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7-1
Module 07 Economic and Socioeconomic Forces Answer Key
True / False Questions
1.
Newspapers in China refer to young people with good jobs as "zippies."
2.
In terms of economic development and competencies, India's strength so far has been in
services whereas China's has been in manufacturing.
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3.
India's average manufacturing labor cost per hour in 2014 was about one-quarter as high
as China's.
4.
The purpose of economic analysis is to assess the overall outlook of the economy and the
impact of economic changes on the firm.
5.
The international environment includes all the uncontrollable forces originating outside the
home country that surround and influence the firm.
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6.
International economic analyses should provide economic data on both actual and
prospective markets.
7.
A common basis for assessing economic development is gross domestic income.
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8.
Developed
is the term given to nations that have achieved high income per capita.
9.
Economies with per capita incomes in the low to middle range that are in a transition
toward developed status are referred to as emerging market economies.
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Topic: Economic Development
10.
To estimate market potential, managers require data on the size and the rates of change
of economic and socioeconomic factors.
11.
When an international manager is considering where to do business, one of the first
considerations is the size of the economy.
7-6
12.
To compare the purchasing power of nations, managers need to know how many people
gross national income (GNI) is divided among.
13.
Generally, it can be assumed, the higher the GNI/capita value, the more advanced the
nation's economy.
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14.
A problem with gross national income estimates that, to compare them, the GNIs in local
currency must be converted to a common currency by using an official exchange rate, and
that may not accurately reflect domestic purchasing powers of currencies.
15.
Purchasing power parity refers to the number of units of a currency required to buy the
same amounts of goods and services in the domestic market that one dollar would buy in
the United States.
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16.
The Atlas conversion factor is the arithmetic average of the current exchange rate and the
exchange rates in the two previous years. Incomes measured by the Atlas conversion
factor are generally more stable over time and changes in income rankings are more likely
to be due to relative economic performance than fluctuations in the exchange rate.
17.
Differences in GNI/capita tell us something about the relative wealth of a nation's
inhabitants, but we also need to know how the GNI is distributed.
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18.
Income distribution studies confirm the belief that income is more evenly distributed in the
richer nations.
19.
A simple calculation based on GDP, total population, and income distribution may indicate
that a country is not an adequate market.
20.
Discretionary income is the amount left after paying taxes.
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21.
The percentage of household expenditures spent on consumer durables by households in
developing nations is half the percentage spent by consumers in developed nations.
22.
The quantity and mix of energy consumed per capita constitutes a rough indicator of a
country's level of development.
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23.
Countries with slower-rising unit labor costs are investment prospects for companies
striving to lower production costs.
24.
Wages tend to vary more widely than hourly compensation because of the differences in
the size of fringe benefits.
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25.
If a major part of the foreign exchange a nation earns cannot be used to import
components used in local products, then either local industries must manufacture them or
the companies that import them must stop production.
26.
The view that defines economic development as a reduction of poverty and employment
as well as an increase in income is called the human development approach.
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27.
Analysts know that a country with a large population is always a better market than a
country with fewer people.
28.
A more even distribution of income and increased urbanization are among the factors
acting to reduce the traditional family size.
29.
The rural-to-urban shift is occurring primarily in the developed countries.
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30.
The increase in the number of working women is significant because it may result in a
greater market for convenience goods.
Multiple Choice Questions
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31.
Which of the following is not true about China, compared to India?
32.
Which of the following is not true about India, according to the text?
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33.
According to the book, what is the purpose of economic analyses?
34.
According to the book, economic analyses become more complex when a firm enters
overseas markets because, unlike the situation for a company operating domestically
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35.
The ________ includes all the uncontrollable forces originating outside the home country
that surround and influence the firm.
36.
The ________ includes the interactions between domestic and foreign environmental
forces, or between sets of foreign environmental forces when an affiliate in one country
does business with customers in another.
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37.
International economic analyses
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38.
Because of the importance of economic information to the control and planning functions
at headquarters the collection of data and preparation of reports is usually the
responsibility of
39.
_______ refers to the total value of all income generated by the residents of a nation,
including both the domestic production of goods and services and income from abroad.
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40.
The World Bank categories countries based on GNI per capita, using the following
categories:
41.
Most developing nations share the following characteristic(s):
