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66) 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
67) 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
68) ________ 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
69) ________ 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
70) ________ 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
71) Which of the following is a step involved in the deregulation of a command economy?
A) adding price controls
B) temporarily restricting international trade
C) abolishing laws regulating the establishment and operation of private enterprises
D) increasing restrictions on direct investment by foreign enterprises
72) Without a strong legal system in a market economy
A) the incentive to engage in economic activity can be increased substantially.
B) private-sector entrepreneurs can expropriate the profits generated by the efforts of private and
public entities.
C) mechanisms for contract enforcement fall to private and corporate lawyers.
D) private and public entities can expropriate the profits generated by the efforts of private-sector
entrepreneurs.
73) 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
74) 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
75) 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.
76) 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.
77) The sale of state assets through an auction is most likely to lead to
A) trade certification.
B) privatization.
C) nationalization.
D) market regulation.
78) 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.
79) Which of the following factors is likely to make a country a more attractive location for
international business?
A) totalitarian regimes
B) planned economies
C) government ownership of production methods
D) market-based economic policies
80) The benefits of doing business in a country are a function of which of the following?
A) the size of the market
B) its past wealth
C) its past growth
D) its future plans for infrastructure development
81) Sony was a pioneer in the portable music market segment. The Sony Walkman was an
innovative product that 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.
82) 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.
83) The costs of doing business in a country tend to be greater if
A) political payoffs are not required to gain market access.
B) supporting infrastructure is sponsored by government.
C) local laws set strict standards with regard to environmental pollution.
D) there are limits or caps on damage awards.
84) ________ 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
85) 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
