Deck 3: The Economic, Legal, and Political Environment

Question 1

The world's largest transition economy is Japan.

Answer 1

False

Question 2

Firms need both tough customers and competitors to push them.

Answer 2

True

Question 3

The theory of competitive advantage forms the basis of modern trade theory.

Answer 3

True

Question 4

In China, legal precedent is only used for guidance and does not take on legal status as in common law systems.

Question 5

Traditionally, it was thought that a country's success in international business depended on its factors of production

Question 6

Unlike the analysis of Porter's Diamond model, in transition economies, natural resources are not critical.

Question 7

The global consumer-goods industry is dominated by Asian and Latin American firms.

Question 8

The Diamond model of national competitiveness is designed for emerging economies.

Question 9

Socialism is an economic policy in which the state owns all assets of the society.

Question 10

Common law systems are primarily built on legal precedent established by judges as they resolve individual cases, and those case opinions have the force of law and strongly influence future decisions.

Question 11

A major flaw in the capitalist system is the idea that it is best to have one big firm, or national champion.

Question 12

The resulting systems of jurisprudence derived from Shari'a can be viewed as quite lenient by most Western standards, where issues of personal behavior are concerned.

Question 13

The belief that the freedom to determine prices and competition without the interference of the government or the guilds would result in the best economic outcome is called laissez-faire economics.

Question 14

Transition economies continue to deal with the remnants of the old central planning, statist system.

Question 15

Studies have shown that civil law countries have greater protection of investors than do common law countries.

Question 16

In a 22-country survey published in 2006, Germany was the only country that disagreed with the statement that the best system is ''the free-market economy.''

Question 17

According to the Economic Freedom Rating, the U.S. has continued to be ranked as the freest market in the world for a number of years.

Question 18

The institutional approach emphasizes the socio-political-cultural factors that affect decision making and actions in subtle but profound ways.

Question 19

Muslims will often, but not always, be guided by Shari'a-based law even if they do not live in a country that is governed by that law.

Question 20

A market-based economic system is based on the negotiated establishment of prices between buyers and sellers of goods and labor.

Question 21

The term copyright is defined as ,the exclusive right to control reproduction or adaptation of creative works, such as books, movies, music, paintings, photographs, and software.

Question 22

When a government seizes the ownership of a private asset, it is known as privatization.

Question 23

Which economic system relies on individuals in the society to determine the price of any good?

A) Sustenance
B) Socialism
C) Market-based
D) Command-based

Question 24

The ability of a firm to take the profits it makes in a country out of that country is called:

A) repatriation of profits.
B) privatization payoffs.
C) expropriation.
D) corporate governance.

Question 25

Which economic system holds the belief that if assets are held by all, then all individuals will benefit?

A) Socialism
B) Market-based
C) Capitalist-based
D) Sustenance

Question 26

Red hats are unique types of Chinese businesses that grew out of worker brigades.

Question 27

Which element of the Diamond model refers to the nature of the competition in an industry?

A) Factors of production
B) Demand
C) Industry strategy and structure
D) Related and supporting industries

Question 28

According to the Economic Freedom Rating, which country has continued to be ranked as the freest market in the world for a number of years?

A) The United States
B) Switzerland
C) Singapore
D) Hong Kong

Question 29

Some countries believe that democracy and free-market economics go hand. This is referred to widely as:

A) the Washington consensus.
B) the Beijing Consensus.
C) laissez-faire economics.
D) a mixed economy.

Question 30

Which of the following is the world's largest transition economy?

A) Hong Kong
B) China
C) Japan
D) Singapore

Question 31

The institutional approach:

A) argues that climate conditions and access to major markets is the root of most economic growth
B) sees developmental economics as out of the hands of the managers.
C) emphasizes the socio-political-cultural factors that affect decision making and actions in subtle but profound ways.
D) argues that economic growth comes from the investment in physical and human capital.

Question 32

The settlement of Israel was pioneered by an economic unit called a(n):

A) chaebol.
B) kibbutz.
C) keiretsu.
D) haskalah.

Question 33

The nationality principle holds that every country has jurisdiction over its own citizens no matter where they are located.

Question 34

All of the following are factors of the Diamond model of national competitiveness EXCEPT:

A) demand.
B) related and supporting industries.
C) factors of production.
D) per-capita income levels.

Question 35

Which of the following is an example of a "white good"?

A) Washing machines
B) Televisions
C) Still cameras
D) Telephones

Question 36

The market system in Russia is more accurately referred to as:

A) market-led capitalism.
B) family capitalism.
C) oligarch capitalism.
D) social-democratic capitalism.

Question 37

Which of the following perspectives argues that economic growth comes from the investment in physical and human capital?

A) Neoclassical theory
B) Geographic and location theory
C) The Heckscher-Ohlin theorem
D) The institutional approach

Question 38

The U.S. is very strong in high technology and would do better to emphasize this strength. This is an example of:

A) the economies of scale theory.
B) the theory of comparative advantage.
C) the theory of factor endowments.
D) the absolute cost theory.

Question 39

In the ijara method, the financial institution is considered to be the buyer of the property, and the customer pays rent to the financial institution.

Question 40

The belief that the freedom to determine prices and competition without the interference of the government or the guilds would result in the best economic outcome is:

A) traditional economics.
B) command economy.
C) laissez-faire economics.
D) mixed economy.

Question 41

Explain a market-based economic system.

Question 42

Businesses that the government owns, but which they allow professional managers run are known as:

A) township and village enterprises.
B) expropriations.
C) laissez-faire economics businesses.
D) red hats.

Question 43

Explain the key types of concerns in intellectual property.

Question 44

In the murabaha method:

A) the consumer reimburses the purchase price by installments for a given number of years, with some specific service fee calculated into each monthly payment.
B) the financial institution is considered to be the buyer of the property, and the customer pays rent to the financial institution.
C) once the purchase money has been repaid, the property is transferred to the occupier.
D) the financial institution buys a property at the price agreed upon between the occupier and the original vendor and then immediately resells it to the occupier at a higher price.

Question 45

The resulting systems of jurisprudence derived from _____ can be viewed as quite harsh by most Western standards, where issues of personal behavior are concerned.

A) Shari'a
B) Kalam
C) civil law
D) common law

Question 46

What are township and village enterprises?

Question 47

Explain what is meant by transitional economies.

Question 48

Which of the following states that countries will extend courtesies to other countries to enforce their judgments and recognize the validity and effect of their executive, legislative, and judicial acts when necessary?

A) The protective principle
B) The doctrine of comity
C) The act of state doctrine
D) The principle of sovereign immunity

Question 49

Briefly explain Shari'a law.

Question 50

A _____ is granted to a new, useful, and non-obvious invention.

A) patent
B) copyright
C) trademark
D) logo

Question 51

The financial institution is considered to be the buyer of the property, and the customer pays rent to the financial institution in the:

A) murabaha method.
B) takaful method.
C) ijara method.
D) riba method.

Question 52

What are the four factors of the Diamond model of national competitiveness? Explain at least one.

Question 53

Which of the following gives a country jurisdiction over behavior that adversely affects its national security, even if that conduct occurred out of the country?

A) The ethnicity principle
B) The territoriality principle
C) The protective principle
D) The nationality principle

Question 54

Compare and contrast common law with civil law.

Question 55

Which of the following statements about Shari'a-based law is true?

A) Banks can directly pay interest on deposits.
B) Interest cannot be charged on loans.
C) Muslims will always be guided by Shari'a-based law even if they do not live in a country that is governed by that law.
D) The resulting systems of jurisprudence derived from Shari'a can be viewed as quite lenient by most Western standards.

Question 56

_____ systems are primarily built on legal precedent established by judges as they resolve individual cases; those case opinions have the force of law and strongly influence future decisions, particularly by lower courts.

A) Civil law
B) Islamic law
C) Common law
D) Statutory law

Question 57

Civil law:

A) originated in medieval England and is used in the United States.
B) is primarily built on legal precedent established by judges as they resolve individual cases.
C) gives judges much leeway to interpret a law's intent and provide commentary that will be used in future legal rulings.
D) uses statutes and comprehensive codes as the primary building blocks.