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Chapter 02 National Differences in Political Economy

True / False Questions 1. (p. 44) A system that stresses the primacy of collective goals over individual goals is called collectivism. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

2. (p. 43-44) Political systems that emphasize collectivism tend to be totalitarian, while political systems that place a high value on individualism tend to be democratic. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

3. (p. 44) The Greek philosopher Plato advocated individualism. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

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4. (p. 44) Communists believed that socialism could be achieved by democratic means, turning their backs on violent revolution and dictatorship. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

5. (p. 44) Modern socialists trace their intellectual roots to Karl Marx. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

6. (p. 44) In the early 20th century, the socialist ideology split into two broad camps, communists and capitalists. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

7. (p. 44) Social democrats believed that socialism could be achieved only through violent revolution and totalitarian dictatorship. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

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8. (p. 45) Individualism refers to a philosophy that an individual should have freedom in his/her economic and political pursuits. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

9. (p. 45-46) Individualism underlies the ideas expressed in the Declaration of Independence. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

10. (p. 46) In practical terms, collectivism translates into an advocacy for democratic political systems and free market economics. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

11. (p. 46) Democracy refers to a political system in which government is by the people, exercised either directly or through elected representatives. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

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12. (p. 46-47) A form of government in which one person or political party exercises absolute control over all spheres of human life, and opposing political parties are prohibited, is referred to as totalitarianism. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

13. (p. 47) The most common form of theocratic totalitarianism is based on Islam and is exemplified by states such as Iran and Saudi Arabia. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

14. (p. 47-48) The four major forms of totalitarianism are: communist, theocratic, tribal, and right-wing. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

15. (p. 48) Tribal totalitarianism is found in states where political power is monopolized by a party, group, or individual that governs according to religious principles. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

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16. (p. 48) Right-wing totalitarianism generally permits some individual economic freedom but restricts individual political freedom, frequently on the grounds that it would lead to the rise of communism. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

17. (p. 48) One common feature of most right-wing dictatorships is an affinity for socialist or communist ideas. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

18. (p. 49) In a market economy, all productive activities are privately owned, as opposed to being owned by the state. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-2 Topic: Economic Systems

19. (p. 49) In a pure 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. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-2 Topic: Economic Systems

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20. (p. 49) In a market economy, state-owned enterprises have little incentive to control costs and be efficient. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-2 Topic: Economic Systems

21. (p. 50) The legal system of a country is influenced by its prevailing political system as well as historical tradition. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

22. (p. 50) Collectivist-inclined totalitarian states tend to enact laws that encourage private enterprise. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

23. (p. 50) Contract law, civil law, and theocratic law are the three main types of legal systems in use around the world. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

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24. (p. 51) A civil law system is one in which the law is based on religious teachings. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

25. (p. 51) Although Islamic law is primarily concerned with moral behavior, it has been extended to cover certain commercial activities. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

26. (p. 52) Property rights refer to the bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

27. (p. 52) Because common law tends to be relatively ill specified, contracts drafted under a common law framework tend to be very detailed with all contingencies spelled out. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

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28. (p. 52) Property refers to a resource over which an individual or business holds a legal title. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

29. (p. 54) The Foreign Corrupt Practices Act makes it illegal to bribe a foreign government official in order to obtain or maintain business over which that foreign official has authority. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

30. (p. 54) Economic evidence suggests that high levels of corruption significantly increase foreign direct investment, level of international trade, and economic growth rate in a country. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

31. (p. 56) A copyright grants the inventor of a new product or process exclusive rights to the manufacture, use, or sale of that invention. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

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32. (p. 56) Designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products are patents. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

33. (p. 57) Product liability involves holding a firm and its officers responsible when a product causes injury, death, or damage. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

34. (p. 58) GNI stands for gross national income. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-4 Topic: The Determinants of Economic Development

35. (p. 62) The GNI is used to measure the quality of human life in different nations. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-4 Topic: The Determinants of Economic Development

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36. (p. 62) The Human Development Index is based on three measures: per capita income, life expectancy, and poverty rate. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

37. (p. 69) In "partly free" countries, the political process is tightly controlled and basic freedoms are denied. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-5 Topic: States in Transition

38. (p. 75) Deregulation involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate. TRUE

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-6 Topic: The Nature of Economic Transformation

39. (p. 77) The United States, Japan, and Australia are currently the three largest national economies in the world. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-7 Topic: Implications of Changing Political Economy

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40. (p. 80) A political risk can be defined as the likelihood that economic mismanagement will cause drastic changes in a country's business environment that affect the profit and other goals of a particular business enterprise. FALSE

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-7 Topic: Implications of Changing Political Economy

Multiple Choice Questions 41. (p. 43) Collectively, we refer to political, economic, and legal systems as constituting the _____ economy of a country. A. domestic B. civic C. administrative D. political

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

42. (p. 43) Political systems can be assessed according to: A. the degree to which they emphasize individualism opposed to totalitarian and the degree to which they are individualistic versus democratic. B. the degree to which they are market orientated opposed to production orientated and the degree to which they are democratic versus individualistic. C. the degree to which they emphasize social democracy opposed to communism and the degree to which they emphasize collectivism opposed to individualism. D. the degree to which they emphasize collectivism opposed to individualism and the degree to which they are democratic.

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

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43. (p. 44) When _____ is practiced, the needs of society as a whole are generally viewed as being more important than individual freedoms. A. totalitarianism B. collectivism C. individualism D. capitalism

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

44. (p. 44) Under _____, the idea is to manage a state-owned enterprise to benefit society as a whole, rather than individual capitalists. A. individualism B. totalitarianism C. collectivism D. absolutism

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

45. (p. 44) The group that believed socialism could be achieved only through violent revolution and totalitarian dictatorship was referred to as: A. communists. B. fascists. C. political democrats. D. social democrats.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

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46. (p. 44) Followers who commit themselves to achieving socialism through democratic reforms are: A. communists. B. social democrats. C. individualists. D. political democrats.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

47. (p. 44) In the 1970s, which of the following countries was NOT communist? A. The Soviet Union B. USA C. Hungary D. China

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

48. (p. 45) The Labor Party that won control of the government in Great Britain in 1997 is considered a(n): A. communist party. B. representative democracy. C. capitalist party. D. social democracy.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

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49. (p. 45) Which of the following can be traced to an ancient Greek philosopher, Aristotle? A. Collectivism B. Individualism C. Socialism D. Totalitarianism

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

50. (p. 45) _____ stresses that the interests of the individual should take precedence over the interests of the state. A. Totalitarianism B. Socialism C. Individualism D. Collectivism

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

51. (p. 45) Which of the following individuals argued that private property is more highly productive than communal property and will thus stimulate progress? A. Aristotle B. Socrates C. Plato D. Marx

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

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52. (p. 46) Which of the following is NOT a central tenet of individualism? A. Guaranteeing individual freedoms. B. Establishing laws that promote society's best interests. C. Guaranteeing self-expression. D. Allowing people to pursue their own economic self-interest.

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

53. (p. 46) The pro-business and pro-free trade values of _____ create a favorable environment within which international business can thrive. A. collectivism B. socialism C. individualism D. communism

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

54. (p. 46) Which of the following is the political system in which government is by the people, exercised either directly or through elected representatives? A. Despotism B. Democracy C. Totalitarianism D. Collectivism

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

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55. (p. 46-47) _____ is a form of government in which one person or political party exercises absolute control over all spheres of human life, and opposing political parties are prohibited. A. Capitalism B. Totalitarianism C. Democracy D. Collectivism

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

56. (p. 47) A political system in which citizens periodically elect individuals to represent them is referred to as a: A. pure democracy. B. totalitarian democracy. C. representative democracy. D. socialist democracy.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

57. (p. 47) To guarantee that elected representatives can be held accountable for their actions by the electorate, an ideal representative democracy has a number of safeguards. Which of the following is NOT an example of a safeguard in an ideal representative democracy? A. A fair court system that is independent from the political system. B. Universal adult suffrage. C. An individual's right to freedom of expression, opinion, and organization. D. Unlimited terms for elected representatives.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

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58. (p. 47) In a totalitarian country: A. free and fair elections are inhibited. B. media has full liberty. C. an individual has basic civil rights. D. an individual has a right to freedom of expression and organization.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

59. (p. 47) _____ is a form of totalitarianism that advocates achieving socialism through totalitarian dictatorship. A. Tribal totalitarianism B. Democratic totalitarianism C. Communist totalitarianism D. Collective totalitarianism

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

60. (p. 47-48) All of the following are forms of totalitarianism EXCEPT: A. right-wing. B. democratic. C. theocratic. D. tribal.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

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61. (p. 48) Which of the following countries would most likely adhere to tribal totalitarianism? A. Iran B. China C. Canada D. Uganda

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

62. (p. 48) _____ totalitarianism generally permits individual economic freedom, but restricts individual political freedom on the grounds that it would lead to a rise of communism. A. Theocratic B. Right-wing C. Capitalist D. Tribal

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

63. (p. 48) The fascist regimes that ruled Germany and Italy in the 1930s and 1940s were: A. right-wing totalitarian. B. left-wing totalitarian. C. communist. D. democratic.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-1 Topic: Political Systems

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64. (p. 48) In which countries are we likely to find free market economies? A. Where collective goals are given preeminence. B. Where individual goals are given primacy over collective goals. C. Where the state may have taken control over many enterprises. D. Where the state decides the demand and supply of produce.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-2 Topic: Economic Systems

65. (p. 49) In what kind of economy is production determined by the interaction of supply and demand and signaled to producers through the price system? A. Mixed economy B. Command economy C. Market economy D. Trade economy

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-2 Topic: Economic Systems

66. (p. 49) Which of the following is an advantage of private ownership? A. It helps pass on cost increases to consumers in the form of higher prices. B. It helps restrict output and lets prices rise, thus allowing taking a greater profit margin on each unit it sells. C. It has no competitors and hence does not need to search for ways to lower production costs. D. It ensures that entrepreneurs have a right to the profits generated by their own efforts.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-2 Topic: Economic Systems

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67. (p. 50) In a _____ economy, certain sectors of the economy are left to private ownership and free market mechanisms, while in other sectors there is significant state ownership and government planning. A. command B. combined C. mixed D. political

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-2 Topic: Economic Systems

68. (p. 50) What kind of economies were once very common throughout much of the world, although they are becoming less so? A. Mixed B. Command C. Democratic D. Market

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-2 Topic: Economic Systems

69. (p. 50) The _____ of a country defines the legal framework within which firms do business. A. economic system B. government C. market economy D. command economy

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

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70. (p. 50) The _____ of a country refers to the rules that regulate behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained. A. political system B. administrative system C. economic system D. legal system

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

71. (p. 51) Common law is based on all of the following EXCEPT: A. religion. B. tradition. C. precedent. D. custom.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

72. (p. 51) A _____ law system is based on a very detailed set of laws organized into codes. A. civil B. theocratic C. common D. traditional

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

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73. (p. 51) Judges in a(n) _____ law system have the power to interpret the law. A. Islamic B. civil C. theocratic D. common

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

74. (p. 51) A law system that is based primarily on religious teachings refers to a: A. civil law system. B. theocratic law system. C. common law system. D. traditional law system.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

75. (p. 51) The most widely practiced theocratic legal system in the modern world is: A. American law. B. Islamic law. C. Jewish law. D. Hindu law.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

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76. (p. 52) The parties to an agreement normally resort to _____ when one party feels the other has violated either the letter or the spirit of the agreement. A. property law B. arbitration C. private action D. contract law

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

77. (p. 52) The body of law that governs contract enforcement is called: A. property law. B. capital law. C. civil law. D. contract law.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

78. (p. 52) The _____ establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers. A. United Nations Convention on Contracts for the International Sale of Goods B. Foreign Practices Act C. Convention on Combating Bribery of Foreign Public Officials in International Business Transactions D. International Court of Arbitration

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

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79. (p. 52) When firms do not wish to accept the rules of the Convention on Contracts for the International Sale of Goods, they usually rely on _____ to settle contract disputes. A. UN involvement B. arbitration C. local codes D. U.S. law

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

80. (p. 52) The bundle of legal rights over the use to which a resource is put and over the use made of any income that may be derived form that resource are called _____ rights. A. statutory B. asset C. taxable D. property

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

81. (p. 53) The theft, piracy, or blackmail by private individuals or groups violating property rights refers to: A. extortion. B. individual action. C. public action. D. private action.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

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82. (p. 53) After the collapse of communism in Russia, successful business owners often had to pay "protection money" to the Mafia or face violent retribution. This is an example of: A. rights corruption. B. public action. C. private action. D. property corruption.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

83. (p. 53) When public officials such as politicians and government bureaucrats extort income or resources from property holders, this can be described as a: A. patents violation. B. public action. C. warrants action. D. private action.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

84. (p. 53) According to Transparency International, which country is the most corrupt? A. New Zealand B. Finland C. Somalia D. India

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

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85. (p. 54) Economic evidence suggests that high levels of _____ significantly reduce the foreign direct investment, level of international trade, and economic growth rate in a country. A. policing B. corruption C. transparency D. capitalism

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

86. (p. 54) In the United States, the Foreign Corrupt Practices Act was passed during the _____ following revelations that U.S. companies had bribed government officials in foreign countries in an attempt to win lucrative contracts. A. 1990s B. 1980s C. 1970s D. 1960s

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

87. (p. 54) Which of the following does the U.S. law and OECD convention allow as an exception? A. To bribe a foreign government official. B. To obtain or maintain business over which that foreign official has authority. C. To allow grease payments. D. To keep no records that would reveal whether a violation of the act has occurred.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

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88. (p. 56) Suppose 3-M Corporation develops a new type of adhesive tape. 3-M can protect its invention for a defined period to the manufacture, use, or sale of that invention through what kind of protection? A. Warrant B. Patent C. Copyright D. Trademark

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

89. (p. 56) A composer is able to protect an original musical score from being copied and sold by someone else through _____ protection. A. patent B. warrant C. trademark D. copyright

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

90. (p. 56) As a result of _____ protection, the Nike "swoosh" logo is protected from being used by any other shoe manufacturer. A. trademark B. copyright C. patent D. warrant

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

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91. (p. 56) Patents, copyrights, and trademarks are examples of _____ property laws. A. intellectual B. administrative C. official D. central

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

92. (p. 56) According to Business Software Alliance, which region had the highest piracy rates in 2006? A. Western Europe B. North America C. Eastern Europe D. South America

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

93. (p. 57) _____ set certain safety standards to which a product must adhere. A. Product violation laws B. Product liability laws C. Product safety laws D. Contract liability laws

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

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94. (p. 57) Which country has the most extensive civil and criminal liability laws? A. Australia B. India C. USA D. Finland

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-3 Topic: Legal Systems

95. (p. 57) Which of the following describes a council that was provided to oversee enforcement of much stricter intellectual property regulations? A. PPP B. TRIPS C. WTO D. UN

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

96. (p. 58) _____ is regarded as a yardstick for the economic activity of a country, and it measures the total annual income received by residents of a nation. A. HDI B. GDP C. GPI D. GNI

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-4 Topic: The Determinants of Economic Development

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97. (p. 60) _____ allows for a more direct comparison of living standards in different countries. A. PPP B. TRIPS C. CIGS D. WTO

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-4 Topic: The Determinants of Economic Development

98. (p. 60) The base for adjustment of purchasing power parity is the cost of living in: A. China. B. Great Britain. C. Australia. D. the United States.

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

99. (p. 60) Which of the following countries had the highest GNI per capita in 2006? A. Germany B. The United States C. The United Kingdom D. Switzerland

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

100. (p. 62) The United Nations _____ index is based on life expectancy, literacy rates, and whether average incomes are sufficient to meet the basic needs of life in a country. A. Human Development B. Standard of Living C. Quality of Life D. Economic Development

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

101. (p. 65) There is fairly wide agreement that _____ is the engine of long-run economic growth. A. political economy B. labor C. innovation D. capital

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

102. (p. 65) It has been argued that the economic freedom associated with a _____ economy creates greater incentives for innovation. A. planned B. market C. commercial D. mixed

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

103. (p. 65) Which of the following is an advantage of a market economy? A. Any individual who has an innovative idea is free to try to make money out of that idea by starting a business. B. The state owns all means of production. C. Entrepreneurial individuals have few economic incentives to develop valuable new innovations. D. It is the state, rather than the individual, that captures most of the gains.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

104. (p. 66) A study of 102 countries found that the more _____ a country had between 1975 and 1995, the more economic growth it achieved and the richer its citizens became. A. political freedom B. economic freedom C. innovation D. trade

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

105. (p. 66) The influential Peruvian economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of _____ until property rights are better defined and protected. A. capitalism B. communism C. collectivism D. individualism

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

106. (p. 67) Which of the following is NOT one of the five fastest growing economies in the past 30 years? A. China B. India C. Hong Kong D. South Korea

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

107. (p. 68) According to economist Jeffrey Sachs, which type of nation-state is most likely to support market institutions? A. Coastal state B. Landlocked state C. Mountainous state D. Tropical state

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

108. (p. 69) Since the late 1980s, which of the following trends has emerged in the political economies of many of the world's national states? A. A wave of communist revolutions has swept the world. B. Totalitarian governments have resurfaced. C. A wave of democratic revolutions has swept the world. D. A strong move toward centrally planned and mixed economies.

AACSB: Reflective thinking BT: Comprehension Difficulty: Hard Learning Objective: 2-5 Topic: States in Transition

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

109. (p. 69) Freedom House classified some _____ countries as free in 2007, accounting for some 47 percent of the world's population. A. 69 B. 60 C. 90 D. 121

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-5 Topic: States in Transition

110. (p. 71) What accounts for the spread of democracy? A. Many totalitarian regimes failed to deliver economic progress to the vast bulk of their populations. B. A strong correlation between vibrant and wealthy economies and communism. C. New information and communication technologies have helped the state's ability to control access to uncensored information. D. In many countries, the economic downfall of the past quarter century have led to the decline of prosperous middle and working classes.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-5 Topic: States in Transition

111. (p. 72) Which of the following theories was propounded by Fukuyama? A. The future is a world dominated by a universal civilization characterized by democratic regimes and free market capitalism. B. While many societies may be modernizing, they are not becoming more Western. C. Modernization in non-Western societies can result in a retreat toward the traditional. D. The world is split into different civilizations, each of which has its own value systems and ideology.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-5 Topic: States in Transition

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112. (p. 73) Which of the following is the world's freest economy according to the 2008 Heritage Foundation index? A. Hong Kong B. Ireland C. Singapore D. Australia

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-5 Topic: States in Transition

113. (p. 75) Which country among the following cannot be considered as a politically free country? A. India B. Singapore C. Brazil D. Canada

AACSB: Reflective thinking BT: Knowledge Difficulty: Easy Learning Objective: 2-5 Topic: States in Transition

114. (p. 75) Which of the following involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate? A. Privatization B. Simplification C. Deregulation D. Innovation

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-6 Topic: The Nature of Economic Transformation

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

115. (p. 75) _____ transfers the ownership of state property into the hands of private individuals. A. Privatization B. Simplification C. Deregulation D. Socialism

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-6 Topic: The Nature of Economic Transformation

116. (p. 76) Which of the following ways can make privatization work? A. By simply selling state-owned assets to private investors. B. By continuing to give subsidies from the state to newly privatized firms. C. By protecting from foreign competition by barriers to international trade and foreign direct investment. D. By a more general deregulation and opening of the economy.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-6 Topic: The Nature of Economic Transformation

117. (p. 79) The advantages that accrue to early entrants into a business market referred to as: A. standard-class advantages. B. first-mover advantages. C. prime-mover advantages. D. first-stage advantages.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-7 Topic: Implications of Changing Political Economy

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

118. (p. 79) Handicaps suffered by late entrants into a business market are referred to as: A. late-mover disadvantages. B. last-class disadvantages. C. standard-class disadvantages. D. prime-mover disadvantages.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-7 Topic: Implications of Changing Political Economy

119. (p. 80) _____ is the likelihood that economic mismanagement will cause drastic changes in a country's business environment that adversely affect the profit and other goals of a business enterprise. A. Industrial risk B. Political risk C. Legal risk D. Economic risk

AACSB: Analytic BT: Knowledge Difficulty: Medium Learning Objective: 2-7 Topic: Implications of Changing Political Economy

120. (p. 81) The likelihood that a trading partner will opportunistically break a contract or expropriate property rights is called: A. political risk. B. economic risk. C. corruption. D. legal risk.

AACSB: Analytic BT: Knowledge Difficulty: Easy Learning Objective: 2-7 Topic: Implications of Changing Political Economy

Essay Questions

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121. (p. 44-46) Describe the difference between collectivism and individualism. Are these two ideologies compatible or in direct conflict? Explain your answer. The term collectivism refers to a political system that stresses the primacy of collective goals over individual goals. The general ideal is that the needs of society as a whole are more important than individual freedoms. As a result, in a collectivist society, an individual's right to do something may be restricted because it runs counter to "the good of the society" or the "common good." Individualism refers to a philosophy that an individual should have freedom in his/her economic and political pursuits. Moreover, individualism stresses that the interests of the individual should take precedence over the interests of the state. The ideals exposed by individualism and collectivism are in direct conflict with one another. Over the past two decades, collectivism has been waning and individualism has been gaining steam. A wave of democratic ideals and free market economics is currently sweeping away socialism and communism worldwide. Evidence of this can be seen in Eastern Europe and the republics of the former Soviet Union.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

122. (p. 46-48) Draw a distinction between democracy and totalitarianism. What are the different forms of democracy and totalitarianism? Democracy and totalitarianism are at different ends of the political spectrum. Democracy refers to a political system in which government is by the people, exercised either directly or through elected representatives. Totalitarianism is a form of government in which one person or political parties exercise absolute control over all spheres of human life, and opposing political parties are prohibited. The pure form of democracy, as originally practiced by several city-states in ancient Greece, is based on a belief that citizens should be directly involved in decision making. Most modern democratic states practice what is commonly referred to as representative democracy. In a representative democracy, citizens periodically elect individuals to represent them. There are four major forms of totalitarianism, including communist totalitarianism, theocratic totalitarianism, tribal totalitarianism, and right-wing totalitarianism.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-1 Topic: Political Systems

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

123. (p. 48-50) Describe the three broad types of economic systems and explain their significance today. The three economic systems are the market economy, the command economy, and the mixed economy. In a market economy, the interaction of supply and demand determines the quantity in which goods and services are produced. For a market economy to work, there must be no restrictions to supply. Therefore, governments have passed antitrust laws to ensure that firms do not monopolize the market. Private ownership ensures that entrepreneurs have a right to the profits generated by their own efforts. This gives entrepreneurs an incentive to search for better ways of serving consumer needs. That may be through introducing new products, by developing more efficient production processes, by pursuing better marketing and after-sale service, or simply through managing their businesses more efficiently than their competitors. 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. The government's objective in a command economy is to "allocate resources for the good of society". In a planned economy, all businesses are state owned. Historically, command economies existed in communist countries. Since the demise of the communist regime, the number of command economies has fallen. In a command economy, state-owned enterprises have little incentive to control costs and be efficient because they cannot go out of business. A mixed economy can be found in between a market economy and a command economy. In a mixed economy, certain sectors of the economy are left to private ownership and government planning. In mixed economies, governments tend to take into state ownership troubled firms whose continued operation is thought to be vital to national interests. Mixed economies are not as common now as they used to be.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-2 Topic: Economic Systems

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

124. (p. 50-51) Describe the three main legal systems, and for each, give an example of a country that uses such a system. The three main types of legal systems are common law, civil law, and theocratic law. Common law evolved in England and is now in use in the United States. It is based on tradition, precedent, and custom. In a common law system, judges have the power to interpret laws and set precedents. Civil law is based on a detailed set of laws organized into codes. France and Germany currently utilize civil law. Judges in civil law have the power to apply the law only, instead of interpreting the law. Theocratic law is a system based on religious teachings. Islamic law is the most widely practiced theocratic law, and it is used in countries like Iran. Theocratic law tends to govern moral rather than commercial law. As a result, many countries blend theocratic law with either common law or civil law.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

125. (p. 53-54) Describe the differences of private action and public action, and give an example of each. What is being done to combat private and public action? Private action refers to theft, piracy, blackmail, and the like by private individuals or groups. In contrast, public action is the extortion of income or resources from property holders by public officials. An example of private action is the Russian Mafia. After the fall of communism, successful business owners in Russia had to pay "protection money" to the Mafia or face violent retribution. An example of public action is corruption. A government official may increase taxes on a business owner to remain open, and then pocket the remains. To combat corruption in the United States, the Foreign Corrupt Practices Act was passed. Internationally, the OECD adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

126. (p. 56) What is intellectual property? What are the different types of ownership rights? Explain them. Intellectual property refers to property, such as computer software, a screenplay, a music score, or the chemical formula for a new drug that is the product of intellectual activity. Patents, copyrights, and trademarks establish ownership rights over intellectual property. A patent grants the inventor of a new product or process exclusive rights for a defined period to the manufacture, use, or sale of that invention. Copyrights are the exclusive legal rights of authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit. Trademarks are designs and names, often officially registered, by which merchants or manufacturers designate and differentiate their products.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-3 Topic: Legal Systems

127. (p. 65-66) How important is innovation and entrepreneurship? How does it impact market and planned economies? There is general agreement that innovation and entrepreneurial activity are the engines of long-run economic growth in virtually any country. Innovation and entrepreneurial activity help to increase economic activity by creating new products and markets that did not previously exist. Also, innovations in production and business processes lead to an increase in the productivity of labor and capital, which further boosts economic growth rates. In a market economy, any individual who has an innovative idea is free to try to make money out of that idea by starting a business (by engaging in entrepreneurial activity). Similarly, existing businesses are free to improve their operations through innovation. To the extent that they are successful, both individual entrepreneurs and established businesses can reap rewards in the form of high profits. Thus, market economies contain enormous incentives to develop innovations. In a planned economy, the state owns all means of production. Consequently, entrepreneurial individuals have few economic incentives to develop valuable new innovations because it is the state, rather than the individual, that captures most of the gains.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-4 Topic: The Determinants of Economic Development

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128. (p. 69) How has political economy changed since the late1980s? What are the two trends that have emerged? The political economy of many of the world's nation-states has changed radically since the late 1980s. Two trends have been evident. First, during the late 1980s and early 1990s, a wave of democratic revolutions swept the world. Totalitarian governments collapsed and were replaced by democratically elected governments that were typically more committed to free market capitalism than their predecessors had been. Second, there has been a strong move away from centrally planned and mixed economies and toward a more free market economic model.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-5 Topic: States in Transition

129. (p. 75) Explain the nature of economic transformation in terms of deregulation and privatization. Deregulation and privatization have transformed the face of global business in recent years. Deregulation involves removing legal restrictions to the free play of markets, the establishment of private enterprises, and the manner in which private enterprises operate. Before the collapse of communism, the governments of command economies had tight control over prices and output. Deregulation involved removing price controls, and establishing methods that facilitated economic trade. Privatization transfers the ownership of state property into the hands of private individuals. It leads to increased economic efficiency by giving new private owners incentives to search for increases in productivity, to enter new markets, and to exit losing ones. Both privatization and deregulation have led to an increased level of international trade.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-6 Topic: The Nature of Economic Transformation

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Full file at http://testbank360.eu/test-bank-global-business-today-6th-edition-charles-hill

130. (p. 80-81) What is the difference between political risk, economic risk, and legal risk? Political risk is the likelihood that political forces will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise. In contrast, economic risk is the likelihood that economic mismanagement will cause drastic changes in a country's business environment that adversely affects the profit and other goals of a business enterprise. Finally, legal risk is the likelihood that a trading partner will opportunistically break a contract or expropriate property rights.

AACSB: Reflective thinking BT: Comprehension Difficulty: Medium Learning Objective: 2-7 Topic: Implications of Changing Political Economy

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Test bank global business today 6th edition charles hill  

test bank global business today 6th edition charles hill. Full file at http://testbank360.eu/test-bank-global-business-today-6th-editio...

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