Topic: Legal Systems
38.
Product liability can be much lower if a product does not conform to
required safety standards.
FALSE
Product liability involves holding a firm and its officers responsible when a
product causes injury, death, or damage. Product liability can be much
greater if a product does not conform to required safety standards.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-03 Understand how the legal systems of countries differ.
Topic: Legal Systems
39.
The political systems of a country raise ethical issues that have implications
for the practice of international business.
TRUE
The political, economic, and legal systems of a country raise important
ethical issues that have implications for the practice of international
business. For example, what ethical implications are associated with doing
business in totalitarian countries where citizens are denied basic human
Difficulty: 1 Easy
Learning Objective: 02-04 Explain the implications for management practice of national differences in political economy.
Topic: Implications For Managers
40.
The political, economic, and legal environments of a country influence the
attractiveness of that country as a market or investment site.
TRUE
The political, economic, and legal environments of a country clearly
influence the attractiveness of that country as a market or investment site.
The benefits, costs, and risks associated with doing business in a country
are a function of that country’s political, economic, and legal systems.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-04 Explain the implications for management practice of national differences in political economy.
Topic: Implications For Managers
Multiple Choice Questions
41.
Interdependent political, economic, and legal systems of a country make up
its:
A.
administrative agenda.
B.
socioeconomic fabric.
C.
cultural environment.
D.
The term political economy is used to stress that the political, economic,
and legal systems of a country are interdependent; they interact and
influence each other, and in doing so they affect the level of economic well–
being.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Introduction
42.
A political system that prioritizes the needs of the society over individual
freedoms is called _____.
A.
totalitarianism
B.
collectivism
C.
capitalism
D.
egalitarianism
Collectivism refers to a political system that stresses the primacy of
collective goals over individual goals. When collectivism is emphasized, the
needs of society as a whole are generally viewed as being more important
than individual freedoms.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
43.
Modern socialism has been popularized largely through the work of _____.
A.
Adam Smith
B.
Karl Marx
C.
David Hume
D.
Thomas Hobbes
Modern socialists trace their intellectual roots to Karl Marx (1818-83),
although socialist thought clearly predates Marx (elements of it can be
traced to Plato). Marx argued that the few benefit at the expense of the
many in a capitalist society where individual freedoms are not restricted.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
44.
The ________ believed that socialism could be achieved only through violent
revolution and totalitarian dictatorship.
A.
existentialists
B.
social democrats
C.
communists
D.
anarchists
The communists believed that socialism could be achieved only through
violent revolution and totalitarian dictatorship, whereas the social
democrats committed themselves to achieving socialism by democratic
means, turning their backs on violent revolution and dictatorship.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
45.
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
In many countries, state-owned companies performed poorly. As a
consequence, a number of Western democracies voted many Social
Democratic parties out of office in the late 1970s and early 1980s. They
were succeeded by political parties, such as Britain’s Conservative Party
and Germany’s Christian Democratic Party, that were more committed to
free market economics. These parties sold state-owned enterprises to
private investors (a process referred to as privatization).
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
46.
Which of the following philosophies can be traced back to the ancient Greek
philosopher Aristotle?
A.
Socialism
B.
Individualism
C.
Collectivism
D.
Anarchism
Like collectivism, individualism can be traced to an ancient Greek
philosopher, in this case Plato’s disciple Aristotle (384-322 BC). In contrast
to Plato, Aristotle argued that individual diversity and private ownership are
desirable.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
47.
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
A tenet of individualism is that the welfare of society is best served by
letting people pursue their own economic self-interest, as opposed to some
collective body (such as government) dictating what is in society’s best
interest.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
48.
Which of the following statements about individualism is NOT true?
A.
Individualism promotes private entrepreneurship.
B.
Individualism promotes free market economics.
C.
Individualism creates an anti-business environment.
D.
Individualism advocates for a democratic political system.
In practical terms, individualism translates into an advocacy for democratic
political systems and market economics, which in general creates a more
favorable environment for international businesses to operate in.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
49.
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.
Democracy refers to a political system in which government is by the
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
50.
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.
Totalitarianism is a form of government in which one person or political
party exercises absolute control over all spheres of human life and prohibits
opposing political parties.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
51.
Peoples’ right to protest on issues of accountability in public expenditure
would be possible in a _____ political set-up.
A.
dictatorial
B.
democratic
C.
totalitarian
D.
fascist
In a representative democracy, elected representatives who fail to perform
this job adequately will be voted out of office at the next election. To
guarantee that elected representatives can be held accountable for their
actions by the electorate, an ideal representative democracy has a number
of safeguards that are typically enshrined in constitutional law.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
52.
_____ 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
Theocratic totalitarianism is found in states where political power is
monopolized by a party, group, or individual that governs according to
religious principles. The most common form of theocratic totalitarianism is
based on Islam and is exemplified by states such as Iran and Saudi Arabia.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
53.
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
Right-wing totalitarianism 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 common feature of many
right-wing dictatorships is an overt hostility to socialist or communist ideas.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Political Systems
54.
In a pure market economy:
A.
all productive activities are owned by the state.
B.
production is determined by the interaction of supply and demand.
C.
collectivist goals are given priority over individual goals.
D.
the prices at which goods are sold is determined by the government.
In the archetypal pure market economy, all productive activities are
privately owned, as opposed to being owned by the state. The goods and
services that a country produces are not planned by anyone.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-02 Recognize how the economic systems of countries differ.
Topic: Economic Systems
55.
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
In the archetypal pure market economy, all productive activities are
privately owned, as opposed to being owned by the state. Production is
determined by the interaction of supply and demand and signaled to
producers through the price system.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Recognize how the economic systems of countries differ.
Topic: Economic Systems
56.
Antitrust laws in the United States are designed to:
A.
restrict agricultural subsidies.
B.
increase trade barriers.
C.
outlaw monopolies.
D.
restrict privatization.
Given the dangers inherent in monopoly, the role of government in a market
economy is to encourage vigorous free and fair competition between private
producers. Governments do this by outlawing restrictive business practices
designed to monopolize a market (antitrust laws serve this function in the
United States).
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Recognize how the economic systems of countries differ.
Topic: Economic Systems
57.
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 economy
D.
laissez-faire
In a pure command 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.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Recognize how the economic systems of countries differ.
Topic: Economic Systems
58.
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
In a mixed 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.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Recognize how the economic systems of countries differ.
Topic: Economic Systems
59.
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
In mixed economies, governments also tend to take into state ownership
troubled firms whose continued operation is thought to be vital to national
interests.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Recognize how the economic systems of countries differ.
Topic: Economic Systems