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c3 Key
1. The purchasing power parity for different countries is adjusted (up or down) depending upon whether a
country's cost of living is lower or higher than the cost of living in the United States.
2. Although countries such as China and India are currently relatively poor, their economies are already large in
absolute terms and growing more rapidly than those of many advanced nations.
3. In Amartya Sen's view, development is solely an economic process, and not a political process.
4. The gross national income (GNI) per capita comes much closer to Amartya Sen's conception of how
development should be measured than narrow economic measures such as Human Development Index (HDI).
5. Economists who argue that innovation and entrepreneurial activity are the engines of long-run economic
growth, define innovation broadly to include not just new products but also new processes, new organizations,
new management practices, and new strategies.
6. If a country's economy is to sustain long-run economic growth, the business environment must be conducive
to the consistent production of product and process innovations and to entrepreneurial activity.
7. Entrepreneurial individuals have fewer economic incentives to develop valuable new innovations in market
economies than in planned economies.
8. Strong legal protection of property rights is a requirement for a business environment to be conducive to
innovation, entrepreneurial activity, and hence economic growth.
9. The Peruvian development economist Hernando de Soto has argued that much of the developing world will
fail to reap the benefits of capitalism until they relax the property rights offered by their legal systems.
10. Five of the fastest growing economies of the past 30 years—China, South Korea, Taiwan, Singapore, and
Hong Kong—had one thing in common at the start of their economic growth: democratic governments.
11. Totalitarian states, by limiting human freedom, are highly conducive to progress in terms of innovation,
entrepreneurship, and economic growth.
12. A strong belief that economic progress leads to adoption of a totalitarian regime underlies the fairly
permissive attitude that many Western governments have adopted toward human rights violations in China.
13. According to the influential economist Jeffrey Sachs, tropical regions have a more extensive division of
labor than temperate regions.
14. During the late 1980s and early 1990s, totalitarian governments collapsed and were replaced by
democratically elected governments.
15. According to Freedom House, all democracies are free countries in terms of political and civil liberties.
16. New information and communication technologies have increased a state's ability to control access to
uncensored information.
17. Many totalitarian regimes failed to deliver economic progress to the vast bulk of their populations.
18. The late Influential political scientist Samuel Huntington predicted that the universalization of Western
liberal democracy will be the final form of human government.
19. Author Francis Fukuyama envisioned a world split into different civilizations, each of which has its own
value systems and ideology.
20. In Samuel Huntington's thesis, global terrorism is a product of the tension between civilizations and the
clash of value systems and ideology.
21. In general, command and mixed economies failed to deliver the kind of sustained economic performance
that was achieved by countries adopting market-based systems.
22. Economic freedom does not necessarily equate with political freedom.
23. The shift toward deregulation has been easier for former command economies than for mixed economies.
24. In China, state-owned companies still dominate the banking, energy, telecom, health care, and technology
sectors.
25. If newly privatized firms are protected from foreign competition by barriers to international trade and
foreign direct investment, they continue to act like state monopolies.
26. Without a legal system that protects property rights, and without the machinery to enforce that system, the
incentive to engage in economic activity can be reduced substantially by private and public entities.
27. In most eastern European nations, the title to urban and agricultural property is often uncertain because of
incomplete and inaccurate records, multiple pledges on the same property, and unsettled claims resulting from
demands for restitution from owners in the pre-communist era.
28. Although free markets and democracy can still be found around the world, the tide has been running in
favor of command economies and totalitarian dictatorships.
29. By identifying and investing early in a potential future economic star, international firms build brand loyalty
and gain experience in that country's business practices.
30. A country's economic system and property rights regime do not influence the attractiveness of the country
as a market or investment site.
31. In both China and India, the shift toward a command-based economic system has produced large gains
despite weak property rights and endemic corruption.
32. It is more costly to do business in relatively primitive or undeveloped economies because of the lack of
infrastructure and supporting businesses.
33. Social unrest and disorder are less likely to be found in countries that contain more than one ethnic
nationality.
34. In the context of political economy, the past three decades have seen a general move toward:
35. One common measure of economic development is a country's:
36. Which of the following measures the total annual income received by residents of a country and is regarded
as a yardstick for the economic activity of a country?
37. One can adjust GNI per capita by purchasing power to account for differences in the:
39. In 2012, if the PPP per capita of China was $9,040 and the PPP per capita of the United States was $52,340,
this means that the:
40. As a result of which of the following, large amounts of economic activity in India are unrecorded and the
official GDP figures of the country fail to tell the entire story of the economy?
41. Black economy is most likely to be prevalent when:
42. Which of the following is based on three measures: life expectancy at birth, educational attainment, and
average incomes based on PPP estimates?
43. The Human Development Index comes close to Amartya Sen's conception of how development should be
measured, although which of the following, suggested by Sen in his thesis, is not included in the index?
44. Which of the following is an indicator of low human development in a country?
45. Which of the following is broadly defined as the development of new products, processes, organizations,
management practices, and strategies?
46. Which of the following best exemplifies an entrepreneur?
47. Which of the following statements is true about innovations and entrepreneurship?
48. Which of the following creates an unfavorable environment for innovations and entrepreneurship?
49. Which of the following creates an environment that is conducive to product and process innovations and to
entrepreneurial activity?
50. Due to strong legal protection of property rights, businesses and individuals will:
51. People in the West tend to associate which of the following with a free market system, strong property
rights protection, and economic progress?
