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International Business
Q:
Strong legal protection of property rights is a requirement for a business environment to be conducive to innovation, entrepreneurial activity, and hence economic growth.
Q:
Entrepreneurial individuals have fewer economic incentives to develop valuable new innovations in market economies than in planned economies.
Q:
If a country's economy is to sustain long-run economic growth, the business environment must be conducive to the consistent production of product and process innovations and to entrepreneurial activity.
Q:
Economists who argue that innovation and entrepreneurial activity are the engines of long-run economic growth, define innovation broadly to include not just new products but also new processes, new organizations, new management practices, and new strategies.
Q:
The gross national income (GNI) per capita comes much closer to Amartya Sen's conception of how development should be measured than narrow economic measures such as Human Development Index (HDI).
Q:
In Amartya Sen's view, development is solely an economic process, and not a political process.
Q:
Although countries such as China and India are currently relatively poor, their economies are already large in absolute terms and growing more rapidly than those of many advanced nations.
Q:
The purchasing power parity for different countries is adjusted (up or down) depending upon whether a country's cost of living is lower or higher than the cost of living in the United States.
Q:
Gamma Gene Incorporated has sought your opinion about the overall attractiveness of various countries as potential markets and investment sites. What would you tell them?
Q:
What are the various types of risks that a business enterprise could face in doing business in a particular country?
Q:
What are the implications of changing political economy for international business?
Q:
Discuss the significance of legal systems in the context of shifting toward a market-based economic system.
Q:
When does the process of privatization fail to deliver predicted benefits? What economic conditions are required for privatization to work?
Q:
Discuss the concept of deregulation.
Q:
Discuss Samuel Huntington's idea of the new world order. What are its implications for international business?
Q:
How does Author Francis Fukuyama's vision of the new world differ from that of the late influential political scientist Samuel Huntington?
Q:
What are the various reasons that account for the spread of democracy?
Q:
What changes have occurred in the political economy of most of the world's nation-states since the late 1980s?
Q:
Discuss Jeffrey Sachs's conception of geography, education, and economic development.
Q:
Why are market economies more conducive to innovation and entrepreneurship than planned or mixed economies?
Q:
List the three measures on which the Human Development Index (HDI) is based.
Q:
Describe Amartya Sen's conceptions of development.
Q:
The government of Nerumbia wants to open the country's economy to international business, and increase its overall attractiveness as a potential market or investment site. Which of the following will facilitate this decision of the Nerumbian government?
A.Shifting toward command economy or an economy where property rights are not enforced strictly
B.Investing in infrastructure and in the required supporting businesses
C.Frequently changing the government and the government policies
D.Maintaining a high inflation rate
E.Adopting a legal system which does not provide any protection for intellectual property rights
Q:
Which of the following is most likely to be true about the overall attractiveness of a country as a potential market or investment site for an international business?
A.The potential long-run benefits of doing business in a foreign country are independent of the country's future economic growth rates.
B.The costs and risks associated with doing business in a foreign country are highest in economically advanced democratic nations.
C.Economic growth tends to be higher in a centrally planned command economy system than in a free market system.
D.The risks associated with doing business are low in developing nations where the governments have huge debts.
E.The costs and risks associated with doing business in a foreign country tend to be greater in politically unstable nations.
Q:
Generally, the costs and risks associated with doing business in a foreign country are typically lower in:
A.less developed countries.
B.economically advanced countries.
C.totalitarian states.
D.countries with high inflation and falling living standards.
E.countries that lack intellectual property rights.
Q:
The risks of doing business are most likely to be the highest in a country that:
A.has low inflation rates.
B.supports high living standards.
C.has only one ethnic nationality.
D.protects intellectual property.
E.faces frequent changes in government and government policy.
Q:
MedPlus Incorporated, based in the United States, hesitates to enter into a joint venture with Azpak Limited, a Sri Lankan company, due to inadequate protection of intellectual property rights. MedPlus is trying to avoid what type of risk?
A.Political
B.Legal
C.Ethical
D.Economic
E.Ethnographic
Q:
What type of risk can be defined as the likelihood that a trading partner will opportunistically break a contract or expropriate property rights?
A.Political
B.Legal
C.Economic
D.Sociological
E.Cultural
Q:
The government of Ugania had been extending huge amounts of loans to the business enterprises in the country. However, the borrowers failed to generate the profits necessary to repay their debts. As a result, national banks in Ugania had a lot of nonperforming assets on their books, and the Uganian currency was devalued. In this context, the business enterprises in Ugania are most likely to face which of the following type of risk?
A.Ethical
B.Economic
C.Technological
D.Legal
E.Sociological
Q:
Which of the following statements is most likely to be true about the risks of doing business in a country?
A.Political risk is low in countries that contain more than one ethnic nationality.
B.Economic risks are independent of political risk.
C.One visible indicator of economic risk is the level of business and government debt in the country.
D.One visible indicator of legal risk tends to be a country's inflation rate.
E.Political risk tends to be low in those countries that have high inflation and falling living standards.
Q:
Lamboria Republic is facing a high rate of inflation, and the government debt in the country is also high. As a result, the country's business environment is beginning to deteriorate, and the profits of the business enterprises are hurt. According to this information, Lamboria Republic is facing which of the following type of risk?
A.Legal
B.Ethical
C.Demographic
D.Ethnographic
E.Economic
Q:
Which of the following factors in a country is most likely to cause political risk for an international business?
A.The presence of more than one ethnic nationality
B.Infrequent changes in government and government policy
C.Low inflation rate
D.Low level of government debt
E.High living standards
Q:
When social unrest and disorder in a country causes drastic changes in its business environment that adversely affect the profit and other goals of a business enterprise, the business enterprise is said to be facing which of the following type of risk?
A.Political
B.Demographic
C.Ethical
D.Technological
E.Physiological
Q:
In the context of cost, which of the following can be considered as the most attractive market or investment site?
A.A country that has adopted a closed totalitarian state
B.A country that has a well-developed body of business contract law
C.A country with a command-based economic system
D.A country with stringent product safety laws and huge liability insurance rates
E.A country which does not provide any protection for property rights
Q:
Star Volans Inc. is planning on expanding its business globally. In terms of the costs involved in conducting business in a country, it will be most economical for the company if it chooses a country:
A.with a closed totalitarian political system.
B.where the company will have to provide its own infrastructure and supporting business.
C.where laws regarding product safety, safety in the workplace, and environmental pollution are extremely stringent.
D.where politicians are held accountable by the electorate.
E.with no local laws to protect intellectual property.
Q:
The cost of doing business is most likely to be the lowest in:
A.closed totalitarian states.
B.primitive or undeveloped economies.
C.open democratic societies.
D.countries where local laws and regulations set strict standards with regard to product safety, safety in the workplace, and environmental pollution.
E.countries that lack well-established laws for regulating business practice.
Q:
Which of the following statements is most likely to be true about the economic prospects of a country?
A.The economic system and property rights regime are reasonably good predictors of economic prospects of a country.
B.Countries with command economies tend to achieve greater economic growth rates than free market economies.
C.Countries which do not provide any protection for property rights tend to achieve greater economic growth rates than the countries in which property rights are protected.
D.Countries where property rights are not well respected and where corruption is rampant always have very low levels of economic growth.
E.The advantages of building brand loyalty and gaining experience in a country's business practices is greater for a last-mover than for a first-mover.
Q:
Both China and India have achieved high growth rates despite relatively weak property rights regimes and high levels of corruption, because of:
A.the shift toward a communist ideology.
B.their high living standards.
C.their large population.
D.their high consumer purchasing power.
E.the shift toward a market-based economic system.
Q:
When Galaxy Ventures, a real estate company, entered the low cost housing business, the market was already saturated with other players. Thus, the company was forced to exit the market due to lack of customer loyalty and substantial dividends. Which of the following is a term used to described the situation faced by the company?
A.First-mover disadvantages
B.Last-mover disadvantages
C.Last-in first-out disadvantages
D.Comparative disadvantages
E.Absolute disadvantages
Q:
Which of the following best exemplifies a first-mover advantage?
A.Venus Inc. has more than 50 percent market share in the telecom industry, because no other company had invested in this industry before Venus Inc.
B.Maya won a cash discount of 75 percent on the latest NewY phone as she was the winner of a competition conducted by NewY.
C.The level of satisfaction Simon experienced when dining at the Emerald Inn was greatest the first time, and thereafter it reduced each time he dined there.
D.Innovative Creations Inc. was the first to exit the declining pager phone manufacturing industry and as a result, it avoided losing a lot of money.
E.Product critiques are extremely respected by major firms, as they are the first ones to review new products and services.
Q:
Capricorn Creative Inc., a U.S.-based advertising firm, was the first in the advertising industry to identify the growth potential of Brazil and to make huge investments in its economy. As a result, the firm was able to build brand loyalty and gain experience in that country's business practices. In the language of business strategy, Capricorn Creative has typically benefited from:
A.a first-mover advantage.
B.forward integration.
C.unrelated differentiation.
D.lateral diversification.
E.technology transfer.
Q:
In economic terms, the long-run monetary benefits of doing business in a country are most likely to be a function of the:
A.gender ratio of the country.
B.latitudinal and the longitudinal location of the country.
C.natural resources available in the country.
D.present wealth (purchasing power) of consumers of the country.
E.political history of the country.
Q:
Although China and India are very large markets when measured by number of consumers, they are relatively small markets when measured in economic terms due to their:
A.orientation toward democracy.
B.small share in the world output.
C.high living standards.
D.limited purchasing power.
E.commitment to a free market system.
Q:
Countries with which of the following are more likely to attain high and sustained economic growth rates and are thus a more attractive location for international business?
A.Weak protection of property rights
B.Democratic regimes
C.Command-based economic policies
D.Ideologies that differ from Western ideologies
E.Totalitarian dictatorships
Q:
The United Nation of Amberia, a Western European country, fought on the winning side of the Cold War. Which of the following was most likely being propagated by the country by participating in the Cold War?
A.Strong business regulations
B.Communist ideologies
C.Command economies
D.Totalitarian dictatorships
E.Free markets
Q:
Which of the following of the Cold War era has vanished?
A.Multipolar world
B.Democratic system
C.Free market system
D.Bipolar world
E.Widespread belief in Western ideology
Q:
Which of the following statements is true about the global changes in political and economic systems?
A.The West lost the Cold War, and East European communist ideology is now widespread.
B.A lack of deregulation has been the cause for the global financial crisis of 2008-2009, and the recession that followed.
C.It is guaranteed that democracy will thrive in most of the world's newer democratic states.
D.The multipolar world dominated by a number of civilizations of the Cold War era has vanished, and is now being replaced by a bipolar world.
E.Many of the undeveloped and impoverished national markets of eastern Europe, Latin America, Africa, and Asia are potentially enormous for international business.
Q:
Many commentators have blamed the problems that led to global financial crisis of 2008-2009, and the recession that followed on:
A.a lack of free markets.
B.a lack of regulation.
C.the political ideologies followed in the Asian countries.
D.a strong presence of command economies.
E.a lack of privatization and liberalization.
Q:
Which of the following is an implication of the global changes in political and economic systems for international business?
A.The ideological conflict between collectivism and individualism is less in evidence today.
B.Adoption of Western ideology is declining worldwide.
C.The global tide has been running in favor of command economies and totalitarian dictatorships.
D.Free markets and democracy are being replaced by mixed economies and communist governments.
E.Liberalization and privatization of state-owned enterprises has been losing popularity.
Q:
The absence of a legal system that protects property rights and the lack of machinery to enforce that system in a market economy usually results in:
A.an improvement in the operating efficiency of newly privatized firms.
B.reduced barriers to foreign direct investment and international trade.
C.an increase in the incentives to engage in economic activity.
D.deregulation and privatization of the economy.
E.the lack of incentive to engage in economic activity.
Q:
In the Republic of Lantharia, the state-owned telephone company enjoys a monopoly. The government of Lantharia Republic wants to maximize the operating efficiency of this company by privatizing it. Which of the following is most likely to help the government succeed in this endeavor?
A.Imposing high corporate taxes on the company immediately after its privatization
B.Increasing barriers to foreign direct investment
C.Intervening in the company's operations by exercising price controls
D.Splitting the company into independent units to compete with each other
E.Prohibiting foreign companies from entering into the field of telecommunication in the Republic of Lantharia
Q:
Which of the following statements is true about privatization?
A.The privatization movement started in China in the early 1980s.
B.Privatization involves replacing a state-owned monopoly with a private monopoly.
C.For privatization to become successful, countries should adopt communism.
D.When newly privatized firms are extensively protected from foreign competition, they have little incentive to restructure their operations to become more efficient.
E.In today's context, a country runs the risk of experiencing a serious economic crisis if it liberalizes and privatizes state-owned enterprises.
Q:
The government of Greenland Republic protects its newly privatized firms from foreign competition by imposing stringent barriers to international trade and foreign direct investment. As a result of this, the newly privatized firms will:
A.continue acting like state monopolies.
B.operate at their maximum efficiency.
C.pay huge taxes.
D.import raw materials and many industrial goods at low tariffs.
E.have no control over production and pricing.
Q:
How does privatization help stimulate gains in economic efficiency?
A.It allows newly privatized firms to gain monopoly position in a particular industry.
B.It provides incentives to new private owners to search for increases in productivity and to enter new markets.
C.It encourages state control over price and production output.
D.It raises barriers to direct investment by foreign enterprises.
E.It results in reservation of heavy industry for state ownership and the increase of import tariffs.
Q:
Which of the following movements started in Great Britain in the early 1980s when then Prime Minister Margaret Thatcher started to sell state-owned assets such as the British telephone company?
A.Nationalization
B.Privatization
C.Anti-democratic
D.Communist
E.Anti-globalization
Q:
Which of the following steps is most likely to be involved in the deregulation of an economy?
A.Increasing restrictions on direct investment by foreign enterprises and international trade
B.Privatizing state-owned enterprises
C.Exercising a high degree of state control over production and pricing
D.Abolishing laws related to the protection of property rights
E.Opposing democracy by adopting communism
Q:
Which of the following is most likely to indicate that the nation of Erbia has adopted deregulation?
A.The Erbian government exercises tight control over the prices of food grains.
B.The establishment of private enterprises in steel industry is prohibited by the Erbian government.
C.The retail sector in Erbia has been opened for foreign direct investment.
D.The Erbian government has been criticized for its inability to introduce a legal system to safeguard property rights.
E.Erbia ranks the lowest among the countries that grant both political and economic freedoms to its citizens.
Q:
The United Nation of Zorwaya has strict restrictions on direct investment by foreign enterprises, and it opposes the establishment and operation of private enterprises. The highest authority in the country enforces tight control over prices and production output. According to this information, the United Nation of Zorwaya most likely opposes:
A.nationalization of private assets.
B.deregulation.
C.socialism.
D.totalitarian ideologies.
E.command economies.
Q:
Which of the following is most likely to be implemented by a country as a part of deregulation?
A.Prohibition of private enterprises from operating in certain sectors
B.Commitment toward communism
C.Removal of price controls
D.Centrally planned economic system
E.Increased restrictions on foreign direct investment
Q:
The government of Great Lanthania is planning to adopt a market-based economic system. To be able to do so, the government of this country should:
A.abolish the laws that deal with protection of property rights.
B.introduce stringent foreign investment regulations.
C.increase its intervention in the economy.
D.adopt privatization.
E.oppose democracy.
Q:
Which of the following statements is true about the changing economic system since the 1980s?
A.There has been a shift from market-based economies to centrally planned economies.
B.There has been a shift away from a mixed economy.
C.Many states have restricted the sale of state-owned businesses to private investors.
D.The competition between economies has been reducing.
E.The extent to which property rights are protected has declined.
Q:
In the context of global economy, which of the following has been widely accepted since the late 1980s?
A.Centrally planned command economy
B.Mixed economy
C.Nationalization of private property
D.Deregulation of economies
E.Authoritarian regime
Q:
Which of the following is most likely to prove detrimental to democracy and international business?
A.Emergence of increasingly prosperous middle and working classes
B.Development of new information and communication technologies
C.Dominance of a universal civilization which leads to the establishment of a more harmonious world
D.Transformation of nations from centrally planned command economies to market-based economies
E.Emergence of different civilizations, each of which has its own value systems and ideology
Q:
In Samuel Huntington's thesis, global terrorism is a product of the:
A.clash of value systems and ideology between civilizations.
B.widespread acceptance of universal global civilization.
C.declining liberal democratic ideals.
D.differences in the factor endowments between countries.
E.geographical differences between nations.
Q:
Which of the following statements is true about the late influential political scientist Samuel Huntington's vision of the new world?
A.Samuel Huntington maintained that as societies continue modernizing they will also become more Western.
B.Samuel Huntington theorized that modernization in non-Western societies can result in a retreat toward the traditional.
C.Samuel Huntington predicted that the universalization of Western liberal democracy will be the final form of human government.
D.Samuel Huntington envisioned the end of the war of ideas between different civilizations.
E.Samuel Huntington suggested that most developing countries will stop adopting the material paraphernalia of the modern world.
Q:
The collapse of communism will result in the new world order that will be dominated by a universal civilization characterized by democratic regimes and free market capitalism, according to:
A.Amartya Sen.
B.Samuel Huntington.
C.Jeffrey Sachs.
D.Francis Fukuyama.
E.Adam Smith.
Q:
According to the author Francis Fukuyama, the world is most likely witnessing the end of:
A.free market economies.
B.capitalism.
C.liberal democracies.
D.privatization.
E.humanity's ideological evolution.
Q:
Economic advances in many countries have led to the:
A.decline of middle and working classes.
B.rise of totalitarian reforms.
C.decline of property rights.
D.emergence of closed and self-contained societies.
E.emergence of increasingly prosperous middle and working classes.
Q:
How have new information and communication technologies, including the Internet, affected the political economy in general?
A.They have led to the spread of communism.
B.They have reduced a state's ability to control access to uncensored information.
C.They have led to the collapse of democracy.
D.They have created new conduits for the spread of closed societies.
E.They have led to increased suppression of political and economic freedoms.
Q:
The collapse of which of the following in eastern Europe was precipitated by the growing gulf between the vibrant and wealthy economies of the West and the stagnant economies of the East?
A.Democracy
B.Communism
C.Free economy
D.Capitalism
E.Individualism
Q:
"Not all democracies are free, as some still restrict certain political and civil liberties." Which of the following countries best fits this argument?
A.Australia
B.United States
C.Great Britain
D.Russia
E.Canada
Q:
In the context of the changing political economy since the late 1980s, which of the following statements is true?
A.There has been a rapid spread of communism worldwide.
B.Capitalist ideologies have been in retreat.
C.A wave of totalitarian revolutions has swept the world.
D.Most countries have moved toward centrally planned and mixed economies.
E.Most of the world's nation-states are providing greater political and civil liberties to their citizens.
Q:
During the late 1980s and early 1990s, many of the world's nation-states moved away from:
A.democratically elected governments.
B.free market capitalism.
C.individualism.
D.political and civil freedoms.
E.totalitarian governments.
Q:
In the context of political economy, one notable development of the past 20 years has been the spread of:
A.centrally planned economies.
B.mixed economies.
C.totalitarian governments.
D.democracy.
E.communism.
Q:
The work by Jeffrey Sachs suggests that investments in which of the following help explain why some countries in Southeast Asia have been able to overcome the disadvantages associated with their tropical geography and grow far more rapidly than tropical nations in Africa and Latin America?
A.Nuclear weapons
B.Education
C.Terrorist activities
D.Nationalization of private properties
E.Active bartering
Q:
The influential economist Jeffrey Sachs argues that throughout history, which of the following, with their long engagements in international trade, have been the most supportive of market institutions.
A.Mountainous states
B.Tropical regions
C.Military societies
D.Landlocked states
E.Coastal states
Q:
The belief that geography can influence economic policy, and hence economic growth rates, goes back to:
A.Adam Smith.
B.Amartya Sen.
C.Plato.
D.Aristotle.
E.Karl Marx.
Q:
Which of the following is most likely to be the consequence of economic progress?
A.Adoption of communism
B.Adoption of democracy
C.Adoption of a command economy
D.Adoption of a totalitarian government
E.Restriction on individual freedom
Q:
The influential Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism:
A.until they adopt communism.
B.until property rights are better defined and protected.
C.if they adopt free market economies.
D.until their governments monopolize all means of production in their countries.
E.if they encourage innovation and entrepreneurship.
Q:
Only a totalitarian regime that is committed to which of the following is capable of promoting economic growth?
A.A command economy
B.A dictatorship
C.Limiting human freedom
D.A market system and strong protection of property rights
E.Limiting individualism and privatization