Deck 4: Political Environment

Question 1

Political interests and economic interests are interrelated.

Answer 1

True

Question 2

Because the former Soviet Union had elections and mandatory voting, it was considered to have the parliamentary form of government.

Answer 2

False

Question 3

Constitutional hereditary monarchy is a form of a parliamentary government.

Answer 3

True

Question 4

Political stability is a function of economic development.

Question 5

Political stability is not necessarily a function of economic development.

Question 6

Democracy is not necessarily a prerequisite for political stability.

Question 7

There is a direct relationship between democracy and economic progress.

Question 8

Political stability is not possible without democracy.

Question 9

Centrally planned economies tend to have a nonmarket and weak economy.

Question 10

Capitalism is a market-oriented system.

Question 11

Capitalism is the ideal system for all countries.

Question 12

Capitalism should be used to lessen the existence of social class conflicts.

Question 13

Capitalism is the best economic system to serve the nation's best interests in terms of social need.

Question 14

It is very unlikely for a country to adopt a system of either 100-percent capitalism or 100-percent communism.

Question 15

The concept of responsible global capitalism is similar to the concept of cooperative capitalism.

Question 16

The concept of karma capitalism is similar to the concept of cooperative capitalism.

Question 17

Domestication means preventing a foreign company from entering a country for the purpose of marketing its goods.

Question 18

The risk of nationalization/expropriation, after being dormant for a long period, has resurfaced.

Question 19

The political threats to MNCs' foreign investments are more likely to be 'creeping expropriation' than conventional expropriation.

Question 20

The world has been witnessing a trend toward private ownership and away from government ownership.

Question 21

MNCs should expect a trend toward government ownership in the near future.

Question 22

Privatization is more a political process than an economic process.

Question 23

There is no working model that supports a "functioning market economy with a massive state enterprise sector."

Question 24

The breakup of the Soviet Union can be attributed to the shift toward monostasy to encourage modernization and competition.

Question 25

Monostasy encourages competition at the expense of cooperation.

Question 26

The premium over the LIBOR rate indicates the extent of the political risk involved.

Question 27

Euromoney's and Institutional Investor's country risk ratings are highly correlated and strongly agree on the creditworthiness of the assessed countries.

Question 28

Euromoney's and Institutional Investor's country risk ratings can be replicated with a few economic variables.

Question 29

One way for a U.S. company to reduce political risk is to 'Americanize' its customers abroad.

Question 30

Political risk cannot be insured.

Question 31

OPIC assists economic development through investment insurance.

Question 32

MIGA insures investment against both commercial and noncommercial (i.e., political) risk in developing countries.