CH 7: Economic Development of Nations

Which measure does the World Bank use to classify a​ country's level of​ development?

A.

GNP

B.

GNI

C.

GDP

D.

PPP

E.

HDI

B.

GNI

Nations are commonly classified as being​ developed, newly​ industrialized, or developing based on a quantifiable economic measure. Such measures include figures on​ ________.

A.

national​ production, the amount of exports in the form of industrial​ goods, and human development to the extent to which a government equitably provides its people with a long and healthy​ life, an​ education, and a decent standard of living

B.

national​ production, the portion of the degree of technological​ dualism, and overall economic structure

C.

the level of development as international companies pursue business opportunities in emerging markets

D.

national​ production, the portion of the economy devoted to​ agriculture, purchasing power​ parity, and the amount of exports in the form agriculture

E.

national​ production, the portion of the economy devoted to​ agriculture, the amount of exports in the form of industrial​ goods, and overall economic structure

E.

national​ production, the portion of the economy devoted to​ agriculture, the amount of exports in the form of industrial​ goods, and overall economic structure

The term​ ________ refers to an increase in the economic​ well-being, quality of​ life, and general welfare of a​ nation's people.

A.

productivity

B.

technological dualism

C.

newly industrialized countries

D.

economic development

E.

economic growth

D.

economic development

Which of the following BEST describes an emerging​ economy?

A.

Highly industrialized and highly efficient

B.

The poorest infrastructures and lowest personal incomes

C.

Accepts risk and opportunities

D.

Developed some​ (but not​ all) of their operations and export capabilities

E.

Increased national production and exports derived from industrial operations

D.

Developed some​ (but not​ all) of their operations and export capabilities

Which of the following transactions get counted in either GDP or​ GNP?

A.

Volunteer work

B.

​Exports, imports, and the international operations of a companies

C.

Unpaid household work

D.

Illegal activities such as gambling and black market​ (underground) transactions

E.

Unreported transactions conducted in cash

B.

​Exports, imports, and the international operations of a companies

Which of the following is the relative ability of two​ countries' currencies to buy the same​ "basket" of goods in those two​ countries?

A.

Purchasing power

B.

Technological dualism

C.

Human development index​ (HDI)

D.

Purchasing power parity​ (PPP)

E.

Gross domestic product​ (GDP)

D.

Purchasing power parity​ (PPP)

Economic transition involves changing a​ nation's fundamental economic organization and creating entirely new​ free-market institutions. Some of the key reform measures to promote economic development include​ ________.

A.

reducing budget​ deficits, increasing tariff charges on all imported​ goods, and strict investment laws

B.

reducing budget​ deficits, legalizing​ privatization, and controlling selling prices

C.

limiting credit availability to control money supply and stabilize the economy

D.

reducing budget​ deficits, allowing prices to reflect supply and demand and expanding credit availability.

E.

stabilizing the economy and expanding state ownership of economic resources

D.

reducing budget​ deficits, allowing prices to reflect supply and demand and expanding credit availability.

Importing modern management practices into the culture of a transition country can be difficult. South​ Korea's Daewoo Motors faced a culture clash when it entered Central Europe.​ Korea's management system is based on a rigid hierarchical structure and an intense work ethic. Managers at​ Daewoo's car plants in South Korea arrived early for work to stand and greet workers at the company gates. But problems arose when​ Daewoo's managers did not fully comprehend the culture at its factories in Central Europe. How did the Korean​ company, Daewoo address this​ issue?

A.

By not allowing any Korean employee to work in the plant in Central and Eastern Europe

B.

By providing all workers in Central Eastern and Europe with a merit increase to develop company loyalty.

C.

Be ensuring that all​ senior-level management of the Korean company in Central and Eastern Europe is all Korean to facilitate the communication with the headquarters

D.

By conducting Korean language training

E.

By sending Central European workers to staff assembly lines in Korea and sending Korean managers and technicians to work in Central and Eastern Europe

E.

By sending Central European workers to staff assembly lines in Korea and sending Korean managers and technicians to work in Central and Eastern Europe

Economic transition involves all of the following EXCEPT​ ________.

A.

reducing barriers to trade and investment and allowing currency convertibility

B.

using English to conduct business

C.

stabilizing the​ economy, reducing budget​ deficits, and expanding credit availability

D.

allowing prices to reflect supply and demand

E.

legalizing private​ business, selling​ state-owned companies, and supporting property rights

B.

using English to conduct business

Which of the following is NOT a key obstacle for countries in​ transition?

A.

Cultural differences

B.

Barter

C.

Sustainability

D.

Shortage of capital

E.

Managerial expertise

B.

Barter

Why is managerial expertise needed in​ centrally-planned economies?

A.

Central planners decide all aspects of the​ nation's commercial activities.

B.

In central​ planning, there is little need for​ production, distribution, and marketing strategies.

C.

In transition​ countries, there is a need for better management as a result of improved education and overseas opportunities for managers.

D.

Factory managers at​ government-owned firms have only to meet production requirements.

E.

There is no need for market research.

C.

In transition​ countries, there is a need for better management as a result of improved education and overseas opportunities for managers.

Which of the following have nations that lived under central planning NOT had to​ overcome?

A.

Social disintegration

B.

Political instability

C.

A decrease in the number of cases of​ HIV/AIDS, tuberculosis, and malaria

D.

Human and economic loss

E.

The lack of a​ top-notch healthcare system

C.

A decrease in the number of cases of​ HIV/AIDS, tuberculosis, and malaria

Political risk has been defined as the likelihood that a society will undergo political change that negatively affects local business activity. Which one of the following is an example of political​ risk?

A.

The foreign government has purchased the​ company's assets at fair market value.

B.

Protective measures are in place to assure foreign nationals are safe from kidnapping.

C.

A multinational company has increased its prices to meet the increased costs of operation​ overseas, which lead to the loss to a huge market share due to intense competition that created a major financial loss.

D.

Foreign government has made a sudden policy change that encourages ownership of domestic companies.

E.

The foreign government has announced new laws stipulating that a specified amount of a good or​ service, which is known as local content requirements​, must be supplied by producers in the domestic market.

E.

The foreign government has announced new laws stipulating that a specified amount of a good or​ service, which is known as local content requirements​, must be supplied by producers in the domestic market.

When PepsiCo first entered the Indian​ market, the company was confronted with a new government mandate to restrict ownership to domestic companies or limit ownership by​ non-domestic firms to a minority stake. This new mandate restricted​ PepsiCo's ownership of local companies to 49 percent when it first entered India. What type of political risk has affected​ PepsiCo?

A.

Local content requirements

B.

Policy changes

C.

Terrorism and kidnapping

D.

Property seizure

E.

Conflict and violence

B.

Policy changes

Which of the following is defined as the likelihood that a society will undergo political change that negatively affects local business​ activity?

A.

Expropriation

B.

Confiscation

C.

Micro risk

D.

Macro risk

E.

Political risk

E.

Political risk

A government may nationalize an industry to do all EXCEPT​ ________.

A.

use subsidies to protect an industry for ideological reasons

B.

encourage globalization

C.

save local jobs in an ailing industry to gain political clout

D.

invest in​ sectors, such as public​ utilities, that private companies cannot afford

E.

control industry profits so they cannot be transferred to low​ tax-rate countries

B.

encourage globalization

The main sources of political risk do NOT include​ ________.

A.

property seizure

B.

international content requirements

C.

terrorism and kidnapping

D.

conflict and violence

E.

policy changes

B.

international content requirements

Which of the following policy changes can reduce political​ risk?

A.

Policy changes that result from civil unrest

B.

Reduced restrictions on​ cross-border investment

C.

Policy changes that result from social unrest

D.

Policy changes that result from political pressure from special interests

E.

Policy changes that result from the ideals of newly empowered political parties

B.

Reduced restrictions on​ cross-border investment

Which one of the following is a method companies can use to manage political risk by incorporating risk into business​ strategies, a ploy known as​ adaptation?

A.

management of currency exchange rates

B.

increasing local debt

C.

development of the​ company's own financial strategy

D.

standardization

E.

partnerships

E.

partnerships

Managers must work within the established rules and regulations of each national business environment. Bribes often represent attempts to gain political influence. Which U.S. law forbids U.S. companies from bribing government officials or political candidates in other​ nations?

A.

Product safety laws

B.

Antitrust laws

C.

Intellectual property laws

D.

Foreign Corrupt Practices Act

E.

U.S. copyright laws

D.

Foreign Corrupt Practices Act

Which of the following is NOT a method of managing political​ risk?

A.

Partnerships

B.

Political influence

C.

Information gathering

D.

Adaptation

E.

Conducting market research

E.

Conducting market research

Adaptation means incorporating risk into business​ strategies, often with the help of local officials. Which of the following is NOT a way to incorporate​ risk?

A.

Partnerships

B.

Localization

C.

Insurance

D.

Bribes

E.

Development assistance

D.

Bribes

Which branch of the United Nations has a broad mandate in the areas of international trade and economic​ development?

A.

Secretariat

B.

Economic and Social Council

C.

Security Council

D.

International Court of Justice

E.

General Assembly

B.

Economic and Social Council

Which of the following actions of business does NOT cause international relations to​ improve?

A.

Favorable and strong political relationships

B.

Multilateral agreements

C.

Unfavorable and weak political relationships

D.

Stability

E.

Strong legal systems

C.

Unfavorable and weak political relationships

Political and social problems pose threats to​ China's future economic performance. Which one of the following potential challenges is largely the result of​ China's privatization of its​ industry?

A.

Unemployment

B.

Relationship with Taiwan

C.

​China's regaining control of Hong Kong

D.

Poor relations with ethnic minority

E.

Factory worker strikes

A.

Unemployment

Which one of the following has​ Russia's annexation of the​ Ukraine's peninsula of Crimea​ created?

A.

Safeguard property rights

B.

Political reforms

C.

Tense uneasiness between​ Russia's government and its business community

D.

Political instability

E.

Corrupt law enforcement

D.

Political instability

Which of the following is NOT a good way to do business in​ China?

A.

Place pleasure before business.

B.

Rely on​ contacts, not contracts.

C.

Rely on​ contracts, not contacts.

D.

Do not meet the family members of business partners.

E.

Do not be concerned with cultural sensitivity.

C.

Rely on​ contracts, not contacts

Which of the following is NOT a challenge facing​ China?

A.

Migrant workers

B.

Unemployment

C.

Advance democratic reforms

D.

Reunification of​ "greater China"

E.

Political and social problems

C.

Advance democratic reforms

Which of the following is NOT a reason for​ non-Russian businesspeople to operate​ cautiously?

A.

Making deals quickly

B.

An opaque legal system

C.

Shifting business laws

D.

A fair amount of corruption

E.

Protection payments

A.

Making deals quickly

Which of the follow is NOT a challenge facing Russia​ today?

A.

Political instability

B.

Managerial talent

C.

Unstable investment climate

D.

The black market

E.

Corrupt law enforcement

D.

The black market