60.
Since the late 1980s, there has been a spread of democracy. This is
because _____.
A.
a state’s ability to control access to uncensored information has
increased
B.
the socialist model failed to deliver economic progress to the vast bulk of
their populations
C.
in many countries the middle and working classes have become less
powerful
D.
in many countries state-ownership of firms has encouraged innovation
and entrepreneurship
Many totalitarian regimes failed to deliver economic progress to the vast
bulk of their populations. In looking for alternatives to the socialist model,
the populations of these countries could not have failed to notice that most
of the world’s strongest economies were governed by representative
democracies.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-02 Identify the macro-political and economic changes occuring worldwide
Topic: States in Transition
61.
In many countries entrepreneurs and other business leaders, eager to
protect their property rights and ensure the dispassionate enforcement of
contracts, had pushed for _____. This contributed to a wave of democratic
revolutions during the late 1980s and early 1990s.
A.
state ownership of productive resources
B.
C.
democratic reforms
D.
planned economies
In many countries the economic advances of the past quarter century have
led to the emergence of increasingly prosperous middle and working
classes who have pushed for democratic reforms. Entrepreneurs and other
business leaders, eager to protect their property rights and ensure the
dispassionate enforcement of contracts, are another force pressing for more
accountable and open government.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-02 Identify the macro-political and economic changes occuring worldwide
Topic: States in Transition
62.
Political scientist Samuel Huntington argues that modernization in non–
Western societies can result in a retreat toward the traditional. This is
exemplified by _____.
A.
the Islamic resurgence
B.
the popularization of modern gadgets
C.
the adoption of Western culture
D.
the higher levels of literacy and education
Huntington maintains that while many societies may be modernizing—they
are adopting the material paraphernalia of the modern world, from
automobiles to Coca-Cola and MTV—they are not becoming more Western.
On the contrary, Huntington theorizes that modernization in non-Western
societies can result in a retreat toward the traditional, such as the
resurgence of Islam in many traditionally Muslim societies.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-02 Identify the macro-political and economic changes occuring worldwide
Topic: States in Transition
63.
According to political scientist Samuel Huntington, the rise of Islamic
fundamentalism is a response to _____.
A.
the corruption prevalent in planned economies
B.
the restricted access to formal education
C.
the alienation produced by modernization
D.
the restrictions associated with totalitarian regimes
Huntington theorizes that modernization in non-Western societies can
result in a retreat toward the traditional, such as the resurgence of Islam in
many traditionally Muslim societies. The rise of Islamic fundamentalism is
portrayed as a response to the alienation produced by modernization.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-02 Identify the macro-political and economic changes occuring worldwide
Topic: States in Transition
64.
Which of the following statements is true about Samuel Huntington?
A.
Samuel Huntington argues that there is a universal civilization based on
widespread acceptance of Western democratic ideals.
B.
Samuel Huntington argues that the rise of Islamic fundamentalism is a
response to the alienation produced by modernization.
C.
Samuel Huntington argues that global terrorism is a product of the static
nature of traditional values and religious systems.
D.
Samuel Huntington argues that many societies, by adopting the material
paraphernalia of the modern world, are becoming more Western.
Huntington theorizes that modernization in non-Western societies can
result in a retreat toward the traditional, such as the resurgence of Islam in
many traditionally Muslim societies.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-02 Identify the macro-political and economic changes occuring worldwide
Topic: States in Transition
65.
Paralleling the spread of democracy, since the 1980s there has been the
transformation from:
A.
free-market economies to socialist economies.
B.
mixed economies to collectivist economies.
C.
open economies to closed economies.
D.
command economies to market-based economies.
Paralleling the spread of democracy since the 1980s has been the
transformation from centrally planned command economies to market-
based economies. More than 30 countries that were in the former Soviet
Union or the Eastern European Communist bloc have changed their
economic systems.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-02 Identify the macro-political and economic changes occuring worldwide
Topic: States in Transition
66.
Many states in Asia, Latin America, and Western Europe have shifted away
from a mixed economy to a market-based economy. Which of the following
measures is most likely to be promoted by such states?
A.
State-ownership of enterprises
B.
Fixing of prices by the government
C.
Deregulation of the economy
D.
Lowering competition
Many states in Asia, Latin America, and Western Europe have sold state-
owned businesses to private investors (privatization) and deregulated their
economies to promote greater competition.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-02 Identify the macro-political and economic changes occuring worldwide
Topic: States in Transition
67.
Which of the following is a step in the shift toward a market-based
economic system?
A.
Increasing trade barriers
B.
Increasing price controls
C.
Nationalization
D.
Creation of a legal system to safeguard property rights
The shift toward a market-based economic system often entails a number
of steps: deregulation, privatization, and creation of a legal system to
safeguard property rights.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Describe how trasition economies are moving toward market-based systems
Topic: The Nature of Economic Transformation
68.
_____ involves removing legal restrictions to the free play of markets, the
establishment of private enterprises, and the manner in which private
enterprises operate.
A.
Deregulation
B.
Trade certification
C.
A product law
D.
A liability law
Deregulation involves removing legal restrictions to the free play of markets,
the establishment of private enterprises, and the manner in which private
enterprises operate.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Describe how trasition economies are moving toward market-based systems
Topic: The Nature of Economic Transformation
69.
Which of the following is an example of deregulation?
A.
A country that implements a simplified income tax filing system
B.
A country that takes over a leading private bank to prevent it from filing
for bankruptcy
C.
A country that provides agricultural subsidies to farmers
D.
A country that encourages foreign direct investment
Deregulation involves removing legal restrictions to the free play of markets,
the establishment of private enterprises, and the manner in which private
enterprises operate.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-03 Describe how trasition economies are moving toward market-based systems
Topic: The Nature of Economic Transformation
70.
Which of the following is a characteristic of a command economy?
A.
Promotion of foreign direct investment
B.
Allowing prices to be set by the interplay between demand and supply
C.
Limited international trade
D.
Restricted state-ownership of means of production
The governments in most command economies exercised tight control over
prices and output. They also prohibited private enterprises from operating in
most sectors of the economy, severely restricted direct investment by
foreign enterprises, and limited international trade.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Describe how trasition economies are moving toward market-based systems
Topic: The Nature of Economic Transformation
71.
The finance minister of a country considers several large, state-owned iron
manufacturing units to be inefficient and a source of corruption. To
generate resources for public expenditure and promote economic growth,
the government decides to auction an entire iron manufacturing plant to sell
it to a strategic investor. This process exemplifies _____.
A.
nationalization
B.
industrialization
C.
liberalization
D.
privatization
Privatization transfers the ownership of state property into the hands of
private individuals, frequently by the sale of state assets through an
auction.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-03 Describe how trasition economies are moving toward market-based systems
Topic: Differences in Economic Development
72.
Studies of privatization in central Europe have shown that the process often
fails to deliver predicted benefits if the newly privatized firms:
A.
stop receiving subsidies from the government.
B.
are completely owned by private individuals.
C.
are sheltered from foreign competition.
D.
are allowed to restructure their operations.
For privatization to work, it must also be accompanied by a more general
deregulation and opening of the economy.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Describe how trasition economies are moving toward market-based systems
Topic: The Nature of Economic Transformation
73.
The sale of state assets through an auction is most likely to lead to _____.
A.
trade certification
B.
privatization
C.
nationalization
D.
market regulation
Privatization transfers the ownership of state property into the hands of
private individuals, frequently by the sale of state assets through an
auction.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Describe how trasition economies are moving toward market-based systems
Topic: The Nature of Economic Transformation
74.
For privatization to work, it must also be accompanied by:
A.
an increase in trade barriers and tariffs.
B.
an increase in government subsidies.
C.
stronger barriers to foreign competition.
D.
a general deregulation of the economy.
For privatization to work, it must also be accompanied by a more general
deregulation and opening of the economy.
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-03 Describe how trasition economies are moving toward market-based systems
Topic: The Nature of Economic Transformation
75.
Which of the following factors is NOT likely to make a country a more
attractive location for international business?
A.
Democratic regimes
B.
Planned economies
C.
Strong protection of property rights
D.
Market-based economic policies
Countries with democratic regimes, market-based economic policies, and
strong protection of property rights are more likely to attain high and
sustained economic growth rates, and are thus a more attractive location
for international business.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-04 Explain the implications for management practice of national differences in political economy.
Topic: Implications for Managers
76.
The benefits of doing business in a country are a function of all of the
following EXCEPT:
A.
the size of the market.
B.
its present wealth.
C.
its past growth.
D.
its future growth prospects.
In the most general sense, the long-run monetary benefits of doing
business in a country are a function of the size of the market, the present
wealth of consumers in that market, and the likely future wealth of
consumers.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-04 Explain the implications for management practice of national differences in political economy.
Topic: Implications for Managers
77.
Sony was a pioneer in the portable music market segment. Sony’s Walkman
was an innovative product which created a new category altogether and
made Sony a technological leader. This gave the company an edge over
other consumer electronics brands that introduced portable music players
for a very long time. In this example, Sony had the:
A.
vertical integration advantage.
B.
purchasing power parity advantage.
C.
free-rider advantage.
D.
first-mover advantage.
First-mover advantages are the advantages that accrue to early entrants
into a market.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-04 Explain the implications for management practice of national differences in political economy.
Topic: Implications for Managers
78.
Google launched Google Plus to gain a foothold in the social media market.
However, given that there are numerous social networking platforms and
Facebook is already a leader in social media, Google Plus found it
challenging to generate brand loyalty and establish itself in the market. This
was because of _____.
A.
incumbent disadvantage.
B.
disintermediation disadvantage.
C.
late-mover disadvantage.
D.
horizontal integration disadvantage.
Late-mover disadvantages are the handicaps that late entrants might
suffer.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-04 Explain the implications for management practice of national differences in political economy.
Topic: Implications for Managers
79.
In all of the following scenarios, the costs of doing business in a country
tend to be greater, EXCEPT where:
A.
political payoffs are required to gain market access.
B.
supporting infrastructure is lacking.
C.
local laws set strict standards with regard to environmental pollution.
D.
there is limits or caps on damage awards.
The costs of doing business in a country tend to be greater where political
payoffs are required to gain market access, where supporting infrastructure
is lacking or underdeveloped, and where adhering to local laws and
regulations is costly. It can also be more costly to do business in a country
like the United States, where the absence of a cap on damage awards has
meant spiraling liability insurance rates.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-04 Explain the implications for management practice of national differences in political economy.
Topic: Implications for Managers
80.
The likelihood that a trading partner will opportunistically break a contract
or expropriate property rights is called a(n) _____.
A.
economic risk
B.
legal risk
C.
cultural risk
D.
political risk
A legal risk can be defined as the likelihood that a trading partner will
opportunistically break a contract or expropriate property rights.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-04 Explain the implications for management practice of national differences in political economy.
Topic: Implications for Managers
Essay Questions