Question 1

For decades,the economies of China,the former Soviet Union,and India functioned according to the tenets of:

Accepted Answer

China, the former Soviet Union, and India all had centrally planned socialist economies for a significant portion of their history. They relied on centralized government planning and ownership of major industries, rather than market forces, to determine the direction and distribution of production. While aspects of market capitalism and socialistic capitalism may have been introduced in recent years, the fundamental economic system was centrally planned socialism.

Question 2

Market capitalism is an economic system in which:

Accepted Answer

In market capitalism, resources and production resources are privately owned and allocated by individuals and firms through the market. The state's role is limited and does not interfere with the workings of the market. This distinguishes it from other economic systems, such as socialism or command economies, where the state plays a much more significant role in resource allocation.

Question 3

One of the distinguishing features of a Centrally Planned Capitalism economic system is:

Accepted Answer

The answer of One of the distinguishing features of a...

Question 4

A country with a positive current account balance has a trade deficit;that is,the outflow of money to pay for imports exceeds the inflow of money for sales of exports.

Accepted Answer

A positive current account balance means that the inflow of money for sales of exports exceeds the outflow of money to pay for imports, which indicates a trade surplus.

Question 5

The "balance of payments" is a record of all economic transactions between the residents of a country and the developed countries of the world.

Accepted Answer

The "balance of payments" is a record of all economic transactions between the residents of a country and the rest of the world, not just developed countries.

Question 6

The foreign exchange market consists literally of a buyer's and a seller's market where currencies are traded for both spot and future delivery on a continuous basis.The forward market is for immediate delivery and the spot market is for future delivery.

Accepted Answer

The forward market is for future delivery and the spot market is for immediate delivery.

Question 7

Product and market opportunities in postindustrial society are heavily dependent upon new products and innovations.

Accepted Answer

In a postindustrial society, the focus is on knowledge-based and service-based industries, which rely heavily on new products and innovations to drive growth and differentiation in the marketplace. Therefore, there are significant opportunities for companies who can develop and bring to market new and innovative products.

Question 8

Traditionally economists identified main types of economic systems,which include all of the following except:

Accepted Answer

The traditional types of economic systems include market capitalism, market socialism, and centrally planned socialism and capitalism. Centrally planned nationalism is not considered a traditional economic system.

Question 9

When a company conducts business across boundaries in countries with different currencies,it is thrust into the turbulent world of exchange risk.

Accepted Answer

When a company deals with different currencies in different countries, it exposes itself to exchange rate risks due to fluctuations in currency values.

Question 10

The only two countries where Coca-Cola is not available through authorized channels are:

Accepted Answer

Coca-Cola is not available in Cuba due to the U.S. embargo on Cuba and in North Korea due to government restrictions on foreign products.

Question 11

The Washington,D.C.-based Heritage Foundation survey consists of over 175 countries ranked by degree of economic freedom.The key economic variables considered for this ranking includes all of the following except:

Accepted Answer

The key economic variables considered for the ranking of economic freedom by the Heritage Foundation include taxation policy, government consumption of economic output, banking policy, and wage and price control. However, percent foreign ownership is not considered as one of the key economic variables.

Question 12

The Swedish government has significant holdings in key business sectors and has a hybrid economic system that incorporates:

Accepted Answer

The Swedish government has a mixed economic system that includes elements of both capitalism and socialism, but it is primarily characterized by centrally planned socialism and capitalism. The government owns a number of key businesses, such as the national railway, and regulates many industries, including healthcare and education. However, Sweden also has a strong private sector and a market economy, with a relatively low level of government intervention in some areas.

Question 13

The Gross Domestic Product (GDP),a measure of a nation's economic activity,is calculated by all of the following factors except:

Accepted Answer

The GDP is calculated by adding up the total value of consumer spending, investment spending, government purchases, and net exports. Industry purchases are not a factor in calculating the GDP.

Question 14

The CEO of Otis Elevators says they measure elevator populations in countries as units installed per thousand people.According to this,China is about half an elevator per thousand people.

Accepted Answer

The answer of The CEO of Otis Elevators says they...

Question 15

The demise of communism as an economic and political system can be explained by all of the following facts except:

Accepted Answer

The statement that "communism works when the currency exchange rate is weak" is not a valid explanation for the demise of communism as an economic and political system. The other options provide valid explanations.

Question 16

Hedging exchange rate exposure involves establishing an offsetting currency position such that the loss or gain of one currency position is offset by a corresponding gain or loss in some other currency.

Accepted Answer

Hedging exchange rate exposure does involve establishing an offsetting currency position to mitigate the risk of loss or gain in a particular currency. This is done to protect the value of assets or liabilities denominated in that currency.

Question 17

The thirty nations that belong to the OECD,who believe in market-allocation economic systems and pluralistic democracy,addressed the vexing problem of bribery by requiring members to cooperate when pursuing bribery allegations.

Accepted Answer

The statement accurately describes the actions taken by the OECD in addressing the problem of bribery.

Question 18

During the past two decades,the world economic environment has become increasingly dynamic.To achieve success,executives and marketers must take into account all of the following realities except:

Accepted Answer

The struggle between capitalism and socialism is not a current reality that executives and marketers need to take into account. While there may be debates and discussions about the merits of each system, it is not a central reality that affects the day-to-day operations of businesses in the global economy. Therefore, option D is the exception, and the other options mentioned are all key realities that must be considered.

Question 19

A country's currency would be overvalued if the Big Mac price (converted to dollars)is lower than the U.S.price.

Accepted Answer

If the Big Mac price (converted to dollars) is lower than the U.S. price, it means that the country's currency is undervalued relative to the U.S. dollar. An overvalued currency would result in a higher Big Mac price (converted to dollars) than the U.S. price.

Question 20

The important fact to recognize about the overall balance of payments is that it is always in balance,although imbalances do occur in subsets of the overall balance.

Accepted Answer

The overall balance of payments must always balance because it is a double-entry accounting system that records transactions made between one country and the rest of the world. Imbalances can occur within its subsets, such as the current account or the financial account, but these are offset by equal and opposite entries elsewhere in the account, ensuring the overall balance of payments sums to zero.

Quiz 2: The Global Economic Environment