Deck 3: National Differences in Economic Development

Question 1

The purchasing power parity for different countries is adjusted (up or down) depending upon whether a country's cost of living is lower or higher than the cost of living in the United States.

Answer 1

True

Question 2

Economists who argue that innovation and entrepreneurial activity are the engines of long-run economic growth, define innovation broadly to include not just new products but also new processes, new organizations, new management practices, and new strategies.

Answer 2

True

Question 3

A totalitarian regime can promote economic growth if it commits to a market system and values strong protection of property rights.

Answer 3

True

Question 4

In general, command and mixed economies failed to deliver the kind of sustained economic performance that was achieved by countries adopting market-based systems.

Question 5

The gross national income (GNI) per capita comes much closer to Amartya Sen's conception of how development should be measured than narrow economic measures such as Human Development Index (HDI).

Question 6

Five of the fastest growing economies of the past 30 years-China, South Korea, Taiwan, Singapore, and Hong Kong-had one thing in common at the start of their economic growth: democratic governments.

Question 7

The late influential political scientist Samuel Huntington predicted that the universalization of Western liberal democracy will be the final form of human government.

Question 8

A shadow economy refers to similar economic activity that takes place in competing nations.

Question 9

In a planned economy, there is a great deal of freedom for entrepreneurial activity and reward.

Question 10

Advances in technology and communication have fostered the growth of democratic ideals.

Question 11

The Peruvian development economist Hernando de Soto has argued that much of the developing world will fail to reap the benefits of capitalism until they relax the property rights offered by their legal systems.

Question 12

A strong belief that economic progress leads to adoption of a democratic regime underlies the fairly permissive attitude that many Western governments have adopted toward human rights violations in China.

Question 13

Francis Fukuyama promoted the idea that Western liberal democracy would be the final form of human government and lead to a harmonious world.

Question 14

If a country's economy is to sustain long-run economic growth, the business environment must be conducive to the consistent production of product and process innovations and to entrepreneurial activity.

Question 15

As categorized by Freedom House, citizens in a "partly free" country enjoy a high degree of political and civil freedom.

Question 16

Gross national income is a measure of the monthly income received by residents of a nation.

Question 17

Nations that have economic freedom also have political freedom.

Question 18

A nation that has inadequate enforcement of property rights reduces the motivation for innovative activity.

Question 19

During the late 1980s and early 1990s, many totalitarian governments collapsed and were replaced by democratically elected governments.

Question 20

Communist nations were the first to adopt deregulation efforts.

Question 21

According to the Human Development Index, average income adjusted for PPP should be sufficient to

A) provide basic needs such as food and shelter.
B) promote economic development.
C) foster decentralization.
D) boost social class.
E) foster entrepreneurial dynamism.

Question 22

State-owned enterprises still dominate the banking and health care industries in China.

Question 23

In 2017, if the GNI per capita of India was $1,820 and its PPP per capita was $7,060, this means that the cost of living in India was lower than the cost of living in

A) China.
B) Great Britain.
C) Germany.
D) the United States.
E) the rest of the world.

Question 24

Purchasing power parity is used to adjust gross national income in order to make a more direct comparison of ________ in various countries.

A) living standards
B) population density
C) geographical area
D) factor endowments
E) labor productivity

Question 25

Amartya Sen believed that ________ should also be a factor in the human development index.

A) birth rates
B) political freedom
C) educational attainment
D) basic average income
E) geographical conditions

Question 26

________ is broadly defined as the development of new products, processes, organizations, management practices, and strategies.

A) Privatization
B) Dynamism
C) Demographics
D) Innovation
E) Benchmarking

Question 27

It is more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses.

Question 28

As a result of ________, large amounts of economic activity in India are not made official and the GDP figures of the country fail to tell the entire story of the economy.

A) a large population
B) unrecorded cash transactions
C) deregulation
D) nationalization
E) closed totalitarianism

Question 29

In 2017, if the PPP per capita of China was $16,760 and the PPP per capita of the United States was $60,200, this means that the

A) GNI per capita was greater in China.
B) percent of goods and services consumed in the United States was lower.
C) standard of living in China was better.
D) cost of living was lower in China.
E) annual average GDP growth rate was lower in China.

Question 30

Traditional grocery stores now have to compete with Amazon's front-door delivery services. As a result, many grocery stores now offer online ordering and home delivery. This new strategy is an example of

A) privatization.
B) economic deregulation.
C) purchasing power parity.
D) innovation
E) benchmarking.

Question 31

Gross national income figures should be carefully evaluated because they don't take into account differences in

A) the available workforce.
B) government intervention.
C) the cost of living.
D) market conditions.
E) political power.

Question 32

The country of Jinret is classified as having low human development (the quality of life is poor). This means its HDI is

A) a score of less than 0.5 on the HDI scale.
B) around 6.0.
C) greater than 5.0 but less than 7.0.
D) around 80.
E) in the bottom 60 percentile.

Question 33

To calculate purchasing power parity, the figure is adjusted based on

A) the trading value of gold in the exchange market.
B) the median cost of living in the top five economic nations.
C) the status of the cost of living in the United States
D) average daily exchange rates in the selected nation.
E) limits set by each nation's government.

Question 34

The three measures of the ________ are life expectancy at birth, educational attainment, and average incomes based on PPP estimates.

A) Human Development Index
B) Gross National Income
C) Gross Domestic Product
D) Cost of Living Index
E) Cash Reserve Ratio

Question 35

Privatization occurs when state-owned property is transferred into the hands of individuals.

Question 36

Social unrest and disorder are less likely to be found in countries that contain more than one ethnic nationality.

Question 37

One common measure of economic development is a country's

A) gender ratio.
B) gross national income.
C) infant mortality rate.
D) population density.
E) total geographical area.

Question 38

A country's ________ measures the total annual income received by residents of a country and is regarded as a yardstick for the economic activity of a country.

A) income elasticity of demand
B) gross national product
C) net cash flow ratio
D) gross national income
E) income equity ratio

Question 39

It is predicted that China will surpass the United States and become the world's largest national economy within the next two decades.

Question 40

A black economy occurs when

A) large amounts of economic activity are in the form of legally recorded cash transactions.
B) citizens engage in barter agreements to avoid paying taxes.
C) a country's GNI per capita exceeds $30,000.
D) the expenses of the government are less than its income.
E) a country has a trade surplus with another foreign country.

Question 41

At one time, economic stagnation resulted in Great Britain because the coal mining and telecommunications industries were

A) privatized.
B) sold off to foreign owners.
C) monopolies owned by the state.
D) compromised during the war.
E) decentralized.

Question 42

The belief that geography can influence economic policy, and hence economic growth rates, goes back to

A) Adam Smith.
B) Amartya Sen.
C) Plato.
D) Aristotle.
E) Karl Marx.

Question 43

Lindsey lives in a country where the state owns all the means of production and there is little incentive for entrepreneurial activity. Lindsey lives in a

A) market economy.
B) mixed economy.
C) planned economy.
D) private economy.
E) democratic economy.

Question 44

According to economist Hernando de Soto, the key issue in the relationship between capitalism and property rights is the inability of owners to

A) pay the necessary taxes on their property.
B) establish legal title to the property they own.
C) adapt to a planned economic system.
D) create a production monopoly.
E) foster dynamism through entrepreneurial activity.

Question 45

The influential economist Jeffrey Sachs argues that which of the following, with their long engagements in international trade, have been the most supportive of market institutions throughout history?

A) mountainous states
B) tropical regions
C) military societies
D) landlocked states
E) coastal states

Question 46

According to Freedom House, just under ________ of the world's nations are considered "free."

A) 5 percent
B) 20 percent
C) 90 percent
D) 75 percent
E) 50 percent

Question 47

China, South Korea, Taiwan, Singapore, and Hong Kong have had the fastest-growing economies in the past 40 years. What did these five countries have in common at the start of their economic spur?

A) extensive trade agreements
B) undemocratic governments
C) active entrepreneurial activity
D) high tariff barriers
E) strong property rights protection

Question 48

The country of Marita ensures strong legal protection of property rights. It is likely that the businesses and individuals in Marita will

A) want to invest more in innovations.
B) avoid privatization.
C) face more corruption.
D) avoid entrepreneurial activity.
E) be faced with a higher tax debt.

Question 49

Jason loves to invent new products but knows that in his country it is difficult for him to reap the rewards of innovations because they are quickly and legally copied by others after he releases them into the marketplace. As a result, Jason has decided to stop inventing. What is preventing Jason from doing what he loves?

A) weak property rights protection
B) excessive tariffs
C) privatization
D) strong government intervention
E) purchasing power parity

Question 50

An unfavorable environment for innovations and entrepreneurship is the result of

A) a market economy.
B) economic freedom.
C) state monopoly in production.
D) privatization.
E) strong legal protection of property rights.

Question 51

Only a totalitarian regime that is committed to ________ is capable of promoting economic growth.

A) a command economy
B) a dictatorship
C) limiting human freedom
D) a strong protection of property rights
E) limiting individualism and privatization

Question 52

In the country of Bolar, the state owns key industries such as energy and transportation. The rest of the industries are privately owned. Bolar is a ________ economy.

A) market
B) planned
C) mixed
D) private
E) democratic

Question 53

Which of these countries demonstrates Jeffrey Sachs's argument about trade?

A) The nation of Ilar exports rice but imports wheat because it is more cost effective.
B) The soil conditions in Sarut are so poor that no crops can be grown and the country must import all food sources.
C) Intellectual property rights are well-protected in the nation of Acher which provides an absolute advantage.
D) The citizens of Rener fail to participate in entrepreneurial activity because of the planned economy.
E) The true GNI of the nation of Wolcott is unknown because of the "hidden economy."

Question 54

People in the West tend to associate a(n) ________with a free market system, strong property rights protection, and economic progress.

A) anarchist state
B) representative democracy
C) planned economy
D) communist state
E) command economy

Question 55

During the late 1980s and early 1990s, many of the world's nation-states moved away from

A) democratically elected governments.
B) free market capitalism.
C) individualism.
D) political and civil freedoms.
E) totalitarian governments.

Question 56

The nation of Talden sold Talden Communications, a state-owned monopoly, to private investors. This is an example of

A) communism.
B) isolationism.
C) privatization.
D) economizing.
E) protectionism.

Question 57

When considering innovations and entrepreneurship, it can be said that

A) a command economy creates greater incentives for innovation and entrepreneurship than a market economy.
B) if a country's economy is to sustain long-run economic growth, the business environment must restrict entrepreneurial activity.
C) a high level of entrepreneurial activity leads to a low level of innovation.
D) innovations in production and business processes lead to an increase in the productivity of labor and capital.
E) strong legal protection of property rights creates an unfavorable environment for innovation and entrepreneurship.

Question 58

Which of these individuals can be considered an entrepreneur?

A) Sam, an employee at a sporting goods store, is solely responsible for all the purchases and sales at the store.
B) Joe recycles old household articles to build phones, radios, and other things for his personal use.
C) Max makes his living by investing in small companies that have the potential to grow.
D) Shondra started a company that processes plastic bags into fabric used in automobiles.
E) Ryan invented a hair regrowth formula and sold it to a company that sells several other hair growth products.

Question 59

Which activity engaged in by DenimExpress best exemplifies innovation?

A) DenimExpress cut the prices of its products by 10 percent.
B) DenimExpress entered the Chinese market.
C) DenimExpress offered a "me-to" product similar to that of a competitor.
D) DenimExpress developed a new business model by selling directly to customers.
E) DenimExpress cut its costs by 10 percent.

Question 60

In the context of political economy, one notable development of the past 30 years has been the spread of

A) centrally planned economies.
B) mixed economies.
C) totalitarian governments.
D) democracy.
E) communism.

Question 61

The collapse of ________ in Eastern Europe was precipitated by the growing gulf between the vibrant and wealthy economies of the West and the stagnant economies of the East.

A) democracy
B) communism
C) a free economy
D) capitalism
E) privatization

Question 62

A nation would ________ as part of deregulation efforts.

A) prohibit private enterprises from operating in certain sectors
B) commit to communism
C) remove price controls
D) create a centrally planned economic system
E) increase restrictions on foreign direct investment

Question 63

How does privatization help stimulate gains in economic efficiency?

A) It allows newly privatized firms to gain monopoly position in a particular industry.
B) It provides incentives to new private owners to search for increases in productivity and to enter new markets.
C) It encourages state control over price and production output.
D) It raises barriers to direct investment by foreign enterprises.
E) It results in reservation of heavy industry for state ownership and the increase of import tariffs.

Question 64

An accurate description of privatization is that

A) it started in China in the early 1980s.
B) it involves replacing a state-owned monopoly with a private monopoly.
C) it is most successful when countries adopt communism.
D) when newly privatized firms are protected from foreign competition, they have little incentive to restructure their operations to become more efficient.
E) in today's context, a country runs the risk of experiencing a serious economic crisis if it liberalizes and privatizes state-owned enterprises.

Question 65

The country of Watoo would be using deregulation efforts if

A) it exercises tight control over the prices of food grains.
B) the establishment of private enterprises in the steel industry is prohibited by the government.
C) the retail sector in Watoo is opened for foreign direct investment.
D) the Watoo government does not have a legal system to safeguard property rights.
E) Watoo ranks the lowest among the countries that grant both political and economic freedoms to its citizens.

Question 66

The government of Cafor wants to create a market-based economic system. To do so, the government should

A) abolish the laws that deal with protection of property rights.
B) introduce stringent foreign investment regulations.
C) increase its intervention in the economy.
D) adopt privatization.
E) oppose democracy.

Question 67

According to the author Francis Fukuyama, the world is most likely witnessing the end of

A) free market economies.
B) capitalism.
C) liberal democracies.
D) privatization.
E) humanity's ideological evolution.

Question 68

Samuel Huntington held the opposite view from Fukuyama and believed that the modernization of non-Western societies caused those societies to

A) become more Western.
B) retreat toward the traditional.
C) focus on democratic regimes.
D) promote diversity and inclusion.
E) reject material possessions.

Question 69

The country of Garuf has recently removed all legal restrictions on the establishment of private enterprises. This action represents the process of

A) the nationalization of private assets.
B) deregulation.
C) socialism.
D) expanding totalitarian controls.
E) isolationism.

Question 70

In the context of global economy, what has been widely accepted since the late 1980s?

A) centrally planned command economy
B) mixed economy
C) nationalization of private property
D) deregulation of economies
E) authoritarian regime

Question 71

In Samuel Huntington's thesis, global terrorism is a product of the

A) clash of value systems and ideology between civilizations.
B) widespread acceptance of universal global civilization.
C) declining liberal democratic ideals.
D) differences in the factor endowments between countries.
E) geographical differences between nations.

Question 72

The deregulation of an economy involves

A) increasing restrictions on direct investment by foreign enterprises and international trade.
B) privatizing state-owned enterprises.
C) exercising a high degree of state control over production and pricing.
D) abolishing laws related to the protection of property rights.
E) opposing democracy by adopting communism.

Question 73

The nation of Gren recently began privatization efforts; however, as a way to protect newly privatized firms, the government imposed strong tariffs on imports from foreign competitors. This has resulted in little competition for these newly privatized firms and essentially created

A) state monopolies.
B) few barriers to trade.
C) a mini-multinational.
D) a democratic regime.
E) a totalitarian state.

Question 74

What started in Great Britain in the early 1980s when Prime Minister Margaret Thatcher started to sell state-owned assets such as the British telephone company?

A) nationalization
B) privatization
C) antidemocratic government
D) communism
E) antiglobalization

Question 75

Based on calculations for 2018, which country is ranked by the Heritage Foundation as having the world's freest economy?

A) Ireland
B) Hong Kong
C) North Korea
D) Canada
E) the United States

Question 76

How have new information and communication technologies, including the Internet, affected the political economy in general?

A) They have led to the spread of communism.
B) They have reduced a state's ability to control access to uncensored information.
C) They have led to the collapse of democracy.
D) They have created new conduits for the spread of closed societies.
E) They have led to increased suppression of political and economic freedoms.

Question 77

Economic advances in many countries have led to the

A) decline of middle and working classes.
B) rise of totalitarian reforms.
C) decline of property rights.
D) emergence of closed and self-contained societies.
E) emergence of increasingly prosperous middle and working classes.

Question 78

"Not all democracies are free, as some still restrict certain political and civil liberties." Which country best fits this argument?

A) Australia
B) the United States
C) Great Britain
D) Russia
E) Canada

Question 79

Francis Fukuyama saw a world in which ________ was the final form of human government.

A) communism
B) dictatorship
C) totalitarianism
D) democracy
E) monarchism

Question 80

As democracy has spread since the 1980s, so has the development of more ________ economies.

A) centrally planned
B) mixed
C) totalitarian
D) command
E) market-based