Deck 2: The Global Economic Environment

Question 1

High-income countries are referred to as emerging markets.

Answer 1

False

Question 2

Agricultural output and services, in particular, are often priced higher in relation to industrial output in developing countries than in industrial countries.

Answer 2

False

Question 3

Purchasing power parity measures an economy's output in terms of demand and supply.

Answer 3

False

Question 4

Global companies entering new markets will need to adapt their offerings, distribution systems, and operations to local demand and custom.

Question 5

Technology as a factor has contributed to the flattening of the world economy.

Question 6

Countries in emerging markets have sustained high rates of growth by taking advantage of high labor costs.

Question 7

The macro dimensions of the environment are economic, social and cultural, political and legal, and technological.

Question 8

The current account is a record of all long-term direct investment, portfolio investment, and other short- and long-term capital flows.

Question 9

Low-income countries are typically referred to as industrialized nations.

Question 10

The nations of the G20 are among the most powerful nations of the postindustrial societies.

Question 11

There are no pure market or command allocation systems today.

Question 12

Economic growth remains concentrated at the high-income countries.

Question 13

The more developed a country is, the scarcer the availability of economic data.

Question 14

Another name for lower-middle income countries is industrializing countries.

Question 15

Most countries of the world have a mixed system of allocation.

Question 16

A market can be defined as a group of people willing and able to buy a particular product or service.

Question 17

According to the Heritage Foundation, the country with the highest degree of economic freedom is the United States.

Question 18

Location is the single most valuable economic indicator of potential for industrial products.

Question 19

Purchasing power differences can account for differential in demand of products and services, and also provide an indication on differences in costs.

Question 20

Low-income countries typically have low birth rates and high literacy rates.

Question 21

Which of the following statements is true about the trends in world economy?

A) Global economic activity will shift from the East to the West.
B) The demand for natural resources will continue to grow.
C) Shifts in consumer segments will not affect the consumer marketplace.
D) An aging worldwide population will demand decreasing levels of productivity.

Question 22

Which of the following categories of countries is referred to as a postindustrial country?

A) low-income
B) upper-middle income
C) lower-middle income
D) high-income

Question 23

With regard to Gross National Product per capita, which of the following categories of countries is considered to be developed?

A) lower-middle income
B) high-income
C) low-income
D) upper-middle income

Question 24

The ASEAN Free Trade Area, or AFTA, was created in 1992 with the aim of promoting the region's competitive advantage as a single production area with the elimination of tariff and nontariff barriers among the member countries.

Question 25

The members of a customs union agree to the establishment of individual external trade barriers.

Question 26

Which of the following is characteristic of a command allocation system?

A) The government's role is to ensure the protection of consumer rights.
B) Product distribution is handled by a large number of intermediaries.
C) The state makes decisions on what consumers should purchase.
D) Consumers allocate resources to the system.

Question 27

Which of the following is characteristic of low-income countries?

A) sustained economic growth
B) low engagement in agriculture
C) high degree of urbanization
D) heavy reliance on foreign aid

Question 28

Devaluation means that more of the home-country's currency is now needed to buy the same amount of a foreign currency.

Question 29

A common market goes beyond the removal of internal barriers to trade and the establishment of common external barriers to the important next stage of eliminating the barriers to the flow of factors (labor and capital) within the market.

Question 30

In general, a country accumulates reserves when the net of its current and capital account transactions shows a deficit.

Question 31

In a fixed exchange-rate system, the currency value is determined by demand and supply.

Question 32

The Euro is a common currency adopted by the members of the European Union.

Question 33

Which of the following is characteristic of a pure market allocation system?

A) The consumers decide what goods will be produced and by whom.
B) The state determines the goods that consumers should use.
C) It has limited economic integration with the rest of the world regions.
D) It fails to utilize the market mix elements when demand exceeds supply.

Question 34

________ accounts for the largest share of output in less developed countries.

A) Education
B) Agriculture
C) Consumer goods
D) Heavy industries

Question 35

The United States is an example of a country that follows a fixed exchange-rate system.

Question 36

Which of the following is the most valuable economic variable used to chart strategic plans for global market expansion of commercial products?

A) regulations
B) competitors
C) income
D) location

Question 37

Which of the following is used to indicate the relative wealth of a country's citizenry?

A) Gross National Product
B) Gross Output
C) Gross Domestic Product
D) Gross Value Added

Question 38

Which of the following statements is true about world economy?

A) Countries in emerging markets have sustained low rates of growth.
B) Global competitors are deprived of new opportunities.
C) The emergence of global markets has displaced local ones.
D) The integration between all world regions has steadily decreased.

Question 39

The member states of the Commonwealth of Independent States (CIS) have signed agreements addressing issues of integration and cooperation with respect to economics, defense, and foreign policy.

Question 40

Member states of the North American Free Trade Agreement (NAFTA) are allowed to make separate bilateral treaties with nonmember states.

Question 41

Which of the following is the primary output of the World Bank's International Comparison Program?

A) purchasing power parities
B) currency fluctuations
C) market demand and supply
D) production costs

Question 42

Which of the following portrays all the economic transactions of a country with the rest of the world?

A) balance of payments
B) International Comparison Program
C) purchasing power parity
D) Gross National Product per capita

Question 43

Which of the following is an example of a customs union?

A) CSME
B) European Economic Area
C) NAFTA
D) Mercosur

Question 44

Which of the following statements is true of global trade patterns?

A) The annual rate of output is less than the total merchandise trade.
B) In most countries, the share of trade as a percentage of the national economy has reduced.
C) Import and export growth has outpaced the rate of increase in GNP.
D) The share of agriculture in exports has increased over the past decade.

Question 45

Which of the following can be perceived from measuring actual individual consumption across global markets?

A) Developed countries are likely to benefit more from full integration than developing countries.
B) Purchasing power differences do not account for differences in demand of products and services.
C) The living standards of high-income countries differ from low-income countries.
D) A vast majority of the world's income is concentrated in the lower-middle or upper-middle income countries.

Question 46

Which of the following is a trade block created between Canada, Mexico, and the United States?

A) NAFTA
B) SCCM
C) CIS
D) APEC

Question 47

What are exchange rates? How do they affect the global economy?

Question 48

________ provides the best comparison of the standards of living in the countries of the world.

A) Purchasing power parity
B) Exchange rate
C) Gross National Product per capita
D) Gross National Income

Question 49

Which of the following eliminates trade barriers to allow the harmonization of economic, social, and regulatory policies?

A) a customs union
B) a common market
C) a free trade area
D) an economic union

Question 50

What are the characteristics of a low-income country?

Question 51

________ refers to the price of one currency in terms of another.

A) Tariff
B) Exchange rate
C) Duty
D) National income

Question 52

Which of the following is a characteristic of countries in a free trade area?

A) abolition of internal tariffs and quotas
B) establishment of common external barriers
C) removal of restriction on factor movements
D) harmonization of economic, social, and regulatory policies

Question 53

Which of the following is the most important variable considered for identifying opportunities in the global economy to sell low-priced products?

A) middle-class income
B) location of population
C) demand in products
D) cost of products