Deck 2: The Global Economic Environment

Question 1

Market capitalism is an economic system in which:

A)individuals and firms allocate resources that are privately owned.
B)the state has broad powers to serve the public interest as it sees fit.
C)market resource allocation is commanded by both private and state ownership.
D)there is no correlation between economic freedom and a nation's economy.
E)market-oriented economies function in an identical manner.

Answer 1

A

Question 2

Today,market capitalism is widely practiced around the world,most notably in North America and the European Union.

Answer 2

True

Question 3

For decades,the economies of China,the former Soviet Union,and India functioned according to the tenets of:

A)market capitalism.
B)market socialism.
C)centrally planned socialism.
D)centrally planned capitalism.
E)market capitalism and socialistic capitalism.

Answer 3

C

Question 4

Traditionally economists identified four main types of economic systems.However,due to globalization it is harder to categorize the systems this narrowly.What will be more robust descriptive criteria that can be used for classification?

Question 5

The Swedish government has significant holdings in key business sectors and has a hybrid economic system that incorporates:

A)market capitalism and centrally planned socialism.
B)centrally planned socialism and market socialism.
C)centrally planned socialism and capitalism.
D)market socialism and market capitalism.
E)market capitalism and socialistic capitalism.

Question 6

In centrally planned socialism economic systems,the state allocates resources,whereas production resources are privately owned.

Question 7

The only two countries where Coca-Cola is not available through authorized channels are:

A)India and China.
B)North Korea and South Korea.
C)Cuba and North Korea.
D)Cuba and Venezuela.
E)Singapore and Indonesia.

Question 8

The Washington,D.C.-based Heritage Foundation survey consists of over 180 countries ranked by degree of economic freedom.The key economic variables considered for this ranking include all of the following except:

A)taxation policy.
B)government consumption of economic output.
C)percent foreign ownership.
D)banking policy.
E)wage and price control.

Question 9

The Gross Domestic Product (GDP),a measure of a nation's economic activity,is calculated by all of the following factors except:

A)consumer spending.
B)investment spending.
C)government purchases.
D)industry purchases.
E)net exports.

Question 10

Traditionally economists identified main types of economic systems,which include all of the following except:

A)market capitalism.
B)market socialism.
C)centrally planned socialism.
D)centrally planned capitalism.
E)centrally planned nationalism.

Question 11

Economic integration was at 10 percent at the beginning of the twentieth century;today,it is approximately 50 percent.

Question 12

Singapore banned the import,manufacture,and sales of chewing gum in the country since wads of gum were making a mess on sidewalks,buses,and subway trains.Violators are subject to severe penalties,and before buying a pack consumers must register their names and addresses.This,according to author William Greider,demonstrates that Singapore's government:

A)is harshly autocratic.
B)deprives the nation's citizens of free speech.
C)deprives a free press and free assembly.
D)requires consumers to register their addresses before buying gum.
E)all of the above

Question 13

The struggle between capitalism and socialism that began in 1917 is over.

Question 14

The world's largest automakers have,for the most part,evolved into local companies.

Question 15

The world economic environment is changing very rapidly and has become increasingly competitive.In order to achieve success,based on author William Greider's analysis,what are the realities that executives and marketers should take into account in such a dynamic environment?

Question 16

The world economy has changed profoundly since the end of the World War II.Perhaps the most fundamental changes that took place include all of the following except:

A)global competitors have steadily displaced local competitors.
B)the integration of the world economy has increased significantly.
C)economic integration is particularly striking in the European Union.
D)protectionism and nationalism have rapidly increased economic integration.
E)integration of the world economy is visible in NAFTA (North American Free Trade Agreement).

Question 17

Key characteristics of the Anglo-Saxon model market system consists of private ownership and:

A)"social partners" orientation.
B)inflexible employment policies.
C)a free enterprise economy.
D)a mix of state ownership.
E)a generous social safety net.

Question 18

The world economy has changed profoundly as evident by the fact that the global competitors have steadily displaced or absorbed local competitors.

Question 19

In Sweden,where the government controls two-thirds of all expenditures,resource allocation is more "market" oriented than "command" oriented.

Question 20

To achieve success,executives and marketers must take into account all of the following new realities except:

A)capital movements have replaced trade as the driving force of the world economy.
B)production has become "uncoupled" from employment.
C)the 100-year struggle between capitalism and socialism is largely over.
D)individual country economies play a major role in the world economy.
E)the growth of e-commerce diminishes the importance of national barriers.

Question 21

Prahalad and Hammond have identified several assumptions and misconceptions about the "bottom of the pyramid" (BOP)that need to be corrected.All of the following mistaken assumptions are correct except:

A)the poor are too concerned with fulfilling basic needs to "waste" money on nonessential goods.
B)the goods sold in developing markets are so expensive that there is no room for a new market entrant to make a profit.
C)the poor have no money.
D)people in BOP markets cannot use advanced technology.
E)global companies that target BOP markets will be criticized for exploiting the poor.

Question 22

In Singapore,gum is available at pharmacies;before buying a pack,however,consumers must register their names and addresses.

Question 23

All of the following facts pertain to China except:

A)China is in the upper-middle-income category.
B)for years China's economic growth has been built on exports and low-wage manufacturing.
C)Beijing is shifting from an external focus to an internal one in order to deal with infrastructure,bribery,and corruption.
D)Beijing has launched a new industrial strategy dubbed "Made in China 2025."
E)China has received the "market economy" status by the World Trade Organization (WTO).

Question 24

French Champagne producers have been compelled to seek growth elsewhere.Which of the following statements is not accurate? In 2016,Champagne producers shipped:

A)two bottles per person in France.
B)one bottle per person in Switzerland.
C)one-half bottle per person in Great Britain.
D)0)07 bottle per person in the United States.
E)one bottle per person in India.

Question 25

Upper-middle-income countries that achieve the highest rates of economic growth are sometimes referred to collectively as:

A)LDCs.
B)BEMs.
C)BRICs.
D)NIEs.
E)BOPs.

Question 26

What are the distinguishing features between centrally planned socialism and centrally planned capitalism? Give examples of two or more countries which follow these systems.

Question 27

With per capita income of less than $700,Ethiopians enjoyed more than a decade of double-digit economic expansion due to all of the following reasons,except:

A)foreign investment from China helped in building several industrial parks.
B)garment workers were trained in Hong Kong by J Crew and Burberry.
C)Ethiopia provides duty-free access to the key U.S.markets.
D)the country has a sufficient available workforce with low wage levels.
E)the country is sufficiently near a seaport for exports.

Question 28

Which one of the following nations falls in the lower-middle-income category?

A)Burundi
B)Bangladesh
C)India
D)Venezuela
E)none of the above

Question 29

A low correlation exists between the degree of economic freedom and the extent to which a nation's mixed economy is market oriented.

Question 30

Low-income countries have a GNI per capita of $1,005 or less.The general characteristics shared by countries at this income level include all of the following except:

A)less engaged in farming.
B)high birth rates.
C)heavy reliance on foreign aid.
D)political unrest.
E)high agricultural population.

Question 31

Upper-middle-income countries are also known as:

A)industrializing countries.
B)BRIC countries.
C)stabilized countries.
D)manufacturing countries.
E)agricultural countries.

Question 32

Upper-middle-income countries,also known as industrializing or developing countries are those with GNI per capita ranging from:

A)$1,006 to $3,955.
B)$3,956 to $12,235.
C)$12,236 or higher.
D)less than $1,005.
E)none of the above

Question 33

In reality,market capitalism and centrally planned socialism do not exist in "pure" form.

Question 34

Smaller countries like Tajikistan and Uzbekistan are lumped into a regional group known as "the Stans." Incomes in these countries are low,there is considerable economic hardship,and the potential for disruption is high.Are these countries problem cases or opportunities for potential economic growth?

Question 35

The big emerging markets (BEMs),include:

A)Japan.
B)Sweden.
C)Vietnam.
D)Pakistan.
E)Brazil.

Question 36

The general characteristics shared by low-income countries do not include:

A)high birth rates.
B)low literacy rates.
C)concentration in Africa south of the Sahara.
D)heavy reliance on foreign aid.
E)lack of genuine market opportunities.

Question 37

All of the following facts pertain to Brazil except:

A)it is the largest country in Latin America.
B)it boasts the richest reserves of natural resources in the hemisphere.
C)its top trading partner is China,which has an insatiable appetite for iron ore.
D)its GNI grew steadily between 2003 and 2013.
E)it lacks logistics software;horse-drawn carts are still a common sight on many roads.

Question 38

According to the 2017 Index of Economic Freedom compiled by the Heritage Foundation,Singapore is ranked as having the highest degree of economic freedom.

Question 39

The United Nations designates 50 countries in the bottom ranks of the low-income category named as:

A)low-income countries.
B)lower-middle-income countries.
C)BRIC countries.
D)developing countries.
E)LDCs (least-developed countries).

Question 40

With a 2016 GNI per capital of $1,680,India has transitioned out from the former category and now is classified as a(n):

A)low-income country.
B)upper-middle-income country.
C)lower-middle-income country.
D)upper-income country.
E)lower-upper-income country.

Question 41

Amazon cannot sell its own goods in India.

Question 42

Which country was upgraded from "emerging" to "developed" status by the Financial Times Stock Exchange (FTSE)in 2009?

A)United States
B)South Korea
C)Britain
D)Italy
E)Malaysia

Question 43

Myanmar people are very similar to Japanese in some ways.

Question 44

China is the first BRICS nation in the upper-middle-income category with a GNI per capita income of $8,260 in 2016.

Question 45

According to the authors of the Harvard Business Review article,"Serving the World's Poor,Profitably," which of the following is a mistaken assumption that global companies might have about the BOP (bottom of the pyramid)?

A)The poor have no money.
B)The poor are too concerned with fulfilling basic needs to "waste" money on nonessential goods.
C)People in BOP markets will be criticized for exploiting the poor.
D)People in BOP markets cannot use advanced technology.
E)All of the above are mistaken assumptions discussed by the authors.

Question 46

Brazil,China,and India are classified as upper-middle income countries,also known as industrialized or developing countries.

Question 47

Product and market opportunities in a postindustrial society are more heavily dependent upon new products and innovations than in industrial societies.An example of this would be:

A)Nestlé marketing Bono brand cookies in Brazil.
B)Coca-Cola Company developing a beverage Vintago in low-income countries.
C)new e-commerce markets for interactive forms of electronic communication.
D)Hermes creating handbags called Amazonia.
E)India's Suzlon Energy using wind-driven turbines.

Question 48

The Organization for Economic Cooperation and Development (OECD)is described as the:

A)organization of 35 nations.
B)rich-man's club.
C)pluralistic democracies.
D)economic think tank.
E)All of the above statements are applicable.

Question 49

The Organization for Economic Cooperation and Development (OECD)has become more focused on global issues,social policy,and labor market regulations as seen by:

A)addressing the vexing problem of bribery.
B)requiring members to cooperate when pursuing bribery allegations.
C)helping members candidly assess their own economic policies.
D)member nations working together in committees to review social policies.
E)all of the above

Question 50

Pursuing alternative sources of energy,such as wind and solar power,is important due to the fact that:

A)people in developing countries are more conscious about the environment.
B)global marketers are more interested in publicizing environmental issues.
C)it is easy to develop solar power in many parts of the world.
D)heavy reliance on fossil fuels contributes to global warming.
E)people worldwide can afford to buy power generated from wind and solar.

Question 51

With a 2016 GNI per capita of $1,680,India has transitioned out of the low-income category and is now classified as an upper-middle-income country.

Question 52

The 35 nations that belong to the OECD,who believe in market-allocation economic systems and pluralistic democracy,are also addressed as an "economic think tank" or the "rich man's club."

Question 53

Which two companies are sourcing product components from small-scale enterprises,which in turn are helping preserve old-growth forests as well as economic opportunities in Brazil?

A)Ford Motor Company and Armani
B)Daimler AG and Hermes
C)General Motors and Hugo Boss
D)Volkswagen and Coach
E)Coca-Cola and Nestlé

Question 54

Approximately 25 percent of the world population is included in the low-income countries category as per the World Bank classification system.

Question 55

Grocery distribution companies in Brazil use logistics software to route their trucks;meanwhile,horse-drawn carts are still a common sight on many roads.

Question 56

Nike produces only a small portion of its output in China,but when the firm refers to China as a "2-billion-foot market," it is referring to the fact that:

A)the Chinese children had no shoes.
B)the Chinese shoe market is very competitive.
C)China can develop its own shoe market.
D)it will take a long time for China to develop a future market.
E)China is a potential future market.

Question 57

Myanmar,a low-income country in Southeast Asia with a population of 52 million people,can be considered an emerging market.

Question 58

Two of the smaller countries from the former Soviet Union,Tajikistan and Uzbekistan,fall into the lower-middle-income categories.

Question 59

The World Bank has developed a four-category classification system for stages of marketing development,which uses a country's population as a base.

Question 60

Most of the world's income is located in all of the following countries except:

A)Japan.
B)United States.
C)Canada.
D)Greater China.
E)Western Europe.

Question 61

To the extent that a country sells more goods and services abroad than it buys,there will be:

A)a greater demand for its currency.
B)a surplus production of goods and services.
C)a scarcity of goods and services within the country.
D)a need for revaluation of its currency.
E)time for fluctuating its currency.

Question 62

The United States' growing trade deficit reflects a number of factors,which exclude:

A)increased imports from China.
B)a seemingly insatiable consumer demand for imported goods.
C)the enormous cost of military operations in the Middle East.
D)the services trade surplus.
E)record goods sales to developing countries.

Question 63

The important fact to recognize about the overall balance of payments is that it is always in balance,although imbalances do occur in subsets of the overall balance.

Question 64

Authors Prahalad and Hammond have identified several assumptions and misconceptions about the "bottom of the pyramid" (BOP).Explain these assumptions,giving examples.

Question 65

Some people believe that marketing is relevant only in affluent,industrialized countries,whereas others believe that the role of marketing is to identify people's needs and wants worldwide,irrespective of the economy.Giving examples of companies involved in energy conservation and technology,support the latter argument.

Question 66

The foreign exchange market consists literally of a buyer's and a seller's market where currencies are traded for both spot and future delivery on a continuous basis.The forward market is for immediate delivery and the spot market is for future delivery.

Question 67

The newly independent countries of the former Soviet Union present an interesting situation: income is declining,and there is considerable economic hardship.The potential for disruption is certainly high.Are these disruptions problem cases,or are they attractive opportunities with good potential for moving out of the low-income category?

Question 68

What are some challenges facing the BRIC framework? Explain with examples from a corporation.

Question 69

When a company conducts business across boundaries in countries with different currencies,it is thrust into the turbulent world of exchange risk.

Question 70

A country with a positive current account balance has a trade deficit;that is,the outflow of money to pay for imports exceeds the inflow of money for sales of exports.

Question 71

The "balance of payments" is a record of all economic transactions between the residents of a country and the rest of the world.It is divided into the current and capital accounts.Current accounts include all of the following except:

A)balance on goods.
B)portfolio investments.
C)balance on services.
D)goods imports.
E)goods exports.

Question 72

The fastest-growing sector of world trade includes:

A)travel and entertainment.
B)accounting and legal services.
C)royalties and license fees.
D)engineering services.
E)all of the above

Question 73

The top global merchandise exporter is:

A)China.
B)Germany.
C)the United States.
D)Japan.
E)Korea.

Question 74

One of the major issues in trade relations between the high- and lower-income countries is trade in:

A)automobiles.
B)computers.
C)textiles.
D)services.
E)shoes.

Question 75

The CEO of Otis Elevators says they measure elevator populations in countries as units installed per thousand people.According to this,China is about one-half an elevator per thousand people.

Question 76

The "balance of payments" is a record of all economic transactions between the residents of a country and the developed countries of the world.

Question 77

Measuring elevator populations in countries measured as units installed per thousand people gives an estimate of the market for elevators.That China has about one-half an elevator per thousand people is indicative of:

A)low product saturation level.
B)high product saturation level.
C)high population level.
D)high technological level.
E)low technological level.

Question 78

What are some of the challenges faced by marketers in relation to the newly formed smaller countries? Explain giving examples.