Deck 3: Economic and Other Related Environmental Variables

Question 1

The gross national income (GNI) of a country is defined as all the money paid to all employed individuals.

Answer 1

False

Question 2

A country's economic activity is measured through sales of goods and services.

Answer 2

False

Question 3

The 2008 financial crisis is a result of the credit crunch that followed a collapse in the U.S. mortgage-backed securities.

Answer 3

True

Question 4

International companies make use of the macroeconomic conditions of a country to decide on whether to enter that country.

Question 5

A strong manufacturing base is the reason for the success of the U.S. economy.

Question 6

Totaling the amount spent by a country on final goods and services is called the expenditure method of computing a country's GDP.

Question 7

Inflation is defined as a change in a country's energy costs.

Question 8

Real interest rates are obtained by adding the rate of inflation to the nominal interest rate.

Question 9

Developing countries find it difficult to control inflation because of fundamental economic structural problems.

Question 10

Balance-of-payments refers to a country's external debt with the rest of the world.

Question 11

Using GNI per capita, the World Bank classifies countries as upper class, middle class, and lower class.

Question 12

An economic system explains how a country allocates its resources.

Question 13

In a centrally planned economy, private companies own and control resources.

Question 14

A market-based economy is more receptive to foreign companies and foreign investments.

Question 15

In conducting country risk analysis, international companies consider those factors that expose them to various types of risks, including financial losses.

Question 16

Euromoney uses a single factor in its ranking of countries.

Question 17

In underground economies, corporations, small businesses, and private citizens do not fully disclose their financial data.

Question 18

Competitive analysis is useful in identifying past competitors and their strategic actions.

Question 19

Infrastructure is the collection of systems, activities, and structures that facilitate logistics and communications.

Question 20

The economic activities of a country is measured by

A) GDP growth rate, GDP/capita, inflation, balance of payments, and exchange rates
B) Total income of the people in the country
C) Total of all manufactured goods produced in the country
D) Current account balance

Question 21

The three key economic sectors of a country are

A) Employment, production, and sales
B) The presidency, the legislature, and the judiciary
C) Agriculture, manufacturing, and services
D) Federal, state, and local

Question 22

Long-term inflation is caused by

A) Price gauging by retailers
B) Excessive demand (demand-pull)
C) Demand for luxury goods
D) A decline in Standard & Poor's 500-stock index

Question 23

The current account in the balance of payment is made up of

A) A country's government expenditure for the current fiscal year
B) The assets of all the companies in the country
C) A country's exports and imports and any income earned or remitted
D) A line item in a country's government budget

Question 24

The three main economic systems are

A) Macro, micro, and mixed economic systems
B) Presidential, parliamentary, and dictatorship
C) Democracy, socialism, and communism
D) Market-based, centrally planned, and mixed economies

Question 25

In a mixed economy, the resources are

A) Owned by shareholders and stakeholders
B) Owned by the president and the legislature of a country
C) Owned by individuals and the government
D) Owned by banking and financial institutions

Question 26

Scenario analysis assumes that

A) The future of an economy or event can be realistically predicted
B) The political system is made up of just two parties
C) The private sector controls the resources
D) The external environment is volatile

Question 27

Underground or parallel economies is a result

A) Of overpopulation
B) High economic growth rates
C) Understatement of income by companies and individuals
D) Low GDP per capita

Question 28

Underground economies is a problem of

A) Both developed and developing countries
B) Developing countries only
C) Socialistic countries
D) Market-based economies

Question 29

International competitors are

A) Companies that operate in the domestic market
B) That operates in the European Union
C) That operates in NAFTA
D) That operates outside their home countries

Question 30

International competition is more complex because

A) There are many more competitors in the international arena and their actions are difficult to predict
B) It is an oligopolistic system
C) Local governments support companies from their own countries
D) The international cartels are difficult to understand

Question 31

The micro competitive environment deals with

A) The attractiveness of countries to investors
B) Competition among companies in a given industry
C) The principles of microeconomics
D) Types of customer segments

Question 32

The critical variables that should be considered in conducting competitive analysis are

A) How similar are the products and customer segments of the company to those of their competitors
B) The number of foreign employees hired by competitors
C) The number of foreign subsidiaries owned by competitors
D) The Fortune Global 500 rankings of competitors

Question 33

Infrastructure is made up of

A) Buildings and other facilities
B) The utilities such as electricity, gas, and water
C) The network transportation systems, telecommunication links, and warehouse facilities.
D) The educational system of a country

Question 34

The efficiency of a country's infrastructure affects

A) The speed limit of automobiles on highways
B) The use of cellular phones by the public
C) The productivity of a country's workforce
D) The logistics and distribution of goods and services

Question 35

Downstream distribution is meant for

A) Bringing raw materials and supplies to manufacturing plants
B) For transporting goods and services using a country's river systems
C) Bringing finished goods to wholesalers and retailers for distribution to consumers
D) Shipping crude oil to refineries

Question 36

Technology is useful for

A) Improving the productivity levels of a country
B) Offering popular TV shows
C) Reaching various consumer segments
D) Importing goods and services

Question 37

Quality of life issues deal with

A) Factors such as standard of living, educational system, crime rate, and healthcare facilities
B) Availability of ISO approved high quality goods and services
C) Aging of a country's population
D) Corporate quality awards established by industry associations

Question 38

Quality of life issues are useful in

A) A country's educational system
B) Developing infrastructure facilities
C) Improving banking transactions
D) In attracting qualified and productive workforce

Question 39

Based on quality of life rankings, the country with the highest number of top ten cities is

A) The United States
B) The United Kingdom
C) Japan
D) Switzerland

Question 40

Why is the economy of a country a critical environmental variable?

Question 41

How are the countries of the world classified in terms of their economic development?

Question 42

Differentiate between market economies and centrally planned economies.

Question 43

What is scenario analysis? How do international companies make use of scenario analysis?

Question 44

What is country risk analysis and how is it conducted?

Question 45

What is underground economy?

Question 46

How important is the competitive environment?

Question 47

How do international companies conduct competitive analysis?

Question 48

Why is the infrastructure of a country important for international companies?

Question 49

What are some of the factors used in raking quality of life indexes?