Deck 7: Economic Environment

Question 1

The costs of doing business in a country tend to be ________where macroeconomic instability exists and where supporting infrastructure is_________.

A)lesser;overdeveloped
B)greater;underdeveloped
C)unimportant;proposed
D)nil;planned

Answer 1

B

Question 2

The Human Development Index is akin to purchasing power parity (PPP).

Answer 2

False

Question 3

Generally,governments have all of the following stabilisation goals except:

A)low inflation.
B)medium unemployment.
C)positive economic growth.
D)balance of payments and receipts.

Answer 3

B

Question 4

It seems likely that democratic regimes are far more conducive to long-term economic growth than authoritarian regimes,because only in a well-functioning,mature democracy are property rights ____________.

A)deregulated by governments
B)financially feasible
C)free of litigation
D)truly secure.

Question 5

The benefits of doing business in a country are a function of:

A)the size of the market.
B)its present wealth.
C)its resource endowments.
D)pride and prejudice.

Question 6

The rate of economic progress in a country seems to depend on the extent to which that country has a:

A)stable and resilient leadership.
B)low inflation environment.
C)well-functioning economy.
D)large export market.

Question 7

Current economic conditions reflect the stage of the business cycle.

Question 8

The economic environment of a country clearly influences the attractiveness of that country as a market and/or investment site.The overall attractiveness of a country depends on balancing:

A)strategy and structure.
B)finance and marketing.
C)costs and benefits.
D)profit and loss.

Question 9

The ratio of output to labour and capital inputs is called productivity.

Question 10

In India,many investments into the region have been lost due to the unreliability of the power supply.

Question 11

Innovation refers to the created assets of an economy that support business.

Question 12

Economic policy in Australia has four main stabilisation goals: low inflation,low level of employment,positive economic growth and balance of international payments and receipts.

Question 13

When behaviour and processes are regulated by a system of laws that are consistently and transparently applied and enforced,this is called:

A)an establishment of codes
B)a dispute resolution procedure
C)an instigated trust
D)a rule of law

Question 14

The GDP deflator is an economic indicator of slow or no growth in the nation's goods and services.

Question 15

The percentage of export earnings used to pay interest on debt is known as the debt-service ratio.

Question 16

Fiscal policy and monetary policy are the main instruments that national governments use to stabilise the economy.

Question 17

The Reserve Bank of Australia,as an authority independent of the national government in policy matters,has as one of its prime responsibilities:

A)stability of the currency of AustraliA.
B)income and price surveillance.
C)reduction of the nation's debt.
D)increases in the nation's income.

Question 18

Fonterra,the New Zealand-based multinational dairy products business,ranked the number one milk processor in the world by volume,relies on China for 40 per cent of its global sales.

Question 19

The percentage of export earnings used to pay interest on debt is known as the:

A)debt-equity ratio.
B)acid-test ratio.
C)debt-service ratio.
D)home-foreign-debt ratio.

Question 20

By investing early in countries that are currently poor but are nevertheless growing rapidly,firms can gain a:

A)first-mover advantage.
B)late-mover advantage.
C)significant advantage.
D)strategic advantage.

Question 21

Economic growth and development are:

A)easily confused principles.
B)always present in the nation.
C)not necessarily the same phenomena.
D)simple economic measures.

Question 22

Sources of economic growth are both:

A)primary and secondary.
B)easy and difficult.
C)quantitative and qualitative.
D)opportunistic and threatening.

Question 23

When a firm is considering going global,it needs to assess not only current (economic)conditions,but also whether or not those conditions are:

A)favourable.
B)competitive.
C)sustainable.
D)practical.

Question 24

Of the four main obstacles to economic performance,the listing comprises all of the following principles except:

A)policy uncertainty.
B)macroeconomic instability.
C)tax rate.
D)consumer price index.

Question 25

A widespread downturn in activity,usually indicated by successive periods of negative economic growth,is referred to as a:

A)mild depression
B)contraction leading to a recession
C)consequence of disinvestment
D)source of real GDP

Question 26

Economic growth is often regarded as a ______ for economic development.

A)condition
B)predisposition
C)necessity
D)measure

Question 27

All of the following are types of economic systems except:

A)market economy.
B)command economy.
C)mixed economy.
D)progressive economy.

Question 28

Production is determined by the interaction of supply and demand,and signalled to producers through the price system,in what kind of economy?

A)mixed economy
B)command economy
C)market economy
D)trade economy

Question 29

Of the fourteen significant obstacles reported concerning economic performance,the main four in order of importance comprise:

A)policy uncertainty;macroeconomic instability;tax rate;corruption.
B)macroeconomic instability;tax rate;corruption;consumer price index.
C)tax rate;corruption;consumer price index;human development index.
D)consumer price index;human development index;policy rulings;tax system.

Question 30

PPP is an acronym that stands for:

A)power purchasing procedures.
B)procurement priority procedures.
C)priority patent procedures.
D)purchasing power parity.

Question 31

The __________ is influenced by the prevailing political system.

A)corporate system
B)economic system
C)technological system
D)market system

Question 32

In any balance of payments summary,the current account records show:

A)financial account statements.
B)net errors and omissions.
C)capital account statements.
D)goods and services.

Question 33

High inflation,increasing current account deficits and foreign debt are elements of which type of macro situation?

A)business cycle
B)political manoeuvre
C)legal fracture
D)economic instability

Question 34

All of the following measures or indices give a static picture of development,except:

A)the Human Development Index (HDI).
B)Gross National Income (GNI).
C)Economic Growth Rates (EGR).
D)Purchasing Power Parity (PPP).

Question 35

It has been argued that the economic freedom associated with a ______ economy creates greater incentives for innovation than either a planned or mixed economy.

A)production
B)market
C)commercial
D)manufacturing

Question 36

A decrease in the general (average)price level of goods and services in the economy is known as:

A)inflation.
B)deflation.
C)stagflation.
D)reflation.

Question 37

Compared to the process of economic development,which is a long-term phenomenon,macroeconomic ______ focuses more on the state of the current economic conditions of an economy.

A)uncertainty
B)instability
C)stability
D)forces

Question 38

The United Nations _________ index is based on life expectancy,literacy rates and whether average incomes are sufficient to meet the basic needs of life in a country.

A)Human Development
B)Standard of Living
C)Quality of Life
D)Economic Development

Question 39

In a ______conomy,certain sectors of the economy are left to private ownership and free market mechanisms,while in other sectors there is significant state ownership and government planning.

A)command
B)combined
C)mixed
D)political

Question 40

Since the demise of Communism in the late 1980s,the number of command economies has:

A)remained the same.
B)reached zero.
C)increased.
D)decreaseD.

Question 41

The common terms for a stylised version of a business cycle are called:

A)principal and interest.
B)growth and decline.
C)cyclical and circular.
D)peak and trough.

Question 42

The likelihood that a trading partner will opportunistically break a contract or expropriate property rights is called:

A)legitimate risk.
B)permissible risk.
C)constitutional risk.
D)legal risk.

Question 43

Monetary policy is a form of ___________ policy.

A)microeconomic
B)national or macroeconomic
C)international
D)national,state and local

Question 44

Economic stabilisation goals can be conflicting in that:

A)reducing national debt levels may not induce overseas investment to the nation.
B)economic prosperity may not be balanced in the nation.
C)increasing deficits nearly always results in higher interest payments.
D)an increase in the rate of economic growth can lead to higher rates of inflation.

Question 45

A recession is a widespread ______ in activity,usually indicated by successive periods of ______ economic growth.

A)upturn;high
B)downturn;neutral
C)downturn;negative
D)disappointment;low

Question 46

Which of the following involves removing legal restrictions to the free play of markets,the establishment of private enterprises,and the manner in which private enterprises operate?

A)privatisation
B)simplification
C)deregulation
D)socialism

Question 47

________ transfers the ownership of state property into the hands of private individuals.

A)Privatisation
B)Simplification
C)Deregulation
D)Socialism

Question 48

Which of the following is NOT one of the key main reasons for the spread of democracy worldwide?

A)The spread of democracy has been unchallenged worldwide.
B)In many countries,the economic advances of the past 25 years have led to the emergence of increasingly prosperous middle and working classes,which have pushed for democratic reforms.
C)The spread of new information and communications technologies.
D)Many totalitarian regimes failed to deliver economic progress to most of their populations.

Question 49

Since the late 1980s,two major trends have emerged in the political economies of many of the world's national states.These are:

A)a wave of Communist revolutions has swept the world,and there has been a strong move away from free market economies towards more centrally planned economies.
B)a wave of socialistic revolutions has swept the world,and there has been a strong move away from free market economies towards more centrally planned and mixed economies.
C)a wave of democratic revolutions has swept the world,and there has been a strong move away from centrally planned and mixed economies towards more free market economies.
D)a wave of totalitarian revolutions has swept the world,and there has been a strong move away from centrally planned and mixed economies towards more free market economies.

Question 50

Bunnings established warehouse-style hardware stores that engaged in heavy advertising and price discounting.Because it was the first company to do so in Australia,it benefited from:

A)entrepreneurship.
B)patents.
C)innovation.
D)cost analysis.