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Exam 3: National Differences in Economic Development

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Question 61

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In the Republic of Lantharia,the state-owned telephone company enjoys a monopoly.The government of Lantharia Republic wants to maximize the operating efficiency of this company by privatizing it.Which of the following is most likely to help the government succeed in this endeavor?

A) imposing high corporate taxes on the company immediately after its privatization
B) increasing barriers to foreign direct investment
C) intervening in the company's operations by exercising price controls
D) splitting the company into independent units to compete with each other
E) prohibiting foreign companies from entering into the field of telecommunication in the Republic of Lantharia

F) B) and E)
G) A) and B)

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Question 62

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Entrepreneurial individuals have fewer economic incentives to develop valuable new innovations in market economies than in planned economies.

A) True
B) False

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Question 63

Multiple Choice

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The belief that geography can influence economic policy,and hence economic growth rates,goes back to

Both China and India have achieved high growth rates despite relatively weak property rights regimes and high levels of corruption,because of

If a country's economy is to sustain long-run economic growth,the business environment must be conducive to the consistent production of product and process innovations and to entrepreneurial activity.

The government of Ugania had been extending huge amounts of loans to the business enterprises in the country.However,the borrowers failed to generate the profits necessary to repay their debts.As a result,national banks in Ugania had a lot of nonperforming assets on their books,and the Uganian currency was devalued.In this context,the business enterprises in Ugania are most likely to face which of the following type of risk?

The risks of doing business are most likely to be the highest in a country that

MedPlus Incorporated,based in the United States,hesitates to enter into a joint venture with Azpak Limited,a Sri Lankan company,due to inadequate protection of intellectual property rights.MedPlus is trying to avoid what type of risk?

In the context of political economy,the past three decades have seen a general move toward

When does the process of privatization fail to deliver predicted benefits? What economic conditions are required for privatization to work?

The purchasing power parity for different countries is adjusted (up or down)depending upon whether a country's cost of living is lower or higher than the cost of living in the United States.

During the late 1980s and early 1990s,totalitarian governments collapsed and were replaced by democratically elected governments.

The collapse of which of the following in eastern Europe was precipitated by the growing gulf between the vibrant and wealthy economies of the West and the stagnant economies of the East?

The gross national income (GNI)per capita comes much closer to Amartya Sen's conception of how development should be measured than narrow economic measures such as Human Development Index (HDI).

When social unrest and disorder in a country causes drastic changes in its business environment that adversely affect the profit and other goals of a business enterprise,the business enterprise is said to be facing which of the following type of risk?

Five of the fastest growing economies of the past 30 years-China,South Korea,Taiwan,Singapore,and Hong Kong-had one thing in common at the start of their economic growth: democratic governments.

Capricorn Creative Inc.,a U.S.-based advertising firm,was the first in the advertising industry to identify the growth potential of Brazil and to make huge investments in its economy.As a result,the firm was able to build brand loyalty and gain experience in that country's business practices.In the language of business strategy,Capricorn Creative has typically benefited from

When the country of Swazimoa sells Swazimoa Telecom,a state-owned monopoly to private investors,it is engaging in

According to Freedom House,all democracies are free countries in terms of political and civil liberties.

Which of the following is most likely to be the consequence of economic progress?