Chapter 02 National Differences in Political Economy True False Questions 1 The term political economy is used to stress the fact that the political economic and legal systems of a country are independent of each other True False 2 Political systems that emphasize collectivism tend to be democratic while political systems that place a high value on individualism tend to be totalitarian True False 3 Plato did not equate collectivism with equality True False 4 Karl Marx advocated state ownership of the basic means of production distribution and exchange i e businesses True False 5 The social democratsbelieved that socialism could be achieved only through violent revolution and totalitarian dictatorship True False 6 By the mid 1990s communism was rising worldwide True False 7 One of the tenets of collectivism is that the welfare of society is best served by letting people pursue their own economic self interest True False 8 In practical terms individualism translates into an advocacy for democratic political systems and market economics True False 2 1 2014 by McGraw Hill Education This is proprietary material solely for authorized instructor use Not authorized for sale or distribution in any manner This document may not be copied scanned duplicated forwarded distributed or posted on a website in whole or part 9 The Cold War was in many respects a war between collectivism championed by the former Soviet Union and individualism championed by the United States True False 10 In practical terms collectivism creates a more favorable environment for international businesses to operate in than individualism True False 11 In a representative democracy elected representatives who fail to perform their job adequately cannot be voted out of office at the next election True False 12 In a totalitarian country all the constitutional guarantees on which representative democracies are built an individual s right to freedom of expression and organization a free media and regular elections are denied to the citizens True False 13 In most democratic states those who question the right of the rulers to rule find themselves imprisoned or worse True False 14 The governments of China Vietnam and Laos are communist in name only because those nations have adopted wide ranging market based economic reforms True False 15 All right wing dictatorships display an affinity toward socialist or communist ideas True False 16 In countries where individual goals are given primacy over collective goals we are less likely to find market based economic systems True False 17 In a pure command economy the goods and services that a country produces the quantity in which they are produced and the prices at which they are sold are all dictated by the interaction of demand and supply True False 2 2 2014 by McGraw Hill Education This is proprietary material solely for authorized instructor use Not authorized for sale or distribution in any manner This document may not be copied scanned duplicated forwarded distributed or posted on a website in whole or part 18 Command economies provide a more favorable environment for innovation and entrepreneurs than market economies True False 19 Historically pure market economies were found in communist countries where collectivist goals were given priority over individual goals True False 20 A common law system tends to be less adversarial than a civil law system True False 21 When law courts interpret civil law they do so with regard to tradition precedent and custom True False 22 Contracts drafted under a common law framework tend to be very detailed with all contingencies spelled out True False 23 Judges under a civil law system have less flexibility than those under a common law system True False 24 Islamic law is primarily a moral rather than a commercial law and is intended to govern all aspects of life True False 25 Compared to common law system it is more expensive to draw up contracts in a civil law jurisdiction True False 26 By adopting the Contracts for the International Sale of Goods CIGS a nation signals to other adopters that it will treat the convention s rules as part of its law True False 27 When firms do not wish to accept the Contracts for the International Sale of Goods they often opt for arbitration by a recognized arbitration court to settle contract disputes True False 2 3 2014 by McGraw Hill Education This is proprietary material solely for authorized instructor use Not authorized for sale or distribution in any manner This document may not be copied scanned duplicated forwarded distributed or posted on a website in whole or part 28 Private action to violate property rights occurs when public officials such as politicians and government bureaucrats extort income resources or the property itself from property holders True False 29 Bribes are legal payments meant to facilitate performance of duties that the recipients are already obligated to perform True False 30 Intellectual property laws stimulate innovation and creative work True False 31 The term public action refers to the exclusive legal rights of authors composers playwrights artists and publishers to publish and disperse their work as they see fit True False 32 International businesses lobby their respective governments to push for international agreements to ensure that intellectual property rights are protected and that the law is enforced True False 33 When intellectual property laws are lax firms are at a greater risk of having their ideas stolen by local entrepreneurs True False 34 Liability laws are typically least extensive in highly developed nations True False 35 When product safety laws are tougher in a firm s home country than in a foreign country the ethical thing to do is to adhere to home country standards True False 36 The benefits costs and risks associated with doing business in a country are independent of that country s political economic and legal systems True False 2 4 2014 by McGraw Hill Education This is proprietary material solely for authorized instructor use Not authorized for sale or distribution in any manner This document may not be copied scanned duplicated forwarded distributed or posted on a website in whole or part 37 Other things being equal a nation with democratic political institutions is clearly more attractive as a place in which to do business than a nation that lacks democratic institutions True False Multiple Choice Questions 38 Which of the following systems is a