Question 1

How are countries classified? Explain with examples.

Accepted Answer

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Question 2

Economic transition is the process of moving from ________.

Accepted Answer

Economic transition refers to the shift from a centrally planned economy to a free-market economy, also known as a transition from socialism to capitalism. This involves introducing market-oriented policies such as private property rights, free trade, and deregulation. The other options in the question are not accurate descriptions of economic transition.

Question 3

Which of the following is a disadvantage of local requirement laws to foreign companies?

Accepted Answer

Local requirement laws may force foreign companies to hire local personnel, which could result in a lack of qualified and adequately trained workers. This can be a disadvantage to the foreign company as they may have to spend time and resources training these workers, which could be used for other aspects of the business operations.

Question 4

How does economic development in countries affect international business?

Accepted Answer

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Question 5

Himark Enterprises has foreign operations in Taiwan,India,and China.The firm pays an annual insurance premium to the Overseas Private Investment Corporation.The firm is most likely protecting itself from ________.

Accepted Answer

The Overseas Private Investment Corporation provides political risk insurance, which protects companies against losses due to expropriation, political violence, and similar events that can occur when a foreign government nationalizes or expropriates assets. This would be the most likely reason why Himark Enterprises pays an annual insurance premium to this organization, as it has foreign operations in countries like Taiwan, India, and China which have different political climates that could pose risks to their investments. The other options - privatization, natural disasters, and financial instability - are not as directly related to political risks that could be mitigated through political risk insurance.

Question 6

Which of the following terms refers to the forced transfer of assets from a company to the government without compensation?

Accepted Answer

Confiscation refers to the forced transfer of assets from a company to the government without compensation. Expropriation also involves the taking of assets, but compensation is usually provided. Nationalism refers to a political ideology that prioritizes the interests of the nation over individual or foreign interests. Nationalization refers to the transfer of private companies or industries to government ownership or control, which may involve compensation.

Question 7

________ is the forced transfer of assets from a company to the government with compensation.

Accepted Answer

Expropriation refers to the forced transfer of assets from a company to the government with compensation. Nationalization, on the other hand, involves the government taking over a private company without necessarily compensating the owners. Confiscation involves the seizure of assets without any compensation, and localization refers to the process of adapting products or services to meet the needs of a particular country or region.

Question 8

Had the government taken over the assets of Global Trading without compensation,and not taken over the assets of any other company,the government's actions would be an example of ________.

Accepted Answer

Confiscation refers to the government taking property without compensation, which matches the scenario described.

Question 9

One of the key obstacles faced by countries in economic transition is the lack of managerial expertise.

Accepted Answer

Countries in economic transition often lack experienced and skilled managers who can effectively lead companies or organizations, resulting in difficulties in managing operations and strategic decision-making.

Question 10

Had the government taken over (with compensation)the assets of Global Trading but not those of any other company,the government's actions would be an example of ________.

Accepted Answer

Expropriation refers to the government's act of taking over private assets for public use, typically with compensation. In this scenario, since the government took over the assets of Global Trading with compensation and did not target any other company, it aligns with the definition of expropriation.

Question 11

What is privatization? What role does it play in economic transition?

Accepted Answer

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Question 12

Nations with the poorest infrastructures and lowest personal incomes are called developing countries.

Accepted Answer

Developing countries are typically characterized by poor infrastructure and low personal incomes.

Question 13

What is economic transition? Describe the obstacles that countries face during economic transition.

Accepted Answer

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Question 14

Differentiate between GDP and GNP.Briefly discuss the drawbacks of using GDP and GNP as indicators of economic development.

Accepted Answer

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Question 15

Expropriation is best defined as the ________.

Accepted Answer

Expropriation is the transfer of ownership from private to public sector with compensation to the private owners for their losses. It is a legally enforced process that allows the government to take private property for public use, with the obligation to compensate the owners for the fair market value of their property. The compensation is usually based on the property's current market value, and additional compensation may be provided for loss of profits, reestablishment costs or other related expenses. Options A, C, and D do not accurately reflect the definition of expropriation.

Question 16

________ 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 risk that political forces (such as changes in government policies, regulations, etc.) may negatively impact a business environment, leading to potential loss of investment value or reduced returns for investors.

Question 17

Does greater economic freedom guarantee a higher standard of living? Provide examples of two specific countries to support your answer.

Accepted Answer

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Question 18

Global Trading just learned that the government of one country in which it does business has taken over the entire electric utility industry.The government's actions are an example of ________.

Accepted Answer

Nationalization occurs when a government takes control of a private industry, such as the electric utility industry in this scenario. Confiscation involves the government seizing private property without compensation, expropriation involves the government taking control of foreign property, and globalization refers to the integration of economies and societies through cross-border trade and investment.

Question 19

________ is the process by which a nation changes its fundamental economic organization and creates new free-market institutions.

Accepted Answer

Economic transition refers to the process of transforming a socialist or centrally planned economy to a market-based economy. This involves the creation of new free-market institutions, such as stock markets, private banks, and private businesses, and the removal of state-owned enterprises and government control over the economy. It also involves the introduction of economic liberalization policies, such as deregulation, privatization, and trade liberalization, to promote market competition and attract foreign investment.

Question 20

Which of the following is a major obstacle to economic transition?

Accepted Answer

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Quiz 4: Economic Development of Nations