53) Tatum Manufacturing recently opened a new facility in Hong Kong. The firm can most likely expect
the Hong Kong government to ________.
A) monitor market prices
B) control natural resources
C) ensure fair competition
D) provide innovation incentives
54) Presently, which of the following countries is best characterized as a pure example of a command
economy?
A) Russia
B) Libya
C) China
D) Vietnam
55) A firm with operations in Denmark can most likely expect all of the following EXCEPT ________.
A) high taxes
B) significant regulation
C) tough job-protection laws
D) minimal monetary policies
56) According to the concept of green economics, measuring a country’s economic performance should
also take into account ________.
A) market share
B) population size
C) ecological costs
D) cost-of-living increases
57) Which of the following calls for economic activity that meets present needs without hindering the
future needs of society?
A) privatization
B) state capitalism
C) economic freedom
D) sustainable development
58) Which of the following ideas calls for assessing a country’s performance based on factors such as
life expectancy, leisure time, and income equality?
A) microeconomics
B) happynomics
C) macroeconomics
D) green economics
59) During a time of reflation, the government is most likely to ________.
A) lower taxes
B) print money
C) reduce interest rates
D) support infrastructure
60) Which of the following governmental actions is LEAST likely to increase national debt?
A) macroeconomic stimulus plans
B) unemployment benefits
C) corporate bailouts
D) T-bond sales
61) In the aftermath of the recent worldwide credit crisis, there has been a significant reduction in the
level of government involvement in economic affairs.
62) When analyzing the key elements of a country’s economic environment, it is best to apply a systems
perspective.
63) Gross domestic product is the value of production that takes place within a nation’s border, without
regard to whether the production is done by domestic or foreign factors of production.
64) A car manufactured in the U.S. by Toyota would be included in the calculation of the GDP for the
United States.
65) The calculation of GNI per capita takes into account the differences in the cost of living from one
country to another.
66) Economic indicators such as GNI, and its expression in terms of per capita, growth rate, and PPP,
are not sufficient to develop a clear picture of the overall quality of life in a country.
67) The Human Development Index measures the average achievements in a country on three basic
dimensions of human development: mortality, knowledge, and standard of living.
68) Inflation occurs because aggregate demand is growing as fast as aggregate supply.
69) Inflation affects interest rates, exchange rates, the cost of living, general economic confidence, and
the stability of the current political system.
70) The so-called “misery index” is the sum of a country’s inflation and unemployment rates.
71) External debt results when the government spends more than it collects in revenues, whereas internal
debt results when a government borrows money from foreign lenders.
72) Uneven income distribution is largely a problem confined to poorer nations.
73) There is a strong relationship between skewed income distributions and the split between those who
live in urban settings versus those who live in rural areas.
74) The balance of trade records is a record of a country’s international transactions that take place
among companies, governments, or individuals.
75) In a country’s balance of payments, the current account and the capital account represent equal
values.
76) An economic system is the set of structures and processes that guides the allocation of resources and
shapes the conduct of business activities within a country.
77) The range of economic systems in the world today, when represented on a spectrum, has one end
anchored by the idea of capitalism, the other with that of socialism.
78) A market economy gives individuals the freedom to decide where to work doing what, how to spend
or save money, and whether to consume now or later.
79) A market economy is one in which resources are primarily owned and controlled by individuals and
companies.
80) In a 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 planned by the government.
81) The government considers itself a better judge of resource allocation than businesses or citizens in a
market economy.
82) In a mixed economy, all dimensions of economic activity, including pricing and production
decisions, are determined by a central government plan.
83) A mixed economy is a system where economic decisions are largely market driven and ownership is
largely private, but the government intervenes in many private economic decisions.
84) There is a positive correlation between economic freedom and economic growth.
85) The collapse of communism in the late 1980s and early 1990s led to a more widespread adoption of
the principles of capitalism.
86) In response to the global credit crisis, the United States government took actions that increased
economic freedom.
87) The BRICs are the strongest developed economies in the world.
88) Between 2000 and 2008, China’s economy grew at a faster rate than Japan’s economy.
89) The Happy Planet Index measures well-being and perceptions of living conditions by assessing areas
such as housing, incomes, security, and work-life balance.
90) In most cases, if the misery index of a country is high, then consumers and businesses are less likely
to spend and invest.
91) What is gross national income? How is it calculated? Illustrate your answer with a specific example.
92) What general characteristics of a country should managers consider when analyzing an economic
environment? What specific indicators help managers measure the economic development, performance,
and potential of a country?
93) What is inflation? How does inflation affect international business?
94) Describe the three ways economies can be categorized. Which one do you believe is best? Why?
95) What is meant by the idea of economic freedom? What factors are used in the Economic Freedom
Index? For managers, what role does the Economic Freedom Index play in analyzing the potential of a
country?
96) What is state capitalism? Why do you think state capitalism is becoming increasingly popular
around the world?
97) What is the difference between a developing country and a developed country? What significant
trends are occurring in each type of market that relate to international business decisions?
98) What issues complicate international economic analysis?
99) What is the difference between a command economy and state capitalism?
100) Why is economic freedom an important factor to consider when analyzing a country’s economic
development, performance, and potential?