International Business Competing in the Global Marketplace 11th Edition By Charles -Thomas Test Bank

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International Business Competing in the Global Marketplace 11th Edition By Charles -Thomas Test Bank

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WITH ANSWERS

International Business Competing in the Global Marketplace 11th Edition By Charles -Thomas Test Bank

Chapter 02

National Differences in Political, Economic, and Legal Systems

 

True / False Questions

1. The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based.

True    False

 

2. The communists believed that socialism could be achieved by democratic means, and turned their backs on violent revolution and dictatorship.

True    False

 

3. The Cold War was, in many respects, a war between collectivism and individualism.

True    False

 

4. Most modern democratic states practice representative democracy.

True    False

 

5. Democracy is a form of government that prohibits opposing political parties.

True    False

 

6. In a totalitarian country, there are safeguards to protect an individuals right to freedom of expression, opinion, and organization.

True    False

 

7. The number of command economies has fallen dramatically since the demise of communism in the late 1980s.

True    False

 

8. The objective of the government in a command economy is to encourage free and fair competition between private producers.

True    False

 

9. In mixed economies, governments also tend to take into state ownership troubled firms whose continued operation is thought to be vital to national interests.

True    False

 

10. A nations legal system is usually of very little interest to international business managers, because international businesses are headquartered in different countries.

True    False

 

11. Judges under a civil law system have more flexibility than those under a common law system.

True    False

 

12. A theocratic law system is one in which the law is based on religious teachings.

True    False

 

13. The parties to an agreement normally resort to contract law when one party feels the other has violated either the letter or the spirit of an agreement.

True    False

 

14. Contracts under a civil law system tend to be very detailed with all contingencies spelled out.

True    False

 

15. Many of the worlds larger trading nations, including India and the United Kingdom, have not ratified the United Nations Convention on Contracts for the International Sale of Goods (CISG).

True    False

 

16. To facilitate international business, property rights are defined in a consistent way across countries.

True    False

 

17. Property rights can be violated in two waysthrough private action and through public action.

True    False

 

18. The Foreign Corrupt Practices Act does not allow for grease payments.

True    False

 

19. Patents, copyrights, and trademarks establish ownership rights over intellectual property.

True    False

 

20. Patents discourage companies from committing themselves to extensive basic research.

True    False

 

21. The Trade-Related Aspects of Intellectual Property Rights, attempts to reduce intellectual property protections to enhance trade.

True    False

 

22. Product liability sets certain safety standards to which a product must adhere.

True    False

 

23. Product liability can be much lower if a product does not conform to required safety standards.

True    False

 

24. The political systems of a country raise ethical issues that have implications for the practice of international business.

True    False

 

 

Multiple Choice Questions

25. Interdependent political, economic, and legal systems of a country make up its:

A. administrative agenda.

 

B. socioeconomic fabric.

 

C. cultural environment.

 

D. political economy.

 

26. A political system that prioritizes the needs of the society over individual freedoms is called _____.

A. totalitarianism

 

B. collectivism

 

C. capitalism

 

D. egalitarianism

 

27. Modern socialism has been popularized largely through the work of _____.

A. Adam Smith

 

B. Karl Marx

 

C. David Hume

 

D. Thomas Hobbes

 

28. The _____ believed that socialism could be achieved only through violent revolution and totalitarian dictatorship.

A. existentialists

 

B. social democrats

 

C. communists

 

D. anarchists

 

29. In several Western democracies, the poor performance of state-owned enterprises, because of protection from competition and guaranteed government financial support, led to _____.

A. privatization

 

B. nationalization

 

C. liberalization

 

D. socialization of production

 

30. Which of the following philosophies can be traced back to the ancient Greek philosopher Aristotle?

A. Socialism

 

B. Individualism

 

C. Collectivism

 

D. Anarchism

 

31. The tenet of _____ is that the welfare of society is best served by letting people pursue their own economic self-interest.

A. socialism

 

B. communism

 

C. anarchism

 

D. individualism

 

32. Which of the following statements about individualism is true?

A. Individualism promotes state ownership of the basic means of production, distribution, and exchange.

 

B. Individualism promotes globalization.

 

C. Individualism creates an anti-business environment.

 

D. Individualism advocates for a democratic political system.

 

33. Which of the following is a feature of a democracy?

A. Exercise of absolute control by one person or political party.

 

B. Governance by people or elected representatives.

 

C. Prohibition of entry to opposing political parties.

 

D. Complete restriction of individual political freedom.

 

34. Totalitarianism:

A. refers to a political system in which government is by the people, exercised either directly or through elected representatives.

 

B. is based on a belief that citizens should be directly involved in decision making.

 

C. is a form of government in which one person or political party exercises absolute control over all spheres of human life.

 

D. is based on the idea that the welfare of society is best served by letting people pursue their own economic self-interests.

 

35. Peoples right to protest on issues of accountability in public expenditure would be possible in a _____ political set-up.

A. dictatorial

 

B. democratic

 

C. totalitarian

 

D. fascist

 

36. _____ refers to a state where political power is monopolized by a party, group, or individual that governs according to religious principles.

A. Representative democracy

 

B. Theocratic totalitarianism

 

C. Tribal anarchism

 

D. Monotheistic communism

 

37. Which system of government generally permits some individual economic freedom but restricts individual political freedom, frequently on the grounds that it would lead to the rise of communism?

A. Tribal totalitarianism

 

B. Right-wing totalitarianism

 

C. Democratic totalitarianism

 

D. Theocratic totalitarianism

 

38. In a pure market economy:

A. all productive activities are owned by the state.

 

B. production is determined by the interaction of supply and demand.

 

C. collectivist goals are given priority over individual goals.

 

D. the prices at which goods are sold is determined by the government.

 

39. An economy in which the interaction of supply and demand determines the quantity in which goods and services are produced is called a _____.

A. planned economy

 

B. command economy

 

C. closed economy

 

D. market economy

 

40. Antitrust laws in the United States are designed to:

A. restrict agricultural subsidies.

 

B. increase trade barriers.

 

C. outlaw monopolies.

 

D. restrict privatization.

 

41. In a(n) _____ economy the government plans the goods and services that a country produces, the quantity in which they are produced, and the prices at which they are sold.

A. market

 

B. command

 

C. open economy

 

D. laissez-faire

 

42. In a _____ economy, certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning.

A. market

 

B. private

 

C. command

 

D. mixed

 

43. In which of the following economies would the government be most likely to take into state ownership troubled firms whose continued operation is thought to be vital to national interests?

A. Market economies

 

B. Laissez-faire economies

 

C. Liberal economies

 

D. Mixed economies

 

44. Which of the following statements about the legal systems of countries is true?

A. They can affect the attractiveness of a country as an investment site or market.

 

B. They are not influenced by the prevailing political system of the country.

 

C. They are almost the same for all countries.

 

D. They are of little importance to international business.

 

45. One key components of a countrys legal system is:

A. establishing a mixed economy.

 

B. taking a hands-off approach to business practices.

 

C. defining the rights and obligations of those involved in business transactions.

 

D. leaving the monitoring of the way business transactions are executed to the United Nations.

 

46. Under the _____, cases are judged with reference to three characteristics: tradition, precedent, and custom.

A. theocratic law system

 

B. civil law system

 

C. contract law system

 

D. common law system

 

47. A civil law system tends to be less adversarial than a common law system because the:

A. judges decisions are based on detailed legal codes.

 

B. judges have the freedom to interpret laws based on the situation.

 

C. judges decisions are based on religious teachings.

 

D. judges are guided by interpretations made in prior legal cases.

 

48. A common law system is different from a civil law system because:

A. a common law system is based on religious teachings, while a civil law system is based on cultural traditions.

 

B. a common law system is very rigid, while a civil law system tends to be more flexible.

 

C. in a common law system a judge relies on legal codes to make rulings, while in a civil law system a judge relies on his intuition and moral reasoning to make judgments.

 

D. in a common law system a judge has the power to interpret the law, while in a civil law system a judge has the power only to apply the law.

 

49. A _____ system is based on a very detailed set of laws organized into codes.

A. traditional law

 

B. theocratic law

 

C. civil law

 

D. common law

 

50. A theocratic law system is one in which the law is based on:

A. religious teachings.

 

B. tradition, precedent, and custom.

 

C. a detailed set of laws organized into codes.

 

D. cultural and social norms.

 

51. Which of the following is the most widely practiced theocratic legal system in the world today?

A. Hindu law

 

B. Sikh law

 

C. Islamic law

 

D. Jewish law

 

52. _____ is the collective term for the legal rights relating to the use to which a resource is put and over the use made of any income that may be derived from that resource.

A. Trade rights

 

B. Property rights

 

C. Positive rights

 

D. Common rights

 

53. In Russia, in the chaotic period following the collapse of communism, an outdated legal system, coupled with a weak police force and judicial system, allowed the Russian Mafia to demand protection money from business owners. Any business owner who rebelled had to face violent retribution. This violation of property rights exemplifies _____.

A. private action

 

B. copyright violation

 

C. infrastructural failure

 

D. public liability

 

54. Violation of property rights done through legal mechanisms such as levying excessive taxation and requiring expensive licenses or permits from property holders is called _____.

A. private action

 

B. collective action

 

C. public action

 

D. copyright violation

 

55. Which of the following areas of international trade is regulated by the Foreign Corrupt Practices Act?

A. Making and performance of commercial contracts in international trade.

 

B. Preventing bribery and unethical acts in the conduct of international business.

 

C. Establishing a set of safety standards to which a new product must adhere.

 

D. Controlling the mafia activity that hinders trade in Russia, Japan, and the U.S.

 

56. Which of the following is an example of intellectual property?

A. A music score

 

B. A lazer-tag game

 

C. A software business

 

D. A theater

 

57. A _____ grants the inventor of a new product or process exclusive rights for a defined period of time to the manufacture, use, or sale of that invention.

A. copyright

 

B. trademark

 

C. contract

 

D. patent

 

58. Design and names by which merchants or manufacturers designate and differentiate their products are known as _____.

A. trademarks

 

B. copyrights

 

C. patents

 

D. licenses

 

59. The Research and Development division of a company has recently designed a new coffee vending machine that is likely to sell very well in the market. It is compact, user-friendly, and provides unprecedented efficiency in terms of cost per cup. Consequently, the company fears that its competitors would soon mimic the design of their product and to protect its product, it is now seeking a _____.

A. copyright

 

B. patent

 

C. trademark

 

D. certification

 

60. Which of the following provides exclusive legal rights to authors, composers, playwrights, artists, and publishers to publish and disperse their work as they see fit?

A. Patent

 

B. Copyright

 

C. Trademark

 

D. License

 

61. The TRIPS agreement was designed to:

A. exclude China from all intellectual property agreements.

 

B. oversee a much stricter enforcement of intellectual property regulations.

 

C. hold a firm and its officers responsible when a product causes injury, death, or damage.

 

D. support traded software and recorded property among developed markets.

 

62. Which of the following statements about the Trade Related Aspects of Intellectual Property Rights (or TRIPS) agreement is true?

A. It was designed to oversee the loosening of intellectual property regulations, beginning in 1995.

 

B. It obliged WTO members to grant and enforce patents lasting at least 20 years and copyrights lasting 50 years.

 

C. It directed rich countries to comply with its rules of intellectual property protection within five years.

 

D. It provided the very poorest countries amnesty from complying with its rules of intellectual property protection.

 

63. Safety standards to which a product must adhere are set by:

A. safety certifications.

 

B. contract laws.

 

C. product safety laws.

 

D. product liability laws.

 

64. Private action refers to:

A. public officials extorting income, resources, or the property itself from property holders.

 

B. bribing government officials in foreign countries in an attempt to win lucrative contracts.

 

C. theft, piracy, blackmail, and the like by private individuals or groups.

 

D. violations of intellectual property rights.

 

65. Which of the following is a safeguard that representative democracies use to ensure that their elected officials are held responsible for their actions?

A. Unlimited terms for elected representatives

 

B. A court system that is integrated with the political system

 

C. An individuals right to freedom of expression, opinion, and organization

 

D. A political police force and armed service

 

66. The _____ establishes a uniform set of rules governing certain aspects of the making and performance of everyday commercial contracts between sellers and buyers who have their places of business in different nations.

A. Trade-Related Aspects of Intellectual Property Rights (TRIPS)

 

B. Paris Convention for the Protection of Industrial Property

 

C. United Nations Convention on Contracts for the International Sale of Goods (CIGS)

 

D. World Trade Organization (WTO)

 

67. The _____ makes it illegal for American companies to bribe a foreign government official in order to obtain or maintain business over which that foreign official has authority, and requires all publicly traded companies to keep detailed records that would allow determining whether a violation of the act has occurred.

A. Trade-Related Aspects of Intellectual Property Rights (TRIPS)

 

B. Foreign Corrupt Practices Act

 

C. Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

 

D. Organisation for Economic Co-operation and Development (OECD)

 

68. Which of the following is a reason that command economies tend to stagnate?

A. Costs are tightly controlled and business are forced to be efficient rather than dynamic and innovative.

 

B. The abolition of private ownership means there is no incentive for individuals to look for better ways to serve consumer needs.

 

C. All economic resources are mobilized for the public good.

 

D. Individuals in command economy countries lack the skills to be innovative.

 

69. Which of the following is true of criminal liability laws?

A. Calls for the payment of monetary damages

 

B. They are more extensive in Western Europe than in any other region of the world

 

C. Results in fines or imprisonment

 

D. They are less impactful if the product does not conform to the required safety standards

 

70. _____ are established through patents, copyrights, and trademarks.

A. Digital signatures

 

B. Ownership rights over private property

 

C. Origination fees and tributes

 

D. Ownership rights over intellectual property

 

71. Systems that emphasize collectivism tend toward _____.

A. totalitarianism

 

B. capitalism

 

C. democracy

 

D. privatization

 

72. In a(n) _____ society, the welfare of society is best served by letting people pursue their own economic self-interest.

A. individualist

 

B. capitalist

 

C. democratic

 

D. totalitarian

 

73. _____ argued that individual diversity and private ownership are undesirable.

A. Karl Marx

 

B. Plato

 

C. John Stuart Smith

 

D. Aristotle

 

74. _____ generally permits some individual economic freedom but restricts individual political freedom, frequently on the grounds that it would lead to the rise of communism.

A. Communist totalitarianism

 

B. Theoretical totalitarianism

 

C. Right-wing totalitarianism

 

D. Tribal totalitarianism

 

75. In a _____, if demand for a product exceeds supply, prices will rise, signaling to producers to produce more.

A. mixed economy

 

B. market economy

 

C. collectivist economy

 

D. command economy

 

76. The abolition of _____ in a command economy means there is no incentive for individuals to look for better ways to serve consumer needs.

A. private ownership

 

B. public ownership

 

C. government-owned businesses

 

D. co-operatives

 

77. In common law, _____ refers to cases that have come before the courts in the past.

A. custom

 

B. precedent

 

C. codification

 

D. tradition

 

78. Judges in a(n) _____ have the power to interpret the law so that it applies to the unique circumstances of an individual case.

A. civil law system

 

B. international law system

 

C. common law system

 

D. theocratic law system

 

79. The most widely practiced theocratic legal system in the world today.

A. Christian

 

B. Hindu

 

C. Jewish

 

D. Islamic

 

80. The legal rights over the use to which a resource is put and over the use made of any income that may be derived from that resource.

A. Property rights

 

B. Public action

 

C. Intellectual rights

 

D. Private action

 

81. In the 1970s, the United States _____ which requires all publicly traded companies, whether or not they are involved in international trade, to keep detailed records that would reveal whether a violation of the act has occurred.

A. adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions policy

 

B. passed the Foreign Corrupt Practices Act

 

C. joined Transparency International

 

D. joined the Organisation for Economic Co-operation and Development (OECD)

 

82. The _____ associated with doing business in a country are a function of that countrys political, economic, and legal systems.

A. ethical considerations

 

B. profitability

 

C. simplicity and ease

 

D. benefits, costs, and risks

 

83. When _____ is emphasized, an individuals right to do something may be restricted on the grounds that it runs counter to the good of society.

A. individualism

 

B. totalitarianism

 

C. collectivism

 

D. theocracy

 

84. Plato _____; he believed that society should be stratified into classes, with those best suited to rule.

A. equated individualism with equality

 

B. equated collectivism with equality

 

C. promoted representative democracy

 

D. did not equate collectivism with equality

 

85. The _____ believed that socialism could be achieved only through violent revolution and totalitarian dictatorship.

A. socialists

 

B. communists

 

C. collectivists

 

D. social democrats

 

86. Modern socialists trace their intellectual roots to _____, although socialist thought clearly predates this individual.

A. David Hume

 

B. Karl Marx

 

C. Adam Smith

 

D. John Stuart Mill

 

87. A law system that is based on a detailed set of laws organized into codes.

A. Theocratic

 

B. Contract

 

C. Civil

 

D. Common

 

88. The term _____ stresses that the political, economic, and legal systems of a country are interdependent.

A. political economy

 

B. common law

 

C. socialism

 

D. collectivism

 

89. Who was the author of The Wealth of Nations in which it is stated that an individual who intends his own gain is led by an invisible hand to promote an end that was not part of his intention?

A. David Hume

 

B. Adam Smith

 

C. Karl Marx

 

D. John Stuart Mill

 

90. _____ occurs when a political party that represents the interests of a particular tribe (and not always the majority tribe) monopolizes power.

A. Tribal dictatorship

 

B. Communist totalitarianism

 

C. Tribal totalitarianism

 

D. Privatization

 

91. The term used to describe a state in which authoritarian elements have captured some or much of the machinery of state and use this in an attempt to deny basic political and civil liberties.

A. Authoritarian dictatorship

 

B. Right-wing democracies

 

C. Representative totalitarianism

 

D. Pseudo-democracies

 

92. In response to increased demand, what is a monopolist likely to do?

A. Restrict output to drive prices down.

 

B. Increase output to drive prices down.

 

C. Restrict output and let prices rise.

 

D. Increase output and let prices rise.

 

93. In 2008, the U.S. government took an 80 percent stake in AIG to stop that financial institution from collapsing, the theory being that if AIG did collapse, it would have very serious consequences for the entire financial system. What type of economy is this an example of?

A. Command

 

B. Mixed

 

C. Capitalistic

 

D. Market

 

94. Although many countries have stringent intellectual property regulations on their books, the enforcement of these regulations has often been lax. This has been the case even among many of the 185 countries that are now members of the _____, all of which have signed international treaties designed to protect intellectual property.

A. World Intellectual Property Organization

 

B. General Agreement on Tariffs and Trade

 

C. Business Software Alliance

 

D. Trade-Related Aspects of Intellectual Property Rights (TRIPS)

 

 

Essay Questions

95. Why did Karl Marx criticize capitalism? Describe how he planned to correct those shortcomings.

 

 

 

 

96. Discuss collectivism. What ideals does the philosophy support? Where did the philosophy start? How does collectivism exist in the modern world?

 

 

 

 

97. What are state-owned companies? Why do they usually perform poorly?

 

 

 

 

98. Discuss individualism. Explain the key positions of the philosophy, it roots, and its role in the modern economy.

 

 

 

 

99. Compare and contrast a pure democracy and a representative democracy. Which type of democracy is more common today? Why?

 

 

 

 

100. Compare and contrast the four forms of totalitarianism.

 

 

 

 

101. Identify the three types of economic systems. How do these three types of economic systems differ from each other? How are they the same?

 

 

 

 

102. Discuss why there is inefficiency in a monopoly situation. What is the role of the government in such a situation?

 

 

 

 

103. Discuss the effects of private ownership of production in a market economy.

 

 

 

 

104. What is a countrys legal system? Why is it important to international businesses?

 

 

 

 

105. Explain the differences between common law and civil law systems by the approach of each to contract law.

 

 

 

 

106. Discuss the ways in which public action to violate property rights can occur.

 

 

 

 

107. What are the factors that contribute to the attractiveness of a country as a market or investment site?

 

 

 

 

108. Discuss the key factors that companies must be aware of before deciding to do business in other countries.

 

 

 

 

Chapter 02 National Differences in Political, Economic, and Legal Systems Answer Key

True / False Questions

1. The central message of collectivism is that individual economic and political freedoms are the ground rules on which a society should be based.

FALSE

Collectivism refers to a political system that stresses the primacy of collective goals over individual goals. When collectivism is emphasized, the needs of society as a whole are generally viewed as being more important than individual freedoms.

 

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Differences in Political Systems
 

 

2. The communists believed that socialism could be achieved by democratic means, and turned their backs on violent revolution and dictatorship.

FALSE

The communists believed that socialism could be achieved only through violent revolution and totalitarian dictatorship, whereas the social democrats committed themselves to achieving socialism by democratic means, turning their backs on violent revolution and dictatorship.

 

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Differences in Political Systems
 

 

3. The Cold War was, in many respects, a war between collectivism and individualism.

TRUE

The Cold War, in many respects, was a war between collectivism, championed by the former Soviet Union, and individualism, championed by the United States.

 

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Differences in Political Systems
 

 

4. Most modern democratic states practice representative democracy.

TRUE

In complex, advanced societies with populations in the tens or hundreds of millions the pure form of democracy is impractical. Most modern democratic states practice representative democracy.

 

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Different Forms of Government
 

 

5. Democracy is a form of government that prohibits opposing political parties.

FALSE

Democracy refers to a political system in which government is by the people, exercised either directly or through elected representatives. Totalitarianism is a form of government in which one person or political party exercises absolute control over all spheres of human life and prohibits opposing political parties.

 

AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Different Forms of Government
 

 

6. In a totalitarian country, there are safeguards to protect an individuals right to freedom of expression, opinion, and organization.

FALSE

In a totalitarian country, all the constitutional guarantees on which representative democracies are builtan individuals right to freedom of expression and organization, a free media, and regular electionsare denied to the citizens.

 

AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 02-01 Understand how the political systems of countries differ.
Topic: Different Forms of Government
 

 

7. The number of command economies has fallen dramatically since the demise of communism in the late 1980s.

TRUE

Historically, command economies were found in communist countries where collectivist goals were given priority over individual goals. Since the demise of communism in the late 1980s, the number of command economies has fallen dramatically.

 

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