66) ________ is the value of goods and services that can be purchased with one unit of a
country’s currency.
A) Potential output
B) Gross national product
C) Purchasing power
D) Gross domestic product
67) An investor wants to invest in a country that has a high gross national income (GNI). Which
of the following countries would most likely qualify as a prospect?
A) Nepal
B) India
C) Japan
D) Vietnam
68) Which of the following terms is used to refer to the exchange of goods and services for other
goods and services instead of money?
A) fiat money
B) letter of credit
C) barter
D) guanxi
69) The GDP per capita of a country is lower than that of France. If the GDP per capita of the
country is adjusted for PPP, the country’s revised GDP is higher than that of France. Which of
the following is most likely true about the country?
A) The cost of living in the country is higher than that of France.
B) The cost of living in the country is lower than that of France.
C) The cost of living in the country is approximately equal to that of France.
D) The cost of living in the country has increased over the past decade.
70) The GDP per capita of a country is higher than that of Thailand. If the GDP per capita of the
country is adjusted for PPP, the country’s revised GDP is lower than that of Thailand. Which of
the following is most likely true about the country?
A) There are fewer goods available for purchase in the country than in Thailand.
B) The cost to buy everyday goods in the country is approximately the same as in Thailand.
C) It costs less to buy everyday goods in the country than in Thailand.
D) It costs more to buy everyday goods in the country than in Thailand.
71) Which of the following measures the extent to which a government equitably provides its
people with a long and healthy life, an education, and a decent standard of living?
A) category development index
B) gross national product index
C) human development index
D) purchasing power index
72) A company is conducting a research on new markets by comparing countries in terms of
their human development index (HDI) scores. The company wishes to expand into a market
where individuals experience a very high level of total well-being. Which of the following
countries would the company most likely choose?
A) Russia
B) Mexico
C) China
D) Japan
73) Which of the following is true about economic development of a nation?
A) The purchasing power parity is a poor indicator of a people’s total well-being.
B) GDP is a larger figure and includes a nation’s income generated from exports, imports, and
international operations.
C) Illegal activities such as gambling and black market transactions are considered in GDP and
GNP.
D) Using gross product figures to compare production across countries accounts for different
cost of living in each country.
74) Which of the following statements is true of national production?
A) Marketers use GDP or GNP figures to determine whether a country’s population is wealthy
enough to purchase its products.
B) Per capita numbers provide a detailed picture of development of the entire country.
C) Gross product figures accurately indicate whether a nation’s economy is growing or shrinking.
D) Volunteer work and unpaid household work are considered in GDP and GNP.
75) Nations having the poorest infrastructures and lowest personal incomes are called ________.
A) developed countries
B) newly industrialized countries
C) emerging markets
D) developing countries
76) A country that has recently increased the portion of its national production and exports
derived from industrial operations is called a(n) ________.
A) newly industrialized country (NIC)
B) developing country
C) emerging market
D) developed country
77) ________ is the process by which a nation changes its fundamental economic organization
and creates new free-market institutions.
A) Central planning
B) Economic transition
C) Industrialization
D) Economic liberalism
78) Which of the following is a major obstacle to economic transition?
A) lack of government support
B) environmental degradation
C) privatization
D) black markets
79) Economic transition is the process of moving from ________.
A) developed to developing economies
B) centrally planned to free-market economies
C) developed to emerging economies
D) free-market to centrally planned economies
Scenario: Stephanie Wong
Stephanie Wong, a Chinese-American, owns a consultancy that advises clients on strategies for
business expansions into China. Wong is to lead a symposium for small and mid-sized exporters
who are planning on expanding their businesses in China. Therefore, she is preparing answers in
advance for questions that symposium participants would most likely ask.
80) The first question that Stephanie expects participants to ask is: “Which is more important for
the Chinese, contacts or contracts?” Which of the following is the most effective response
Stephanie could give for this question?
A) Contracts are critical because of their extreme importance in Chinese business.
B) Face-to-face communications and personal relationships take priority over written contracts.
C) Non-Chinese businesspeople should take time to agree on a legal contract before developing
personal relationships.
D) Business relationships are established only after successful legal dealings are concluded.
81) Stephanie also expects participants to ask: “Are the Chinese as formal and business-oriented
as Americans are?” Which of the following would most likely be Stephanie’s response?
A) The Chinese operate very much like Americans, for them business is more important than
pleasure.
B) The Chinese dislike guessing games; give them your sales pitch right away and let the
meeting develop.
C) Don’t overlook the importance of personal relationships; friendship comes before business.
D) The Chinese are very flexible and will easily adapt to your culture‘s way of doing business.
82) Another question that Stephanie anticipates concerns the acceptability of certain topics of
discussion like: “Should we avoid discussing our families and spouses?” Which of the following
represents the most effective response to this question?
A) Absolutely, family is kept completely separate from business in China.
B) Yes, because it is considered very rude by businesspeople to discuss family.
C) No, Chinese businesspeople may invite business partners to family functions.
D) It’s fine to discuss family, but never agree to go to a business partner’s house.
83) Sergei believes that it is important to know the origin of the economic system in each
country. He learns that the idea of central economic planning that was practiced in Russia, was
popularized in the nineteenth century by ________.
A) Peter Drucker
B) Frederick Taylor
C) Karl Marx
D) Abraham Maslow
84) Sergei recognizes that one of the major reasons why central planning declined was its failure
to ________.
A) create economic value
B) take care of national security
C) control rampant economic growth
D) satisfy government requirements
85) Sergei learns that an important aspect of market-based economies is the private ownership of
companies. As Russia goes through the privatization process, it aims to ________.
A) increase tax revenues
B) improve military defense
C) increase social welfare
D) increase economic efficiency
86) Sergei finds out that prices in a market economy are determined by the interplay of
________.
A) government and labor
B) labor and management
C) demand and prices
D) supply and demand
87) Russia is in transition from ________.
A) a capitalist economy to a mixed economy
B) a centrally planned economy to a free-market economy
C) a market economy to a centrally planned economy
D) a mixed economy to a centrally planned economy
88) Which of the following challenges is Cleanshot most likely to face in Russia?
A) organized crime
B) too many competitors
C) low demand for the products of non-Russian companies
D) fading underground economy
89) Given the lack of available hard currency, Russian businesses often use goods and services
as payment for other products they buy from abroad. This practice is referred to as ________.
A) letter of credit
B) fiat money
C) barter
D) guanxi
90) Describe the three main types of economic systems.
91) Discuss the factors that contributed to the collapse of centrally planned economies.
92) Discuss the challenges China faces as it continues its experiment on “socialism with Chinese
characteristics.”
93) Why are many mixed economies converting to market-based systems? How does the role of
government change when a mixed economy transitions to a market economy?
94) How does economic development in countries affect international business?
95) Differentiate between GDP and GNP. Briefly discuss the drawbacks of using GDP and GNP
as indicators of economic development.
96) How are countries classified? Explain with examples.
97) Does greater economic freedom guarantee a higher standard of living? Provide examples of
two specific countries to support your answer.
98) What is economic transition? Describe the obstacles that countries face during economic
transition.
99) What is privatization? What role does it play in economic transition?
100) Compare and contrast the business environments in China and Russia.