International Business Competing in the Global Marketplace 11th Edition By Charles -Thomas – Test Bank

 

 

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Sample Test

Chapter 03

National Differences in Economic Development

 

True / False Questions

1.	GNI allows a more direct comparison of living standards in different countries. True    False

 

2.	In Sen’s view, development is an economic process that should be assessed by material output measures such as GNI per capita. True    False

 

3.	Life expectancy at birth is one of the measures used by the Human Development Index (HDI) to measure the quality of human life in different nations. True    False

 

4.	Political freedom is one of the measures used by the Human Development Index (HDI) to measure the quality of human life in different nations. True    False

 

5.	If a country’s economy is to sustain long-run economic growth, the business environment must be conducive to innovations and entrepreneurial activity. True    False

 

6.	Privatization refers to the process of hiring private management consultancy firms to manage state-owned enterprises. True    False

 

7.	Peruvian development economist Hernando de Soto has argued that the chronic inability of property owners to establish legal title to the property they own is a key problem for innovation, and entrepreneurial activity in developing nations. True    False

 

8.	Most property in poor countries is owned legally by investors. True    False

 

9.	Totalitarian states promote human freedom and human development, which facilitates economic progress. True    False

 

10.	Since the late 1980s, there has been a strong move away from a more free market economic model and toward a more centrally planned and mixed economies. True    False

 

11.	Many totalitarian regimes were able to deliver economic progress to the vast bulk of their populations, which curbed the spread of democracy during the late 1980s. True    False

 

12.	New information and communication technologies have enabled the spread of democratic ideals. True    False

 

13.	Transformation from centrally planned command economies to market-based economies can be attributed to the fact that command and mixed economies failed to deliver the sustained economic performance achieved by countries adopting market-based systems. True    False

 

14.	Economic freedom necessarily equates with political freedom. True    False

 

15.	In a command economy, the prices are determined by the free interplay of demand and supply. True    False

 

16.	In mixed economies, in certain sectors the state sets prices, owns businesses, limits private enterprise, restricts investment by foreigners, and restricts international trade. True    False

 

17.	Studies of privatization in central Europe have shown that the process often fails to deliver predicted benefits if the newly privatized firms continue to receive subsidies from the state and if they are protected from foreign competition. True    False

 

18.	For privatization to work, it must also be accompanied by a more general deregulation and opening of the economy. True    False

 

19.	The government of a country takes over the airport security industries following a major terrorist attack, to improve airport security. This is an example of privatization. True    False

 

20.	A well-functioning market economy requires laws protecting private property rights and providing mechanisms for contract enforcement. True    False

 

21.	When communism collapsed, many of the communist countries lacked the legal structure required to protect property rights because all the property was earlier held by the state. True    False

 

22.	A market with a large number of consumers with low living standards will have a relatively large market when measured in economic terms. True    False

 

23.	The long-run monetary benefits of doing business in a country are a function of the size of the market, the present wealth of consumers in that market, and the likely future wealth of consumers. True    False

 

24.	A country’s economic system and property rights regime are reasonably good predictors of economic prospects. True    False

 

25.	Economic risks are independent of political risk. True    False

 

 

Multiple Choice Questions

26.	_____ per person figures can be misleading because they don’t consider differences in the cost of living. A. Gross domestic product (GDP)   B. Gross national income (GNI)   C. Purchasing power parity (PPP)   D. Human Development Index (HDI)

 

27.	GNI per capita can be adjusted by _____ to account for differences in the cost of living. A. gross domestic product   B. gross values added   C. purchasing power   D. the total value of goods and services produced

 

28.	The _____ adjustment allows for a more direct comparison of living standards in different countries. A. gross domestic product   B. value added   C. gross national income (GNI)   D. purchasing power parity (PPP)

 

29.	GNI and PPP data are useful because they provide a _____ of economic development. A. dynamic analysis   B. cross-sectional view   C. static analysis   D. global view

 

30.	In a _____, the state owns all means of production. A. mixed economy   B. planned economy   C. market economy   D. totalitarian state

 

31.	The economic freedom associated with a _____ creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy. A. mixed economy   B. planned economy   C. market economy   D. command economy

 

32.	Which of the following is a legal means by which the state can expropriate the profits from innovation? A. Demands for money to grant a license   B. Expropriation   C. Enforcing property rights   D. Excessive taxation

 

33.	Some _____ have fostered a market economy and strong property rights protection and have experienced rapid economic growth. A. totalitarian regimes   B. command economies   C. dictatorships   D. centrally planned systems

 

34.	Several of the fastest-growing Asian economies adopted more _____ governments during the past three decades, including South Korea and Taiwan. A. totalitarian   B. democratic   C. dictatorial   D. socialists

 

35.	Anecdotal comparisons suggest that the assertion that nations that invest more in _____ will have higher growth rates is true. A. infrastructure   B. centralized urban centers   C. education   D. manufacturing

 

36.	One of the reasons for the spread of democracy is the emergence of _____ who have pushed for democratic reforms. A. a more vocal working poor   B. better educated lower classes   C. a desperate urban poor   D. increasingly prosperous middle and working classes

 

37.	Political scientist _____ predicts that there will be a world that is split into different civilizations, each of which has its own value systems and ideology. A. Samuel Huntington   B. Amartya Sen   C. Francis Fukuyama   D. Hernando de Soto

 

38.	According to political scientist’s thesis is global terrorism a product of the tension between civilizations and the clash of value systems and ideology? A. Amartya Sen   B. Samuel Huntington   C. Francis Fukuyama   D. Hernando de Soto

 

39.	_____ involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate. A. Privatization   B. Developing command economies   C. Deregulation   D. Globalization

 

40.

_____ is seen as a way to stimulate gains in economic efficiency by giving owners a powerful incentive—the reward of greater profits—to search for increases in productivity, to enter new markets, and to exit losing ones. A. Globalization   B. Economic transformation   C. Deregulation   D. Privatization

 

41.

By identifying and investing early in a potential future economic star, international firms can _____ and gain experience in that country’s business practices. A. build brand loyalty   B. learn which government officials need to receive kickbacks   C. begin to stockpile that country’s currency   D. build infrastructure

 

42.	_____ are the advantages gained by early entrants into a market. A. Early investor advantages   B. First-mover advantages   C. First-to-market advantages   D. Late-mover advantages

 

43.	Countries with _____ economies in which property rights are protected tend to achieve greater economic growth rates than other economies where property rights are poorly protected. A. mixed   B. market   C. free market   D. command

 

44.	It may be more costly to do business in relatively primitive or undeveloped economies because of: A. international trade restrictions.   B. the lack of governmental support.   C. difficulty obtaining workers.   D. the lack of infrastructure and supporting businesses.

 

45.	One visible indicator of _____ tends to be a country’s inflation rate. A. economic mismanagement   B. high GNI   C. political risks   D. low HDI

 

46.

The overall attractiveness of a country as a potential market or investment site for an international business depends on: A. if the country has a high gross national income.   B. balancing the benefits, costs, and risks associated with doing business in that country.   C. whether the company can be the first mover in the market.   D. whether the government can be greased.

 

47.	GNI per person figures can be misleading because ____. A. they also include barter agreements   B. they provide a dynamic picture of development   C. they don’t consider differences in the cost of living   D. they don’t consider exchange rate

 

48.	Which of the following helps in adjusting GNI such that it accounts for the differences in the cost of living? A. Purchasing power parity (PPP) adjustment   B. Human Development Index   C. Debt to GNI ratio   D. Consumer Price Index

 

49.

In some countries, the official GNI per capita measured at PPP data does not reflect the actual the total annual income because: A. it doesn’t consider differences in the cost of living.   B. it gives a static picture of development.   C. it fails to include income earned from other countries in the form of dividends.   D. large amounts of economic activity may be in the form of barter agreements.

 

50.	Which of the following is a measure that is developed by the United Nations to measure the quality of life in different nations? A. Gross national income   B. Human Development Index   C. Purchasing power parity   D. Gross domestic product

 

51.	Which of the following is one of the measures that HDI is based on? A. Life expectancy at birth.   B. Political freedom.   C. Attainment of housing.   D. Whether the lowest incomes are sufficient to meet the basic needs of life.

 

52.	_____, a Nobel Prize-winning economist, has argued that development is not just an economic process, but it is a political one as well. A. Hernando de Soto   B. Karl Marx   C. Samuel Huntington   D. Amartya Sen

 

53.

According to Amartya Sen, development should be: A. seen as a process of expanding the real freedoms that people experience.   B. seen as a non-political concept that focuses on the net income of a country.   C. viewed as a purely economic process.   D. assessed by material output measures such as GNI per capita.

 

54.	Which of the following statements pertaining to innovation and entrepreneurship is true? A. They are the engines of growth.   B. They require strong legal systems.   C. They require state ownership of means of production.   D. They require a mixed economy.