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1
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Which of the following is an example of deregulation?

Select one:
a. A country that implements a simplified income tax filing system.
b. A country that encourages foreign direct investment.
c. A country that provides agricultural subsidies to farmers.
d. A country that takes over a leading private bank to prevent it from filing for bankruptcy. 
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The correct answer is: A country that encourages foreign direct investment.

Question 2
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Which of the following is a step in the shift toward a market-based economic system?

Select one:
a. Increasing trade barriers
b. Increasing price controls
c. Creation of a legal system to safeguard property rights
Creation of a legal system to safeguard property rights

d. Nationalization
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The correct answer is: Creation of a legal system to safeguard property rights
Creation of a legal system to safeguard property rights
Question 3
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______________ involves removing legal restrictions to the free play of markets, the establishment
of private enterprises, and the manner in which private enterprises operate.

Select one:
a. Trade certification
Trade certification
b. A liability law
c. Deregulation 
d. A product law
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The correct answer is: Deregulation

Question 4
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Privatization reduces the incentive of business owners to increase productivity, enter new markets,
and to exit losing ones.

Select one:
a. True.
b. False. 
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The correct answer is: False.

Question 5
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For privatization to work, it must also be accompanied by:

Select one:
a. a general deregulation of the economy 
b. an increase in trade barriers and tariffs
c. stronger barriers to foreign competition
d. an increase in government subsidies
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The correct answer is: a general deregulation of the economy

Question 6
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First-mover advantages are the advantages that accrue to early entrants into a market.

Select one:
a. True. 
b. False.
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The correct answer is: True.

Question 7
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Which of the following factors is NOT likely to make a country a more attractive location for
international business?

Select one:
a. Market-based economic policies
b. Democratic regimes 
c. Planned economies
d. Strong protection of property rights
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The correct answer is: Planned economies

Question 8
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A market economy encourages innovation because:

Select one:
a. state ownership of enterprises reduces risks of innovation.
b. the prices of goods and services, including new products, are fixed by government.
c. economic freedom leads to greater incentives for innovation. 
d. government-owned and funded research centers become hubs of innovation.
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The correct answer is: economic freedom leads to greater incentives for innovation.

Question 9
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Which of the following statement pertaining to innovation and entrepreneurship is NOT true?

Select one:
a. They are the engines of growth.
b. They require strong property rights.
c. They require state ownership of means of production. 
d. They require a market economy.
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The correct answer is: They require state ownership of means of production.

Question 10
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The government of a country takes over the airport security industries following a major terrorist
attack, to improve airport security. This is an example of privatization.
Select one:
a. True.
b. False. 
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The correct answer is: False.