module 5 hw

When the U.S. government assumed a controlling interest in General Motors after the financial crisis of 2008-2009, what was its primary goal?

to save jobs and support its recovery

Businesses are unlikely to profit from any political change or instability.

False Explanation: Business does not crave stasis; often businesses can profit from opportunities that accompany change. Besides, stasis is unlikely in our increasingly complex global environment.

Country risks are hardly ever political in nature.

False Explanation: Country risks are often political and take the form of coups, wars, and revolutions.

To avoid the risk of cybercrime, the best approach is to stay out of foreign markets.

False Explanation: Cybercrime is borderless, no one government or legal system can control it.

Fair competition is a strong rationale for trade barriers. With fair competition, there will be increased efficiency for everyone.

False Explanation: Fair competition argues that import duties should be used to bring the imported item up to the cost of the domestic one. It eliminates unfair advantages gained through superior technology, lower taxes, lower raw material costs, or lower labor costs. This barrier eliminates the competition's comparative advantage.

Businesspeople are seldom targeted for kidnapping and ransom because businesses are viewed as apolitical.

False Explanation: Kidnapping for ransom is a weapon used by terrorists and other criminals that targets international managers as well as tourists.​

When people are kidnapped for ransom, all governments agree that the right response is to pay the ransom, get the hostages released, and then retaliate.

False Explanation: Many governments claim not to pay ransoms as well. Everyone agrees that long-term, doing so is counterproductive because paying ransom rewards the kidnappers, reinforces their actions, and funds terrorism. Yet we know that victims of kidnapping for ransom do get released.

Firms are nationalized when the goal of the government is to spread a socialist-communist ideology.

False Explanation: Many other reasons exist for nationalization, including to extract more money from the firms, to increase profitability, to preserve jobs, and as a result of government investments.

The national defense argument for trade restrictions is based on the country's level of development and foreign direct investment.

False Explanation: The level of development is not important with regard to trade restrictions. The national defense argument states that certain industries are vital to security and must be kept operating.

Trade restraints are generally beneficial to consumers.

False Explanation: Trade restraints cost consumers everywhere tens of billions of dollars per year, while they benefit a small number of companies in the protected sectors of the economy.

Unpredictable government actions create many business opportunities.

False Explanation: Unpredictable government actions are a form of instability and reduce the likelihood of business success.

When the U.S. military contracts out security details in war zones, it is engaged in nationalization.

False Explanation: When any government contracts out government work to the private sector, it is engaged in privatization.​

Businesses favor stable governments because fiscal, monetary, and political policies are then predictable.

True Explanation: Business prospers most when there is a stable government with policies that are permanent or that change only gradually.

Governments own the factors of production not only in communist countries, but in many market-based countries.

True Explanation: Capitalist governments often own the factors of production.

One historic function of government has been to create stable and predictable environments, in order to protect economic activities within its borders.

True Explanation: In addition to fostering a stable, predictable context for business, governments, whatever their ideology, have historically functioned to protect the economic activities of their citizens—including farming, mining, manufacturing, and the delivery of services—within their area of control.

The practice of country risk assessment is an exercise in understanding the local environment.

True Explanation: Risk assessment is an attempt to understand the local environment. Risk assessment is a good idea.

Sanctions are a type of trade restriction generally ineffective in forcing change in other countries.

True Explanation: Sanctions tend to be ineffective. Think Cuba, but perhaps the goal there is not change, but rather, to make a political statement or to punish.

Kidnap, ransom, and extortion are techniques often used by terrorists against which insurance is available.

True Explanation: There is kidnap, ransom, and extortion (KRE) insurance.

U.S. ocean shipping companies are benefiting from U.S. government subsidies.

True Explanation: U.S. ocean shipping companies benefit from U.S. government subsidies. This is an example of the national defense argument for trade restrictions, subsidies being an indirect trade restriction.

Under Prime Minister Cameron, the British government sold the Royal Mail; shares can now be purchased on the London Stock Exchange. This is an example of

privatization