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.
2. Political systems that emphasize collectivism tend to be democratic, while political
systems that place a high value on individualism tend to be totalitarian.
3. Plato did not equate collectivism with equality.
4. Karl Marx advocated state ownership of the basic means of production, distribution, and
exchange (i.e., businesses).
5. The social democratsbelieved that socialism could be achieved only through violent
revolution and totalitarian dictatorship.
6. By the mid-1990s, communism was rising worldwide.
7. One of the tenets of collectivism is that the welfare of society is best served by letting
people pursue their own economic self-interest.
8. In practical terms, individualism translates into an advocacy for democratic political
systems and market economics.
9. The Cold War was in many respects a war between collectivism, championed by the
former Soviet Union, and individualism, championed by the United States.
10. In practical terms, collectivism creates a more favorable environment for international
businesses to operate in than individualism.
11. In a representative democracy, elected representatives who fail to perform their job
adequately cannot be voted out of office at the next election.
12. 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.
13. In most democratic states, those who question the right of the rulers to rule find
themselves imprisoned, or worse.
14. The governments of China, Vietnam, and Laos are communist in name only because
those nations have adopted wide-ranging market-based economic reforms.
15. All right-wing dictatorships display an affinity toward socialist or communist ideas.
16. In countries where individual goals are given primacy over collective goals, we are
less likely to find market-based economic systems.
17. 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.
18. Command economies provide a more favorable environment for innovation and
entrepreneurs than market economies.
19. Historically, pure market economies were found in communist countries where collectivist
goals were given priority over individual goals.
20. A common law system tends to be less adversarial than a civil law system.
21. When law courts interpret civil law, they do so with regard to tradition, precedent, and
custom.
22. Contracts drafted under a common law framework tend to be very detailed with all
contingencies spelled out.
23. Judges under a civil law system have less flexibility than those under a common law
system.
24. Islamic law is primarily a moral rather than a commercial law and is intended to govern all
aspects of life.
25. Compared to common law system, it is more expensive to draw up contracts in a civil law
jurisdiction.
26. By adopting the Contracts for the International Sale of Goods (CIGS), a nation signals to
other adopters that it will treat the convention’s rules as part of its law.
27. 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.
28. Private action to violate property rights occurs when public officials, such as politicians
and government bureaucrats, extort income, resources, or the property itself from property
holders.
29. Bribes are legal payments meant to facilitate performance of duties that the recipients
are already obligated to perform.
30. Intellectual property laws stimulate innovation and creative work.
31. The term “public action” refers to the exclusive legal rights of authors, composers,
playwrights, artists, and publishers to publish and disperse their work as they see fit.
32. International businesses lobby their respective governments to push for international
agreements to ensure that intellectual property rights are protected and that the law is enforced.
33. When intellectual property laws are lax, firms are at a greater risk of having their ideas
stolen by local entrepreneurs.
34. Liability laws are typically least extensive in highly developed nations.
35. When product safety laws are tougher in a firm’s home country than in a foreign country,
the ethical thing to do is to adhere to home-country standards.
36. The benefits, costs, and risks associated with doing business in a country are
independent of that country’s political, economic, and legal systems.
37. Other things being equal, a nation with democratic political institutions, is clearly more
attractive as a place in which to do business than a nation that lacks democratic institutions.
38. Which of the following systems is a part of the political economy?