal policies

In ________ cultures, economic systems tend to provide incentives and rewards for a person's private business initiatives. A) individualist B) high uncertainty avoidance C) feminine D) large power distance

A) individualist

Laissez-faire economics refers to ________. A) less government interference in commerce and greater individual economic freedom B) a government-controlled system with less economic freedom at the individual level C) a centrally planned economic system D) creating monopolies through government partnership

A) less government interference in commerce and greater individual economic freedom

Which of the following would characterize a nation with high degree of economic freedom? A) low tariffs B) strict trade policies C) government interventions D) flourishing black markets

A) low tariffs

A country that has recently increased the portion of its national production and exports derived from industrial operations is called a(n) ________. A) newly industrialized country (NIC) B) developing country C) emerging market D) developed country

A) newly industrialized country (NIC)

The ________ approach to national economics calls for less government interference in commerce and greater individual economic freedom. A) totalitarian B) laissez-faire C) guanxi D) centrally planned economy

B) laissez-faire

When one company alone controls a product's supply and therefore, its price, it is considered a(n) ________. A) oligopsony B) monopoly C) duopoly D) oligopoly

B) monopoly

Assuming insects destroyed most of the coffee crops in key coffee-producing countries worldwide, which of the following would most likely occur within the coffee market? A) Coffee prices would increase. B) Coffee prices would decrease. C) Demand for coffee would increase. D) Demand for coffee would decrease.

A) Coffee prices would increase.

Several research studies were published lately that documented the health benefits of a certain grain. Which of the following is the most likely economic result of these findings? A) Demand for the grain increases. B) Equilibrium in terms of demand and supply is maintained. C) The price of the grain decreases. D) Supply of the grain remains constant.

A) Demand for the grain increases

The ________ of a country is its gross national product divided by its population. A) GNP per capita B) GDP per capita C) purchasing power parity D) purchasing power

A) GNP per capita

________ is the value of all goods and services produced by the domestic economy over a one-year period. A) Gross domestic product (GDP) B) Human development index (HDI) C) Gross national product (GNP) D) Purchasing power parity (PPP)

A) Gross domestic product (GDP)

Which of the following statements is true of national production? A) Marketers use GDP or GNP figures to determine whether a country's population is wealthy enough to purchase its products. B) Per capita numbers provide a detailed picture of development of the entire country. C) Gross product figures accurately indicate whether a nation's economy is growing or shrinking. D) Volunteer work and unpaid household work are considered in GDP and GNP.

A) Marketers use GDP or GNP figures to determine whether a country's population is wealthy enough to purchase its products.

Which of the following is true about economic development of a nation? A) The purchasing power parity is a poor indicator of a people's total well-being. B) GDP is a larger figure and includes a nation's income generated from exports, imports, and international operations. C) Illegal activities such as gambling and black market transactions are considered in GDP and GNP. D) Using gross product figures to compare production across countries accounts for different cost of living in each country.

A) The purchasing power parity is a poor indicator of a people's total well-being.

Which of the following emerged during the failure of centrally planned economic systems? A) black markets B) public markets C) free enterprise system D) market economies

A) black markets

In which of the following economies would manufacturing firms most likely produce defective products due to low incentives for quality outputs? A) centrally planned economies B) market economies C) closed economies D) mixed economies

A) centrally planned economies

Central planning is rooted in the ideology that ________. A) the welfare of a group is more important than individual well-being B) individual concerns should be placed above group consensus C) individual and group concerns are just as important as government concerns D) privatization will enhance a country's economic well-being

A) the welfare of a group is more important than individual well-being

Which of the following statements is most accurate regarding the element of free choice when market economies are compared with centrally planned economies? A) Consumers have free choice in both types of economies. B) Free choice exists in market economies, but choices are restricted in planned economies. C) Planned economies allow for greater free choice than do market economies. D) Consumers do not have free choice in either of these economies

B) Free choice exists in market economies, but choices are restricted in planned economies.

The GDP per capita of a country is lower than that of France. If the GDP per capita of the country is adjusted for PPP, the country's revised GDP is higher than that of France. Which of the following is most likely true about the country? A) The cost of living in the country is higher than that of France. B) The cost of living in the country is lower than that of France. C) The cost of living in the country is approximately equal to that of France. D) The cost of living in the country has increased over the past decade.

B) The cost of living in the country is lower than that of France.

The government maintains control over the banking industry in a country. Which of the following is most likely true if the country has a mixed economy? A) Businesses in most economic sectors of the country are privately owned. B) The government considers banking sector as important to national security. C) The country has never experienced threats against its long-term stability. D) The government views banking as more important than manufacturing.

B) The government considers banking sector as important to national security.

Economic transition is the process of moving from ________. A) developed to developing economies B) centrally planned to free-market economies C) developed to emerging economies D) free-market to centrally planned economies

B) centrally planned to free-market economies

In a market economy, economy-related decisions are determined by the interactions between ________. A) the government and individuals B) supply and demand C) customers and employees D) large and small businesses

B) supply and demand

________ policies control the currency supply and interest rates in a market economy. A) Fiscal B) Economic C) Monetary D) Social

C) Monetary

A ________ economy is a system in which the government owns a nation's land, factories, and other economic resources, and schedules nearly all economic activities. A) mixed B) market C) centrally planned D) laissez-faire

C) centrally planned

North Korea practices a policy of self-reliance known as ________. A) guanxi B) laissez-faire C) juche D) kaizen

C) juche

In which of the following systems is land, factories, and other economic resources equally split between private and government ownership? A) market economy B) black market economy C) mixed economy D) centrally planned economy

C) mixed economy

Guanxi, in the Chinese business context, means ________. A) bribing government officials B) manufacturing inexpensive products C) personal relationships D) preference for communism

C) personal relationships

To function smoothly and properly, a market economy requires ________. A) government partnership B) the practice of monopoly C) price flexibility D) nationalization

C) price flexibility

Which of the following dictates supply and demand in a market economy? A) privatization B) production quotas C) price mechanism D) government intervention

C) price mechanism

The selling of government-owned economic resources to private operators is called ________. A) price mechanism B) social stratification C) privatization D) guanxi

C) privatization

Which of the following would most likely characterize a nation with a low degree of economic freedom? A) low government intervention B) protected property rights C) strict trade policies D) low tariffs

C) strict trade policies

Supply and demand are dictated by ________. A) government ownership B) free enterprise C) the price mechanism D) the management's decisions

C) the price mechanism

The GDP per capita of a country is higher than that of Thailand. If the GDP per capita of the country is adjusted for PPP, the country's revised GDP is lower than that of Thailand. Which of the following is most likely true about the country? A) There are fewer goods available for purchase in the country than in Thailand. B) The cost to buy everyday goods in the country is approximately the same as in Thailand. C) It costs less to buy everyday goods in the country than in Thailand. D) It costs more to buy everyday goods in the country than in Thailand.

D) It costs more to buy everyday goods in the country than in Thailand.

A company is conducting a research on new markets by comparing countries in terms of their human development index (HDI) scores. The company wishes to expand into a market where individuals experience a very high level of total well-being. Which of the following countries would the company most likely choose? A) Russia B) Mexico C) China D) Japan

D) Japan

Which of the following is an important factor in forming successful business ventures in China? A) following the strategies of western countries for establishing business relationships B) focusing on establishing tight formal contracts C) giving high importance to written contracts D) establishing a trusting relationship before proceeding with business

D) establishing a trusting relationship before proceeding with business

France, Germany, and Sweden are examples of ________. A) centrally planned economies B) market economies C) closed economies D) mixed economies

D) mixed economies

An economic system based on public ownership fosters growth much better than an economy based on private ownership.

False

Both GDP and GNP measure a nation's income per person.

False

Frederick Taylor popularized the idea of central economic planning in the nineteenth century.

False

Incentives and rewards for individual business initiatives are an important aspect of collectivist cultures.

False

Individualist cultures tend to offer fewer incentives and rewards than collectivist cultures.

False

When the assets of a country are owned by the government, there seems to be more incentive to eliminate waste.

False