Chapter 2 - Financial Statements, Taxes, and Cash Flow

Select the accurate description of a common law system. . Judges in a common law system have the power only to apply the law but not interpret it. A common law system does not allow existing laws to be amended. A common law framework tends to be much shorter and less specific than a civil law system. A common law system has a degree of flexibility that other legal systems lack.

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

Right-Wing Totalitarianism

A political system in which political power is monopolized by a party, group, or individual that generally permits individual economic freedom but restricts individual political freedom, including free speech, often on the grounds that it would lead to the rise of communism.

Civil Law System

A system of law based on a very detailed set of written laws and codes.

Common Law

A system of law based on tradition, precedent, and custom; when law courts interpret common law, they do so with regard to these characteristics.

Communist Totalitarianism

A version of collectivism advocating that socialism can be achieved only through a totalitarian dictatorship.

A nation that fosters individualism would tend to support a totalitarian political system in order to achieve the needs of the society as a whole. advocate that communal property is more productive than private property and thus stimulates progress. restrict a person's right to do something on the grounds that it runs counter to "the common good." stress that the interests of the people are more important than the interests of the state.

stress that the interests of the people are more important than the interests of the state.

The production of goods in a pure market economy is determined by supply and demand. state-owned institutions. the collective good. the political system.

supply and demand

political economy

the political, economic, and legal systems of a country

In a command economy, businesses are owned by _____. conglomerates foreign investors the state individuals

the state

Under Vladimir Putin, the government of Russia is becoming increasingly _____. individualistic totalitarian theocratic democratic

totalitarian

Within a common law system, a country's legal history is known as ______. custom tradition folkways circuit

tradition

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? Pure command Pure market Free Mixed

Mixed

How are monopolies viewed in a market economy? Monopolies are seen as a positive force as they encourage competition which leads to lower prices. Monopolies are seen as neither a threat or a strength. Monopolies are considered a negative force as they can restrict output and increase prices.

Monopolies are considered a negative force as they can restrict output and increase prices.

In the late 1970s, the communist version of socialism was at its highest point. This has declined dramatically today with old-style communism found most notably in only _____. the Soviet Union North Korea Germany China

North Korea

Which Greek philosopher is credited with advocating the origins of collectivism? Euphrates Plato Socrates Aristotle

Plato

Democracy

Political system in which government is by the people, exercised either directly or through elected representatives.

In the last half of the twentieth century, Britain's Conservative Party sold state-owned enterprises to individual investors in order to create a free market economy. What process was Britain using to create this economy? Totalitarianism Isolationism Privatization Federalism

Privatization

Contract Law

The body of law that governs contract enforcement.

trademarks

The designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products.

copyrights

The exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit.

Privatization

The sale of state-owned enterprises to private investors

Which characteristic is typical within a totalitarian country? The leaders have limited terms in office. There is no questioning of the ruler's decisions. An individual is given the right to freedom of expression. There are no restrictions on media.

There is no questioning of the ruler's decisions.

social democrats

Those committed to achieving socialism by democratic means.

Private Action

Violation of property rights through theft, piracy, blackmail, and the like by private individuals or groups.

Theocratic Totalitarianism

a political system in which political power is monopolized by a party, group, or individual that governs according to religious principles

Theocratic Law System

a system of law based on religious teachings

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

legal

The _____ often back(s) right-wing totalitarianism governments. citizens theocracy military tribe

military

In a ______ economy, both private enterprise and state ownership co-exist. command planned mixed market

mixed

The system of government in a nation is called the _____ system. social political economic parliamentary

political

The term ______ refers to the interconnection of the political, economic, and legal systems of a country. transnational economic development cultural values political economy

political economy

Joanna is a lawyer defending a client accused of arson. During the trial, she refers to a similar case that came before the Supreme Court several years ago. The case Joanna references is an example of _____. tradition precedent folkway custom

precedent

In a(n) ______ democracy, elected individuals represent the citizens and make decisions on behalf of the electorate. common totalitarianism elite representative

representative

Intellectual property laws are said to stimulate innovation and creative work. be more concerned with the safety of tangible properties. discourage companies from committing to extensive basic research. create uniform protection of intellectual property across countries.

stimulate innovation and creative work.

Theocratic totalitarianism is described as a political system in which rulers govern based on religious rules and principles. that typically emphasizes the importance of individual economic and political freedom. in which a party, group, or individual that represents the interests of a particular tribe monopolizes political power. that strongly advocates private ownership of the basic means of production, distribution, and exchange.

in which rulers govern based on religious rules and principles.

contract

A document that specifies the conditions under which an exchange is to occur and details the rights and obligations of the parties involved.

Tribal Totalitarianism

A political system in which a party, group, or individual that represents the interests of a particular tribe (ethnic group) monopolizes political power.

Representative Democracy

A political system in which citizens periodically elect individuals to represent them in government.

Collectivism

A political system that emphasizes collective goals as opposed to individual goals.

United Nations Convention on Contracts for the International Sale of Goods (CISG)

A set of rules governing certain aspects of the making and performance of commercial contracts between sellers and buyers who have their places of businesses in different nations.

Which statement BEST describes a totalitarian system? It refers to a political system that typically asserts the primacy of individual economic and political freedom over societal goals. It is a form of government that typically aims to achieve socialism by democratic means rather than violent revolution or dictatorship. It refers to a political system in which government is by the people, exercised either directly or through elected representatives. 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.

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.

The Declaration of Independence is an ideal example of the tenets of _____, which emphasize the importance of individual freedoms. individualism isolationism collectivism expansionism

individualism

Along the continuum between democracy and totalitarianism, it can be said that political repression is often widespread in a democracy, whereas a totalitarian state often involves its citizens in decision making. it is possible to have a democratic state in which some degree of collectivism exists. it is not possible to have a totalitarian state in which some degree of individualism is encouraged. democracy and communism go hand in hand, whereas a totalitarian state is consistent with the individualistic ideology.

it is possible to have a democratic state in which some degree of collectivism exists.

The political economy of a country refers to the interaction of the political, economic, and _____ systems of a country. education legal business social

legal

To guarantee that elected representatives can be held accountable for their actions by the electorate, an ideal representative democracy has a number of safeguards that include biased and irregular elections. politically influenced police force. restrictions on media. limited terms in office.

limited terms in office.

In a pure ______ economy, all productive activities are owned privately—not by the state. mixed planned market command

market

Plato would have agreed that society should be stratified into classes and ______ were best suited to rule society. religious leaders the wealthy philosophers and soldiers lawyers and physicians

philosophers and soldiers

In a nation where right-wing totalitarianism is present, you would find that political freedom is restricted, frequently on the grounds that it would lead to the rise of communism. individual political freedom is the ground rule on which a society should be based. there is a goal to achieve socialism by democratic means while condemning violent revolution and dictatorship. citizens periodically elect individuals to represent them.

political freedom is restricted, frequently on the grounds that it would lead to the rise of communism.

Collectivism refers to a political system that -generally supports a pure market economy and privately-owned enterprises. -restricts an individual's right to do something on the grounds that it runs counter to the "good of society." -generally emphasizes individual freedom and self-expression. -stresses that the welfare of the society is best served by letting people pursue their own economic self-interest.

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

Product Safety Laws

set certain safety standards to which a product must adhere

Contracts drafted under a civil law system tend to be _____ compared to those drafted under a common law system. more specific more expensive to draw up very detailed shorter

shorter

While a pure command economy is thought to be based on the collective good of a society, it often results in a lack of nationalization of the private sector. dynamism that is evident in every business sector. state-owned enterprises that have fewer reasons to control costs. state-owned enterprises that demonstrate innovation to serve customers better.

state-owned enterprises that have fewer reasons to control costs.

Public Action

the extortion of income or resources of property holders by public officials, such as politicians and government bureaucrats

A pseudo-democracy is the term given to a nation in which . the government is in control of the machinery of the state and uses this power to deny political and civil liberties. free elections are introduced as the first step in achieving a pure democracy. all productive activities are privately owned. electors and the electorate work in harmony to achieve the best interests of the nation.

the government is in control of the machinery of the state and uses this power to deny political and civil liberties.

A society that is based on collectivism would agree that individual freedom and self-expression are more important than "the good of society." free market economics should be promoted. the welfare of the society is best served by a governing body dictating what is in the society's best interest. individual diversity and private ownership should take precedence over state-owned enterprises.

the welfare of the society is best served by a governing body dictating what is in the society's best interest.

Identify the accurate statement about individualism. It believes that communal property receives the greatest care and is hence more highly productive than private property. It strongly advocates nationalization of private enterprises to benefit the society as a whole. It asserts the primacy of societal goals over individual goals using violent revolution and totalitarian dictatorship. It stresses that society should be based on individual economic and political freedoms.

It stresses that society should be based on individual economic and political freedoms.

Which of these statements would Aristotle agree with based on his arguments for individualism? Individual freedom can be achieved only through totalitarianism. Communal property is more highly productive than private property. Private property receives greater care compared to communal property. Society should restrict self-expression and focus on common societal goals.

Private property receives greater care compared to communal property.

______ refers to the process of selling state-owned enterprises to private investors. Customization Privatization Commercialization Depersonalization

Privatization

intellectual property

Products of the mind, ideas (e.g., books, music, computer software, designs, technological know-how); intellectual property can be protected by patents, copyrights, and trademarks.

By the end of the 1970s in Great Britain, state-owned companies monopolized the telecommunications, gas, railway, electric, and shipbuilding industries. This was a reflection of which political system in place at the time? Totalitarianism Social democracy Communism Pure democracy

Social democracy

legal system

System of rules that regulate behavior and the processes by which the laws of a country are enforced and through which redress of grievances is obtained.

What is one of the tenets of individualism? State-owned property fosters the "good of society." The welfare of society is best served by allowing individuals to follow their own economic self-interest. The welfare of the society is best served by adopting a totalitarian political system. Communal property is more highly productive than private property and thus stimulates progress.

The welfare of society is best served by allowing individuals to follow their own economic self-interest.

socialists

Those who believe in public ownership of the means of production for the common good of society.

communists

Those who believe socialism can be achieved only through revolution and totalitarian dictatorship

______ totalitarianism occurs when a political party that represents the interests of a particular tribe monopolizes power. Theocratic Monarchical Democratic Tribal

Tribal

True or false: Command economies do not make innovation a priority and, therefore, tend to stagnate.

True

True or false: Russia, as it is today, is an example of a pseudo-democracy.

True

True or false: When firms do not wish to accept the United Nations Convention on Contracts for the International Sales of Goods (CISG), they often opt for arbitration by a recognized arbitration court to settle contract disputes.

True

Foreign Corrupt Practices Act (FCPA)

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.

What condition paves the way for an ideal representative democracy? Universal adult suffrage Politically influenced court system Unlimited terms in office for elected representatives Restricted access to state information

Universal adult suffrage

Select an accurate description of a civil law system. A civil law system is based on interpreting tradition, precedent, and custom. Unlike a common law system, a civil law system relies on detailed codes. Judges under a civil law system have the highest degree of flexibility. Judges in a civil law system have the power to interpret the law.

Unlike a common law system, a civil law system relies on detailed codes.

In the early 20th century, communists differed from social democrats in that communists believed in commitment to democratic means. encouraging individual freedom. establishment of a non-totalitarian society. a strategy of revolutionary action.

a strategy of revolutionary action.

Multiple Choice Question Social democrats advocate for _____. . private-ownership of the basic means of production, distribution, and exchange the idea of establishing a totalitarian dictatorship achieving socialism through non-violent means achieving socialism by emphasizing individual interests over societal goals

achieving socialism through non-violent means

The philosopher Aristotle argued in favor of individualism when he said that communal property is more highly productive than private property. diversity and private ownership are beneficial to society. individual freedom should be restricted and society should be stratified into classes. unlike private property, communal property receives the greatest care.

diversity and private ownership are beneficial to society.

In a market economy, the government's role is to allow private producers to control and restrict the supply of products. encourage free and fair competition and minimize restrictive business practices. encourage a single firm to monopolize the market. mobilize economic resources for the public good by prohibiting private ownership.

encourage free and fair competition and minimize restrictive business practices.

What is the objective of a pure command economy? Allotment of resources for the overall good of society Abolition of state ownership Privatization of state-owned enterprises Diversification of private-sector enterprises

Allotment of resources for the overall good of society

market economy

An economic system in which the interaction of supply and demand determines the quantity in which goods and services are produced.

command economy

An economic system where the allocation of resources, including determination of what goods and services should be produced, and in what quantity, is planned by the government.

Individualism

An emphasis on the importance of guaranteeing individual freedom and self-expression.

World Intellectual Property Organization

An international organization whose members sign treaties to agree to protect intellectual property

property rights

Bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.

______ refers to a political system that values the needs of society over that of an individual. Monarchy Collectivism Plutocracy Individualism

Collectivism

Until recently, what was the most common form of totalitarianism in the world? Tribal Right-wing Communist Theocratic

Communist

______ refers to a political system in which the citizens exercise power directly or elect representatives to form a governing body. Democracy Oligarchy Totalitarianism Monarchy

Democracy

True or False: According to Karl Marx, the pay of workers in a capitalist society reflects the full value of their labor.

False

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

False

Totalitarianism

Form of government in which one person or political party exercises absolute control over all spheres of human life and opposing political parties are prohibited.

patent

Grants the inventor of a new product or process exclusive rights to the manufacture, use, or sale of that invention

______ refers to a philosophy that promotes the free exercise of one's goals and desires in economic and political pursuits. Communism Collectivism Totalitarianism Individualism

Individualism

Paris Convention for the Protection of Industrial Property

International agreement to protect intellectual property.

product liability

Involves holding a firm and its officers responsible when a product causes injury, death, or damage.

The most widely practiced theocratic legal system in the modern world is ______ law. Islamic Lutheran Jewish Hindu

Islamic

In a country governed by a totalitarian system, you would find that state bureaucracy is not influenced by politics. free and fair elections are conducted regularly. the country has a nonpolitical armed service. basic civil liberties are denied to citizens.

basic civil liberties are denied to citizens

Karl Marx would agree that _____. capitalists take the value created by workers for their own use state-owned enterprises pay workers lower wages individual capitalists rather than state-owned enterprises benefit the society as a whole in a capitalist society, many people benefit at the expense of a few

capitalists take the value created by workers for their own use

A _____ law system is based on a detailed set of laws organized into codes. tribal common civil

civil

A country that bases its laws on the traditions within the country's legal history operates under a _____ law legal system. common tribal civil

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. invoice subpoena bill of lading contract

contract

China and Vietnam have experienced greater individual freedom in the economic sphere; however, this is not a reflection of the presence of a(n) _____. monarchy totalitarianism democracy aristocracy

democracy

Political systems that emphasize individualism tend to promote _____. democracy state-run businesses a planned economy totalitarianism

democracy

Nations adopting the pure form of democracy would deny civil liberties to citizens. foster political repression and a planned economy. directly involve citizens in the decision making of the country. assign a governing body to oversee economic matters.

directly involve citizens in the decision making of the country.