SOM 354 CH 3

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1. The absence of a legal system that protects property rights and the lack of machinery to enforce E. the lack of incentive to
that system in a market economy usually results in: engage in economic
activity.
A. an improvement in the operating efficiency of newly privatized firms.

B. reduced barriers to foreign direct investment and international trade.

C. an increase in the incentives to engage in economic activity.

D. deregulation and privatization of the economy.

E. the lack of incentive to engage in economic activity.

2. According to the author Francis Fukuyama, the world is most likely witnessing the end of: E. humanity's ideological
evolution.
A. free market economies.

B. capitalism.

C. liberal democracies.

D. privatization.

E. humanity's ideological evolution.

3. Although China and India are very large markets when measured by number of consumers, they D. limited purchasing
are relatively small markets when measured in economic terms due to their: power.

A. orientation toward democracy.

B. small share in the world output.

C. high living standards.

D. limited purchasing power.

E. commitment to a free market system.

4. As a result of which of the following, large amounts of economic activity in India are unrecorded B. Active bartering
and the official GDP figures of the country fail to tell the entire story of the economy?

A. A large population

B. Active bartering

C. Deregulation

D. Nationalization

E. Closed totalitarianism
5. The belief that geography can influence economic policy, and hence economic growth rates, goes back to: A. Adam Smith.

A. Adam Smith.

B. Amartya Sen.

C. Plato.

D. Aristotle.

E. Karl Marx.
6. Black economy is most likely to be prevalent when: B. people
engage in barter
A. large amounts of economic activity are in the form of legally recorded cash transactions. agreements to
avoid paying
B. people engage in barter agreements to avoid paying taxes. taxes.

C. a country's GNI per capita exceeds $30,000.

D. the expenses of the government are less than its income.

E. a country is in trade surplus with another foreign country.

7. Both China and India have achieved high growth rates despite relatively weak property rights regimes and high E. the shift
levels of corruption, because of: toward a
market-based
A. the shift toward a communist ideology. economic
system.
B. their high living standards.

C. their large population.

D. their high consumer purchasing power.

E. the shift toward a market-based economic system.

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

A. a first-mover advantage.

B. forward integration.

C. unrelated differentiation.

D. lateral diversification.

E. technology transfer.
9. The collapse of communism will result in the new world order that will be dominated by a universal civilization D. Francis
characterized by democratic regimes and free market capitalism, according to: Fukuyama.

A. Amartya Sen.

B. Samuel Huntington.

C. Jeffrey Sachs.

D. Francis Fukuyama.

E. Adam Smith.
10. The collapse of which of the following in eastern Europe was precipitated by the growing gulf between the B. Communism
vibrant and wealthy economies of the West and the stagnant economies of the East?

A. Democracy

B. Communism

C. Free economy

D. Capitalism

E. Individualism
11. The cost of doing business is most likely to be the lowest in: C. open
democratic
A. closed totalitarian states. societies.

B. primitive or undeveloped economies.

C. open democratic societies.

D. countries where local laws and regulations set strict standards with regard to product safety, safety in the
workplace, and environmental pollution.

E. countries that lack well-established laws for regulating business practice.

12. Countries with which of the following are more likely to attain high and sustained economic growth rates and B. Democratic
are thus a more attractive location for international business? regimes

A. Weak protection of property rights

B. Democratic regimes

C. Command-based economic policies

D. Ideologies that differ from Western ideologies

E. Totalitarian dictatorships
13. Due to strong legal protection of property rights, businesses and individuals A. invest more in innovations.
will:

A. invest more in innovations.

B. face a huge burden from excessive taxation.

C. face more corruption.

D. move away from entrepreneurial activity.

E. run the risk of their profits being expropriated.

14. During the late 1980s and early 1990s, many of the world's nation-states E. totalitarian governments.
moved away from:

A. democratically elected governments.

B. free market capitalism.

C. individualism.

D. political and civil freedoms.

E. totalitarian governments.
15. Economic advances in many countries have led to the: E. emergence of increasingly prosperous middle
and working classes.
A. decline of middle and working classes.

B. rise of totalitarian reforms.

C. decline of property rights.

D. emergence of closed and self-contained societies.

E. emergence of increasingly prosperous middle and working classes.

16. Generally, the costs and risks associated with doing business in a foreign B. economically advanced countries.
country are typically lower in:

A. less developed countries.

B. economically advanced countries.

C. totalitarian states.

D. countries with high inflation and falling living standards.

E. countries that lack intellectual property rights.

17. The government of Great Lanthania is planning to adopt a market-based economic system. To be D. adopt privatization.
able to do so, the government of this country should:

A. abolish the laws that deal with protection of property rights.

B. introduce stringent foreign investment regulations.

C. increase its intervention in the economy.

D. adopt privatization.

E. oppose democracy.
18. The government of Greenland Republic protects its newly privatized firms from foreign competition A. continue acting like
by imposing stringent barriers to international trade and foreign direct investment. As a result of state monopolies.
this, the newly privatized firms will:

A. continue acting like state monopolies.

B. operate at their maximum efficiency.

C. pay huge taxes.

D. import raw materials and many industrial goods at low tariffs.

E. have no control over production and pricing.

19. The government of Nerumbia wants to open the country's economy to international business, and B. Investing in
increase its overall attractiveness as a potential market or investment site. Which of the following infrastructure and in the
will facilitate this decision of the Nerumbian government? required supporting
businesses
A. Shifting toward command economy or an economy where property rights are not enforced
strictly

B. Investing in infrastructure and in the required supporting businesses

C. Frequently changing the government and the government policies

D. Maintaining a high inflation rate

E. Adopting a legal system which does not provide any protection for intellectual property rights
20. The government of Ugania had been extending huge amounts of loans to the business enterprises in B. Economic
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?

A. Ethical

B. Economic

C. Technological

D. Legal

E. Sociological
21. How does privatization help stimulate gains in economic efficiency? B. It provides incentives
to new private owners
A. It allows newly privatized firms to gain monopoly position in a particular industry. to search for increases
in productivity and to
B. It provides incentives to new private owners to search for increases in productivity and to enter enter new markets.
new markets.

C. It encourages state control over price and production output.

D. It raises barriers to direct investment by foreign enterprises.

E. It results in reservation of heavy industry for state ownership and the increase of import tariffs.
22. How have new information and communication technologies, including the Internet, affected the B. They have reduced a
political economy in general? state's ability to control
access to uncensored
A. They have led to the spread of communism. information.

B. They have reduced a state's ability to control access to uncensored information.

C. They have led to the collapse of democracy.

D. They have created new conduits for the spread of closed societies.

E. They have led to increased suppression of political and economic freedoms.

23. The Human Development Index comes close to Amartya Sen's conception of how development B. Political freedom
should be measured, although which of the following, suggested by Sen in his thesis, is not
included in the index?

A. Basic health care

B. Political freedom

C. Educational attainment

D. Basic average income

E. Life expectancy at birth

24. In 2012, if the PPP per capita of China was $9,040 and the PPP per capita of the United States D. cost of living was lower in
was $52,340, this means that the: China.

A. GNI per capita was greater in China.

B. percent of goods and services consumed in the United States was

lower.

C. standard of living in China was better.

D. cost of living was lower in China.

E. annual average GDP growth rate was lower in China.

25. In economic terms, the long-run monetary benefits of doing business in a country are most D. present wealth (purchasing
likely to be a function of the: power) of consumers of the
country.
A. gender ratio of the country.

B. latitudinal and the longitudinal location of the country.

C. natural resources available in the country.

D. present wealth (purchasing power) of consumers of the country.

E. political history of the country.

26. The influential economist Jeffrey Sachs argues that throughout history, which of the following, E. Coastal states
with their long engagements in international trade, have been the most supportive of market
institutions.

A. Mountainous states

B. Tropical regions

C. Military societies

D. Landlocked states

E. Coastal states
27. The influential Peruvian development economist Hernando de Soto has argued that B. until property rights are better
much of the developing world will fail to reap the benefits of capitalism: defined and protected.

A. until they adopt communism.

B. until property rights are better defined and protected.

C. if they adopt free market economies.

D. until their governments monopolize all means of production in their countries.

E. if they encourage innovation and entrepreneurship.

28. In Samuel Huntington's thesis, global terrorism is a product of the: A. clash of value systems and
ideology between civilizations.
A. clash of value systems and ideology between civilizations.

B. widespread acceptance of universal global civilization.

C. declining liberal democratic ideals.

D. differences in the factor endowments between countries.

E. geographical differences between nations.

29. In the context of cost, which of the following can be considered as the most attractive B. A country that has a well-
market or investment site? developed body of business contract
law
A. A country that has adopted a closed totalitarian state

B. A country that has a well-developed body of business contract law

C. A country with a command-based economic system

D. A country with stringent product safety laws and huge liability insurance rates

E. A country which does not provide any protection for property rights
30. In the context of global economy, which of the following has been widely accepted D. Deregulation of economies
since the late 1980s?

A. Centrally planned command economy

B. Mixed economy

C. Nationalization of private property

D. Deregulation of economies

E. Authoritarian regime
31. In the context of political economy, one notable development of the past 20 years has been D. democracy.
the spread of:

A. centrally planned economies.

B. mixed economies.

C. totalitarian governments.

D. democracy.

E. communism.
32. In the context of political economy, the past three decades have seen a general move toward: C. adoption of legal systems
that better enforce property
A. autocratic forms of government. rights.

B. command-based economic reforms.

C. adoption of legal systems that better enforce property rights.

D. an environment which is unfavorable for international business.

E. military parties monopolizing political power worldwide.

33. In the context of the changing political economy since the late 1980s, which of the following E. Most of the world's nation-
statements is true? states are providing greater
political and civil liberties to
A. There has been a rapid spread of communism worldwide. their citizens.

B. Capitalist ideologies have been in retreat.

C. A wave of totalitarian revolutions has swept the world.

D. Most countries have moved toward centrally planned and mixed economies.

E. Most of the world's nation-states are providing greater political and civil liberties to their
citizens.
34. In the Republic of Lantharia, the state-owned telephone company enjoys a monopoly. The D. Splitting the company into
government of Lantharia Republic wants to maximize the operating efficiency of this company independent units to compete
by privatizing it. Which of the following is most likely to help the government succeed in this with each other
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
35. Lamboria Republic is facing a high rate of inflation, and the government debt in the country is also high. As a result, E.
the country's business environment is beginning to deteriorate, and the profits of the business enterprises are hurt. Economic
According to this information, Lamboria Republic is
facing which of the following type of risk?

A. Legal

B. Ethical

C. Demographic

D. Ethnographic

E. Economic
36. Many commentators have blamed the problems that led to global financial crisis of 2008-2009, and the recession B. a lack
that followed on: of
regulation.
A. a lack of free markets.

B. a lack of regulation.

C. the political ideologies followed in the Asian countries.

D. a strong presence of command economies.

E. a lack of privatization and liberalization.

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

A. Political

B. Legal

C. Ethical

D. Economic

E. Ethnographic
38. "Not all democracies are free, as some still restrict certain political and civil liberties" Which of the following D. Russia
countries best fits this argument?

A. Australia

B. United States

C. Great Britain

D. Russia

E. Canada
39. One can adjust GNI per capita by purchasing power to account for differences in the: A. cost of living.

A. cost of living.

B. population density.

C. geographical area.

D. factor endowments.

E. labor productivity.
40. One common measure of economic development is a country's: B. gross national income.

A. gender ratio.

B. gross national income.

C. infant mortality rate.

D. population density.

E. total geographical area.

41. Only a totalitarian regime that is committed to which of the following is capable of D. A market system and strong
promoting economic growth? protection of property rights

A. A command economy

B. A dictatorship

C. Limiting human freedom

D. A market system and strong protection of property rights

E. Limiting individualism and privatization

42. People in the West tend to associate which of the following with a free market system, B. Representative democracy
strong property rights protection, and economic progress?

A. Anarchist state

B. Representative democracy

C. Planned economy

D. Communist state

E. Command economy
43. The risks of doing business are most likely to be the highest in a country that: E. faces frequent
changes in
A. has low inflation rates. government and
government
B. supports high living standards. policy.

C. has only one ethnic nationality.

D. protects intellectual property.

E. faces frequent changes in government and government policy.

44. Star Volans Inc. is planning on expanding its business globally. In terms of the costs involved in conducting D. where
business in a country, it will be most economical for the company if it chooses a country: politicians are
held accountable
A. with a closed totalitarian political system. by the electorate.

B. where the company will have to provide its own infrastructure and supporting business.

C. where laws regarding product safety, safety in the workplace, and environmental pollution are
extremely stringent.

D. where politicians are held accountable by the electorate.

E. with no local laws to protect intellectual property.

45. The United Nation of Amberia, a Western European country, fought on the winning side of the Cold War. E. Free markets
Which of the following was most likely being propagated by the country by participating in the Cold War?

A. Strong business regulations

B. Communist ideologies

C. Command economies

D. Totalitarian dictatorships

E. Free markets
46. The United Nation of Zorwaya has strict restrictions on direct investment by foreign enterprises, and it B. deregulation.
opposes the establishment and operation of private enterprises. The highest authority in the country
enforces tight control over prices and production output. According to this information, the United Nation
of Zorwaya most likely opposes:

A. nationalization of private assets.

B. deregulation.

C. socialism.

D. totalitarian ideologies.

E. command economies.
47. What type of risk can be defined as the likelihood that a trading partner will opportunistically break a contract B. Legal
or expropriate property rights?

A. Political

B. Legal

C. Economic

D. Sociological

E. Cultural
48. When Galaxy Ventures, a real estate company, entered the low cost housing business, the market was already B. Last-mover
saturated with other players. Thus, the company was forced to exit the market due to lack of customer loyalty disadvantages
and substantial dividends. Which of the following is a term used to described the situation faced by the
company?

A. First-mover disadvantages

B. Last-mover disadvantages

C. Last-in first-out disadvantages

D. Comparative disadvantages

E. Absolute disadvantages
49. When social unrest and disorder in a country causes drastic changes in its business environment that adversely A. Political
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?

A. Political

B. Demographic

C. Ethical

D. Technological

E. Physiological
50. Which of the following best exemplifies a first-mover advantage?
A. Venus Inc. has more than 50 percent market share in the
telecom industry, because no other company had invested in this
industry before Venus Inc.
A. Venus Inc. has more than 50 percent market share in the
telecom industry, because no other company had invested in
this industry before Venus Inc.

B. Maya won a cash discount of 75 percent on the latest NewY

phone as she was the winner of a competition conducted by
NewY.

C. The level of satisfaction Simon experienced when dining at the

Emerald Inn was greatest the first time, and thereafter it reduced
each time he dined there.

D. Innovative Creations Inc. was the first to exit the declining

pager phone manufacturing industry and as a result, it avoided
losing a lot of money.

E. Product critiques are extremely respected by major firms, as

they are the first ones to review new products and services.
51. Which of the following best exemplifies an entrepreneur? D. Javier purchased an invention of his friend to start a
company that processes plastic bags into synthetic cloth.
A. Sam, an employee at a supermarket, is solely responsible for
all the purchases and sales at the grocery department.

B. Joe recycles old household articles to build phones, radios, and

other things for his personal use.

C. Max makes his living by investing in small companies that have

the potential to grow.

D. Javier purchased an invention of his friend to start a company

that processes plastic bags into synthetic cloth.

E. Ryan invented an anti-aging formulation and sold it to a major

pharmaceutical firm.
52. Which of the following creates an environment that is conducive C. Privatization
to product and process innovations and to entrepreneurial
activity?

A. Communism

B. Centrally planned economy

C. Privatization

D. Command economy

E. Lack of strong property rights

53. Which of the following creates an unfavorable environment for C. State monopoly in production
innovations and entrepreneurship?

A. Market economy

B. Economic freedom

C. State monopoly in production

D. Privatization

E. Strong legal protection of property rights

54. Which of the following factors in a country is most likely to cause A. The presence of more than one ethnic nationality
political risk for an international business?

A. The presence of more than one ethnic nationality

B. Infrequent changes in government and government policy

C. Low inflation rate

D. Low level of government debt

E. High living standards

55. Which of the following is an implication of the global changes in political A. The ideological conflict between collectivism and
and economic systems for international business? individualism is less in evidence today.

A. The ideological conflict between collectivism and individualism is less

in evidence today.

B. Adoption of Western ideology is declining worldwide.

C. The global tide has been running in favor of command economies and
totalitarian dictatorships.

D. Free markets and democracy are being replaced by mixed economies

and communist governments.

E. Liberalization and privatization of state-owned enterprises has been

losing popularity.
56. Which of the following is an indicator of low human development in a country? A. A score of 0.3 on
the HDI scale
A. A score of 0.3 on the HDI scale

B. Rapid "democratization" of political communities

C. Large population due to a highly developed health care system

D. Giving citizens a voice in the important decisions made for the

community

E. A higher GNI per capita than the United States

57. Which of the following is based on three measures: life expectancy at birth, educational attainment, A. Human
and average incomes based on PPP estimates? Development Index

A. Human Development Index

B. Gross National Income

C. Gross Domestic Product

D. Cost of Living Index

E. Cash Reserve Ratio

58. Which of the following is broadly defined as the development of new products, processes, D. Innovation
organizations, management practices, and strategies?

A. Privatization

B. Economic deregulation

C. Boundary spanning

D. Innovation

E. Benchmarking
59. Which of the following is most likely to be implemented by a country as a part of deregulation? C. Removal of price
controls
A. Prohibition of private enterprises from operating in certain sectors

B. Commitment toward communism

C. Removal of price controls

D. Centrally planned economic system

E. Increased restrictions on foreign direct investment

60. Which of the following is most likely to be the consequence of economic B. Adoption of democracy
progress?

A. Adoption of communism

B. Adoption of democracy

C. Adoption of a command economy

D. Adoption of a totalitarian government

E. Restriction on individual freedom

61. Which of the following is most likely to be true about the overall E. The costs and risks associated with doing business
attractiveness of a country as a potential market or investment site for in a foreign country tend to be greater in politically
an international business? unstable nations.

A. The potential long-run benefits of doing business in a foreign country

are independent of the country's future economic growth rates.

B. The costs and risks associated with doing business in a foreign country
are highest in economically advanced democratic nations.

C. Economic growth tends to be higher in a centrally planned command

economy system than in a free market system.

D. The risks associated with doing business are low in developing nations
where the governments have huge debts.

E. The costs and risks associated with doing business in a foreign country
tend to be greater in politically unstable nations.
62. Which of the following is most likely to indicate that the nation of Erbia C. The retail sector in Erbia has been opened for
has adopted deregulation? foreign direct investment.

A. The Erbian government exercises tight control over the prices of food
grains.

B. The establishment of private enterprises in steel industry is prohibited

by the Erbian government.

C. The retail sector in Erbia has been opened for foreign direct
investment.

D. The Erbian government has been criticized for its inability to introduce
a legal system to safeguard property rights.

E. Erbia ranks the lowest among the countries that grant both political
and economic freedoms to its citizens.
63. Which of the following is most likely to prove detrimental to democracy and E. Emergence of different civilizations,
international business? each of which has its own value
systems and ideology
A. Emergence of increasingly prosperous middle and working classes

B. Development of new information and communication technologies

C. Dominance of a universal civilization which leads to the establishment of a more

harmonious world

D. Transformation of nations from centrally planned command economies to market-

based economies

E. Emergence of different civilizations, each of which has its own value systems and
ideology
64. Which of the following measures the total annual income received by residents of a D. Gross national income
country and is regarded as a yardstick for the economic activity of a country?

A. Income elasticity of demand

B. Cash reserve ratio

C. Net cash flow ratio

D. Gross national income

E. Income equity ratio

65. Which of the following movements started in Great Britain in the early 1980s when B. Privatization
then Prime Minister Margaret Thatcher started to sell state-owned assets such as the
British telephone company?

A. Nationalization

B. Privatization

C. Anti-democratic

D. Communist

E. Anti-globalization
66. Which of the following of the Cold War era has vanished? D. Bipolar world

A. Multipolar world

B. Democratic system

C. Free market system

D. Bipolar world

E. Widespread belief in Western ideology

67. Which of the following statements is most likely to be true about the
economic prospects of a country?
A. The economic system and property rights regime are reasonably good
predictors of economic prospects of a country.
A. The economic system and property rights regime
are reasonably good predictors of economic
prospects of a country.

B. Countries with command economies tend to achieve greater economic

growth rates than free market economies.

C. Countries which do not provide any protection for property rights tend
to achieve greater economic growth rates than the countries in which
property rights are protected.

D. Countries where property rights are not well respected and where
corruption is rampant always have very low levels of economic growth.

E. The advantages of building brand loyalty and gaining experience in a

country's business practices is greater for a last-mover than for a first-
mover.
68. Which of the following statements is most likely to be true about the risks C. One visible indicator of economic risk is the
of doing business in a country? level of business and
government debt in the country.
A. Political risk is low in countries that contain more than one ethnic
nationality.

B. Economic risks are independent of political risk.

C. One visible indicator of economic risk is the level of business and

government debt in the country.

D. One visible indicator of legal risk tends to be a country's inflation rate.

E. Political risk tends to be low in those countries that have high inflation
and falling living standards.
69. Which of the following statements is true about innovations and D. Innovations in production and business
entrepreneurship? processes lead to an increase in the productivity of
labor and capital.
A. A command economy creates greater incentives for innovation and
entrepreneurship than a market economy.

B. If a country's economy is to sustain long-run economic growth, the

business environment must restrict entrepreneurial activity.

C. A high level of entrepreneurial activity leads to a low level of innovation.

D. Innovations in production and business processes lead to an increase in

the productivity of labor and capital.

E. Strong legal protection of property rights creates an unfavorable

environment for innovation and entrepreneurship.
70. Which of the following statements is true about privatization? D. When newly privatized firms are extensively protected from
foreign competition, they have little incentive to restructure
A. The privatization movement started in China in the early their operations to become more efficient.
1980s.

B. Privatization involves replacing a state-owned monopoly with

a private monopoly.

C. For privatization to become successful, countries should adopt

communism.

D. When newly privatized firms are extensively protected from

foreign competition, they have little incentive to restructure their
operations to become more efficient.

E. In today's context, a country runs the risk of experiencing a

serious economic crisis if it liberalizes and privatizes state-owned
enterprises.
71. Which of the following statements is true about the changing B. There has been a shift away from a mixed economy.
economic system since the 1980s?

A. There has been a shift from market-based economies to

centrally planned economies.

B. There has been a shift away from a mixed economy.

C. Many states have restricted the sale of state-owned

businesses to private investors.

D. The competition between economies has been reducing.

E. The extent to which property rights are protected has

declined.
72. Which of the following statements is true about the global
changes in political and economic systems?
A. The West lost the Cold War, and East European communist
ideology is now widespread.
E. Many of the undeveloped and impoverished national
markets of eastern Europe, Latin America, Africa, and Asia are
potentially enormous for international business.

B. A lack of deregulation has been the cause for the global

financial crisis of 2008-2009, and the recession that followed.

C. It is guaranteed that democracy will thrive in most of the

world's newer democratic states.

D. The multipolar world dominated by a number of civilizations

of the Cold War era has vanished, and is now being replaced by
a bipolar world.

E. Many of the undeveloped and impoverished national markets

of eastern Europe, Latin America, Africa, and Asia are
potentially enormous for international business.
73. Which of the following statements is true about the late B. Samuel Huntington theorized that modernization in non-
influential political scientist Samuel Huntington's vision of the Western societies can result in a retreat toward the traditional.
new world?

A. Samuel Huntington maintained that as societies continue

modernizing they will also become more Western.

B. Samuel Huntington theorized that modernization in non-

Western societies can result in a retreat toward the traditional.

C. Samuel Huntington predicted that the universalization of

Western liberal democracy will be the final form of human
government.

D. Samuel Huntington envisioned the end of the war of ideas

between different civilizations.

E. Samuel Huntington suggested that most developing countries

will stop adopting the material paraphernalia of the modern
world.
74. Which of the following statements is true of purchasing power parity (PPP)? C. The PPP data gives
a static picture of
A. PPP figures can be misleading because they don't consider differences in the cost of living. economic
development.
B. The PPP for different countries is adjusted (up or down) depending upon whether the cost of living is
lower or higher than in Great Britain.

C. The PPP data gives a static picture of economic development.

D. China's GNI PPP per capita is higher than that of the United States.

E. PPP adjustment does not allow for a direct comparison of living standards in different countries.
75. Which of the following steps is most likely to be involved in the deregulation of an economy? B. Privatizing state-
owned enterprises
A. Increasing restrictions on direct investment by foreign enterprises and international trade

B. Privatizing state-owned enterprises

C. Exercising a high degree of state control over production and pricing

D. Abolishing laws related to the protection of property rights

E. Opposing democracy by adopting communism

76. The work by Jeffrey Sachs suggests that investments in which of the following help explain why some B. Education
countries in Southeast Asia have been able to overcome the disadvantages associated with their
tropical geography and grow far more rapidly than tropical nations in
Africa and Latin America?

A. Nuclear weapons

B. Education

C. Terrorist activities

D. Nationalization of private properties

E. Active bartering