Question 1

By identifying and investing early in a potential future economic star,international firms build brand loyalty and gain experience in that country's business practices.

Accepted Answer

By identifying and investing early in a potential future economic star, international firms can get a head start in building brand loyalty and gaining experience in that country's business practices, which can pay off in the long run.

Question 2

It is more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses.

Accepted Answer

In undeveloped economies, businesses may have to provide their own infrastructure and services, such as electrical generators or transportation. This can drive up costs and make it more expensive to do business. Additionally, there may be a lack of skilled workers or suppliers, which can also add to costs.

Question 3

Which of the following measures the total annual income received by residents of a country and is regarded as a yardstick for the economic activity of a country?
A)income elasticity of demand
B)cash reserve ratio
C)net cash flow ratio
D)gross national income
E)income equity ratio

Accepted Answer

Gross national income (GNI) measures the total annual income received by residents of a country, including income generated abroad. It is often used as a metric to assess the economic activity and well-being of a country. Choices A, B, C, and E do not measure the total annual income of a country or its economic activity.

Question 4

Which of the following is an indicator of low human development in a country?
A)score of 0.3 on the HDI scale
B)rapid "democratization" of political communities
C)large population due to a highly developed health care system
D)giving citizens a voice in the important decisions made for the community
E)higher GNI per capita than the United States

Accepted Answer

A score of 0.3 on the HDI scale is a low score indicating low human development in a country. HDI (Human Development Index) measures a country's average achievements in three basic dimensions of human development: a long and healthy life, knowledge, and a decent standard of living. A score of 0.3 suggests that the country's population has low life expectancy, limited access to education, and low income levels.

Question 5

In both China and India,the shift toward a command-based economic system has produced large gains despite weak property rights and endemic corruption.

Accepted Answer

Both China and India have experienced economic growth, but China has a more command-based system, while India has a mixed economy with significant market-based elements. The statement inaccurately describes India's economic system.

Question 6

As a result of _____,large amounts of economic activity in India are unrecorded and the official GDP figures of the country fail to tell the entire story of the economy.
A)a large population
B)active bartering
C)deregulation
D)nationalization
E)closed totalitarianism

Accepted Answer

Active bartering, particularly in rural areas, is a common practice in India and a significant portion of economic transactions occur through informal channels that are not recorded in official statistics such as GDP.

Question 7

When the industry practice was to charge a fee for each DVD rented by the customer,Netflix pioneered the subscription method,a new way to rent DVDs that was cheaper.This is an example of
A)privatization
B)economic deregulation
C)boundary spanning
D)innovation
E)benchmarking

Accepted Answer

Netflix's introduction of a new and cheaper subscription model for DVD rental is an example of innovation, which involves introducing a new product, service, or way of doing things that creates value for customers and/or the organization.

Question 8

The country of Baloonistan is classified as having low human development (the quality of life is poor).This means its HDI is
A)a score of less than 0.5 on the HDI scale
B)Around 6.0
C)Greater than 5.0 but less than 7.0 t Than 5.0 but less than 7.0
D)Around 80
E)In the bottom 60 percentile

Accepted Answer

Low human development is defined as an HDI score of less than 0.5 on the HDI scale. Therefore, option A is the correct answer. Options B, C, D, and E do not fall within the definition of low human development.

Question 9

Which of the following statements is true of purchasing power parity (PPP)?
A)PPP figures can be misleading because they don't consider differences in the cost of living.
B)The PPP for different countries is adjusted (up or down)depending upon whether the cost of living is lower or higher than in Great Britain.
C)The PPP data gives a static picture of economic development.
D)China's GNI PPP per capita is higher than that of the United States.
E)PPP adjustment does not allow for a direct comparison of living standards in different countries.

Accepted Answer

PPP data provides a static picture of economic development as it reflects the relative value of currencies and cost of living at a specific point in time.

Question 10

A black economy is most likely to be prevalent when
A)large amounts of economic activity are in the form of legally recorded cash transactions.
B)people engage in barter agreements to avoid paying taxes.
C)a country's GNI per capita exceeds $30,000.
D)the expenses of the government are less than its income.
E)a country is in trade surplus with another foreign country.

Accepted Answer

A black economy occurs when economic activities go unrecorded and/or untaxed. Bartering, which involves exchanging goods or services without the use of money or formal contracts, is one way for people to avoid paying taxes or being tracked by the government. Therefore, option B is the best choice. A, C, D, and E do not necessarily indicate a prevalence of black economy.

Question 11

In 2014,if the GNI per capita of India was $1,570 and its PPP per capita was $5,630,this means that the cost of living in India was lower than the cost of living in
A)China.
B)Great Britain.
C)Germany.
D)the United States.
E)The rest of the world.

Accepted Answer

PPP per capita takes into account the differences in the cost of living between countries. Therefore, if India's PPP per capita is $5,630 and its GNI per capita is $1,570, it means that goods and services are cheaper in India compared to the United States. Thus, the cost of living would be lower in India compared to the United States.

Question 12

Which of the following is broadly defined as the development of new products,processes,organizations,management practices,and strategies?
A)privatization
B)economic deregulation
C)boundary spanning
D)innovation
E)benchmarking

Accepted Answer

Innovation is broadly defined as the development of new products, processes, organizations, management practices, and strategies. Privatization, economic deregulation, boundary spanning, and benchmarking are all related terms but do not encompass the full definition of innovation.

Question 13

One common measure of economic development is a country's
A)gender ratio.
B)gross national income.
C)infant mortality rate.
D)population density.
E)total geographical area.

Accepted Answer

Gross national income (GNI) is a widely recognized measure of economic development. It represents the total value of goods and services produced by a country's residents and businesses, including those produced abroad. GNI takes into account factors such as trade, investment, and remittances, and provides a more comprehensive picture of a country's economic activity than other measures like population density or total geographical area. Gender ratio and infant mortality rate are indicators of social and health development, respectively, but do not directly measure economic development.

Question 14

A country's economic system and property rights regime do not influence the attractiveness of the country as a market or investment site.

Accepted Answer

A country's economic system and property rights regime greatly influence the attractiveness of the country as a market or investment site. For instance, a free-market economy with strong property rights protection is generally seen as more attractive for foreign investors than a socialist economy with weak property rights protection.

Question 15

Which of the following is based on three measures: life expectancy at birth,educational attainment,and average incomes based on PPP estimates?
A)Human Development Index
B)Gross National Income
C)Gross Domestic Product
D)Cost of Living Index
E)Cash Reserve Ratio

Accepted Answer

The three measures (life expectancy, educational attainment, and income) are the components of the Human Development Index (HDI), which ranks countries based on their level of human development. The other options (B, C, D, and E) are not based on these same measures.

Question 16

You can adjust GNI per capita by purchasing power to account for differences in the
A)cost of living.
B)population density.
C)geographical area.
D)factor endowments.
E)labor productivity.

Accepted Answer

Adjusting GNI per capita by purchasing power accounts for differences in the cost of living, which varies significantly across countries. This adjustment reflects how far a unit of money can go in different countries and provides a more accurate picture of the standard of living in each country. Population density, geographical area, factor endowments, and labor productivity are not directly related to adjusting GNI per capita by purchasing power.

Question 17

The Human Development Index comes close to Amartya Sen's conception of how development should be measured,although which of the following,suggested by Sen in his thesis,is not included in the index?
A)basic health care
B)political freedom
C)educational attainment
D)basic average income
E)life expectancy at birth

Accepted Answer

According to Amartya Sen, development should not only focus on basic income, health, and education, but also on political freedom, women's empowerment, social inclusion, and environmental sustainability. The Human Development Index covers the first three dimensions but does not include a measure of political freedom.

Question 18

In 2014,if the PPP per capita of China was $13,170 and the PPP per capita of the United States was $55,860,this means that the
A)GNI per capita was greater in China.
B)percent of goods and services consumed in the United States was lower.
C)standard of living in China was better.
D)cost of living was lower in China.
E)annual average GDP growth rate was lower in China.

Accepted Answer

PPP per capita measures the relative cost of living and inflation rates between two countries. A lower PPP per capita in China compared to the United States implies a lower cost of living in China. Therefore, choice D is the correct answer. None of the other choices can be concluded from the given data.

Question 19

Social unrest and disorder are less likely to be found in countries that contain more than one ethnic nationality.

Accepted Answer

Multiple ethnic nationalities can actually lead to social tensions and conflicts, especially if there are disparities in power, resources, and representation among different groups. Additionally, issues of identity and belonging can also create divisions and fuel unrest. Therefore, having multiple ethnic nationalities does not necessarily guarantee social stability.

Question 20

In the context of political economy,the past three decades have seen a general move toward
A)autocratic forms of government.
B)command-based economic reforms.
C)adoption of legal systems that better enforce property rights.
D)an environment which is unfavorable for international business.
E)military parties monopolizing political power worldwide.

Accepted Answer

The adoption of legal systems that better enforce property rights has been a general trend in the past three decades in the context of political economy. This has been seen as a way to attract foreign investment and promote economic growth. Autocratic forms of government and command-based economic reforms have been in decline, while there has been an overall increase in global economic integration and a trend toward more democratic institutions. There is no evidence of military parties monopolizing political power worldwide.

Quiz 3: National Differences in Economic Development

By identifying and investing early in a potential future economic star,international firms build brand loyalty and gain experience in that country's business practices.

It is more costly to do business in relatively primitive or undeveloped economies because of the lack of infrastructure and supporting businesses.

Which of the following measures the total annual income received by residents of a country and is regarded as a yardstick for the economic activity of a country?

Which of the following is an indicator of low human development in a country?

In both China and India,the shift toward a command-based economic system has produced large gains despite weak property rights and endemic corruption.

As a result of _____,large amounts of economic activity in India are unrecorded and the official GDP figures of the country fail to tell the entire story of the economy.

When the industry practice was to charge a fee for each DVD rented by the customer,Netflix pioneered the subscription method,a new way to rent DVDs that was cheaper.This is an example of

The country of Baloonistan is classified as having low human development (the quality of life is poor) .This means its HDI is

Which of the following statements is true of purchasing power parity (PPP) ?

A black economy is most likely to be prevalent when

In 2014,if the GNI per capita of India was $1,570 and its PPP per capita was $5,630,this means that the cost of living in India was lower than the cost of living in

Which of the following is broadly defined as the development of new products,processes,organizations,management practices,and strategies?

One common measure of economic development is a country's

A country's economic system and property rights regime do not influence the attractiveness of the country as a market or investment site.

Which of the following is based on three measures: life expectancy at birth,educational attainment,and average incomes based on PPP estimates?

You can adjust GNI per capita by purchasing power to account for differences in the

The Human Development Index comes close to Amartya Sen's conception of how development should be measured,although which of the following,suggested by Sen in his thesis,is not included in the index?

In 2014,if the PPP per capita of China was $13,170 and the PPP per capita of the United States was $55,860,this means that the

Social unrest and disorder are less likely to be found in countries that contain more than one ethnic nationality.

In the context of political economy,the past three decades have seen a general move toward