International Business: The Challenges of Globalization, 7e (Wild)
Chapter 3 Politics, Law, and Business Ethics
1) In a totalitarian system, rulers tightly control people’s lives and do not tolerate opposing
viewpoints.
2) Anarchism is the belief that every aspect of people’s lives must be controlled in order for a
nation’s political system to be effective.
3) Pluralism is the belief that only individuals and private groups should control a nation’s
political activities.
4) Pluralistic political systems include authoritarian regimes such as communism and fascism.
5) When a country’s religious leaders are also its political leaders, its political system is called a
theocracy.
6) Pluralism is a political system in which political leaders rely on military and bureaucratic
power.
7) Secular totalitarianism is a political system in which government leaders are elected directly
by the wide participation of the people or their representatives.
8) The most peaceful nations today are those that were once controlled and stabilized by colonial
powers.
9) In a coalition government, the strongest political parties share power by dividing government
responsibilities among themselves.
10) The bureaucracy is the part of government that implements the rules and laws passed by
elected representatives.
11) Economic socialism won the battle over communist totalitarianism and capitalism.
12) A solid grasp of local values, customs, and traditions can help reduce a company’s exposure
to political risk.
13) Expropriation involves the forced transfer of assets from a company to the government
without compensation.
14) Among asset seizure approaches, expropriation is more common than confiscation and
nationalization.
15) Lobbying is the policy of hiring people to represent a company’s views on political matters.
16) The Foreign Corrupt Practices Act forbids U.S. companies from bribing government officials
or political candidates in other nations.
17) Totalitarian governments tend to favor private ownership of economic resources.
18) Civil law can be more adversarial than common law because civil law relies more on the
need to interpret laws according to tradition, precedent, and usage.
19) Islamic law is the most widely practiced theocratic legal system today.
20) Trademark protection typically lasts indefinitely, provided the word or symbol continues to
be distinctive.
21) Product liability laws hold only manufacturers responsible for damage, injury, or death
caused by defective products.
22) Developing nations have the toughest product liability laws, while developed countries have
more relaxed laws.
23) A value-added tax is a tax levied on each party that adds value to a product throughout its
production and distribution.
24) The cultural relativist view says that a company’s sole responsibility is to maximize profits
for its owners while operating within the law.
25) Corporate social responsibility is the practice of going beyond legal obligations to actively
balance commitments to investors, customers, other companies, and communities.
26) Which of the following political ideologies states that every aspect of people’s lives must be
controlled for a nation’s political system to be effective?
A) totalitarianism
B) capitalism
C) anarchism
D) pluralism
27) Under a(n) ________ political system, the state reigns supreme over institutions such as
family, religion, business, and labor.
A) pluralistic
B) totalitarian
C) democratic
D) anarchist
28) Totalitarian political systems include authoritarian regimes such as ________.
A) democracy and theocracy
B) anarchism and pluralism
C) communism and fascism
D) capitalism and secularism
29) ________ is the belief that only individuals and private groups should control a nation’s
political activities.
A) Pluralism
B) Anarchism
C) Theocracy
D) Totalitarianism
30) ________ is the belief that both private and public groups play important roles in a nation’s
political activities.
A) Totalitarianism
B) Capitalism
C) Anarchism
D) Pluralism
31) ________ political systems include democracies, constitutional monarchies, and some
aristocracies.
A) Totalitarian
B) Anarchist
C) Fascist
D) Pluralistic
32) Konesia is a country whose political leaders do not tolerate opposing viewpoints and often
suppress or punish dissidents. The lives of Konesians are tightly controlled by its rulers. Which
of the following political systems prevails in the country?
A) totalitarianism
B) democracy
C) anarchism
D) pluralism
33) Which of the following is a characteristic of totalitarian governments?
A) Political dissidents can oppose the government with no repercussions.
B) Citizens are guaranteed civil, property, and minority rights.
C) The means of production are owned by the people who use them.
D) Leaders rule without the explicit approval of the people.
34) A ________ is a political system in which a country’s religious leaders serve as its political
leaders.
A) democracy
B) theocracy
C) plutocracy
D) septocracy
35) Renzi belongs to a country in which religion governs all aspects of his life, whether personal
or public. He has to abide by a strict, rigid, code that dictates everything from the clothes he
wears to the food he eats. Breaking away from these traditions is not an option since religion
plays an important role in the functioning of the nation. What political system prevails in his
country?
A) communist totalitarianism
B) left-wing totalitarianism
C) right-wing totalitarianism
D) theocratic totalitarianism
36) ________ is a political system in which political leaders rely on military and bureaucratic
power to support their rule.
A) Secular totalitarianism
B) Secular anarchism
C) Theocratic totalitarianism
D) Theocratic pluralism
37) Which of the following terms refers to an economic system in which the government owns
and controls all types of economic activity?
A) socialism
B) sovereign nationalism
C) political bureaucracy
D) pluralism
38) Robert believes that social and economic equality can be obtained only by establishing an
economic system in which the government owns and controls all types of economic activity.
However, he does not think of himself as a communist, but as a socialist. Which of the following
statements about Robert is true?
A) Robert does not believe that a violent revolution is needed to seize control over resources.
B) Robert does not think that political dissidents should go unpunished.
C) Robert believes that the pricing of goods should be left to the discretion of laborers.
D) Robert believes that the means of production should be owned by the people who use them.
39) Both Pat and Terry believe that social and economic equality can be obtained only by
establishing an economic system in which the government owns and controls all types of
economic activity. Which of the following statements proves that Pat is a communist and Terry
is a socialist?
A) Unlike Terry, Pat believes that the government should decide the prices at which goods are
sold.
B) Unlike Pat, Terry does not believe in the elimination of political opponents.
C) Unlike Terry, Pat believes that the means of production should be owned only by the public.
D) Unlike Pat, Terry believes that a violent revolution is necessary to seize control over
resources.
40) What do communists and socialists have in common?
A) Both believe in the elimination of political opponents.
B) Both believe that the government should control all types of economic activity.
C) Both believe that the pricing of goods should be the responsibility of individuals.
D) Both believe that a violent revolution is necessary to seize control over resources.
41) Under ________ the government endorses private ownership of property and a market-based
economy but grants little or no political freedom.
A) left-wing totalitarianism
B) theocratic totalitarianism
C) secular totalitarianism
D) right-wing totalitarianism
42) Which of the following terms is also used to refer to communism?
A) tribal totalitarianism
B) right-wing totalitarianism
C) left-wing totalitarianism
D) civil totalitarianism
43) Which of the following is an advantage of conducting business in totalitarian nations?
A) International companies are less likely to face local political opposition to their activities.
B) Government deals are always straightforward and transparent.
C) Laws regarding the resolution of contractual disputes are clearly defined.
D) International companies run no risk of their public image being tarnished.
44) Which of the following is a disadvantage of conducting business in totalitarian nations?
A) Laws regarding the resolution of contractual disputes are rigid and inflexible.
B) Companies have to contend with the interference of local political opposition.
C) A refusal to pay a bribe can result in the forfeiture of investments in the country.
D) The government has little power over the economic activities of the nation.
45) A ________ is a political system in which government leaders are elected directly by the
wide participation of the people or by their representatives.
A) democracy
B) theocracy
C) plutocracy
D) autocracy
46) Which of the following statements about representative democracies is true?
A) All citizens participate freely and actively in political processes.
B) Leaders of representative democracies can stay in power indefinitely.
C) Citizens elect individuals from political groups to act on their behalf.
D) Representative democracies across the world share identical features.
47) In a ________ government, the strongest political parties share power by dividing
government responsibilities among themselves.
A) coalition
B) bilateral
C) totalitarian
D) theocratic
48) Democracies try to preserve peaceful coexistence among groups of people with diverse
cultural, ethnic, and racial backgrounds. These rights are known as ________ rights.
A) indirect
B) central
C) subcapital
D) minority
49) The segment of the economic environment comprising independently owned firms that seek
to earn profits is called the ________.
A) political sector
B) private sector
C) democratic sector
D) public sector
50) Which of the following philosophies asserts that ownership of the means of production
belongs in the hands of individuals and private businesses?
A) capitalism
B) communism
C) tribalism
D) socialism
51) Which of the following terms refers to the forced transfer of assets from a company to the
government without compensation?
A) expropriation
B) nationalism
C) nationalization
D) confiscation
52) ________ is the forced transfer of assets from a company to the government with
compensation.
A) Expropriation
B) Nationalization
C) Confiscation
D) Localization
53) ________ refers to the takeover of an entire industry by the government.
A) Decentralization
B) Globalization
C) Nationalization
D) Automatization
54) Which of the following is a disadvantage of local requirement laws to foreign companies?
A) They do not foster local business activity and increase regional and national unemployment.
B) They make it necessary for the government to resort to expropriation and confiscation.
C) The companies are forced to bring in raw material and workers from their own countries.
D) Companies required to hire local personnel might be forced to take on inadequately trained
workers.
55) The U.S. legal system is largely based on ________.
A) common law
B) social law
C) civil law
D) theocratic law
56) Under ________ law, the justice system decides cases by interpreting the law on the basis of
tradition, precedent, and usage.
A) civil
B) international
C) common
D) theocratic
57) ________ is a legal system which is based on a detailed set of written rules and statutes that
constitute a legal code.
A) International law
B) Civil law
C) Tribal law
D) Common law
58) A legal tradition based on religious teachings is called ________ law.
A) democratic
B) common
C) civil
D) theocratic
59) A ________ is a right granted to the inventor of a product or process that excludes others
from making, using, or selling the invention.
A) patent
B) trademark
C) watertight
D) copyright
60) ________ are words or symbols that distinguish a product and its manufacturer from
competitors.
A) Patents
B) Trademarks
C) Watermarks
D) Copyrights
61) Shimmer and Sparkle is an American jewellery store which discovers that several shops in
developing countries are selling counterfeited necklaces under their name and label. Which of
the following problems are they facing?
A) patent expiration
B) trademark infringement
C) copyright expiration
D) monopolization
62) Which of the following is an example of a trademark infringement?
A) manufacturers who sell different versions of their own products in different countries
B) manufacturers who sell counterfeit products under the names and logos of more famous
brands
C) a company which exports factory rejects to developing countries
D) a company which sells products at half the price of their competitors
63) Which of the following functions does a copyright perform?
A) It protects the trade secrets of an organization, including its business plans.
B) It prevents a company from monopolizing an invention.
C) It distinguishes the product and manufacturers from competitors through distinct words and
symbols.
D) It give creators of original work the freedom to publish or dispose of them as they choose.
64) Which of the following do governments impose upon people to help pay for the
consequences of using a particular product?
A) income taxes
B) consumption taxes
C) property taxes
D) value-added taxes
65) Product liability laws are those which ________.
A) provide consumers with a wide variety of products at fair prices
B) add value to a product throughout its production and distribution
C) protect people from defective products
D) define the taxation on locally manufactured products
66) Laws designed to prevent companies from fixing prices, sharing markets, and gaining unfair
monopoly advantages are called ________.
A) antitrust laws
B) theocratic laws
C) anarchist laws
D) bilateral laws
67) ________ is the layer of corporate social responsibility whereby a corporation donates
money and, perhaps, employee time toward a specific social cause.
A) Risk management
B) Strategic CSR
C) Socialist CSR
D) Traditional philanthropy