San Francisco State University

IBUS 330

International Business: Environments and Operations, 15e

Chapter 4 The Economic Environments Facing Businesses

1)The recent global economic crisis has led to which of the following?

 

2. Which of the following is most likely a  statement about the global economy since the 1980s?

 

3. Kyle, an international manager for Apex Industries, has been given the task of analyzing the economies of three different emerging countries for the firm's potential expansion. Which of the following questions is LEAST relevant to Kyle's assignment?

C) What is the likelihood that Apex can fill manufacturing positions with locals?

 

4. Managers at Morrison Manufacturing are considering expanding the firm's production overseas and want to ensure that the firm is located in a country with a high degree of economic freedom. Presently, which of the following locations would most likely offer Morrison the highest economic freedom?

 

5. Since the late 1980s, the growing emergence of freer markets has been powered by the

realization that                        .

 

6. The Economic Freedom Index indicates that economic freedom is positively correlated with all of the following EXCEPT                                                             .

 

7. The recent global credit crisis has interrupted the trend of national economies                              .

 

8. History suggests that if the economic crisis worsens, we are likely to see more people question the .

 

9. According to research, which of the following countries is the strongest supporter of free markets?

 

10. Which of the following is NOT a characteristic of capitalism?

 

11. Communism primarily relies on a system of                             .

 

12. In a market economy, the patterns of resource allocation are most directly influenced by

                     .

 

13. A system in which individuals, rather than the government, make the majority of economic decisions is commonly referred to as a                                                 .

 

14. Market economies are primarily characterized by                             .

 

15. 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 planned by                                                             .

 

16. In a command economy,                         .

 

17. In Country X, all dimensions of economic activity, including pricing and production decisions, are determined by the central government. Which term best describes Country X?

 

18. Which of the following is most typical of a command economy?

 

19. In a                         economy, certain sectors of the economy are left to private ownership and

free market mechanisms, while other sectors have significant state ownership and government planning.

 

20. Some countries opt for a mixed economic system in the belief that although an economic system should aspire to achieve the efficiencies created by free markets, it must also support policies to       .

 

21. In the Economic Freedom Index,                            exhibit high economic freedom whereas

                      exhibit little to no economic freedom.

 

22. Which of the following countries is the best example of a mixed economic model?

 

23. Country X is in the process of transforming from a command economy to a market economy. This process most likely involves                                                            .

 

24. In a country that practices state capitalism, all of the following are most likely to be handled by the state EXCEPT                                                            .

 

25. Gross national income (GNI), the broadest measure of economic activity for a country, is defined as the    .

 

26. In computing GNI, the value of a Ford car that is manufactured in Mexico using capital from the United States would                                                           .

 

27. The measure of the value of production that occurs within a country's borders without regard to whether the production is done by domestic or foreign factors of production is its

                     .

 

28. To determine whether the standard of living within a country is rising or falling, economists would most likely use which of the following measures?

 

29. Eileen, a manager at an international restaurant chain, wants to know if it will be most cost effective to buy 1,000 pounds of sugar in Country X or in Country Y using U.S. dollars. Which of the following is Eileen most likely trying to determine?

 

30. The United Nations'                           measures life expectancy, educational attainment, and the standard of living in a given country.

 

31. The Human Development Index measures the average achievements in a country on three basic dimensions of human development, including                                                                .

 

32. The                        starts with the same accounting framework used to calculate GDP but then adjusts for values assigned to environmental quality, population health, livelihood security, equity, free time, and educational attainment.

 

33.                        is a general, sustained rise in prices measured against a standard level of purchasing power.

 

34. What is the most likely reason that a universal scheme for assessing the performance and potential of a country's economic environment does NOT exist?

 

35. A worrisome outcome of chronic inflation is that it tends to                               .

 

 

36. In most cases, governments                          in order to regulate inflation.

 

37.                        typically results when demand decreases and supply increases.

 

38. In the U.S., the unemployment rate indicates the                          .

 

39. The so-called "misery index" is the sum of a country's                              .

 

40. A government increases its internal debt for all of the following reasons EXCEPT

                     .

 

41. Country X has a significant amount of external debt. Which of the following is the most likely cause?

 

42. Uneven income distribution                          .

 

43. Which of the following is most likely a  statement about income inequality?

 

44. The World Bank reports that approximately                             percent of the world's population is poor.

45. The Gini coefficient estimates a country's                            .

 

46. The                        view calls for companies to develop low-cost, high-powered, resource- minimizing innovations that can be marketed to the billions of people living on less than a few dollars a day.

 

47. Which of the following is a statement that summarizes all economic transactions between a country and the rest of the world during a given period of time?

 

48. The two main categories in the balance of payments are the                            .

 

49. In a country's balance of payments, the                           tracks all trade activity in merchandise.

 

50. An economic system is the set of structures and processes that                             in a country.

 

51. Pender Pharmaceuticals is considering expanding overseas and is focusing primarily on the BRICs. Which of the following countries is one that Pender is considering?

 

52. Taylor Enterprises wants to expand its operations into Asia. Managers are focusing on countries with high degrees of economic freedom most likely because the firm is interested in a country with         .

 

53. Tatum Manufacturing recently opened a new facility in Hong Kong. The firm can most likely expect the Hong Kong government to                                                                          .

 

54. Presently, which of the following countries is best characterized as a pure example of a command economy?

 

55. A firm with operations in Denmark can most likely expect all of the following EXCEPT

                     .

 

56. According to the concept of green economics, measuring a country's economic performance should also take into account                                                      .

 

57. Which of the following calls for economic activity that meets present needs without hindering the future needs of society?

 

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?

 

59. During a time of reflation, the government is most likely to                               .

 

60. Which of the following governmental actions is LEAST likely to increase national debt?

 

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 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?