Global Business Today, 11e (Hill)
Chapter 2 National Differences in Political, Economic, and Legal Systems
1) The term political economy is used to stress the fact that the political, economic, and legal
systems of a country are independent of each other and do not influence one another.
2) One way to assess a political system is by understanding the emphasis on individualism or
collectivism.
3) Plato did not equate collectivism with equality.
4) Karl Marx believed that in a capitalist society, the few benefit at the expense of the many.
5) The social democrats believed that socialism could be achieved only through violent revolution
and totalitarian dictatorship.
6) By the mid-1990s, communism had reached its highest point in history.
7) Under the tenets of individualism, citizens should have freedom to choose their own economic
and political pursuits.
8) The Cold War can be thought of as a war between collectivism, championed by the former
Soviet Union, and individualism, championed by the United States.
9) In a totalitarian country, all the constitutional guarantees on which representative democracies
are built—an individual’s right to freedom of expression and organization, a free media, and
regular elections—are denied to the citizens.
10) One identifier of a democratic state is a free media.
11) The governments of China, Vietnam, and Laos are communist nations, but they have adopted
wide-ranging, market-based economic reforms.
12) The most common form of theocratic totalitarianism is Christianity.
13) In a pure 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 all dictated by the interaction of
demand and supply.
14) Command economies provide a more favorable environment for innovation and entrepreneurs
than market economies.
15) A common law system is based on tradition and precedent.
16) In a common law system, judges base decisions on detailed legal codes.
17) Judges under a civil law system have less flexibility than those under a common law system.
18) Islamic law is primarily a moral rather than a commercial law and is intended to govern all
aspects of life.
19) Contracts in a common law system tend to be shorter and less detailed than those created in a
civil law system.
20) By adopting the Contracts for the International Sale of Goods (CISG), a nation signals to other
adopters that it will treat the convention’s rules as part of its law.
21) When firms do not wish to accept the Contracts for the International Sale of Goods, they often
opt for arbitration by a recognized arbitration court to settle contract disputes.
22) A textbook author would apply for a patent to obtain the exclusive legal rights associated with
their written piece.
23) When considering the violation of property rights, blackmail is a form of public action.
24) In a criminal case involving product safety law, defendants who are found guilty are subject to
fines or imprisonment.
25) The benefits, costs, and risks associated with doing business in a country are independent of
that country’s political, economic, and legal systems.
26) A country’s ________ system is a part of the political economy.
A) religious
B) value
C) demographic
D) legal
E) technological
27) A political system that promotes activity “for the good of society” is based on
A) democratic principles.
B) individualism.
C) public action.
D) collectivism.
E) private action.
28) The country of Maracon downplays individual goals and emphasizes the collective goals of the
country. Maracon’s political system stresses
A) democracy.
B) collectivism.
C) individualism.
D) capitalism.
E) privatization.
29) The needs of society as a whole are generally viewed as being more important than individual
freedoms when the emphasis is on
A) democracy.
B) collectivism.
C) individualism.
D) capitalism.
E) privatization.
30) On the Belif peninsula, citizens are restricted in how much land they can own if it creates
opposition to the rule of the “common good.” What is the political system of the Belif peninsula
based on?
A) individualism
B) democracy
C) collectivism
D) capitalism
E) protectionism
31) Karl Marx promoted the idea of a(n) ________ society in which the state owned the means of
production, distribution, and exchange.
A) socialist
B) capitalist
C) individualist
D) monarchist
E) feudalist
32) Modern socialism traces its intellectual roots to
A) Aristotle
B) David Hume
C) Karl Marx.
D) Adam Smith.
E) Milton Friedman.
33) Karl Marx believed that the way to correct the economic inequalities in a capitalist society was
to
A) enforce high tariffs on imports.
B) promote exports but defer imports.
C) sell state-owned enterprises to private investor
D) have state ownership as the basic means of production.
E) expropriate funds from nation-states.
34) In the early twentieth century, the socialist ideology split into two broad camps and the people
who believed that socialism could be achieved only through violent revolution and totalitarian
dictatorship were referred to as
A) communists.
B) capitalists.
C) democrats.
D) individualists.
E) anarchists.
35) For centuries, Somariya was a capitalist country where the rich became richer and the poor
became poorer. A group calling itself the “Change Brotherhood” sought to convert Somariya into a
socialist country by democratic means. The “Change Brotherhood” is an example of
A) communists.
B) democrats.
C) republicans.
D) social democrats.
E) ideological democrats.
36) Those who attempt to achieve the same ideologies as that of the communists without violent
revolution and totalitarian dictatorship are called
A) pure capitalists.
B) social democrats.
C) individualists.
D) anarchists.
E) aristocrats.
37) Karl Marx would disagree with which of these ideas?
A) concern over public good rather than private profit
B) monopoly of state-owned companies in certain industries
C) opposing the ideologies of capitalist societies
D) substantial limits on individual political freedom
E) selling state-owned enterprises to private investors
38) Today, communism, which includes state control over all economic activity, is the political
norm mainly found in
A) countries throughout Europe and Asia.
B) small pockets of the United States and Japan.
C) small fringe nations.
D) eastern Europe.
E) large Westernized countries.
39) The sale of state-owned enterprises to independent, nonpublic investors is referred to as
A) privatization.
B) nationalization.
C) collectivism.
D) communalism.
E) public action.
40) The Greek philosopher Aristotle argued for diversity and private ownership. This laid the
groundwork for
A) collectivism.
B) individualism.
C) socialism.
D) totalitarianism.
E) communism.
41) The government of Alfon believes that its citizens should have complete freedom in their
economic and political pursuits, and the Alfon ideology is “private profit over public good.” In this
context, it can be said that Alfon follows the philosophy of
A) totalitarianism.
B) socialism.
C) individualism.
D) communism.
E) Marxism.
42) When the American colonists fought for independence from Great Britain, the concept of
________ influenced the decision.
A) private ownership
B) individualism
C) socialism
D) the greater good
E) collectivism
43) A nation based on individualism would agree that
A) communal property is more highly productive than private property.
B) public good should be preferred over private profit.
C) state-owned companies should monopolize certain industries.
D) the welfare of society is best served by some collective body such as government.
E) free market ideologies should be followed for achieving better standards of living.
44) What is the central message of individualism?
A) State-owned entities are more profitable for the common good.
B) Individuals rely on government to organize society.
C) Individual economic and political freedoms are the rules on which a society should be based.
D) The few should benefit at the expense of the many.
E) Harmony can only be achieved by turning our backs on dictatorships.
45) Democracy, in its purest form, is based on the belief that
A) citizens should be directly involved in decision making.
B) political freedom of the citizens should be limited.
C) citizens are responsible for their own economic health and thus need no government.
D) individual freedom in the economic sphere should be restricted.
E) one person should have an absolute control over all the citizens of a nation.
46) Which form of government involves one person or political party that exercises absolute
control over all spheres of human life and prohibits opposing political parties?
A) capitalism
B) totalitarianism
C) pure democracy
D) republicanism
E) representative democracy
47) What is one characteristic of a representative democracy?
A) all enterprises are state-owned
B) a single-house legislature
C) a lack of intellectual property laws
D) a court system that is linked to the political system
E) citizens periodically elect individuals to act on their behalf
48) Totalitarian states usually have
A) free and fair elections.
B) free access to state information.
C) all the basic civil liberties for citizens.
D) the right to freedom of expression and organization.
E) media that are heavily censored.