Question 1

What is privatization? What role does it play in economic transition?

Accepted Answer

The selling of government-owned economic resources to private operators is called privatization.Privatization helps eliminate subsidized materials,labor,and capital formerly provided to government-owned companies.It also curtails the practice of appointing managers for political reasons rather than for their professional expertise.To survive,newly privatized companies must produce competitive products at fair prices because they are subject to forces of the free market.The overall aim of privatization is to increase economic efficiency,boost productivity,and raise living standards.
Economic transition is the process through which countries move from centrally planned economies to stronger market economies.This process involves changing a nation's fundamental economic organization and creating entirely new free-market institutions.It typically involves four reform measures: (1)stabilizing the economy; (2)allowing prices to reflect supply and demand; (3)legalizing private business; and (4)reducing barriers to trade.
During economic transition,privatization occurs as part of establishing a free market system.To solidify the new economy,governments must legalize private business,sell state-owned companies,and support property rights as this legalization helps in increasing economic efficiency,boosting productivity and raising the standard of living of a country.

Question 2

CADE Enterprises,a U.S.manufacturer,received assistance from the Overseas Private Investment Corporation when it expanded operations into Saudi Arabia.Which of the following types of support did CADE most likely receive from OPIC?

Accepted Answer

A)   financial capital
B)   cultural training
C)   legal guidance
D)   political risk insurance D

Question 3

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

Accepted Answer

A) True 
 B)False  False

Question 4

Explain each of the four means of incorporating risk into business strategies when companies employ an adaptation strategy.

Accepted Answer

The answer of Explain each of the four means of...

Question 5

Had the government taken over (with compensation)the assets of Global Trading but not those of any other company,the government's actions would be an example of ________.

Accepted Answer

A)   expropriation
B)   nationalization
C)   confiscation
D)   communism

Question 6

________ is political risk that affects only a specific firm or firms within a specific industry.

Accepted Answer

A)   Inclusive political risk
B)   Exclusive political risk
C)   Micropolitical risk
D)   Macropolitical risk

Question 7

What is economic transition? Describe the obstacles that countries face during economic transition.

Accepted Answer

The answer of What is economic transition? Describe the obstacles...

Question 8

A government can limit the economic activities of a foreign firm that resists its effort to introduce home-country nationals into the company.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is true of national production?

Accepted Answer

A)   Marketers use GDP or GNP figures to determine whether a country's population is wealthy enough to purchase its products.
B)   Per capita numbers provide a detailed picture of development of the entire country.
C)   Gross product figures accurately indicate whether a nation's economy is growing or shrinking.
D)   Volunteer work and unpaid household work are considered in GDP and GNP.

Question 10

One of the key obstacles faced by countries in economic transition is the lack of managerial expertise.

Accepted Answer

A) True 
 B)False

Question 11

________ is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower-than-projected rate of return.

Accepted Answer

A)   Governmental risk
B)   Operating risk
C)   Transaction risk
D)   Political risk

Question 12

Which of the following is a disadvantage of local requirement laws to foreign companies?

Accepted Answer

A)   They do not foster local business activity and increase regional and national unemployment.
B)   They make it necessary for the government to resort to expropriation and confiscation.
C)   The companies are forced to bring in raw material and workers from their own countries.
D)   Companies required to hire local personnel might be forced to take on inadequately trained workers.

Question 13

The human development index (HDI)demonstrates that high national income alone guarantees human progress.

Accepted Answer

A) True 
 B)False

Question 14

Nations with the poorest infrastructures and lowest personal incomes are called developing countries.

Accepted Answer

A) True 
 B)False

Question 15

Christopher Electronics plans to expand into foreign markets.Top executives want the firm to focus only on locations where the rule of law prevails.Which of the following should most likely be considered by Christopher?

Accepted Answer

A)   wealthier, westernized countries
B)   developing, non-Western countries
C)   emerging economies experiencing rapid growth
D)   countries inclined toward totalitarian-style government

Question 16

A company is conducting a research on new markets by comparing countries in terms of their human development index (HDI)scores.The company wishes to expand into a market where individuals experience a very high level of total well-being.Which of the following countries would the company most likely choose?

Accepted Answer

A)   Russia
B)   Mexico
C)   China
D)   Japan

Question 17

Managers who take an active approach to political risk management are likely to rely on statistical modeling to quantify the precise degree of political risk.

Accepted Answer

A) True 
 B)False

Question 18

Differentiate between GDP and GNP.Briefly discuss the drawbacks of using GDP and GNP as indicators of economic development.

Accepted Answer

The answer of Differentiate between GDP and GNP.Briefly discuss the...

Question 19

The GDP per capita of a country is lower than that of France.If the GDP per capita of the country is adjusted for PPP,the country's revised GDP is higher than that of France.Which of the following is most likely true about the country?

Accepted Answer

A)   The cost of living in the country is higher than that of France.
B)   The cost of living in the country is lower than that of France.
C)   The cost of living in the country is approximately equal to that of France.
D)   The cost of living in the country has increased over the past decade.

Question 20

Had the government taken over the assets of Global Trading without compensation,and not taken over the assets of any other company,the government's actions would be an example of ________.

Accepted Answer

A)   expropriation
B)   nationalization
C)   confiscation
D)   communism

Exam 4: Economic Development of Nations

What is privatization? What role does it play in economic transition?

CADE Enterprises,a U.S.manufacturer,received assistance from the Overseas Private Investment Corporation when it expanded operations into Saudi Arabia.Which of the following types of support did CADE most likely receive from OPIC?

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

Explain each of the four means of incorporating risk into business strategies when companies employ an adaptation strategy.

Had the government taken over (with compensation) the assets of Global Trading but not those of any other company,the government's actions would be an example of ________.

________ is political risk that affects only a specific firm or firms within a specific industry.

What is economic transition? Describe the obstacles that countries face during economic transition.

A government can limit the economic activities of a foreign firm that resists its effort to introduce home-country nationals into the company.

Which of the following statements is true of national production?

One of the key obstacles faced by countries in economic transition is the lack of managerial expertise.

________ is the chance that political forces may change a country's business environment in ways that lead investors to lose some or all of the value of their investment or be forced to accept a lower-than-projected rate of return.

Which of the following is a disadvantage of local requirement laws to foreign companies?

The human development index (HDI)demonstrates that high national income alone guarantees human progress.

Nations with the poorest infrastructures and lowest personal incomes are called developing countries.

Christopher Electronics plans to expand into foreign markets.Top executives want the firm to focus only on locations where the rule of law prevails.Which of the following should most likely be considered by Christopher?

Managers who take an active approach to political risk management are likely to rely on statistical modeling to quantify the precise degree of political risk.

Differentiate between GDP and GNP.Briefly discuss the drawbacks of using GDP and GNP as indicators of economic development.

The GDP per capita of a country is lower than that of France.If the GDP per capita of the country is adjusted for PPP,the country's revised GDP is higher than that of France.Which of the following is most likely true about the country?

Had the government taken over the assets of Global Trading without compensation,and not taken over the assets of any other company,the government's actions would be an example of ________.