46) In the country of Bolar, the state owns key industries such as energy and transportation. The
rest of the industries are privately owned. Bolar is a ________ economy.
A) market
B) planned
C) mixed
D) private
E) democratic
47) At one time, economic stagnation resulted in Great Britain because the coal mining and
telecommunications industries were
A) privatized.
B) sold off to foreign owners.
C) monopolies owned by the state.
D) compromised during the war.
E) decentralized.
48) The nation of Talden sold Talden Communications, a state-owned monopoly, to private
investors. This is an example of
A) communism.
B) isolationism.
C) privatization.
D) economizing.
E) protectionism.
49) Jason loves to invent new products but knows that in his country it is difficult for him to reap
50) The country of Marita ensures strong legal protection of property rights. It is likely that the
businesses and individuals in Marita will
A) want to invest more in innovations.
B) avoid privatization.
C) face more corruption.
D) avoid entrepreneurial activity.
E) be faced with a higher tax debt.
51) People in the West tend to associate a(n) ________with a free market system, strong property
rights protection, and economic progress.
A) anarchist state
B) representative democracy
C) planned economy
D) communist state
E) command economy
52) Only a totalitarian regime that is committed to ________ is capable of promoting economic
growth.
A) a command economy
B) a dictatorship
C) limiting human freedom
D) a strong protection of property rights
E) limiting individualism and privatization
53) According to economist Hernando de Soto, the key issue in the relationship between
capitalism and property rights is the inability of owners to
A) pay the necessary taxes on their property.
B) establish legal title to the property they own.
C) adapt to a planned economic system.
D) create a production monopoly.
E) foster dynamism through entrepreneurial activity.
54) China, South Korea, Taiwan, Singapore, and Hong Kong have had the fastest-growing
economies in the past 40 years. What did these five countries have in common at the start of their
economic spur?
A) extensive trade agreements
B) undemocratic governments
C) active entrepreneurial activity
D) high tariff barriers
E) strong property rights protection
55) 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.
56) The influential economist Jeffrey Sachs argues that which of the following, with their long
engagements in international trade, have been the most supportive of market institutions
throughout history?
A) mountainous states
B) tropical regions
C) military societies
D) landlocked states
E) coastal states
57) Which of these countries demonstrates Jeffrey Sachs’s argument about trade?
A) The nation of Ilar exports rice but imports wheat because it is more cost effective.
B) The soil conditions in Sarut are so poor that no crops can be grown and the country must import
all food sources.
C) Intellectual property rights are well-protected in the nation of Acher which provides an absolute
advantage.
D) The citizens of Rener fail to participate in entrepreneurial activity because of the planned
economy.
E) The true GNI of the nation of Wolcott is unknown because of the “hidden economy.”
58) In the context of political economy, one notable development of the past 30 years has been the
spread of
A) centrally planned economies.
B) mixed economies.
C) totalitarian governments.
D) democracy.
E) communism.
59) 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.
60) According to Freedom House, just under ________ of the world’s nations are considered
“free.”
A) 5 percent
B) 20 percent
C) 90 percent
D) 75 percent
E) 50 percent
61) “Not all democracies are free, as some still restrict certain political and civil liberties.” Which
country best fits this argument?
A) Australia
B) the United States
C) Great Britain
D) Russia
E) Canada
62) The collapse of ________ 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) a free economy
D) capitalism
E) privatization
63) 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.
64) 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.
65) 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.
66) Francis Fukuyama saw a world in which ________ was the final form of human government.
A) communism
B) dictatorship
C) totalitarianism
D) democracy
E) monarchism
67) Samuel Huntington held the opposite view from Fukuyama and believed that the
modernization of non-Western societies caused those societies to
A) become more Western.
B) retreat toward the traditional.
C) focus on democratic regimes.
D) promote diversity and inclusion.
E) reject material possessions.
68) 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.
69) As democracy has spread since the 1980s, so has the development of more ________
economies.
A) centrally planned
B) mixed
C) totalitarian
D) command
E) market-based
70) In the context of global economy, what 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
71) Based on calculations for 2018, which country is ranked by the Heritage Foundation as having
the world’s freest economy?
A) Ireland
B) Hong Kong
C) North Korea
D) Canada
E) the United States
72) The government of Cafor wants to create a market-based economic system. To do so, the
government 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.
73) A nation would ________ as part of deregulation efforts.
A) prohibit private enterprises from operating in certain sectors
B) commit to communism
C) remove price controls
D) create a centrally planned economic system
E) increase restrictions on foreign direct investment
74) The country of Garuf has recently removed all legal restrictions on the establishment of private
enterprises. This action represents the process of
A) the nationalization of private assets.
B) deregulation.
C) socialism.
D) expanding totalitarian controls.
E) isolationism.
75) The country of Watoo would be using deregulation efforts if
A) it exercises tight control over the prices of food grains.
B) the establishment of private enterprises in the steel industry is prohibited by the government.
C) the retail sector in Watoo is opened for foreign direct investment.
D) the Watoo government does not have a legal system to safeguard property rights.
E) Watoo ranks the lowest among the countries that grant both political and economic freedoms to
its citizens.
76) The deregulation of an economy involves
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.
77) What started in Great Britain in the early 1980s when Prime Minister Margaret Thatcher
started to sell state-owned assets such as the British telephone company?
A) nationalization
B) privatization
C) antidemocratic government
D) communism
E) antiglobalization
78) 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.
79) The nation of Gren recently began privatization efforts; however, as a way to protect newly
privatized firms, the government imposed strong tariffs on imports from foreign competitors. This
has resulted in little competition for these newly privatized firms and essentially created
A) state monopolies.
B) few barriers to trade.
C) a mini-multinational.
D) a democratic regime.
E) a totalitarian state.
80) An accurate description of privatization is that
A) it started in China in the early 1980s.
B) it involves replacing a state-owned monopoly with a private monopoly.
C) it is most successful when countries adopt communism.
D) when newly privatized firms are 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.
81) The country of Morson has decided to privatize the state-owned cable television company.
How can the country help this newly privatized industry succeed?
A) impose high corporate taxes on the company immediately after its privatization
B) increase barriers to foreign direct investment
C) intervene in the company’s operations by exercising price controls
D) split the company into independent units to compete with each other
E) prohibit foreign companies from entering into the field of telecommunication
82) 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.
83) What is one 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.