Question 1

A ________ law system is based on tradition,judge-made precedent,and usage and assigns a preeminent position to existing case law as a guide to dispute resolution.

Accepted Answer

The definition given in the question suggests that the legal system described is a common law system. The other options - theocratic, customary, and civil - do not fit the definition given in the question.

Question 2

Which of the following types of political risks often is caused by ethnic conflict or civil disorder and includes those random political developments that adversely affect the operations of all companies in a country?

Accepted Answer

The answer of Which of the following types of political...

Question 3

The ________ of a country specifies the rules that regulate behavior,the processes by which laws are enforced,and the procedures used to resolve grievances.

Accepted Answer

The legal system of a country defines the laws and regulations that govern behavior, as well as the mechanisms for enforcing them and resolving disputes. While the political system, political philosophy, and philosophical orientation of a country may also influence its legal system to some extent, it is primarily the legal system itself that governs behavior and resolves disputes.

Question 4

Which of the following is a condition that powered the worldwide spread of democracy from 1970 onward?

Accepted Answer

The worldwide spread of democracy from 1970 onward was powered by the breakdown of the ability of the state to control access to uncensored information, especially that from foreign sources, due to the advent of information and communications technologies. This allowed for greater awareness of democratic ideals and movements, increasing pressure on authoritarian regimes to democratize.

Question 5

Ian,a financial manager,is preparing to transfer to Germany where he will serve as an expatriate manager of his employer's European office. With which type of legal system will Ian most likely have to deal with in Germany?

Accepted Answer

Germany operates under a civil legal system, which is based on a written code of laws and statutes. This is in contrast to common law systems, which rely heavily on past judicial decisions as precedent. Theocratic legal systems are based on religious law, and mixed legal systems combine elements of both civil and common law.

Question 6

A U.S. firm with manufacturing facilities in Nigeria will most likely be faced with a ________ legal system.

Accepted Answer

Nigeria operates a mixed legal system, incorporating elements of English common law, Islamic law (in some northern regions), and traditional customary law. This reflects the country's colonial history, diverse ethnic groups, and religious practices.

Question 7

Which of the following was a notable trend in political systems during the second half of the 20th century and beginning of the 21st century?

Accepted Answer

The trend of democratic transformations occurred during the second half of the 20th century and beginning of the 21st century, as many countries shifted away from totalitarian systems towards more democratic forms of governance. This was seen in the collapse of Soviet-style communism in Eastern Europe and the Soviet Union, the democratic transitions in Latin America and Africa, and the spread of democracy in Asia.

Question 8

Recently,the Economist Intelligence Unit investigated the status of democracies around the globe. Relying on 60 indicators that focus on the performance of free elections,civil liberties,government functioning,political participation,and political culture in a country,the study found that ________.

Accepted Answer

The study found that nearly half of the world's democracies qualify as "full" or "flawed" democracies. Therefore, choice B is the correct answer. Option A is incorrect because not all democracies are classified as "full" democracies. Option C is incorrect because less than a quarter of the countries studied are outright authoritarian regimes, but this does not mean that the majority of countries are democracies. Option D is incorrect because most democracies are not hybrid political systems that share theocratic and totalitarian characteristics.

Question 9

________ political risks arise from political actions,such as public corruption or a partisan judicial system,that interfere with transactions between sellers and buyers and that can significantly raise the costs of getting things done.

Accepted Answer

Procedural political risks are specifically related to political actions that can interfere with the normal procedures of transactions, such as corruption or issues within the judicial system, making processes more cumbersome and expensive.

Question 10

Select the correct order,going from low to high total impact on an MNE,of the following types of political risk: (1)procedural political risks,(2)systemic political risks,(3)distributive political risks,(4)catastrophic political risks.

Accepted Answer

The answer of Select the correct order,going from low to...

Question 11

A system of ________ law sets the framework for the system of government and defines the authority and procedure of political bodies to establish laws and regulations.

Accepted Answer

A system of constitutional law sets out the rules that govern the relationship between the government and the people. It defines the rights and powers of the different branches of government, outlines the limits of governmental authority, and provides a framework for the creation and enforcement of laws and regulations. Criminal law deals with acts considered to be crimes, civil law deals with disputes between individuals or organizations, and commercial law deals with business transactions.

Question 12

Which of the following is most likely a characteristic of a "partly free" country,such as Guatemala,Kenya,or Malaysia?

Accepted Answer

A "partly free" country typically has weak rule of law, meaning that the government is not effectively enforcing laws and is often influenced by corruption or other factors. While civil liberties may still be respected to some extent, there may be limitations or restrictions on freedom of speech, assembly, or other rights. Fair election procedures may also be a concern in a partly free country, with allegations of voter fraud or manipulation. Strict religious constraints are not necessarily a defining characteristic of a partly free country, as some such countries may be relatively secular or have multiple religions represented.

Question 13

A(n)________ law system is based on a systematic and extensive codification of laws and puts political officials in charge of specifying accessible,detailed,and written law that applies to all citizens.

Accepted Answer

A civil law system is based on a written legal code, and legal decisions are made based on statutes rather than on precedent, which is the main feature of a common law system. Political officials typically oversee the creation and implementation of these codes, which are intended to apply equally to all citizens. Customary law is based on longstanding cultural practices and traditions, while theocratic law is based on religious principles and is typically enforced by religious leaders.

Question 14

________ is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower-than-projected rate of return.

Accepted Answer

Political risk refers to the possibility of changes in a country's business environment due to political forces, which may lead to losses for investors or a lower rate of return than projected. This can include policy changes, regulatory shifts, expropriation of assets or properties, civil unrest, and other political factors that may impact business operations and profitability.

Question 15

The march toward greater political freedoms and more expansive civil liberties,beginning in the 1970s,strongly fueled a sense of ________.

Accepted Answer

The march toward greater political freedoms and more expansive civil liberties in the 1970s fueled a sense of inevitability of democracy, rather than any of the other answer choices listed.

Question 16

Which of the following is NOT a component of modern legal systems?

Accepted Answer

Private law is actually a component of modern legal systems, focusing on relationships between individuals, such as contracts and property law, rather than being something outside of these systems. The question asks for what is NOT a component, and since private law is a component, it does not fit as the correct answer to the question as phrased. However, all options listed (constitutional law, criminal law, commercial law, and private law) are indeed components of modern legal systems, making the premise of the question misleading.

Question 17

The pushback against democracy has powered a rise in totalitarianism,a situation that is likely to include which of the following?

Accepted Answer

The pushback against democracy is likely to lead to an increasing adoption of the principles of the rule of man, where the rulers or leaders make decisions with little regard for the rule of law or for the rights and freedoms of individuals. This can result in the rise of totalitarianism, where individual rights and freedoms are suppressed, and the state holds absolute control over all aspects of society. Options A, B, and D are unlikely to occur in such a situation, as they involve the strengthening of democratic institutions, the promotion of justice and fairness in legal proceedings, and reducing state control, respectively.

Question 18

In which of the following countries would business activity,given its status as a "not free" marketplace,be under the greatest government control?

Accepted Answer

According to the latest report by Freedom House, Vietnam is categorized as "not free" with a score of 20 out of 100 for economic freedom, indicating high government control over business activity. Additionally, Vietnam is ranked 70th out of 190 countries in the World Bank's Ease of Doing Business Report, indicating a challenging business environment with significant government bureaucracy and regulation.

Question 19

Barkely Enterprises,a U.S. manufacturer,received assistance from the Overseas Private Investment Corporation when it expanded operations into Saudi Arabia. Which of the following types of support did Barkely most likely receive from OPIC?

Accepted Answer

The Overseas Private Investment Corporation (OPIC) provides political risk insurance to U.S. companies investing in foreign countries. This type of insurance protects companies against losses due to political instability, such as expropriation of assets, currency inconvertibility, and political violence. Given that Barkely Enterprises expanded operations into Saudi Arabia, it is likely that they received political risk insurance from OPIC to protect against potential political risks.

Question 20

Which of the following statements about approaches to political risk management is NOT true?

Accepted Answer

Passive political risk management encourages managers to fully or partially hedge their bets against exposure to political hazards, while active political risk management assumes that it is difficult to systematically model political risk.

Quiz 3: The Political and Legal Environments Facing Business