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Student name:__________
1) Why did Karl Marx criticize capitalism? Describe how he planned to correct those
shortcomings.
2) Discuss collectivism. What ideals does the philosophy support? Where did the
philosophy start? How does collectivism exist in the modern world?
3) What are state-owned companies? Why do they usually perform poorly?
4) Discuss individualism. Explain the key positions of the philosophy, it roots, and its role
in the modern economy.
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5) Compare and contrast a pure democracy and a representative democracy. Which type of
democracy is more common today? Why?
6) Compare and contrast the four forms of totalitarianism.
7) Identify the three types of economic systems. How do these three types of economic
systems differ from each other? How are they the same?
8) Discuss why there is inefficiency in a monopoly situation. What is the role of the
government in such a situation?
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9) Discuss the effects of private ownership of production in a market economy.
10) What is a country’s legal system? Why is it important to international businesses?
11) Explain the differences between common law and civil law systems by the approach of
each to contract law.
12) Discuss the ways in which public action to violate property rights can occur.
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13) What factors contribute to the attractiveness of a country as a market or investment site?
14) Discuss the key factors that companies must be aware of before deciding to do business
in other countries.
15) _____ occurs when a political party that represents the interests of a particular tribe (and
not always the majority tribe) monopolizes power.
A) Tribal monopoly
B) Communist totalitarianism
C) Tribal totalitarianism
D) Privatization
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16) Who was the author of The Wealth of Nations in which he stated that “an individual who
intends his own gain is led by an invisible hand to promote an end that was no part of his
intention…”?
A) David Hume
B) Adam Smith
C) Karl Marx
D) John Stuart Mill
17) The term _____ stresses that the political, economic, and legal systems of a country are
interdependent.
A) political economy
B) common law
C) socialism
D) collectivism
18) Modern socialists trace their intellectual roots to _____, although socialist thought clearly
predates this individual.
A) David Hume
B) Karl Marx
C) Adam Smith
D) John Stuart Mill
19) Manchu believed that socialism could be achieved only through violent revolution and
totalitarian dictatorship.Manchu was likely a
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A) libertarian.
B) communist.
C) collectivist.
D) social democrat.
20) Plato _____; he believed that society should be stratified into classes, with those best
suited to rule administering society for the benefit of all.
A) equated individualism with equality
B) equated collectivism with equality
C) promoted representative democracy
D) did not equate collectivism with equality
21) When _____ is emphasized, an individual’s right to do something may be restricted on
the grounds that it runs counter to “the good of society.”
A) individualism
B) totalitarianism
C) collectivism
D) theocracy
22) What term is used to describe a state in which authoritarian elements have captured some
or much of the machinery of state and use this in an attempt to deny basic political and civil
liberties?
A) authoritarian dictatorship
B) right-wing democracies
C) representative totalitarianism
D) pseudo-democracies
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23) _____ argued that individual diversity and private ownership are desirable.
A) Karl Marx
B) Plato
C) John Stuart Smith
D) Aristotle
24) In a(n) _____ society, the welfare of society is best served by letting people pursue their
own economic self-interest.
A) individualist
B) collectivist
C) communist
D) totalitarian
25) Systems that emphasize collectivism tend toward
A) totalitarianism.
B) capitalism.
C) democracy.
D) privatization.
26) Interdependent political, economic, and legal systems of a country make up its
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A) administrative agenda.
B) socioeconomic fabric.
C) cultural environment.
D) political economy.
27) A political system that prioritizes the needs of the society over individual freedoms is
called
A) totalitarianism.
B) collectivism.
C) capitalism.
D) egalitarianism.
28) Modern socialism has been popularized largely through the work of
A) Adam Smith.
B) Karl Marx.
C) David Hume.
D) Thomas Hobbes.
29) In several Western democracies, the poor performance of state-owned enterprises,
because of protection from competition and guaranteed government financial support, led to
A) privatization.
B) nationalization.
C) liberalization.
D) socialization of production.
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30) Which of the following philosophies can be traced back to the ancient Greek philosopher
Aristotle?
A) socialism
B) individualism
C) collectivism
D) anarchism
31) The tenet of _____ is that the welfare of society is best served by letting people pursue
their own economic self-interest.
A) socialism
B) communism
C) anarchism
D) individualism
32) Which of the following statements about individualism is true?
A) Individualism promotes state ownership of the basic means of production,
distribution, and exchange.
B) Individualism promotes globalization.
C) Individualism creates an antibusiness environment.
D) Individualism and democracy go hand in hand.
33) Which of the following is a safeguard that representative democracies use to ensure that
their elected officials are held responsible for their actions?
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A) unlimited terms for elected representatives
B) a court system that is integrated with the political system
C) an individual’s right to freedom of expression, opinion, and organization
D) a political police force and armed service
34) Which of the following is a feature of a democracy?
A) exercise of absolute control by one person or political party
B) governance by people or elected representatives
C) prohibition of entry to opposing political parties
D) complete restriction of individual political freedom
35) Totalitarianism
A) refers to a political system in which government is by the people, exercised either
directly or through elected representatives.
B) is based on a belief that citizens should be directly involved in decision making.
C) is a form of government in which one person or political party exercises absolute
control over all spheres of human life.
D) is based on the idea that the welfare of society is best served by letting people pursue
their own economic self-interests.
36) People’s right to protest on issues of accountability in public expenditure would be
possible in a _____ political setup.
A) dictatorial
B) democratic
C) totalitarian
D) fascist
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37) _____ refers to a state where political power is monopolized by a party, group, or
individual that governs according to religious principles.
A) Representative democracy
B) Theocratic totalitarianism
C) Tribal anarchism
D) Monotheistic communism
38) Which system of government generally permits some individual economic freedom but
restricts individual political freedom, frequently on the grounds that it would lead to the rise of
communism?
A) tribal totalitarianism
B) right-wing totalitarianism
C) democratic totalitarianism
D) theocratic totalitarianism
39) In a pure market economy,
A) all productive activities are owned by the state.
B) production is determined by the interaction of market forces of supply and demand.
C) collectivist goals are given priority over individual goals.
D) the prices at which goods are sold are determined by the government.
40) The abolition of _____ in a command economy distorts incentive and competition.
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A) private ownership
B) public ownership
C) government-owned businesses
D) co-operatives
41) The local grocery in a small southern city is the only option for the residents, so it has a
monopoly on the grocery business there. When the population of the city grows and demand for
groceries increases, what is the grocery store most likely to do?
A) Restrict output to drive prices down.
B) Increase output to drive prices down.
C) Restrict output and let prices rise.
D) Increase output and keep prices constant.
42) In a _____, if demand for a product exceeds supply, prices will rise, signaling to
producers to produce more.
A) mixed economy
B) market economy
C) collectivist economy
D) command economy
43) In 2008, the U.S. government took an 80 percent stake in AIG to stop that financial
institution from collapsing, the theory being that if AIG did collapse, it would have very serious
consequences for the entire financial system. What type of economy is this an example of?
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A) command
B) mixed
C) capitalistic
D) market
44) An economy in which the interaction of supply and demand determines the quantity in
which goods and services are produced is called a
A) planned economy.
B) command economy.
C) closed economy.
D) market economy.
45) Which of the following is a reason that command economies tend to stagnate?
A) Costs are tightly controlled and business are forced to be efficient rather than
dynamic and innovative.
B) The abolition of private ownership means there is no incentive for individuals and no
competition.
C) All economic resources are mobilized for the public good.
D) Individuals in command economy countries lack the skills to be innovative.
46) Antitrust laws in the United States are designed to
A) restrict agricultural subsidies.
B) increase trade barriers.
C) outlaw monopolies.
D) restrict privatization.
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47) In a(n) _____ economy, the government plans the goods and services that a country
produces, the quantity in which they are produced, and the prices at which they are sold.
A) market
B) command
C) open
D) laissez-faire
48) In a _____ economy, certain sectors of the economy are left to private ownership and free
market mechanisms while other sectors have significant state ownership and government
planning.
A) market
B) private
C) command
D) mixed
49) In which of the following economies would the government be most likely to take into
state ownership troubled firms whose continued operation is thought to be vital to national
interests?
A) market economies
B) laissez-faire economies
C) liberal economies
D) mixed economies
50) Which of the following statements about the legal systems of countries is true?
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A) They can affect the attractiveness of a country as an investment site or market.
B) They are not influenced by the prevailing political system of the country.
C) They are almost the same for all countries.
D) They are of little importance to international business.
51) One key component of a country’s legal system is
A) establishing a mixed economy.
B) taking a hands-off approach to business practices.
C) defining the rights and obligations of those involved in business transactions.
D) leaving the monitoring of the way business transactions are executed to the United
Nations.
52) Under the _____, cases are judged with reference to three characteristics: tradition,
precedent, and custom.
A) theocratic law system
B) civil law system
C) contract law system
D) common law system
53) A civil law system tends to be less adversarial than a common law system because the
A) judges’ decisions are based on detailed legal codes.
B) judges have the freedom to interpret laws based on the situation.
C) judges’ decisions are based on religious teachings.
D) judges are guided by interpretations made in prior legal cases.
54) A common law system is different from a civil law system because
A) a common law system is based on religious teachings, while a civil law system is
based on cultural traditions.
B) a common law system is very rigid, while a civil law system tends to be more
flexible.
C) in a common law system a judge relies on legal codes to make rulings, while in a
civil law system a judge relies on his intuition and moral reasoning to make judgments.
D) in a common law system a judge has the power to interpret the law, while in a civil
law system a judge has the power only to apply the law.
55) A _____ law system is based on a very detailed set of laws organized into codes.
A) traditional
B) theocratic
C) civil
D) common
56) A theocratic law system is one in which the law is based on
A) religious teachings.
B) tradition, precedent, and custom.
C) a detailed set of laws organized into codes.
D) cultural and social norms.
57) Which of the following is the most widely practiced theocratic legal system in the world
today?