Deck 4: Economic Systems and Development

Question 1

At the time of their collapse, the standard of living in most centrally planned economies was at or above that of market economies.

Answer 1

False

Question 2

In China, a legal contract is just a formality that serves to ensure mutual understanding.

Answer 2

True

Question 3

Similar to how national cultures are neither completely individualistic or completely collectivist, no economic system reflects a completely individual or group orientation.

Answer 3

True

Question 4

China is developing its economy based on natural resources and cheap labor while India is relying on the brainpower of its people.

Question 5

Guanxi is the Chinese term for "personal relationships."

Question 6

One factor that contributed to the collapse of centrally planned economies is the failure to create political value.

Question 7

A country's economic system consists of the structure and processes it uses to allocate its resources and conduct its commercial activities.

Question 8

Hong Kong's leaders describe its economic philosophy as "socialism with Chinese characteristics."

Question 9

German philosopher Helmut Newton popularized the idea of central planning in the nineteenth century.

Question 10

Entrepreneurs are businesspeople who accept the risks and opportunities involved in creating and operating new business ventures.

Question 11

One of the most important factors in forming a successful venture in China is guanxi (or government ownership).

Question 12

Many companies seeking partnerships in China overlook the importance of personal relationships.

Question 13

One of the most important factors in forming a successful joint venture in China is guanxi.

Question 14

In a centrally planned economy, entrepreneurs own a nation's land, factories and other economic resources in a strategic fashion.

Question 15

Collectivist cultures tend to offer fewer incentives and rewards than individualist cultures.

Question 16

Central planning is rooted in the ideology that the welfare of the group is more important than individual well-being.

Question 17

In China, family relationships rarely enter the business environment.

Question 18

China's leaders describe that country's economic philosophy as "socialism with Chinese characteristics."

Question 19

In a centrally planned economy, the government makes nearly all economy-related decisions including who produces what and the prices of products, labor, and capital.

Question 20

Incentives and rewards for individual business initiatives are an important component of collectivist cultures.

Question 21

One key feature of a market economy is price flexibility, which allows most prices to rise and fall to reflect the forces of supply and demand.

Question 22

In a market economy, the majority of a nation's land, factories, and other economic resources are government owned.

Question 23

Nearly all economic-related decisions in a centrally planned economy are determined by the interplay of supply and demand.

Question 24

Like privatized companies, government-owned companies seldom produce competitive products at fair prices.

Question 25

Free enterprise in a market economy gives companies the ability to decide which goods and services to produce and the markets in which to compete.

Question 26

Mixed economies are found all around the world in countries such as Spain, Denmark, South Africa, and India, where the governments of these nations centrally plan their economies.

Question 27

Canada and the United States are examples of contemporary market economies.

Question 28

Laissez-faire economics called for greater government involvement in commerce.

Question 29

China and Taiwan have both gained entry into the World Trade Organization in recent years.

Question 30

The biggest contributor to China's unemployment rate is its reunification with Hong Kong.

Question 31

The ultimate goal of a market economy is to achieve a wide range of political, social, and economic objectives by taking complete control over production and distribution of the nation's resources.

Question 32

The sale of government-owned economic resources to private companies and individuals is called privatization.

Question 33

Free choice in a market economy gives individuals access to alternative purchase options.

Question 34

A monopoly occurs when one company is able to control a product's supply and, therefore, its price.

Question 35

When China regained control of Hong Kong, it promised to implement a "one country, two systems" scenario to support economic and political freedom in Hong Kong.

Question 36

In a mixed economy, the government tends to control those economic sectors it considers important to national security and long-term stability.

Question 37

The main goal of privatization is to increase economic efficiency, boost productivity, and raise living standards.

Question 38

The price mechanism dictates supply and demand in a market economy.

Question 39

The Netherlands recently shifted from a centrally planned economy to a market economy, resulting in one of the lowest unemployment rates in Europe.

Question 40

Market economics is rooted in the belief that group concerns should be placed above individual well-being.

Question 41

People in countries that rank high on wealth and HDI tend to have dramatically shorter life spans.

Question 42

Volunteer work and unpaid household work are both counted in GNP and GDP.

Question 43

The human development index (HDI) looks beyond financial wealth and demonstrates that high national income does not guarantee human progress.

Question 44

Developing countries are also sometimes called less-developed countries.

Question 45

Technological dualism occurs when a country uses the latest technologies in its economy but exports outdated technologies to developing countries.

Question 46

Monetary policy deals with taxation and government spending, whereas fiscal policy deals with controlling interest rates.

Question 47

The United Nations' human development index measures the extent to which a government equitably provides its people with a long and healthy life, an education, and a decent standard of living.

Question 48

A smoothly functioning market economy rests on a legal system that safeguards individual property rights.

Question 49

Countries providing the greatest economic freedom tend to have the highest standards of living, whereas those with the lowest freedom tend to have the lowest standards of living.

Question 50

In less advanced countries, coastal regions are usually more developed than interior regions.

Question 51

Economic development is a measure for gauging the economic well-being of one nation's people as compared with that of another nation's people.

Question 52

As supply and demand change for a good or service, so does its selling price.

Question 53

Barter is a popular alternative for buyers lacking the hard currency needed to pay for imports.

Question 54

Nations are commonly classified as being either developed, newly industrialized, or developing.

Question 55

When we combine newly industrialized countries with those countries that have the potential to become newly industrialized, we arrive at a category often called developed countries.

Question 56

Purchasing power parity is the relative ability of two countries' currencies to buy the same "basket" of goods in those two countries.

Question 57

Both GDP per capita and GNP per capita measure a nation's income per person.

Question 58

If GDP per capita at PPP is lower in country X as compared with country Y, it costs more to buy the same basket of goods in country Y than it does in country X.

Question 59

The concept of producer price parity must be applied to understand the value of a currency in its home country.

Question 60

Interfering with the price mechanism violates a fundamental principle of the market economy.

Question 61

Which of the following was NOT true of centrally planned economies?

A) At the time of their collapse, standards of living in most centrally planned economies was at or above that of market economies.
B) Basic necessities were often not provided to citizens in centrally planned economies.
C) Underground economies for goods and services thrived in most centrally planned economies.
D) Prices on the black market were much higher than the official prices set by governments.

Question 62

Businesspeople who accept the risks and opportunities involved in creating and operating new business ventures are called ________.

A) managers
B) risky operators
C) entrepreneurs
D) central planners

Question 63

The term "juche" in Korean refers to ________.

A) strong personal relationships
B) self-reliance
C) allowing market forces to operate without interference
D) intervention in markets on an as-needed basis

Question 64

Central planning is rooted in the ideology that ________.

A) the welfare of the group is more important than individual well-being
B) individual concerns should be placed above group consensus
C) individual and group concerns are just as important as government concerns
D) privatization will enhance a country's economic well-being

Question 65

All the following factors contributed to the collapse of centrally planned economies EXCEPT ________.

A) failure to provide incentives
B) failure to satisfy consumer needs
C) failure to create political value
D) failure to measure up

Question 66

Who popularized the idea of central economic planning?

A) Jiang Zemin
B) Karl Marx
C) Mikhail Gorbachev
D) Henry Fayol

Question 67

Managers in the poorest transitional countries tend to lack training in all areas of business management.

Question 68

Who makes nearly all economy-related decisions in a centrally planned economy?

A) Consumers
B) Entrepreneurs
C) Government
D) Employees

Question 69

A by-product of the centrally planned economy was the emergence of ________.

A) black markets
B) public markets
C) mixed economy
D) market economy

Question 70

Political instability in the form of intensified nationalism is threatening Russia's further progress toward transition.

Question 71

In China, managers ________.

A) follow a strategy for forming business relationships that is similar to their American counterparts
B) focus on getting tight formal contracts
C) place greater importance on written contracts than on personal relationships
D) establish a trusting relationship before proceeding with business

Question 72

China's leaders describe its economic philosophy as ________.

A) capitalism with Chinese characteristics
B) pure market economy
C) theocracy with capital structure
D) socialism with Chinese characteristics

Question 73

A country's ________ system consists of the structure and processes it uses to allocate its resources and conduct its commercial activities.

A) political
B) economic
C) social
D) external

Question 74

All the following are true of centrally planned economies EXCEPT ________.

A) government determines who produces what products
B) government determines the prices of products and labor
C) factories are privately owned
D) government sets production goals

Question 75

A ________ is a system in which the government owns a nation's land, factories, and other economic resources.

A) mixed economy
B) market economy
C) centrally planned economy
D) none of the above

Question 76

In which of the following systems is a nation's land, factories, and other economic resources owned by the government?

A) Mixed economy
B) Public economy
C) Market economy
D) Centrally planned economy

Question 77

North Korea practices a policy of self reliance that it calls ________.

A) guanxi
B) laissez-faire
C) juche
D) privatization

Question 78

In most failed centrally planned economies, ________.

A) market conditions helped determine who produced what goods
B) prices of products were a function of supply and demand
C) central planning agencies specified production goals and decided prices
D) central planners paid a great deal of attention to efficiency

Question 79

Factors contributing to the collapse of centrally planned economies include all the following EXCEPT ________.

A) little attention was paid to the task of producing quality goods and services at the lowest possible cost
B) government ownership of economic resources reduced incentives for people and organizations to maximize the benefits obtained from the resources
C) economic growth in countries like Hong Kong, Singapore, South Korea, and Taiwan took opportunities away from the centrally planned economies and caused economic distress
D) would-be consumers in many centrally planned economies were tired of standards of living that had slipped far below those of their counterparts in market economies

Question 80

Transition replaces a people's dependence on government with greater reliance on social welfare and unemployment benefits.