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| 1 | |
The UN has developed a Human Development Index (HDI) to compare the quality of life in nations, using life expectancy, education attainment and whether average incomes meet basic needs of life. |
| | A) | True |
| | B) | False |
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| 2 | |
Since the 1980s, democracy has spread to many new nation-states, and free market economies have also spread. |
| | A) | True |
| | B) | False |
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| 3 | |
Global terrorism may be the result of tensions between civilizations and the clash of value systems, long-standing conflicts, or the illegal drug trade – all of which pose a problem for international businesses. |
| | A) | True |
| | B) | False |
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| 4 | |
In keeping with the global trends toward privatization, China has privatized the banking, energy and telecom areas. |
| | A) | True |
| | B) | False |
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| 5 | |
First movers find they lack the brand loyalty and experience necessary to achieve a significant presence in the market. |
| | A) | True |
| | B) | False |
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| 6 | |
Purchasing power parity refers to: |
| | A) | adjusting gross domestic product per capita to reflect differences in the cost of living for each country. |
| | B) | the amount of annual income the average individual makes in each country. |
| | C) | the differences between individuals’ earnings within each country. |
| | D) | the total income each country produces. |
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| 7 | |
Unrecorded cash transactions or barter transactions __________________________. |
| | A) | are generally insignificant in economies and do not affect important economic totals |
| | B) | are taxed at the same rate as recorded transactions |
| | C) | may be significant in developing countries, which can result in significant understatement of national income |
| | D) | have come under increasing scrutiny of the WTO because of complaints by some developed countries |
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| 8 | |
An extensive 20-year study of the relationship between economic growth and economic freedom (as provided by a market economy) demonstrated ________________. |
| | A) | no significant correlation between the two |
| | B) | the more economic freedom, the more economic growth it achieved |
| | C) | despite more economic freedom, economic growth in fact decreased |
| | D) | the less economic freedom, the more economic growth it achieved |
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| 9 | |
Many economies have transformed into market-based systems due primarily to the fact that _____________________. |
| | A) | in general, command and mixed economies have failed to deliver the kind of sustained performance achieved by market-based systems |
| | B) | the WTO has endorsed and encouraged the growth of market-based systems |
| | C) | special interest groups, including the green movement and organized labor have embraced this approach |
| | D) | the Internet and other new media have been instrumental in promoting this kind of system |
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| 10 | |
Which of the following is not one of the steps in a shift toward a market-based economic system? |
| | A) | Deregulation |
| | B) | A stable price of petroleum and other natural resources |
| | C) | Privatization |
| | D) | The creation of a legal system to safeguard property rights |
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| 11 | |
_______________________ involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate. |
| | A) | Political reform |
| | B) | Transforming a market-based economy to a mixed economy |
| | C) | The U.N. Declaration of Human Rights |
| | D) | Deregulation |
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| 12 | |
Although the changing political economy has moved toward market-based systems and there has been tremendous growth and market opportunity, the implications for business include the possibility that gains could be reversed. Which of the following is NOT one of the potential threats to continued growth? |
| | A) | Continued growth in the developing world threatens the economies of the developed world. |
| | B) | Totalitarian dictatorships could return. |
| | C) | Democracy may not thrive in newer democratic states. |
| | D) | A significant financial crisis might occur in China due in part to fears about the lack of transparency in its banking system. |
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| 13 | |
____________________ is defined as the likelihood that political forces will cause drastic changes in a country’s business environment that adversely affect the profit and goals of a business enterprise. |
| | A) | Deregulation |
| | B) | Reregulation |
| | C) | Political risk |
| | D) | Legal risk |
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| 14 | |
Managers need to be concerned with legal risks regarding outside foreign trading partners because: |
| | A) | they can be sued for lack of due diligence by their trading partner. |
| | B) | they might find it difficult in foreign courts to lodge legal complaints for recovery and relief against their trading partner. |
| | C) | they must hire local attorneys to protect their interests and those of their trading partners. |
| | D) | they can face the likelihood that a trading partner will opportunistically break a contract or steal property rights. |
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| 15 | |
When considering the cost-benefit-risk trade-off in determining the overall attractiveness of a country as a potential market or investment site for an international business, _____________________________. |
| | A) | economic risk outweighs all others, including political and legal risks |
| | B) | the most favorable is likely to be the politically stable nations that have free market systems and no upsurge in inflation rates or private sector debts |
| | C) | the most favorable is likely to be politically unstable developing nations that operate with a mixed or command economy as long as the firm can create a first-mover advantage |
| | D) | the most favorable is likely to be a developed country, regardless of the possibility of financial bubbles that have led to excessive borrowing, as they will easily bounce back |
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