International Business: The Challenges of Globalization, 9e (Wild)
Chapter 3 Political Economy and Ethics
1) In ________ cultures, economic systems tend to provide incentives and rewards for a person’s
private business initiatives.
A) individualist
B) high uncertainty avoidance
C) feminine
D) large power distance
2) Which of the following political ideologies states that every aspect of people’s lives must be
controlled for a nation’s political system to be effective?
A) totalitarianism
B) capitalism
C) anarchism
D) pluralism
3) In a totalitarian political system, ________.
A) political power resides with the citizens of the country
B) governments direct most economic activity but few social ones
C) an individualistic outlook shapes political debate and policy formation
D) one agent monopolizes political power
4) Totalitarian political systems include authoritarian regimes such as ________.
A) democracy and theocracy
B) anarchism and pluralism
C) communism and fascism
D) capitalism and secularism
5) ________ is the belief that only individuals and private groups should control a nation’s
political activities.
A) Pluralism
B) Anarchism
C) Theocracy
D) Totalitarianism
6) ________ is the belief that both private and public groups play important roles in a nation’s
political activities.
A) Totalitarianism
B) Capitalism
C) Anarchism
D) Pluralism
7) ________ political systems include democracies, constitutional monarchies, and some
aristocracies.
A) Totalitarian
B) Anarchist
C) Fascist
D) Pluralistic
8) Konesia is a country whose political leaders do not tolerate opposing viewpoints and often
suppress or punish dissidents. The lives of Konesians are tightly controlled by its rulers. Which
of the following political systems prevails in the country?
A) totalitarianism
B) democracy
C) anarchism
D) pluralism
9) Which of the following is a characteristic of totalitarian governments?
A) Political dissidents can oppose the government with no repercussions.
B) Citizens are guaranteed civil, property, and minority rights.
C) The means of production are owned by the people who use them.
D) Leaders rule without the explicit approval of the people.
10) A ________ is a political system in which a country’s religious leaders serve as its political
leaders.
A) democracy
B) theocracy
C) plutocracy
D) septocracy
11) Renzi belongs to a country in which religion governs all aspects of his life, whether personal
or public. He has to abide by a strict, rigid, code that dictates everything from the clothes he
wears to the food he eats. Breaking away from these traditions is not an option since religion
plays an important role in the functioning of the nation. What political system prevails in his
country?
A) communist totalitarianism
B) left-wing totalitarianism
C) right-wing totalitarianism
D) theocratic totalitarianism
12) ________ is a political system in which political leaders rely on military and bureaucratic
power to support their rule.
A) Secular totalitarianism
B) Secular anarchism
C) Theocratic totalitarianism
D) Theocratic pluralism
13) Under ________, the government endorses private ownership of property and a market-
based economy but grants little or no political freedom.
A) left-wing totalitarianism
B) theocratic totalitarianism
C) secular totalitarianism
D) right-wing totalitarianism
14) Which of the following terms is also used to refer to communism?
A) tribal totalitarianism
B) right-wing totalitarianism
C) left-wing totalitarianism
D) civil totalitarianism
15) Which of the following is an advantage of conducting business in totalitarian nations?
A) International companies are less likely to face local political opposition to their activities.
B) Government deals are always straightforward and transparent.
C) Laws regarding the resolution of contractual disputes are clearly defined.
D) International companies run no risk of their public image being tarnished.
16) Which of the following is a disadvantage of conducting business in totalitarian nations?
A) Laws regarding the resolution of contractual disputes are rigid and inflexible.
B) Companies have to contend with the interference of local political opposition.
C) A refusal to pay a bribe can result in the forfeiture of investments in the country.
D) The government has little power over the economic activities of the nation.
17) A ________ is a political system in which government leaders are elected directly by the
wide participation of the people or by their representatives.
A) democracy
B) theocracy
C) plutocracy
D) autocracy
18) Which of the following statements about representative democracies is true?
A) All citizens participate freely and actively in political processes.
B) Leaders of representative democracies can stay in power indefinitely.
C) Citizens elect individuals from political groups to act on their behalf.
D) Representative democracies across the world share identical features.
19) In a ________ government, the strongest political parties share power by dividing
government responsibilities among themselves.
A) coalition
B) bilateral
C) totalitarian
D) theocratic
20) Democracies try to preserve peaceful coexistence among groups of people with diverse
cultural, ethnic, and racial backgrounds. These rights are known as ________ rights.
A) indirect
B) central
C) subcapital
D) minority
21) The government maintains control over the banking industry in a country. Which of the
following is most likely true if the country has a mixed economy?
A) Businesses in most economic sectors of the country are privately owned.
B) The government considers banking sector as important to national security.
C) The country has never experienced threats against its long-term stability.
D) The government views banking as more important than manufacturing.
22) Which of the following do governments impose upon people to help pay for the
consequences of using a particular product?
A) income taxes
B) consumption taxes
C) property taxes
D) value-added taxes
23) Susan decides not to set up production facilities in Konesia because its business laws are
vague and are often interpreted according to the convenience of the government. Bribery is a
common feature in conducting business deals there and a refusal to pay up is not an option. What
kind of government does Konesia have?
A) democratic
B) theocratic
C) totalitarian
D) pluralist
24) Susan also decides not to set up production facilities in Margazo, a country which functions
by a strict set of religious tenets, because some of them contradict her company’s work policy.
Expecting potential employees to break away from these traditions is not an option since religion
plays an important role in the functioning of the nation. What kind of political system prevails in
Margazo?
A) pluralistic
B) theocracy
C) tribal totalitarian
D) democracy
25) In a totalitarian system, rulers tightly control people’s lives and do not tolerate opposing
viewpoints.
26) Anarchism is the belief that every aspect of people’s lives must not be controlled in order for
a nation’s political system to be effective.
27) Pluralism is the the belief that both private and public groups play important roles in a
nation’s political activities.
28) Pluralistic political systems include democracies, constitutional monarchies, and some
aristocracies.
29) A political system in which a country’s religious leaders are also its political leaders is called
a theocracy.
30) Pluralism is a political system in which political leaders rely on military and bureaucratic
power.
31) Secular totalitarianism is a political system in which government leaders are elected directly
by the wide participation of the people or their representatives.
32) The most peaceful nations today are those that were never controlled and stabilized by
colonial powers.
33) In a coalition government, the strongest political parties share power by dividing government
responsibilities among themselves.
34) The bureaucracy is the part of government that implements the rules and laws passed by
elected representatives.
35) Communists are socialists, but socialists are not necessarily communist.
36) Totalitarianism is a political ideology that typically involves constant indoctrination of the
population by agents of the government to eliminate dissent.
37) Totalitarian governments tend to favor government ownership of economic resources.
38) Compare and contrast the world’s three main political ideologies: anarchism, totalitarianism,
and pluralism.
39) Compare and contrast two prevalent political systems: totalitarianism and democracy, and
explain how a country’s political system influences its legal system.
40) Central planning is rooted in the ideology that ________.
A) the welfare of a group is more important than individual well-being
B) individual concerns should be placed above group consensus
C) individual and group concerns are just as important as government concerns
D) privatization will enhance a country’s economic well-being
41) In a command economy, the goods and services that a country produces, the quantity in
which they are produced, and the prices at which they are sold are planned by ________.
A) government officials
B) private industries
C) individual entrepreneurs
D) local trade associations
42) In Country X, all dimensions of economic activity, including pricing and production
decisions, are determined by the central government. Which term best describes Country X?
A) market economy
B) mixed economy
C) command economy
D) democratic economy
43) Which of the following terms refers to an economic system in which the government owns
and controls all types of economic activity?
A) socialism
B) sovereign nationalism
C) political bureaucracy
D) pluralism
44) Robert believes that social and economic equality can be obtained only by establishing an
economic system in which the government owns and controls all types of economic activity.
However, he does not think of himself as a communist, but as a socialist. Which of the following
statements about Robert is true?
A) Robert does not believe that a violent revolution is needed to seize control over resources.
B) Robert does not think that political dissidents should go unpunished.
C) Robert believes that the pricing of goods should be left to the discretion of laborers.
D) Robert believes that the means of production should be owned by the people who use them.
45) Both Pat and Terry believe that social and economic equality can be obtained only by
establishing an economic system in which the government owns and controls all types of
economic activity. Which of the following statements proves that Pat is a communist and Terry
is a socialist?
A) Unlike Terry, Pat believes that the government should decide the prices at which goods are
sold.
B) Unlike Pat, Terry does not believe in the elimination of political opponents.
C) Unlike Terry, Pat believes that the means of production should be owned only by the public.
D) Unlike Pat, Terry believes that a violent revolution is necessary to seize control over
resources.
46) What do communists and socialists have in common?
A) Both believe in the elimination of political opponents.
B) Both believe that the government should control all types of economic activity.
C) Both believe that the pricing of goods should be the responsibility of individuals.
D) Both believe that a violent revolution is necessary to seize control over resources.
47) The segment of the economic environment comprising independently owned firms that seek
to earn profits is called the ________.
A) political sector
B) private sector
C) democratic sector
D) public sector
48) Which of the following philosophies asserts that ownership of the means of production
belongs in the hands of individuals and private businesses?
A) capitalism
B) communism
C) tribalism
D) socialism
49) In a market economy, the patterns of resource allocation are most directly influenced by
________.
A) government administrators who monitor the equilibrium of supply and demand
B) industry coalitions that strive to improve the efficiency of production and service
C) consumer group alliances that negotiate with firms to improve product quality
D) consumers who “vote” by their personal decision to buy or not buy products
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Scenario: Susan Goes Global with Grape Fizz
Susan is the CEO of Grape Fizz, a global drinks-manufacturing company. She wishes to set up
production facilities in other countries and has been advised to assess the political system of each
country before she does so.
50) Susan thinks that it would be easiest setting up production facilities in a country whose
government leaders are elected directly by the wide participation of the people or by their
representatives. Which of the following political systems should the country have?
A) anarchist
B) democratic
C) theocratic
D) fascist
51) A value-added tax is a tax levied on each party that adds value to a product throughout its
production and distribution.
52) Describe the three main types of economic systems.
53) Discuss the factors that contributed to the collapse of centrally planned economies.
54) Discuss the challenges China faces as it continues its experiment on “socialism with Chinese
characteristics.”