Question 1

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

China has a large population, and while it has a significant number of elevators, the ratio of elevators to people is relatively low, approximately half an elevator per thousand people.

Question 2

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 had economies that were centrally planned under a socialist system. This means that the government controlled and owned the means of production, distribution, and exchange. Market capitalism, where the market and private individuals drive economic decisions, was not implemented in these countries during this time.

Question 3

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

Accepted Answer

Centrally Planned Capitalism involves command resource allocation within a system where resources are privately owned, distinguishing it from other economic systems.

Question 4

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 conducts business across boundaries in countries with different currencies, it is exposed to exchange rate fluctuations and is thus subject to exchange risk.

Question 5

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

Accepted Answer

Industry purchases are not a factor in calculating GDP. The four factors used in calculating GDP are consumer spending, investment spending, government purchases, and net exports.

Question 6

Market capitalism is an economic system in which:

Accepted Answer

Market capitalism is based on the principles of private property and market allocation of resources. Individuals and firms have the freedom to own and allocate resources according to their preferences and the demands of the market. The state's role in a market capitalist economy is generally limited to enforcing property rights, maintaining a legal framework for market transactions, and providing public goods and services.

Question 7

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

Accepted Answer

The statement mentions that the Swedish government has significant holdings in key business sectors, indicating a presence of centralized planning or socialism. However, it also mentions that the country has a hybrid economic system that incorporates market elements. Therefore, the best choice is centrally planned socialism and capitalism.

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 are market capitalism, market socialism, and centrally planned socialism. Centrally planned capitalism and centrally planned nationalism are not recognized as traditional economic systems.

Question 9

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 10

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

Accepted Answer

Communism does not work 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, such as the relatively superior performance of market economies and the difficulty of managing national economies with a single central plan, are well-established reasons for the downfall of communism. Increased public participation in matters of state also played a role in the collapse of communist regimes.

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 this ranking are taxation policy, government consumption of economic output, banking policy, and wage and price control. Percent foreign ownership is not one of the variables considered.

Question 12

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 reduce the risk of loss or gain in one currency being offset by a corresponding gain or loss in another currency.

Question 13

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

Accepted Answer

In postindustrial society, where traditional manufacturing industries have declined, new products and innovations are crucial for identifying and capitalizing on new market opportunities.

Question 14

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 a trade embargo imposed by the United States since 1960. In North Korea, it is not available through authorized channels due to international sanctions imposed on the country.

Question 15

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 in the global economic environment. While there may be political debates and differences in economic systems, the dominant economic model in the world today is market capitalism.

Question 16

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 17

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.

Question 18

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

This is a true statement. The OECD (Organisation for Economic Co-operation and Development) has taken measures to combat bribery, including the Anti-Bribery Convention that requires member nations to cooperate in investigating and prosecuting bribery cases.

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

The currency would be undervalued if the Big Mac price (converted to dollars) is lower than the U.S. price. If the Big Mac price (converted to dollars) is higher than the U.S. price, then the currency would be overvalued.

Question 20

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 country with a positive current account balance means that the inflow of money for sales of exports exceeds the outflow of money to pay for imports, indicating a trade surplus.

Quiz 2: The Global Economic Environment