Module 5 Political Forces
A comparison of labor cost based on hourly wages is a reasonable guide to a need to protect domestic jobs.
False
Country risks are hardly ever political in nature.
False
Fair competition is a strong rationale for trade barriers. With fair competition, there will be increased efficiency for everyone.
False
Firms are nationalized when the goal of the government is to spread a socialist-communist ideology.
False
The national defense argument for trade restrictions is based on the country's level of development and foreign direct investment.
False
To hedge the terrorism risk, the best approach is to stay out of foreign markets.
False
U.S. ocean shipping companies do not benefit from U.S. government subsidies.
False
When people are kidnapped for ransom, a reasonable response is to pay the ransom, get the hostages released, and then retaliate.
False
When the U.S. military contracts out security details in war zones, it is engaged in nationalization.
False
Businesses favor stable governments because the context is predictable.
True
Governments own the factors of production not only in communist countries, but in many market-based countries.
True
Kidnap, ransom, and extortion are techniques often used by terrorists against which insurance is available.
True
One historic function of government has been to create stable and predictable environments, in order to protect economic activities within its borders.
True
Paying ransom does not make sense because although lives may be saved, the kidnapper is rewarded and the method is reinforced.
True
Predictable government actions create many business opportunities.
True
Sanctions are a type of trade restriction that is ineffective in forcing change in other countries.
True
The length of the investment in a foreign country has an impact on the risk assessment for that investment.
True
The practice of country risk assessment is an exercise in understanding the local environment.
True
To protect an infant industry, trade restrictions might be effective, but for a short time period.
True
When government-owned companies compete with private companies, the government companies usually have the advantage.
True
