International Business Competing in the Global Marketplace Global Edition Charles Hill 10th Edition- Test Bank

 

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Sample Test

Chapter 03

Political Economy and Economic Development

 

True / False Questions

1.	Gross national income per-capita data take into account differences in the cost of living. True    False

 

2.	GNI per capita can be adjusted by purchasing power to account for differences in the cost of living. True    False

 

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

 

4.	The base for the purchasing power parity adjustment of the GNI is the cost of living in the United States. True    False

 

5.	GNI and PPP data are useful because they provide a dynamic analysis of economic development. True    False

 

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

 

7.	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

 

8.	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

 

9.	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

 

10.	In a planned economy, the means of production are owned by private individuals. True    False

 

11.	The economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy. True    False

 

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

 

13.	The state can expropriate the profits from innovation through legal means. True    False

 

14.	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

 

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

 

16.	Some totalitarian regimes have fostered a market economy and strong property rights protection and have experienced rapid economic growth. True    False

 

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

 

18.	Democracy is one of the consequences of economic growth and progress. True    False

 

19.	Anecdotal comparisons suggest that the assertion that nations that invest more in education will have higher growth rates is true. True    False

 

20.	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

 

21.	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

 

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

 

23.	One of the reasons for the spread of democracy is the emergence of increasingly prosperous middle and working classes who have pushed for democratic reforms. True    False

 

24.	Political scientist Samuel Huntington predicts that there will be a more harmonious world dominated by a universal civilization characterized by democratic regimes and free market capitalism. True    False

 

25.	According to political scientist Samuel Huntington’s thesis, global terrorism is a product of the tension between civilizations and the clash of value systems and ideology. True    False

 

26.	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

 

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

 

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

 

29.	Deregulation involves prohibiting private enterprises from operating in most sectors of the economy. True    False

 

30.	In mixed economies, in certain sectors the state set prices, owned businesses, limited private enterprise, restricted investment by foreigners, and restricted international trade. True    False

 

31.	Privatization reduces the incentive of business owners to increase productivity, enter new markets, and to exit losing ones. True    False

 

32.	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

 

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

 

34.	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

 

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

 

36.	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

 

37.	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

 

38.	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

 

39.	By identifying and investing early in a potential future economic star, international firms can build brand loyalty and gain experience in that country’s business practices. True    False

 

40.	First-mover advantages are the advantages that accrue to early entrants into a market. True    False

 

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

 

42.	Countries with free market economies in which property rights are protected tend to achieve lower economic growth rates than command economies where property rights are poorly protected. True    False

 

43.	It may be more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses. True    False

 

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

 

45.	One visible indicator of political risks tends to be a country’s inflation rate. True    False

 

46.	The overall attractiveness of a country as a potential market or investment site for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country. True    False

 

 

Multiple Choice Questions

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.	The HDI is based on all of the following measures EXCEPT: A. life expectancy at birth.   B. political freedom.   C. educational attainment.   D. whether average 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. AmartyaSen

 

53.

According to AmartyaSen, 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. should be viewed as a purely economic process.   D. assessed by material output measures such as GNI per capita.

 

54.	Which of the following statement pertaining to innovation and entrepreneurship is NOT true? A. They are the engines of growth.   B. They require strong property rights.   C. They require state ownership of means of production.   D. They require a market economy.

 

55.

A market economy encourages innovation because ____. A. state ownership of enterprises reduces risks of innovation   B. economic freedom leads to greater incentives for innovation   C. government-owned and funded research centers become hubs of innovation   D. the prices of goods and services, including new products, are fixed by government

 

56.

Stagnation can occur in planned economies because: A. entrepreneurial individuals have few economic incentives for innovation.   B. private ownership of means of production leads to exploitation of workers.   C. prices of goods and services are fixed by market forces of demand and supply.   D. lack of barriers to trade results in increased competition for domestic producers.

 

57.	_____ is required for a business environment to be conducive to innovation and entrepreneurial activity. A. State ownership of means of production   B. Strong legal protection of property rights   C. Barriers to foreign trade and investment   D. Government regulation of the market

 

58.	The state can expropriate the profits from innovation through legal means, such as ____. A. bureaucratic kickbacks   B. excessive taxation   C. black market transactions   D. privatization

 

59.

The influential Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism until ____. A. they have political stability   B. they invest in infrastructural development   C. they have better defined and secure property rights   D. they have adequate market regulation

 

60.

According to Hernando de Soto, which of the following factors is essential for the developing world to be able to reap the benefits of innovation and entrepreneurship? A. Detailed state planning   B. Restricting direct investment by foreign enterprises   C. Strong property rights   D. Market regulation

 

61.	A free market economy in which property rights are protected leads to subsequent economic growth, which often leads to the establishment of: A. a democratic regime.   B. a planned economy.   C. government owned enterprises.   D. a socialist economy.

 

62.

The political economy of many of the world’s nation-states has changed radically since the late 1980s. All of the following are trends that have been evident EXCEPT: A. a wave of democratic revolutions has swept the world.   B. totalitarian governments collapsed and have been replaced by democratically elected governments.   C. there has been a strong move away from centrally planned economies toward free market economic models.   D. mixed economies are fast replacing market economies.

 

63.

Since the late 1980s, there has been a spread of democracy. This is because ____. A. a state’s ability to control access to uncensored information has increased   B. the socialist model failed to deliver economic progress to the vast bulk of their populations   C. in many countries the middle and working classes have become less powerful   D. in many countries state-ownership of firms has encouraged innovation and entrepreneurship

 

64.

In many countries entrepreneurs and other business leaders, eager to protect their property rights and ensure the dispassionate enforcement of contracts, had pushed for ____. This contributed to a wave of democratic revolutions during the late 1980s and early 1990s. A. state ownership of productive resources   B. regulated markets   C. democratic reforms   D. planned economies

 

65.

Political scientist Samuel Huntington argues that modernization in non-Western societies can result in a retreat toward the traditional. This is exemplified by ____. A. the Islamic resurgence   B. the popularization of modern gadgets   C. the adoption of Western culture   D. the higher levels of literacy and education

 

66.

According to political scientist Samuel Huntington, the rise of Islamic fundamentalism is a response to ____. A. the corruption prevalent in planned economies   B. the restricted access to formal education   C. the alienation produced by modernization   D. the restrictions associated with totalitarian regimes

 

67.

Which of the following statements is true about Samuel Huntington? A. Samuel Huntington argues that there is a universal civilization based on widespread acceptance of Western democratic ideals.   B. Samuel Huntington argues that the rise of Islamic fundamentalism is a response to the alienation produced by modernization.   C. Samuel Huntington argues that global terrorism is a product of the static nature of traditional values and religious systems.   D. Samuel Huntington argues that many societies, by adopting the material paraphernalia of the modern world, are becoming more Western.

 

68.	Paralleling the spread of democracy, since the 1980s there has been the transformation from: A. free-market economies to socialist economies.   B. mixed economies to collectivist economies.   C. open economies to closed economies.   D. commandeconomies to market-based economies.

 

69.

Many states in Asia, Latin America, and Western Europe have shifted away from a mixed economy to a market-based economy. Which of the following measures is most likely to be promoted by such states? A. State-ownership of enterprises   B. Fixing of prices by the government   C. Deregulation of the economy   D. Lowering competition

 

70.	Which of the following is a step in the shift toward a market-based economic system? A. Increasing trade barriers   B. Increasing price controls   C. Nationalization   D. Creation of a legal system to safeguard property rights

 

71.	_____ involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate. A. Deregulation   B. Trade certification   C. A product law   D. A liability law

 

72.

Which of the following is an example of deregulation? A. A country that implements a simplified income tax filing system   B. A country that takes over a leading private bank to prevent it from filing for bankruptcy   C. A country that provides agricultural subsidies to farmers   D. A country that encourages foreign direct investment

 

73.	Which of the following is a characteristic of a command economy? A. Promotion of foreign direct investment   B. Allowing prices to be set by the interplay between demand and supply   C. Limited international trade   D. Restricted state-ownership of means of production

 

74.

The finance minister of a country considers several large, state-owned iron manufacturing units to be inefficient and a source of corruption. To generate resources for public expenditure and promote economic growth, the government decides to auction an entire iron manufacturing plant to sell it to a strategic investor. This process exemplifies ____. A. nationalization   B. industrialization   C. liberalization   D. privatization

 

75.

Studies of privatization in central Europe have shown that the process often fails to deliver predicted benefits if the newly privatized firms: A. stop receiving subsidies from the government.   B. are completely owned by private individuals.   C. are sheltered from foreign competition.   D. are allowed to restructure their operations.

 

76.	The sale of state assets through an auction is most likely to lead to ____. A. trade certification   B. privatization   C. nationalization   D. market regulation

 

77.	For privatization to work, it must also be accompanied by: A. an increase in trade barriers and tariffs.   B. an increase in government subsidies.   C. stronger barriers to foreign competition.   D. a general deregulation of the economy.

 

78.	Which of the following factors is NOT likely to make a country a more attractive location for international business? A. Democratic regimes   B. Planned economies   C. Strong protection of property rights   D. Market-based economic policies

 

79.	The benefits of doing business in a country are a function of all of the following EXCEPT: A. the size of the market.   B. its present wealth.   C. its past growth.   D. its future growth prospects.

 

80.

Sony was a pioneer in the portable music market segment. Sony’s Walkman was an innovative product which created a new category altogether and made Sony a technological leader. This gave the company an edge over other consumer electronics brands that introduced portable music players for a very long time. In this example, Sony had the: A. vertical integration advantage.   B. purchasing power parity advantage.   C. free-rider advantage.   D. first-mover advantage.

 

81.

Google launched Google Plus to gain a foothold in the social media market. However, given that there are numerous social networking platforms and Facebook is already a leader in social media, Google Plus found it challenging to generate brand loyalty and establish itself in the market. This was because of ____. A. incumbent disadvantage.   B. disintermediation disadvantage.   C. late-mover disadvantage.   D. horizontal integration disadvantage.

 

82.

In all of the following scenarios, the costs of doing business in a country tend to be greater, EXCEPT where: A. political payoffs are required to gain market access.   B. supporting infrastructure is lacking.   C. local laws set strict standards with regard to environmental pollution.   D. there is limits or caps on damage awards.

 

83.	The likelihood that a trading partner will opportunistically break a contract or expropriate property rights is called a(n) ____. A. economic risk   B. legal risk   C. cultural risk   D. political risk

 

84.	A change in political regime in a country can result in laws that _____ to international businesses. A. are more favorable   B. are less favorable   C. provide less incentives   D. provide more incentives

 

85.	Economic growth appears to be a function of a country’s capacity for growth and ___________. A. its previous economic success   B. its political environment   C. its free market system   D. its mixed economy

 

 

Essay Questions

86.	What is gross national income? Is it related to purchasing power parity?

 

87.	What is the philosophy of AmartyaSen?

 

88.	What are the conditions required to encourage innovation and entrepreneurship?

 

89.	Why are democratic regimes more conducive to economic growth than dictatorships?

 

90.	Explain how geography of a nation influences its economic development.

 

91.	Why does education lead to economic development?

 

92.	Discuss the three main reasons for the spread of democracy.

 

93.	Discuss Samuel Huntington’s views on Islamic fundamentalism.

 

94.	Since the 1980s, there has been a transformation from centrally planned command economies to market-based economies. What is the rationale for this transformation?

 

95.	What is deregulation? What are the steps involved in the deregulation of a command economy?

 

96.	Is privatization by itself enough to guarantee economic growth? Why? Explain using an example.

 

97.	How does the ownership structure of newly privatized firms affect its functioning?

 

98.	Explain why a well-functioning market economy requires strong legal systems?

 

99.	What are the factors that determine the long-run monetary benefits of doing business in a country?

 

100.	What are first-mover advantages? Explain with an example.

 

101.	What are late-mover disadvantages?

 

102.	What are the factors that determine the costs of doing business in a country?

 

103.	Why does doing business in a country with a relatively unsophisticated economy result in increased costs?

 

104.	Describe how overinvestment led to the 1997-98 financial crises in Southeast Asia.

 

105.	What are the factors that contribute to the risks of doing business in a country?

 

 

Chapter 03 Political Economy and Economic Development AnswerKey
 

True / False Questions

1.	Gross national income per-capita data take into account differences in the cost of living. FALSE GNI per person figures can be misleading because they don’t consider differences in the cost of living.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Differences in Economic Development

 

2.

GNI per capita can be adjusted by purchasing power to account for differences in the cost of living. TRUE To account for differences in the cost of living, one can adjust GNI per capita by purchasing power. Referred to as a purchasing power parity (PPP) adjustment, it allows for a more direct comparison of living standards in different countries.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Differences in Economic Development

 

3.	GNI allows a more direct comparison of living standards in different countries. FALSE Referred to as a purchasing power parity (PPP) adjustment, it allows a more direct comparison of living standards in different countries.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Differences in Economic Development

 

4.

The base for the purchasing power parity adjustment of the GNI is the cost of living in the United States. TRUE Referred to as a purchasing power parity (PPP) adjustment, it allows for a more direct comparison of living standards in different countries. The base for the adjustment is the cost of living in the United States.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Differences in Economic Development

 

5.	GNI and PPP data are useful because they provide a dynamic analysis of economic development. FALSE The GNI and PPP data give a static picture of development. They tell us, for example, that China is much poorer than the United States, but they do not tell us if China is closing the gap.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Differences in Economic Development

 

6.

In Sen’s view, development is an economic process that should be assessed by material output measures such as GNI per capita. FALSE The Nobel Prize-winning economist AmartyaSen has argued that development should be assessed less by material output measures such as GNI per capita and more by the capabilities and opportunities that people enjoy. In Sen’s view, development is not just an economic process, but it is a political one too.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Differences in Economic Development

 

7.

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 The HDI is based on three measures: life expectancy at birth (a function of health care), educational attainment (measured by a combination of the adult literacy rate and enrollment in primary, secondary, and tertiary education), and whether average incomes, based on PPP estimates, are sufficient to meet the basic needs of life in a country (adequate food, shelter, and health care).

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Differences in Economic Development

 

8.

Political freedom is one of the measures used by the Human Development Index (HDI) to measure the quality of human life in different nations. FALSE The HDI is based on three measures: life expectancy at birth (a function of health care), educational attainment (measured by a combination of the adult literacy rate and enrollment in primary, secondary, and tertiary education), and whether average incomes, based on PPP estimates, are sufficient to meet the basic needs of life in a country (adequate food, shelter, and health care).

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Differences in Economic Development

 

9.

If a country’s economy is to sustain long-run economic growth, the business environment must be conducive to innovations and entrepreneurial activity. TRUE Innovations in production and business processes lead to an increase in the productivity of labor and capital, which further boosts economic growth rates. Entrepreneurs first commercialize innovative new products and processes, and entrepreneurial activity provides much of the dynamism in an economy.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

10.

In a planned economy, the means of production are owned by private individuals. FALSE In a planned economy, the state owns all means of production. Consequently, entrepreneurial individuals have few economic incentives to develop valuable new innovations, because it is the state, rather than the individual, that captures most of the gains.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

11.

The economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy. TRUE It has been argued that the economic freedom associated with a market economy creates greater incentives for innovation and entrepreneurship than either a planned or a mixed economy.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

12.	Privatization refers to the process of hiring private management consultancy firms to manage state-owned enterprises. FALSE Privatization refers to the process of selling state-owned enterprises to private investors.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

13.

The state can expropriate the profits from innovation through legal means. TRUE The state can expropriate the profits from innovation through legal means, such as excessive taxation, or through illegal means, such as demands from state bureaucrats for kickbacks in return for granting an individual or firm a license to do business in a certain area (i.e., corruption).

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

14.

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 The influential Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism until property rights are better defined and protected. His arguments are interesting because he says the key problem is not the risk of expropriation but the chronic inability of property owners to establish legal title to the property they own.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

15.	Most property in poor countries is owned legally by investors. FALSE Because most property is poor countries is informally “owned,” the absence of legal proof of ownership means that property holders cannot convert their assets into capital, which could then be used to finance business ventures.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

16.	Some totalitarian regimes have fostered a market economy and strong property rights protection and have experienced rapid economic growth. TRUE Some totalitarian regimes have fostered a market economy and strong property rights protection and have experienced rapid economic growth.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

17.	Totalitarian states promote human freedom and human development, which facilitates economic progress. FALSE Totalitarian states, by limiting human freedom, also suppress human development and therefore are detrimental to progress.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

18.

Democracy is one of the consequences of economic growth and progress. TRUE Several of the fastest-growing Asian economies adopted more democratic governments during the past three decades, including South Korea and Taiwan. Thus, although democracy may not always be the cause of initial economic progress, it seems to be one consequence of that progress.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

19.

Anecdotal comparisons suggest that the assertion that nations that invest more in education will have higher growth rates is true. TRUE Education emerges as another important determinant of economic development. The general assertion is that nations that invest more in education will have higher growth rates because an educated population is a more productive population.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-01 Explain what determines the level of economic development of a nation. Topic: Political Economy and Economic Progress

 

20.

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. FALSE The political economy of many of the world’s nation-states has changed radically since the late 1980s. There has been a strong move away from centrally planned and mixed economies and toward a more free market economic model.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-02 Identify the macro-political and economic changes occurring worldwide. Topic: States in Transition

 

21.

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. FALSE One of the causes for the spread of democracy is that many totalitarian regimes failed to deliver economic progress to the vast bulk of their populations.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-02 Identify the macro-political and economic changes occurring worldwide. Topic: States in Transition

 

22.

New information and communication technologies have enabled the spread of democratic ideals. TRUE New information and communication technologies have created new conduits for the spread of democratic ideals and information from free societies. Today, the Internet is allowing democratic ideals to penetrate closed societies as never before.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-02 Identify the macro-political and economic changes occurring worldwide. Topic: States in Transition

 

23.

One of the reasons for the spread of democracy is the emergence of increasingly prosperous middle and working classes who have pushed for democratic reforms. TRUE In many countries the economic advances of the past quarter century have led to the emergence of increasingly prosperous middle and working classes who have pushed for democratic reforms.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-02 Identify the macro-political and economic changes occurring worldwide. Topic: States in Transition

 

24.

Political scientist Samuel Huntington predicts that there will be a more harmonious world dominated by a universal civilization characterized by democratic regimes and free market capitalism. FALSE Huntington sees a world that is split into different civilizations, each of which has its own value systems and ideology.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 2 Medium Learning Objective: 03-02 Identify the macro-political and economic changes occurring worldwide. Topic: States in Transition

 

25.

According to political scientist Samuel Huntington’s thesis, global terrorism is a product of the tension between civilizations and the clash of value systems and ideology. TRUE In Huntington’s thesis, global terrorism is a product of the tension between civilizations and the clash of value systems and ideology.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-02 Identify the macro-political and economic changes occurring worldwide. Topic: States in Transition

 

26.

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 Command and mixed economies failed to deliver the kind of sustained economic performance that was achieved by countries adopting market-based systems, such as the United States, Switzerland, Hong Kong, and Taiwan. As a consequence, even more states have gravitated toward the market-based model.

 

AACSB: Analytic Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 03-02 Identify the macro-political and economic changes occurring worldwide. Topic: States in Transition